APPEAL from the Circuit Court of Cook County; the Hon. WALTER
P. DAHL, Judge, presiding.
MR. JUSTICE MEJDA DELIVERED THE OPINION OF THE COURT:
Rehearing denied March 6, 1975.
Plaintiff, Milton R. Kramlich, brought action for specific performance against Home Federal Savings & Loan Association of Chicago (Home Federal) to honor an assignment from Walter E. Heller & Company (Heller) to Kramlich of certain pledged savings accounts on deposit with Home Federal. Home Federal filed an answer and a counterclaim for interpleader, alleging conflicting claims to the savings accounts by Kramlich, Heller, L.L. Roerkohl and Winona National and Savings Bank of Winona, Minnesota, who were made counterdefendants. Following trial without a jury, a judgment was entered which declared Roerkohl the owner of the savings accounts and further ordered Heller and Kramlich to pay to Roerkohl $66,641.28. Kramlich and Heller, appellants, jointly appeal from the judgment.
The instant appeal involves the conflicting claims of Kramlich and Roerkohl to certain pledged savings accounts arising out of a series of assignments and subordination agreements. The pertinent facts follow. In 1962, the pledged savings accounts on deposit at Home Federal were assigned to Roerkohl. On August 2, 1963, Roerkohl subordinated his interest in the accounts Nos. 95090, 95078, 95038, 95105 and 79631 to Heller as security for a loan from Heller to Mortgage Funding Corporation (Mortgage Funding). The subordination agreement signed by Roerkohl provided:
"* * * the undersigned * * * hereby expressly subordinates his interest in said accounts to the interest of WALTER E. HELLER & COMPANY in the accounts assigned therein and thereby as security for the obligations of MORTGAGE FUNDING CORPORATION to WALTER E. HELLER & COMPANY, evidenced by a certain Note of even date herewith in the principal amount of $130,000.00, together with interest thereon as in said Note provided and service charges with respect to said accounts as set forth in the Loan Agreement between MORTGAGE FUNDING CORPORATION and WALTER E. HELLER & COMPANY of even date herewith."
The collateral note of Mortgage Funding dated August 2, 1963, evidencing the above loan, countained the following printed provision:
"To secure the payment of the principal and interest of this note and all renewals and extensions of the same or any part thereof and any and all other sums, indebtedness and liabilities now or hereafter owing or to become owing from the undersigned to the payee, or the holder hereof, howsoever created, * * * the undersigned has assigned, pledged, deposited and delivered to the payee the following (hereinafter called `Collateral'):"
The note continued with the following typewritten description:
"Certain savings share accounts with Home Federal Savings & Loan Association, Chicago, Illinois, and all other accounts and sundry collateral, all in accordance with written agreements between the maker and the payee, including a Letter Agreement of even date herewith."
On August 2, 1963, Mortgage Funding and Heller entered into the letter agreement referred to in the note. The agreement included a paragraph stating that Mortgage Funding was in the business of acquiring, at a discount, ownership of savings share accounts in savings and loan associations. It further stated that Mortgage Funding was desirous of borrowing funds from Heller from time to time to be secured by collateral as may be required.
Pursuant to a subordination executed by Roerkohl to Heller of his interest in savings accounts Nos. 95025, 95038, 79631, 95090 and 95078, Heller on October 28, 1963, loaned $65,000 to Mortgage Funding upon its note which stated that the loan was made in accordance with written agreements between the maker and the payee, including the letter agreement dated August 2, 1963. The October 24, 1963, subordination to Heller for the purpose of making loans to Mortgage Funding from time to time "provided that the total principal amount of such loans shall not exceed sixty per cent (60%) of the balance * * * and further provided that the proceeds of any loans made on the security of said Accounts shall be made payable jointly to MORTGAGE FUNDING CORPORATION and the undersigned."
Thereafter, Heller made loans to Mortgage Funding of $17,000 on February 13, 1964, $12,000 on June 5, 1964, $17,000 on October 1, 1964, and $35,000 on August 10, 1965. Kramlich personally guaranteed each of these loans, excluding the February 13, 1964 loan. Each loan was evidenced by a note which provided that it was secured by "[a]ll savings share accounts with Savings and Loan Associations heretofore or hereafter assigned, transferred and delivered by maker to payee." The February 13, 1964, note provided that the collateral included "all other accounts and sundry collateral, all in accordance with written agreements between the maker and the payee, including a Letter Agreement dated August 2, 1963." Roerkohl received the proceeds of only the October 28, 1963, loan. He received no notice of the other loans which were made payable directly to Mortgage Funding.
Mortgage Funding defaulted in its obligations to Heller. As of April 7, 1967, the amount of $86,418.65 was due to Heller on the unpaid loans of Mortgage Funding. The parties stipulated at trial that as of that date, Heller held $29,766.05 representing proceeds from the Roerkohl accounts which had matured. The original notes for $130,000 and $65,000 had been discharged. Kramlich, pursuant to his guarantee, paid the full amount due Heller, who thereupon turned over to Kramlich the pledged savings accounts in question and other collateral, together with the payment of $29,796.83. The pledged savings accounts in controversy were those specified in the subordination dated August 24, 1963.
On August 29, 1972, the trial court entered an order which found the issues in favor of Roerkohl and against Kramlich, specifically:
"3. That L.L. Roerkohl's subordinations dated August 21, 1963 and October 24, 1963 extended to the two promissory notes to Walter E. Heller and Company in the principal amounts of $130,000.00 and $55,000.00 [sic], respectively; that as of August 4, 1966 said notes had been paid in full; that Heller's interest in all collateral savings accounts covered by said subordinations ceased upon such repayment and Roerkohl thereupon became entitled to the sum of $73,409.81, plus interest originating from said accounts.
4. The court further finds that Roerkohl is entitled to the following sums:
(a) All sums currently on deposit at HOME FEDERAL SAVINGS AND LOAN ASSOCIATION in pledged savings accounts numbered 95025, 79631, 95038, 95078, 95090, in the amount of $59,011.15 as of the date of this order and all future available funds valued at $6,115.00 as of the date of this order.
(b) The court finds that Roerkohl is entitled to the sum of $73,409.81, plus interest in the sum of $58,357.62 or a total amount of $131,767.43 as of the date of this order to which the sum of the amounts on hand and to become available from HOME FEDERAL SAVINGS AND ...