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Evergreen Sav. & Loan Ass'n v. Barnard

OPINION FILED OCTOBER 12, 1978.

EVERGREEN SAVINGS AND LOAN ASSOCIATION, PLAINTIFF-APPELLANT,

v.

LESLIE C. BARNARD ET AL., DEFENDANTS. — (HAPPIEST PARTNER CORPORATION, INTERVENING DEFENDANT-APPELLEE.)



APPEAL from the Circuit Court of Cook County; the Hon. ARCHIBALD J. CAREY, JR., Judge, presiding.

MR. JUSTICE LINN DELIVERED THE OPINION OF THE COURT:

Plaintiff, Evergreen Savings and Loan Association (Evergreen), brought this action in the circuit court of Cook County to foreclose its mortgage secured by certain real property held in a land trust. The trial court allowed Happiest Partner Corporation (HPC), a beneficiary of the trust, to intervene as a defendant and file a petition asserting its right to cure the amount in default on the mortgage pursuant to statute. Ill. Rev. Stat. 1975, ch. 95, par. 57.

Evergreen appeals from the trial court's order dismissing its complaint for foreclosure. On appeal, Evergreen raises the following questions: (1) whether the trial court erred in dismissing Evergreen's complaint for foreclosure; (2) whether this court should resolve certain issues raised by the pleadings but not reached by the trial court; (3) whether HPC's petition to intervene and petition for special equitable relief failed to comply with the requirements of the Civil Practice Act (Ill. Rev. Stat. 1975, ch. 110, par. 26.1); (4) whether HPC has standing to assert the right to cure the default (Ill. Rev. Stat. 1975, ch. 95, par. 57); and, (5) whether the terms of the note and mortgage allow Evergreen to reject any tender made by HPC.

We reinstate the complaint for foreclosure and remand the case for further proceedings.

Leslie C. Barnard, owner and developer of certain improved property in the City of Country Club Hills, Illinois, conveyed it in trust to the First National Bank of Blue Island (trustee), retaining the entire beneficial interest. In 1973, the trustee, pursuant to direction, executed a note in the principal amount of $1,966,000 to Evergreen, secured by a mortgage on the trust property and guaranteed personally by Barnard. *fn1

In April 1975, Barnard entered into a partnership agreement with HPC under which HPC paid $250,000 to Barnard in exchange for an assignment of 40% of the beneficial interest in the trust. Barnard assigned his beneficial interest in the trust to the City of Country Club Hills to secure his obligation to complete certain public improvements. In January 1977, Evergreen acquired Barnard's 60% interest after he defaulted on his improvement obligations and the city sold the interest pursuant to article IX of the Illinois Uniform Commercial Code (Ill. Rev. Stat. 1975, ch. 26, par. 9-504). Since December 1976, Evergreen has been in possession of the subject property pursuant to an assignment of rents previously executed by the trustee.

On December 10, 1976, Evergreen, after determining that the trustee had defaulted in the payment of installments due under the mortgage note, filed a complaint to foreclose the mortgage. Summons was served on the trustee on December 15, 1976. A final default order was entered against the trustee on January 21, 1977.

The intervening defendant, HPC, filed its petition to intervene on January 26, 1977. The trial court allowed the intervention and granted HPC 14 days to answer or otherwise plead to the complaint for foreclosure. After receiving an additional extension of time from the trial court, HPC, on February 22, 1977, filed a petition for special equitable relief. This petition alleged that HPC, as 40% owner of the beneficial interest in the trust, desired to cure the amount of default under the Evergreen mortgage pursuant to section 7 of "An Act relating to mortgages of property * * *." (Ill. Rev. Stat. 1975, ch. 95, par. 57.) In addition, HPC requested the trial court to determine that HPC was entitled to assess 60% of the amount in default against Evergreen. Accordingly, the petition prayed for an accounting and an order dismissing Evergreen's complaint upon HPC's payment to Evergreen of 40% of the actual amount in default.

Evergreen responded, asking that the petition be stricken for failing to comply with section 26.1 of the Civil Practice Act (Ill. Rev. Stat. 1975, ch. 110, par. 26.1), and, alternatively, that the relief requested pursuant to section 7 be denied because HPC lacked standing to assert the curing provisions contained in that section of the statute.

After hearing arguments on March 10, 11 and 14, 1977, concerning the section 7 issue, the trial court determined that the 90-day curing period allowed by section 7 would expire on March 16, 1977, and that the court could not extend the 90-day period. Considering the possible forfeiture which HPC might sustain if the curing period expired the following day, the trial court on March 15, 1977, entered an order dismissing plaintiff's initial complaint in order to allow the court additional time to determine the respective rights of the parties. This order dismissed Evergreen's complaint without prejudice, directed HPC to pay Evergreen the cost of refiling its complaint for foreclosure and recited that there was no just cause to delay its enforcement or appeal. Evergreen elected to stand on its complaint and proceeded with this appeal.

OPINION

I

The first issue presented for review is whether the able and concerned trial court erred in dismissing plaintiff's complaint in order to prevent the expiration of the 90-day curing period provided by section 7. We can find no legal basis for the trial court's dismissal of the complaint. The Civil Practice Act specifies that involuntary dismissal may be sought on motion of the defendant if the complaint fails to state a cause of action (Ill. Rev. Stat. 1975, ch. 110, par. 45), or if the claim asserted in the complaint is barred by other affirmative matter avoiding the legal effect of the claim (Ill. Rev. Stat. 1975, ch. 110, par. 48). In addition to the grounds specified in the Civil Practice Act a trial court may order dismissal of an action if the plaintiff is not diligent in prosecuting his claim. Bender v. Schallerer (1973), 9 Ill. App.3d 951, 293 N.E.2d 411.

HPC's petition for special equitable relief requested dismissal of the foreclosure proceeding only upon a legal determination of and tender to Evergreen by HPC of the amount required to cure the default. However, the action taken by the trial court in dismissing the complaint was not in response to the relief requested in the petition since the court had not as yet determined the legal issues presented by the pleadings. Nor was the dismissal within the inherent power of the ...


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