APPEAL from the Circuit Court of Lake County; the Hon. FRED H.
GEIGER, Judge, presiding.
MR. PRESIDING JUSTICE GUILD DELIVERED THE OPINION OF THE COURT:
The defendant Elizabeth P.K. Cluxton only, appeals from a decree of foreclosure and sale of the Circuit Court of Lake County, the denial of her defense of usury set forth in her amended answer, the denial of her post-trial motion to vacate the decree and to assert the defense of discharge, and from the sale held pursuant to the decree of foreclosure.
On January 2, 1970, the defendant was divorced from her husband, Harley E. Cluxton Jr., a/k/a Dr. Cluxton. She was in sole possession of the marital domicile which she owned jointly with her former husband. Pursuant to her husband's request, she executed a junior trust deed with her husband to secure a note for $90,000 made by her husband to the plaintiff-appellee, MLC Corporation, Inc. The record indicates her husband only received a loan of $50,000 for the note. At the time of closing the loan, MLC Corporation, Inc. credited itself with an additional $2,500 and also charged Dr. Cluxton with an additional $2,925 insurance. Appellee instituted foreclosure proceedings on September 1, 1970. Appellant appeared and filed an amended answer alleging the defense of usury and claimed a penalty against the plaintiff in an amount equal to twice the total of all interest, discount and charges pursuant to the provisions of Ill. Rev. Stat. 1969, ch. 74, sec. 6. The defendant, Dr. Cluxton, did not appear and answer, having previously filed a voluntary petition in bankruptcy.
On September 3, 1971, the trial court, without hearing but upon the motion of plaintiff and argument of counsel, denied the alleged defense of usury. Subsequent to this in chronological order, the following transpired:
Oct. 22, 1971, decree of foreclosure entered as proved up by affidavit.
Oct. 25, 1971, one Fred Brown purchased the right, title and interest of Dr. Cluxton in the subject property from the federal bankruptcy trustee.
Nov. 19, 1971, Mrs. Cluxton filed post trial motion to vacate the decree of foreclosure and set aside order denying defense of usury.
Dec. 7, 1971, MLC Corporation purchased from the trustee of Dr. Cluxton's bankruptcy estate, his claim of usury for the sum of $450.
Dec. 10, 1971, Mrs. Cluxton filed an addendum to post trial motion of Nov. 19, 1971.
Dec. 15, 1971, Addendum motion denied by trial court.
Jan. 10, 1972, Subject property sold at foreclosure sale to MLC Corporation.
Mar. 13, 1972, Certificate of sale assigned to Frederic D. Brown.
Our opinion will be confined to whether or not Mrs. Cluxton as surety had the right to interpose the defense of usury.
The record indicates the appellee charged appellant's husband a discount of about $40,000 in making a loan of $90,000 to him to be repaid by March 18, 1975. Due process requires appellant be granted a hearing to determine if the note in question were usurious. It appears to this court that the interest charged on this loan violates Ill. Rev. Stat. 1969, ch. 74, par. 4, unless it falls within any of the exceptions therein set forth.
The plaintiff, MLC Corporation, Inc. contends that this loan was a business loan to Dr. Cluxton and that Mrs. Cluxton, as surety, could not invoke the defense of usury. No hearing was had, nor was evidence adduced as to this point in the trial court. The defendant filed an affidavit which he had executed on the date of his note and ...