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Miller Bros. I.s.m. v. La Salle Nat. Bank

DECEMBER 31, 1969.

MILLER BROS. INDUSTRIAL SHEET METAL CORPORATION, AN ILLINOIS CORPORATION, PLAINTIFF-APPELLANT,

v.

LA SALLE NATIONAL BANK, ETC., ET AL., DEFENDANTS-APPELLEES, THOMAS J. DUFFEY, ET AL., APPOINTED AND PRESENTLY ACTING AS TRUSTEES OF THE CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND, HOLDERS OF NOTES SECURED BY DOCUMENTS NOS. 1046444 AND 1075681, COUNTERCLAIMANT-APPELLEES IN MORTGAGE FORECLOSURE, ARMCO STEEL CORPORATION, ET AL., PITTSBURGH PLATE GLASS COMPANY, ET AL., AND UNKNOWN OWNERS, CROSS AND DEFENDANT-COUNTERCOMPLAINANT-APPELLEES IN MECHANIC'S LIEN FORECLOSURE.



Appeal from the Circuit Court of Kane County; the Hon. JOHN S. PETERSEN, Judge, presiding. Affirmed.

MR. JUSTICE ABRAHAMSON DELIVERED THE OPINION OF THE COURT.

Rehearing denied March 16, 1970.

Two separate appeals have been prosecuted from a decree of foreclosure and sale entered by the Circuit Court of Kane County and have been consolidated for purpose of consideration by this court. Although the suit involved a large number of parties and the trial record is voluminous, the issues before this court are relatively few and the facts need only brief exposition.

On May 20, 1965, La Salle National Bank as Trustee, the record owner of the property commonly known as the Aurora Downs Race Track, executed a trust deed to Chicago Title and Trust Company as trustee to secure a note in the principal amount of $850,000. The note was held by the Trustees of the Central States, Southeast and Southwest Areas Pension Fund (hereinafter called "Pension Fund") as evidence of their loan in that amount to finance the purchase of the property. On August 20, 1966, La Salle executed a second trust deed to Chicago Title to secure a note in the amount of $750,000 for funds advanced by the Pension Trust to partially finance a modernization of the track. The proceeds from both loans were disbursed through escrows established at Chicago Title.

On March 15, 1967, Miller Bros. Industrial Sheet Metal Co. (hereinafter called "Miller Bros.") filed a complaint to foreclose a mechanic's lien claimed on the property and alleged that the lien was superior to the interest claimed by Chicago Title and made them party defendant. On May 3, 1967, the complaint was amended to name numerous other lien claimants as parties including Pittsburgh Plate Glass Company (hereinafter called "Pittsburgh") and the Pension Fund. Pittsburgh and the other claimants answered the amended complaint and filed counterclaims to foreclose their own alleged mechanics' liens against the property for labor and material expended in the modernization of the track.

On June 16, 1967, Chicago Title as trustee under the two trust deeds and the Pension Fund answered the amended complaint and various counterclaims and denied that their liens were subject or subordinate and, by countercomplaint, the Pension Fund sought foreclosure of the trust deeds for default in the repayment of the loans made by them. Thereafter, the record is filled with petitions of other claimants to intervene, cross-claims, answers, motions and other pleadings filed by the seventeen different attorneys that appeared in the cause.

On October 25, 1968, the trial court entered a decree of foreclosure that found that the Pension Fund had a first lien against the property in the amount of $1,013,840.16 for principal, interest, costs and attorneys fees by virtue of the trust deed recorded in 1965 and a lien in the amount of $787,070.56 by virtue of the trust deed recorded August 20, 1966, that was junior to the lien of the first trust deed but senior to the rights of all other parties. The decree further found that certain mechanic's lien claimants had perfected their liens and reserved the question of "enhancement" to the property pursuant to section 16 of the Mechanics' Lien Act (Ill Rev Stats 1967, c 82, § 16) for further determination. A further provision found that certain other claimants, including Miller Bros. and Pittsburgh, had proven their claims only against the realty and the owner and that their liens were junior both to the Pension Fund and to the perfected liens of the other claimants. Miller Bros. and Pittsburgh both appealed from that decree on the grounds that they were entitled to the priority of perfected lien claimants and for other reasons.

On June 16, 1966, Pittsburgh entered into a contract with G.T.O. Steel Erectors, Inc., the general remodeling contractor, to furnish the labor and material for the installation of a plate glass curtain wall at the track for an agreed consideration of $58,500. On July 1, 1966, Pittsburgh entered into an identical agreement with the Haber Corporation to do the same work for the same consideration as an additional security for payment. The second contract was personally guaranteed by the beneficiaries under the land trust that held legal title to the property. The contracts provided that payments would be made as the work progressed on the basis that 90% of the value of all materials delivered and work completed during a month would be paid by the 10th day of the following month and the balance paid in full upon completion of the contract.

As the work progressed, Pittsburgh submitted applications for payment in August, September and October, 1966, for 90% of the work completed during the prior months. The application dated October 11, 1966, showed that $40,000 of the work had been completed and that, after the 10% retention, $36,000 was then due. On October 20, Pittsburgh was paid the $36,000 from the construction loan escrow after it had submitted a partial waiver of lien for work done to that date.

On November 1, a further application was submitted that stated that all of the work had been completed including $161 in "change orders" and that $22,661 was due as of that date. The application was marked as "Final" in two places and no part of the total amount due was to be retained. Identical statements were submitted in the months following and were never paid.

On March 6, 1967, Pittsburgh served the record owner, La Salle, with notice that $22,661 was due them and stated that the work had been completed December 6, 1966. On March 8, 1967, a claim for lien in that amount was filed with the office of the recorder of Kane County that also stated that the work was completed December 6. Pittsburgh's counterclaim and amended counterclaim to foreclose their lien also alleged the work had been completed December 6.

On appeal, Pittsburgh maintains that it was uncontested that they had completed the work provided in the contracts with G.T.O. and Haber; that they were still owed the balance of $22,661; and, that they had perfected their lien rights as provided in the Mechanics' Lien Act and were entitled to the priority afforded to the other perfected claims in the decree entered by the trial court. They further contend that the trial court erroneously provided that interest on the amount due would be computed from the date of the decree rather than the date the full amount was due.

Although the decree does not contain any factual findings to support the priorities of claims, it is apparent that the court concluded that Pittsburgh had failed to record a notice of lien within four months after completion of the work. Section 7 of the Act (Ill Rev Stats 1967, c 82, § 7) provides that no contractor "shall be allowed to enforce such lien against or to the prejudice of any other creditor or encumbrance. . ." unless, within four months after completion of the work or within four months of the completion of "extra or additional" work the contractor has brought suit to enforce his lien or filed a verified claim for lien in the office of the recorder of deeds.

The only testimony offered in regard to the Pittsburgh claim was that of Normal W. Allen, the branch manager. Allen identified numerous invocies that indicated the dates work was done at the track. From the invoices, he testified that men were dispatched to the job on January 11, 1967, and the work "completed" one or two days later. ...


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