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Bank of Broadway v. Goldblatt

DECEMBER 12, 1968.

BANK OF BROADWAY, AN ILLINOIS BANKING CORPORATION, PLAINTIFF-APPELLANT,

v.

NOEL GOLDBLATT, DEFENDANT-APPELLEE.



Appeal from the Circuit Court of Cook County; the Hon. SIDNEY JONES, Judge, presiding. Judgment reversed and cause remanded with directions.

MR. JUSTICE SCHWARTZ DELIVERED THE OPINION OF THE COURT.

Appellant Bank of Broadway (Broadway) obtained a judgment by confession against Noel Goldblatt on May 4, 1967, for $5,609.39. Broadway thereafter caused citations to discover assets to be issued against Goldblatt, the Cosmopolitan National Bank of Chicago (Cosmopolitan) and the First National Bank of Lincolnwood (Lincolnwood). The citation against Cosmopolitan was dismissed on June 9, 1967, and no appeal is taken from that order. As to Lincolnwood, it appears that Goldblatt owned the beneficial interest in a land trust known as Trust No. 16156, in which Cosmopolitan was trustee. On October 21, 1966, Goldblatt assigned his interest to Lincolnwood and that assignment was accepted by Cosmopolitan on October 25, 1966. Broadway now seeks to invalidate the assignment to Lincolnwood on the ground that Lincolnwood had not filed a financing statement, as required by the Uniform Commercial Code, and hence those assets may be subject to payment of Goldblatt's indebtedness to it (Broadway). Ill Rev Stats, c 26, § 9-302 (1967). The trial court held against Broadway and dismissed the citations against both Goldblatt and Lincolnwood on June 29, 1967.

On appeal Broadway contends that Goldblatt's assignment to Lincolnwood of his interest in the land trust was only as additional security for a pre-existing loan; that to perfect such a security interest a Uniform Commercial Code financing statement must be filed with the Secretary of State in Springfield and that since no such statement was filed by Lincolnwood, Broadway by virtue of its citation to discover assets has a superior right to Goldblatt's beneficial interest in the land trust.

Goldblatt testified at the citation proceedings that the corpus of the land trust is a nine-room house and lot and that he assigned his beneficial interest in the trust to Lincolnwood on October 21, 1966. He testified that the assignment was made to give Lincolnwood additional security on a prior loan, that Lincolnwood collected no rent after the assignment, and that he continued to make mortgage payments after the assignment. Since the date of the assignment Marian Riola, one of Goldblatt's employees, has been living in the house but paying no rent. It was said to be "part of the salary."

Saul Binder, representing Lincolnwood which had been directed to produce certain records at the citation proceeding, testified that he did not have any of the records concerning Goldblatt's assignment to Lincolnwood and did not know whether a financing statement had been filed. The court continued the case and ordered Lincolnwood to return the following week with all the records relating to any interest Goldblatt might have in Trust No. 16156. The following week Roy J. Golson, an attorney representing Lincolnwood, was examined as an adverse witness by counsel for Broadway. Following is his testimony:

WAXMAN: "You are responding to the citation on behalf of the First National Bank?" (Lincolnwood).

GOLSON: "Only to present to you the information that was given to me."

Q. "Counsel, does the bank have a Uniform Code statement?"

A. "I do not know."

Q. "Counsel, do you have the records [file] of the bank here?"

A. "I have the records which I presented at this — before this point."

Q. "Do these records contain a Uniform Code statement?"

A. "I didn't present one. I don't have any in my file."

Broadway first contends that the assignment to Lincolnwood of the beneficial interest in the land trust was as additional security for a prior existing debt and not as a sale. Goldblatt's uncontradicted testimony was that he made the assignment as additional security on a debt. The fact that his employee continued to live in the house and that he (Goldblatt) continued to make the ...


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