APPEAL from the Circuit Court of Cook County; the Hon. WALTER
P. DAHL, Judge, presiding.
MR. JUSTICE DOWNING DELIVERED THE OPINION OF THE COURT:
After a consolidated bench trial of actions to foreclose the lien of a trust deed on a tract of real estate, and to foreclose several mechanic's liens on the same tract of land, the trial court entered a decree giving rise to this appeal.
On June 13, 1968, Case International Company (hereinafter "Case") filed its complaint to foreclose its mechanic's lien against the American National Bank and Trust Company (hereinafter "American") as trustee under Trust No. 22916, the Chicago Title & Trust Co. as trustee under a trust deed, Hyde Park Condominium, Inc. (hereinafter "Hyde Park"), and unknown owners. (Cause No. 68 CH 2441.)
In its complaint, Case alleged a written agreement with Hyde Park whereby Case agreed to furnish all labor and materials necessary to install 61 caissons upon real estate located at 5400 S. Hyde Park Boulevard in Chicago. Title to the real estate was held under Trust 22916. Case further alleged performance of its duties under the contract; that Hyde Park had ignored its requests for payment of $63,022.11; that it was entitled to a mechanic's lien upon the real estate in that amount; and that it had caused its lien to be filed with the recorder of deeds on June 7, 1968.
American, both as trustee and as holder of the note, filed answers. Thereafter, American, in its capacity as holder of the note, was dismissed since on April 30, 1969 it transferred and assigned the note to the Manufacturer's National Bank.
On June 16, 1969, the trial court granted the petition of Martin C. and Vivian Faye *fn1 for leave to appear since the trust deed relating to the real estate and note securing it had been assigned to Manufacturer's National Bank as agent for the Fayes. In their answer to Case's complaint, the Fayes denied any knowledge of a contract between Case and Hyde Park or that Hyde Park was general contractor for the real estate, and, alleged that Case's claim was inferior to the lien of the trust deed.
On July 1, 1969, the Fayes filed their complaint to foreclose the trust deed against, among others, American as trustee under Trust No. 22916, Case, Leroy J. Snitoff (hereinafter "Snitoff") and various subcontractors. (Cause No. 69 CH 2330.) The Fayes brought suit in their alleged capacity as "legal holders of the Note secured by the said Trust Deed." In its answer to this complaint, Case claimed it did not have sufficient knowledge to admit or deny the information concerning the mortgage (trust deed) but denied the Fayes' allegations of their paramount lien as holders of the note. Case alleged as affirmative defenses: (1) the priority of its mechanic's lien over the lien of the trust deed, and (2) that the Fayes, Snitoff, and American as trustee under Trust No. 22916 knowingly permitted a contract to be entered into with Case and that $63,022.11 had been due to Case since May 5, 1968. Replying to these affirmative defenses, the Fayes again asserted the superiority of the lien of the note and trust deed and denied any knowledge of a contract between Hyde Park and Case.
The trial court consolidated Case's action to foreclose the mechanic's lien with the Fayes' action to foreclose the trust deed.
On April 17, 1970, Snitoff filed both an answer to the complaint to foreclose the trust deed and a counterclaim. The essence of Snitoff's answer joined in by Hyde Park was a denial of the Fayes' right to foreclose the trust deed since, it was alleged, the Fayes were nominees for others and the note was being held in trust for the benefit of Snitoff, Hyde Park, and others. Snitoff's counterclaim alleging, inter alia, an oral agreement between himself and Martin Faye and Faye's breach of that agreement will be dealt with more specifically in a subsequent portion of this opinion.
During the proceedings, M.E. Stein & Company (hereinafter "Stein") filed its cross-complaint to foreclose a junior trust deed against Snitoff and Hyde Park. Snitoff followed by filing a counterclaim against Faye and Stein alleging that, at the instance of Faye, he negotiated with Stein for a junior mortgage loan against the premises; that Stein charged an usurious rate of interest on the loan; and that Faye conspired with Stein to charge the alleged usurious interest and, thus, breached his fiduciary duty to Snitoff as a joint venturer. In answer to Snitoff's counterclaim, Stein admitted extending a second mortgage loan on the property, requested that the allegations of usury be stricken since the loan was made to a corporate trustee and, thus, was not controlled by the usury laws, and denied any conspiracy with Faye. Faye's answer to the counterclaim, in essence, mirrored Stein's answer.
Having conducted extensive hearings on these matters, the trial court entered its decree of foreclosure wherein it ordered as follows: that all the material allegations in the Fayes' complaint to foreclose the trust deed were true and proven; that, by virtue of the trust deed and note secured thereby, certain costs, fees, and advancements were due to the Fayes; that a number of proven mechanic's liens were subordinate to the lien of the trust deed; that Case had proven and was entitled to a mechanic's lien in the amount of $63,022.11 but that Case's work, labor, and materials had enhanced the premises only to the extent of $30,000; that this amount plus 5% interest from April 19, 1968, to date of decree (or $34,577.70) was entitled to priority over the lien of the Fayes for principal, interest, and advancements but subordinate to their lien for costs and expenses; that the balance due Case plus interest (or $38,119.57) was subordinate to the lien of the trust deed and all costs, fees, and advancements due thereunder; that Stein's encumbrance was subordinate to the lien of the Fayes and each mechanic's lienholder; that the material allegations in Snitoff's counterclaim were not proven and the counterclaim was dismissed; and that the rights and interest of Snitoff, Hyde Park, and others were subject to the liens of the Fayes, the mechanic's lien claimants set out in the decree, and Stein's junior encumbrance. The decree further provided for a public sale of the real estate by the sheriff and specified the priority of the proceeds.
Case subsequently filed its notice of appeal, stating that it appealed from the decree insofar as the decree subordinated Case's mechanic's lien to the lien of the first trust deed and costs, fees, and advances further found due therein.
Snitoff filed a motion to vacate the decree of foreclosure and that motion was denied.
The Fayes cross-appealed from that portion of the decree which gave part of Case's mechanic's lien priority over the Fayes' lien for principal, interest, and advancements and the portion of the decree granting distribution of proceeds from the sheriff's sale to Case before the ...