APPEAL from the Circuit Court of Cook County; the Hon. SAMUEL
B. EPSTEIN, Judge, presiding.
MR. JUSTICE MEJDA DELIVERED THE OPINION OF THE COURT:
This is an appeal by First Arlington National Bank (Bank) from an order finding that the Bank was a stakeholder and not entitled to any share of the funds held by it under an escrow agreement, and ordering the Bank to turn over to Marianna Pecora $12,000 plus interest from the escrow funds. Two issues are presented: (1) whether an order entered by the trial court on November 19, 1974, terminated the escrow, and (2) whether the Bank, as a creditor of Lowy and Canna, who are parties to the escrow, had a right of set-off against the funds.
The background of this appeal is summarized from the opinion of this court in an earlier appeal involving another facet of this litigation. Filosa v. Pecora (1974), 18 Ill. App.3d 123, 309 N.E.2d 356.
In August 1971, six neighbors, Anthony Filosa, Angelo Morelli, Willis M. Hoffbeck, Martin D. Galis, Paul Pennick and Joseph Graber, entered into a contract with Carlos Pecora to buy a parcel of unimproved land, approximately 600 feet long and 100 feet wide, which bordered on the rear of their six homes. The contract which was not recorded provided for Pecora to convey the purchased land in separate deeds and that each deed would be contiguous with the lot of each of the six neighbors. In September 1971, Pecora contracted to sell a larger tract of land, including the 600- by 100-foot strip, to two real estate developers, Michael J. Lowy and John A. Canna, who intended to construct several condominium apartment buildings on the property. When Pecora failed to convey the realty they had purchased, Filosa, Morelli, Hoffbeck and Galis sued him for specific performance. Pecora answered the complaint. Lowy and Canna intervened. Pennick and Graber chose not to join in the litigation; instead they conveyed their interests in such properties to intervenors, Lowy and Canna, by quitclaim deed on December 1, 1972.
During the trial on the issues, settlement negotiations were held between the attorney for the plaintiffs and the attorney who represented Pecora, Lowy and Canna. An agreement was reached, and the final settlement provided that the 600-foot strip of land would be narrowed from 100 to 25 feet and that the four plaintiffs and Pennick and Graber would receive individual deeds for 25 feet behind each of their homes and that the six of them would receive $6000 in damages. The agreement further provided that in the event the intervenors failed to apply for building permits within 120 days after the rezoning of the property was obtained, the 600- by 100-foot strip would pass to the plaintiffs and their two neighbors for their contracted purchase price subject only to current real estate taxes.
On May 9, 1972, an order was entered incorporating the terms of the agreement, referred to here and in the prior appeal as the "consent decree." It was approved for entry by the signatures of the respective attorneys and specifically provided inter alia: "IT IS FURTHER ORDERED that this case be dismissed without costs as the matter is settled and compromised between the parties."
On June 8, 1972, Pecora transferred all of his interest in Maywood Proviso Bank and Trust Company Trust No. 3000 to intervenors Lowy and Canna. The trust held legal title to all of the land contracted for by intervenors, including the 600- by 100-foot strip at issue in the prior appeal.
On July 11, 1972, attorneys for Pecora, Lowy and Canna filed a petition under section 72 of the Civil Practice Act (Ill. Rev. Stat. 1971, ch. 110, par. 72) to vacate the order of May 9. The petition was granted and the order was vacated. In the prior appeal to this court, we reversed the order vacating the consent decree, allowing plaintiffs to pursue the remedies stated in that decree. 18 Ill. App.3d 123.
On February 2, 1973, during the pendency of the prior appeal, intervenors, Canna and Lowy, and Marianna Pecora, as administratrix of her deceased husband's estate, entered into an escrow agreement with the Bank as escrowee. The aforementioned were the only parties to the escrow agreement which provides in pertinent part:
"(5) That MARIANNA PECORA, Individually and as Administratrix of the Estate of CARLO PECORA, Deceased and her two (2) sons, DAN PECORA and Ronald Carlo PECORA, shall receive $12,000.00 less pro-rations on the ultimate disposition of ANTHONY FILOSA, et. al. vs. CARLO PECORA, et. al., under No. 72 CH 461 now pending in the Appellate Court of Illinois under Court No. 58374. Final disposition meaning a Dismissal Order, Settlement Order, Satisfaction, or other final Court Order which cannot be appealed.
(6) In the event that ANTHONY FILOSA, ANGELO J. MORELLI, WILLIS M. HOFFBECK or MARTIN D. GALIS and/or/the other Plaintiffs in Case No. 72 CH 461 obtain a verdict of damages against the Estate of CARLO PECORA, said damages shall be deducted from said $12,000.00 and in the event Plaintiffs receive a decree of specific performance no monies shall be received by the Estate of CARLO PECORA, namely, MARIANNA PECORA, DAN PECORA or Ronald Carlo PECORA, and said monies shall be repaid to John A. Canna and Michael J. Lowy."
Subsequent to our decision in the earlier appeal, plaintiffs Filosa, Morelli, Hoffbeck and Galis filed a petition to enforce the consent decree, asking that the land be deeded to them since intervenors Lowy and Canna failed to obtain building permits within the prescribed 120-day period. Meanwhile, Lowy and Canna, and Marianna Pecora, directed the Bank to terminate the escrow and pay the proceeds to Marianna Pecora, which the Bank refused to do.
On November 19, 1974, the trial court entered an order in favor of plaintiffs that defendants and intervenors deed the four parcels of land to plaintiffs as provided in the consent decree and that upon compliance plaintiffs pay $8000 less prorations to defendants and intervenors. The order also gave leave to implead the Bank as a party defendant. The Bank alleges that the funds placed in escrow by intervenors Lowy and Canna were part of the proceeds of its $800,000 loan to intervenors and that upon termination of the ...