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First Fed. S. & L. v. American Nat. Bank

OCTOBER 9, 1968.

FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF CHICAGO, A UNITED STATES CORPORATION, PLAINTIFF-APPELLEE,

v.

AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, A NATIONAL BANKING ASSOCIATION, AS TRUSTEE UNDER TRUST AGREEMENT DATED 11/10/58, AND KNOWN AS TRUST NO. 13969, WARREN E. AVIS, ALEX FLICHT, AND CHICAGO TITLE AND TRUST COMPANY, AN ILLINOIS CORPORATION, AS TRUSTEE UNDER TRUST DEED DATED 10/15/64, AND RECORDED 10/21/64, AS DOCUMENT NO. 19 280 552, DEFENDANTS, ALEX FLICHT, DEFENDANT AND COUNTER-PLAINTIFF-APPELLANT.



Appeal from the Circuit Court of Cook County; the Hon. WALKER BUTLER, Judge, presiding. Affirmed.

MR. PRESIDING JUSTICE MCCORMICK DELIVERED THE OPINION OF THE COURT.

This appeal is taken from an order of the Circuit Court entered on November 29, 1965, which order decreed a foreclosure and sale of certain mortgaged premises and the chattels and personalty contained therein, and which at the same time denied the claims asserted in appellant's amended counterclaim. However, in this appeal the appellant only questions the validity of the foreclosure decree in its application to the chattel mortgage, and further contends that the trial court erred in denying him the relief prayed for in his counterclaim.

The evidence presented in this case is clear and uncontroverted. The defendant, American National Bank and Trust Company of Chicago (hereafter referred to as the defendant bank), under Trust Agreement No. 13969, dated January 27, 1959, holds the legal title to certain real estate located at 58th Street and South Cicero Avenue in Chicago, Illinois, known as the Avis Motel, and to all the fixtures, machinery, equipment, furniture, goods and all other chattels, in addition to those specifically described in a list attached to the trust agreement, contained therein. Defendant Warren E. Avis is the owner of the beneficial interest of that trust.

On February 13, 1959, the defendant bank, acting in its capacity as trustee under the trust agreement with Avis, and not personally, made, executed and delivered to plaintiff its promissory note for $400,000, payable with interest, said principal and interest being payable in monthly installments; $3,903.50 due on March 30, 1959, and a like sum payable on the 30th day of each and every month thereafter until the note is fully paid on February 28, 1971. The note further provided that upon any default in the prescribed payments the whole unpaid balance would become immediately due and payable at the election of the appellee.

In order to secure its note the defendant bank delivered to appellee its trust deed to the real estate described in the before-mentioned trust, and as further security delivered a chattel mortgage covering those chattels specifically described and listed, all the other chattels then on the premises, and all the chattels to be placed thereafter upon the said premises. Both the trust deed and the chattel mortgage were filed for record on February 20, 1959, in the office of the Recorder of Deeds of Cook County, Illinois. On April 9, 1964, the appellee filed with the same Recorder of Deeds an affidavit for extending its chattel mortgage.

On July 1, 1964, prior to the maturity of the note, the defendant bank stopped paying the principal and interest due and owing to the appellee under the terms of that promissory note, and thereafter no further payments were made. Subsequently, on October 13, 1964, defendant-counterplaintiff, Alex Flicht (hereafter referred to as the appellant), acquired title to the motel premises under a quitclaim deed and title to the chattels located therein under a bill of sale executed and delivered by Warren E. Avis. The bill of sale specifically described the chattels conveyed as being subject to the chattel mortgage filed for record by the appellee. The real and personal property was purchased by the appellant for $30,000, to be paid $5,000 in cash and the balance by a promissory note of $25,000, secured by a second trust deed on the premises.

On November 5, 1964, over four months after the defendant bank had defaulted on its promissory note, the appellee filed its complaint to foreclose on the trust deed and the chattel mortgage, and on the 13th of that month a receiver was appointed who took possession of the premises in question and the chattels therein. Appellant filed his answer, claiming that the appellee was not entitled to foreclose on 87 television sets then located on the premises. He then filed a counterclaim asking for affirmative relief in reference to those television sets; namely, that they be turned over to him as his property, and that the appellee pay him a fair rental value for their past use.

The cause was referred to a master in chancery, and while it was pending there the appellant appeared before the trial court on September 22, 1965, and asked leave to file an amended answer and counterclaim. The court referred the motion to the same master, who recommended that he be given leave to file the amendments to his pleadings. In his amended pleadings appellant stated that not only was he entitled to possession of the 87 television sets referred to in his original answer and counterclaim, but also to possession of all the other chattels located on the premises, and prayed for affirmative relief in that regard.

After considering all the evidence presented the master determined that under the law of Illinois the appellant was not entitled to the relief prayed for with respect to any of the chattels located on the premises in question. The appellant then filed objections to the master's report which were allowed to stand as exceptions. On November 29, 1965, the trial court entered an order adopting the master's recommendation and permitted the appellant to file his amended answer and counterclaim. The appellee, however, did not ask leave to file any additional pleadings. The court then overruled the exceptions to the master's report and entered a decree of foreclosure on the trust deed and chattel mortgage. On December 16, 1965, the appellant filed his notice of appeal. Seven days later, on the 23rd, the appellee requested for the first time leave to file a reply and answer to appellant's amended answer and counterclaim. The court granted appellee's request on December 27, 1965.

In this appeal the appellant sets forth two theories which he believes entitle him to the relief prayed for. First, he claims that the trial court had no jurisdiction to enter the order of December 27, allowing the appellee leave to file responsive pleadings to his amended pleadings after his notice of appeal had been filed on December 16, 1965, and that the trial court therefore erred in entering a decree of foreclosure of the chattel mortgage, since the case was not in issue in that his amended answer and counterclaim stood admitted without ever having been denied.

Also, the appellant asserts that the trial court erred in overruling his exceptions to and adopting the master's report which held that his rights in the chattels located on the premises were inferior to those of the appellee. Specifically, the appellant claims to have rights superior to those of the appellee in all of the mortgaged chattels on the theory that since the appellee did not take possession of the chattels within a reasonable time after the defendant bank defaulted on its note, it thereby forfeited its prior lien on the chattels where the rights of a purchaser of those chattels for value — such as the appellant — have intervened. Disregarding the question of whether the appellee acted promptly, nevertheless the appellant claims that since the 87 television sets on the premises had not been described in the chattel mortgage, they were not included therein.

Section 76(2) of the Civil Practice Act (Ill Rev Stats 1963, c 110, § 76(2)) provides that "An appeal is perfected when the notice of appeal is filed in the lower court. After being perfected no appeal shall be dismissed without notice, and no step other than that by which the appeal is perfected is jurisdictional." In other words, with the filing of notice of appeal the trial court was divested of its jurisdiction to enter the order permitting the filing of further pleadings. Lind v. Spannuth, 8 Ill. App.2d 442, 131 N.E.2d 796.

The situation presented in the instant case is comparable to that in Butler v. Palm, 36 Ill. App.2d 351, 184 N.E.2d 633. In that case the lower court allowed the plaintiff to file an amended complaint after the defendant had ...


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