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Schwind v. Mattson

JANUARY 16, 1974.

ROBERT SCHWIND ET AL., PLAINTIFFS-APPELLANTS,

v.

MARVIN MATTSON ET AL., DEFENDANTS-APPELLEES. CHICAGO FEDERAL SAVINGS AND LOAN ASSOCIATION ET AL., PLAINTIFFS-APPELLANTS,

v.

MARVIN MATTSON ET AL., DEFENDANTS-APPELLEES.



APPEAL from the Circuit Court of Cook County; the Hon. JAMES J. MEJDA, Judge, presiding. MR. PRESIDING JUSTICE HAYES DELIVERED THE OPINION OF THE COURT:

Rehearing denied February 14, 1974.

On 16 July 1971, Chicago Federal Savings and Loan Association instituted an action in the Circuit Court of Cook County, Chancery Division (71 CH 1416), to foreclose its mortgage on the residence of Marvin and Dorothy Mattson. The decree of foreclosure issued on 16 December 1971 and the property was sold on 1 February 1972. At the sale of the property, Chicago Federal was the highest bidder, bidding $34,807. That figure was the amount of the balance of the debt secured by the mortgage. The Mattsons' statutory right of redemption was to expire on 1 August 1972, that date being six months from the date of sale. Ill. Rev. Stat. 1971, ch. 77, par. 18(e).

On 28 March 1972, Robert and Margaret Schwind, as buyers, signed an offer to purchase the Mattsons' residence for $48,500, which offer was accepted in writing by the Mattsons. The Schwinds gave the Mattsons earnest money in the amount of $4,850. The date set for closing was 24 June 1972. The Schwinds were not aware of the foreclosure when they signed the offer to purchase the Mattson residence. Thereafter, the Schwinds hired Thomas William Burke as their attorney.

On 25 April 1972, Attorney Burke received a tract index title report from Chicago Title and Trust Co. disclosing the existence of the foreclosure and the issuance of the Sheriff's certificate of sale to Chicago Federal. The report also disclosed certain other junior liens on the property, which liens had also been foreclosed.

By registered letters dated 3 May and 8 May 1972, Attorney Burke demanded of the Mattsons that the earnest money paid them be placed in escrow. The Mattsons did not comply with these demands. Thereafter, on 16 May 1972, the Schwinds instituted an action in the Circuit Court of Cook County, Chancery Division (72 CH 2802), before Judge Mejda seeking a mandatory injunction compelling the Mattsons to place the earnest money in escrow. The Mattsons did not appear or defend and, on 19 May 1972, the trial court ordered the Mattsons to place the earnest money in escrow.

The Mattsons informed Attorney Burke on 7 June 1972 that they would vacate the residence prior to the closing date of 24 June 1972. On 12 June 1972 the Schwinds and John Pinger, Mrs. Schwind's father, entered into an escrow agreement to purchase an assignment of the Certificate of Sale of Mattsons' property from Chicago Federal. The assignment was contingent upon the Mattsons failing to exercise their right of redemption on or before 1 August 1972. The purchase price of the assignment was approximately $36,200. The Schwinds did not inform the Mattsons of this agreement prior to 1 August 1972. Neither was Chicago Federal advised by the Schwinds or Pinger that the Schwinds had an agreement with the Mattsons.

On 20 June 1972, the Mattsons vacated the residence and on 24 June 1972, Mr. Mattson called Mrs. Schwind. He was told to talk to Attorney Burke. Throughout the month of June, Mattson had been attempting to call Attorney Burke without success. On 27 June 1972, Mattson telephoned Attorney Burke requesting him to call the Mattsons' lawyer regarding closing the sale.

In early July of 1972, the Mattsons' attorney called Attorney Burke to tell him that the residence had been vacated and that the Mattsons were prepared to deposit the earnest money in escrow if Attorney Burke and the Schwinds were ready to consummate the deal. Attorney Burke merely replied that he would get back to him.

In late July of 1972, Mr. Mattson went to the office of the attorney for Lincoln National Bank. Lincoln National Bank was the holder of a second mortgage on the Mattson residence in the amount of $4,800 and was a junior decree creditor of Mattson. That attorney suggested a way in which the Mattsons might carry out their contract with the Schwinds. His solution was a three-way escrow between the Mattsons, the Schwinds, and Lincoln National Bank. Lincoln would advance funds for a redemption on behalf of the Mattsons, since the contract price of $48,500 with the Schwinds was far in excess of the redemption price of $34,807. This arrangement would have allowed Lincoln to be paid, as well as leaving about $8,900 for the Mattsons and other junior decree creditors.

On 1 August 1972 in 71 CH 1416 the Mattsons presented a petition to Judge Covelli seeking to extend the right of redemption to 31 August 1972 in order to keep viable the Lincoln National Bank's plan. That petition was granted. Thereafter, the attorney for the Mattsons telephoned Attorney Burke to inform him that the period for redemption had been extended. He further informed him that Mattson had a new buyer, but that Mattson would still sell to the Schwinds, if they so desired. Attorney Burke replied that he would serve the Mattsons' attorney with some papers the following day.

The next day, 2 August 1972, Chicago Federal, pursuant to the agreement of 12 June, delivered the certificate of sale to the Schwinds and Pinger. A Sheriff's deed was then issued to the Schwinds and Pinger. The deed was recorded on 3 August 1972.

On 4 August 1972, the Schwinds, as assignees of Chicago Federal, filed a motion in 71 CH 1416 for the vacation of Judge Covelli's order of 1 August 1972 on the ground that the Mattsons' petition should have been presented to Judge Mejda (who had taken over the case upon the death of Judge Paschen). Judge Covelli vacated his order. On the same day, Judge Mejda entered an order restraining all parties from taking any further action regarding the Mattson property until a hearing could be had.

On 10 August 1972, the Mattsons filed a counterclaim in 71 CH 1416 against the Schwinds praying that the Schwinds be adjudged to be constructive trustees of the legal and equitable title to the property in question, that the Mattsons be allowed to exercise the right of redemption, and further that the Mattsons recover judgment against the Schwinds in the amount of $8,846 (the amount which, under the Lincoln National Bank plan, would have accrued to the Mattsons for their benefit and that of the junior decree creditors other than the bank). On the same day, the Schwinds and Pinger filed a petition for a writ of assistance in 71 CH 1416, and in 72 CH 2802 filed a petition for a judgment against the Mattsons in the amount of the earnest money. In addition, the Schwinds filed an answer to the Mattsons' counterclaim.

On 25 August 1972, after a trial in which 71 CH 1416 and 72 CH 2802 were consolidated, Judge Mejda entered an order in 71 CH 1416 setting aside the sheriff's deed dated 2 August 1972, and extending the time for Mattsons' redemption from the sheriff's sale on 1 February 1972, from 1 August 1972 until 15 September 1972. The decree further provided, in part, that, if the contract of 28 March 1972 between the Mattsons and the Schwinds was consummated, the contract was to be consummated through an existing escrow at Chicago Title and Trust Co. No express disposition was then made of the Schwinds' petition in 72 CH 2802 for a judgment ...


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