APPEAL from the Circuit Court of Cook County; the Hon. DONALD
J. O'BRIEN, Judge, presiding.
MR. JUSTICE LORENZ DELIVERED THE OPINION OF THE COURT:
Rehearing denied April 16, 1974.
Plaintiff appeals from an order dismissing certain portions of his complaint that sought an injunction and other appropriate equitable relief enjoining and restraining defendants Andrew Messick, Aetna State Bank, William Fauber, Joseph L. Dombrowski and National Boulevard Bank of Chicago from transferring certain properties out of a land trust and barring their sale except pursuant to a judgment of foreclosure by a court of competent jurisdiction.
Plaintiff and his now deceased wife were owners in joint tenancy of the beneficial interest in eight improved parcels of Chicago real estate, titles to which were held in trust by the National Boulevard Bank of Chicago as trustee under a trust agreement dated January 31, 1969. On September 30, 1971, they entered into a transaction with defendant Messick whereby Messick loaned them $80,000 for a term of six months. Plaintiff and his wife secured the loan by giving Messick: (1) their collateral note in the amount of $90,000 (the additional $10,000 allegedly represents Messick's fee for making the loan); and (2) assigning their certificate of beneficial interest in the land trust to him. This assignment was filed with the land trustee.
No payment was ever made by plaintiff or his wife on the collateral note and on its due date, April 1, 1972, the entire amount of the note remained unpaid.
On May 5, 1972, defendant Dombrowski mailed notice to plaintiff that he had been retained as an attorney by Messick to represent his interests regarding the loan. The letter indicated that under the assignment of the beneficial interest in the trust the rental income on the eight properties would be collected by Dombrowski's agent and turned over to Messick and that the properties would be disposed of at a private sale on May 23, 1972, in Dombrowski's office.
On the same date that notice of the intended sale was sent to the Kortenhofs, Messick directed defendant National Boulevard Bank to convey the eight properties to defendant Fauber, an employee of defendant Aetna State Bank, allegedly to hold title as Messick's nominee.
On May 22, 1972, plaintiff filed his complaint alleging, inter alia, that the collateral assignment of the beneficial interest did not authorize or warrant Messick's direction to the National Boulevard Bank to convey the eight properties out of the land trust to defendant Fauber and that the action constituted a wrongful and unlawful conversion. It was also alleged that a "rider" attached to the collateral assignment reserved plaintiff and his wife the right to refinance or sell any of the eight properties at certain agreed upon minimum prices to reduce the indebtedness, that by reason thereof Messick's interest is at best, if it survived the act of conversion, in the nature of and constitutes an equitable mortgage and that therefore the properties cannot be sold except pursuant to a lawful order of court. It was further alleged that the $10,000 fee was usurious, that the trust properties were valued at $324,000 while the loan was only $90,000 and that plaintiff was in the process of obtaining mortgage refinancing and/or sales of the various land parcels sufficient in amount to fully pay Messick. Plaintiff prayed for: (1) an order restraining and enjoining National Boulevard Bank *fn1 and Fauber from conveying the eight properties and a temporary and/or permanent injunction blocking the proposed sale without a strict foreclosure as required under section 23 of the Illinois Mortgage and Foreclosure Act (Ill. Rev. Stat. 1971, ch. 95, par. 23); (2) the sum of $20,000 plus reasonable attorney's fees for the usurious and unlawful fee of $10,000 charged by Messick on the $80,000 loan in violation of section 5 of the interest statute (Ill. Rev. Stat. 1971, ch. 74, par. 5); and (3) other equitable relief that the court deemed appropriate.
Messick's answer to the complaint admitted the conveyance of properties to Fauber but denied that he did not have that right. It also stated that plaintiff's reservation in the "rider" did not create an equitable mortgage, that the loan was not usurious, that the property value of the eight parcels was considerably less than $324,000, that due to liens and other encumbrances, plaintiff's equity in the properties was only a few thousand dollars and that plaintiff was not in fact making any realistic effort to liquidate or borrow money on the properties.
Plaintiff's reply disputed the evaluation of the eight properties.
On October 2, 1972, the trial court denied plaintiff's motion for a temporary injunction and thereafter, on October 24, 1972, entered an order sustaining Messick's motion for judgment on the pleadings with regard to the relief sought in prayers (1) and (3) because plaintiff's complaint failed to state a cause of action for equitable relief. This appeal ensued. The allegation in prayer (2) that the loan was usurious and unlawful is still pending adjudication.
The essence of plaintiff's position is that Messick's interest in the eight parcels of real estate is in the nature of an equitable mortgage and falls within the purview of section 23 of the Illinois Mortgage and Foreclosure Act (Ill. Rev. Stat. 1971, ch. 95, par. 23) which requires that:
"No real estate within this state shall be sold by virtue of any power of sale, contained in any mortgage, trust deed or other conveyance in the nature of a mortgage, executed after the taking effect of this act; but all such mortgages, trust deeds or other conveyances in the nature of a mortgage, shall only be foreclosed, in the manner provided for foreclosing mortgages containing no power of sale; and no real estate shall be sold to satisfy any such mortgage, trust deed or other ...