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Bezin v. Ginsburg

OPINION FILED APRIL 13, 1978.

WALTER BEZIN ET AL., PLAINTIFFS-APPELLANTS,

v.

HAROLD GINSBURG ET AL., DEFENDANTS-APPELLEES.



APPEAL from the Circuit Court of Cook County; the Hon. NATHAN M. COHEN, Judge, presiding.

MR. JUSTICE LINN DELIVERED THE OPINION OF THE COURT:

Plaintiff, Walter Bezin, current owner of the beneficial interest of property held by the National Bank of Austin as trustee under a land trust agreement, brought an action for declaratory and injunctive relief against defendants, Harold Ginsburg and James Ginsburg, former beneficial owners under the trust; T.B. & Z. Realty and Management Co., Inc. (T.B. & Z.); Albert F. Brown, the lessee of the subject property under leases executed at the direction of the former beneficial owners; and, the trustee. *fn1 Bezin sought to have the leases executed by the former beneficial owners declared void and to enjoin the defendants from enforcing the provisions of these leases. Three forcible entry and detainer actions (Nos. 76-M1-717260, 76-M1-712234 and 76-M1-71233), brought by Park Lane Management Corporation (Park Lane), as rental agent of Bezin, for possession of the subject property, were consolidated with the above action by the trial court. *fn2

The trial court denied Bezin's motion for partial summary judgment and granted the motions of certain defendants for total summary judgment and dismissed other defendants. On appeal, the plaintiffs contend: (1) that the trial court improperly denied Bezin's partial motion for summary judgment; (2) that the court erred in granting the defendants' motions for summary judgment and in declaring the leases valid, because genuine issues of material fact were raised by the pleadings and supporting materials; (3) that the court improperly dismissed the Ginsburgs and T.B. & Z. as party-defendants.

We affirm the decision of the trial court granting summary judgment to the Ginsburgs and Brown and dismissing T.B. & Z. but vacate the dismissal of the complaint as to the Ginsburgs.

FACTS

Background

In July of 1970, Harold Ginsburg created a land trust with the Bank of Austin involving an improved parcel of land located at the southeast corner of State and Division streets in Chicago. Harold Ginsburg named himself sole beneficiary under the trust. He later assigned 50 percent of his beneficial interest in the trust to his son, James Ginsburg, and 50 percent to Louis Bauer; however, Harold Ginsburg retained the power of direction over the trust.

James Ginsburg and Bauer thereafter encumbered their interest in the land trust with a collateral assignment to the First National Bank of Lincolnwood (Bank of Lincolnwood), as security for a $200,000 loan.

As a result of a lawsuit which later ensued between the Ginsburgs, Bauer and others (Bauer v. Ginsburg, No. 73 CH 4923, hereinafter the Bauer case), a restraining order was issued by stipulation of the parties on March 27, 1974, temporarily enjoining the parties to that action from "selling, assigning, transferring, mortgaging or encumbering" the subject property. This order was to remain in effect until June 24, 1974, at which time any party could apply to the court for an order dissolving the injunction. Bezin attempted but was denied leave to intervene in the Bauer case and did not participate in that action.

The Bank of Lincolnwood declared a default on the Ginsburg-Bauer loan and gave notice that it would sell the beneficial interest in the trust property at auction, to satisfy the loan. The sale was held on October 4, 1975, after a postponement resulting from a lawsuit filed by James Ginsburg. On September 30, 1975, and prior to the sale, the two leases in issue in this case were entered into with Brown at the direction of Harold Ginsburg. The leases were signed by Brown and by Harry Leadingham, an employee of T.B. & Z., the purported agent of the trustee. The Brown leases were each for a term of five years, renewable at the option of the lessee for two additional five-year periods. The Brown leases were recorded on October 3, 1975, the Friday before the auction sale of the beneficial interest.

On Saturday, October 4, 1975, the public sale of the beneficial interest took place. Bezin and all other bidders signed copies of the terms of sale and letters of opinion distributed by the Bank of Lincolnwood which expressly stated that the bank made no warranties as to the existence of leases on the property. Bezin admittedly never examined the title to the trust property, nor inquired about outstanding leases, nor was he represented by an attorney at the sale. The Ginsburgs and their attorney were present at the sale but made no mention of the Brown leases recorded the previous day. Bezin prevailed at the sale and purchased the entire beneficial interest for $450,000. Bezin deposited $50,000 with the Bank of Lincolnwood at the auction and paid the balance at closing on October 20, 1975.

Present Litigation

On February 3, 1976, Bezin filed this action seeking a declaratory judgment that the Brown leases were invalid. He also sought other related relief. The verified complaint stated three bases for the requested relief: (1) that T.B. & Z. was not authorized to execute the Brown leases on behalf of the trustee; (2) that the defendants had entered into the Brown leases as a fraud on the prospective purchasers of the beneficial interest at the public sale; (3) that the Brown leases were executed in violation of the restraining order in the Bauer case. Brown answered the complaint, the Ginsburgs answered and asked to be dismissed and T.B. & Z. moved to dismiss. Brown also filed a counterclaim which sought a declaration that the leases were valid and he also sought related injunctive relief.

On May 10, 1976, Bezin moved for partial summary judgment based on his claim that T.B. & Z. lacked authority to execute the Brown leases on behalf of the trustee. Attached to this motion as an exhibit was a letter dated April 23, 1973, from Bauer, then a beneficiary of the trust, to the trustee attempting to revoke the power of direction held by Harold Ginsburg. Also attached to Bezin's motion was the transcript of the deposition testimony of Harry Leadingham, an employee of T.B. & Z. who signed the Brown leases on behalf of T.B. & Z. On appeal the defendants vigorously contest the propriety of considering the Leadingham deposition, taken by Bezin in the case of Brown v. Milano (75 ...


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