APPEAL from the Circuit Court of Cook County; the Hon. RAYMOND
K. BERG, and the Hon. EDWARD J. HEALY, Judges, presiding.
MR. PRESIDING JUSTICE DOWNING DELIVERED THE OPINION OF THE COURT:
This appeal concerns the priority of mortgage liens. The defendant, Lakeshore Commercial Finance Corporation (Lakeshore), is appealing from an order of the circuit court of Cook County granting priority to the mortgage held by the plaintiff, Northridge Bank (Northridge), on certain real estate located in Cook County, Illinois over that held by Lakeshore and ordering that the proceeds of an escrow fund held by defendant Schroeder et al. be paid over to Northridge. The trial court stayed the latter portion of its order pending the outcome of this appeal.
On September 16, 1974, Howard Bloom executed a mortgage deed in favor of Lakeshore. The mortgage identifies Bloom as the mortgagor and Lakeshore as the mortgagee, states that the mortgage is to secure the principal sum of $30,000, sets forth the legal description of the real estate, and then, amongst other language, states:
"This mortgage is given to secure the following note, or other obligation or obligations, hereinafter called the Debt Instrument: To secure all obligations of Mortgagor to Mortgagee. * * *
COVENANTS OF MORTGAGOR: The Mortgagor covenants and agrees as follows:
2. The Mortgaged property shall stand as security for the Debt Instrument and for the performance by the Mortgagor of its covenants and agreements therein, and the lien of this mortgage, subject only to the exceptions noted above, shall be a valid and continuing lien upon all of the Mortgaged Property to secure the prompt payment of the Debt Instrument and the performance of each and every obligation therein, provided The Mortgaged Property shall also be security for any additional and subsequent advances by the Mortgagee to the Mortgagor, and all other obligations due from, or guaranteed by, the Mortgagor to the Mortgagee, at any time prior to the satisfaction of this mortgage." (Emphasis supplied.)
The next following language, included on the printed form, has been crossed out on the mortgage held by Lakeshore:
"It is provided, however, that the total indebtedness outstanding at any one time and secured hereby shall in no event exceed ____ DOLLARS."
On October 4, 1974, Bloom executed another mortgage on the same described real estate in favor of Northridge. The relevant portions of that document read as follows:
"THE MORTGAGOR, Howard Bloom, * * *, Mortgages and Warrants to Northridge Bank, * * *, to secure the payment of a certain promissory note, executed by said mortgagor bearing even date herewith, payable to the order of said mortgagee the following described real estate [the legal description of the real estate follows] situated in the County of Cook, in the State of Illinois."
It is to be noted that nowhere on the face of the Northridge mortgage document is there a statement or description of the amount of indebtedness it secures.
Northridge recorded its mortgage at 9:28 a.m. on October 25, 1974. On that same date, at 3:07 p.m., the prior mortgage executed in favor of Lakeshore was recorded.
Subsequently, it became apparent to all of the parties concerned that the value of the real estate was insufficient to fully satisfy both of the encumbrances. A buyer having been found, Lakeshore and Northridge entered into an escrow agreement with defendant Schroeder et al., as escrow agent on April 4, 1975. By the terms of this agreement, the parties agreed that the land would be sold and both parties would deliver to the escrow agent satisfactions of their respective mortgages. The escrow agent would deliver them to the buyer of the land at the time of closing. In consideration for the satisfactions, the proceeds of the sale would be given to the escrow agent pending the outcome of a declaratory judgment action to be commenced by Northridge.
The sale was completed according to the terms of the agreement. Northridge then commenced this action for a declaratory judgment, alleging the superiority of its right to the escrow fund over the claim of Lakeshore. Lakeshore's answer admitted the material allegations of the complaint and raised as an affirmative defense that because the Northridge mortgage failed to state the amount of the debt it secured, nor facts by which the amount of the debt could be ascertained, it was insufficient in law to impart constructive notice of Northridge's interest and was therefore unenforceable as against Lakeshore. Northridge replied to the ...