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Glen Ellyn Sav. & Loan v. State Bk. of Geneva

OPINION FILED NOVEMBER 17, 1978.

GLEN ELLYN SAVINGS AND LOAN ASSOCIATION, PLAINTIFF-APPELLEE,

v.

THE STATE BANK OF GENEVA, TRUSTEE, ET AL., DEFENDANTS-APPELLANTS. — (ROBERT E. NILLES, INC., COUNTERPLAINTIFF-APPELLANT,

v.

GLEN ELLYN SAVINGS AND LOAN ASSOCIATION ET AL., COUNTERDEFENDANTS-APPELLEES.)



APPEAL from the Circuit Court of Lake County; the Hon. JOHN HUGHES, Judge, presiding.

MR. JUSTICE NASH DELIVERED THE OPINION OF THE COURT:

Defendant Robert E. Nilles, Inc., appeals from a decree foreclosing a mortgage and supplemental orders entered therein which declared its interest in the subject property to be inferior to plaintiff's and determined its right to redeem had expired.

Plaintiff, Glen Ellyn Savings and Loan Association (hereinafter Glen Ellyn), filed its complaint to foreclose a mortgage dated December 23, 1972, and recorded December 26, 1972, given to it by defendants Ralph and Rose Cantrell to secure their note for $102,500 which Glen Ellyn also held. The property securing the mortgage consisted of 12 vacant lots located in the Marian Hills Subdivision in Lake County, Illinois. The complaint joined as defendants the State Bank of Geneva, as trustee, which then held record title, Ralph and Rose Cantrell, mortgagors, unknown owners and Robert E. Nilles, Inc., appellant herein. In addition to the usual allegations relating to the mortgage and the debt secured by it, the complaint alleged that, although not known to Glen Ellyn when it accepted the mortgage, Ralph Cantrell had previously entered into a written contract to sell the property to Robert E. Nilles, Inc. (hereinafter Nilles). Nilles answered, essentially admitting Glen Ellyn's mortgage but asserting that the mortgage was subject, subordinate and junior to Nilles' contractual interest in the property. Nilles also counterclaimed alleging that on July 10, 1972, it had entered into the written agreement with Ralph Cantrell to purchase the property for $97,000 and had sought to complete that purchase of the property on August 1, 1972, pursuant to the terms of the agreement, but that Cantrell had refused to do so. Nilles alleged that it recorded the agreement in the office of the recorder of Lake County on December 20, 1972, but that on December 23, 1972, Ralph and Rose Cantrell executed the mortgage Glen Ellyn now seeks to foreclose and on June 26, 1973, conveyed title to the State Bank of Geneva, as trustee. In its counterclaim Nilles sought specific performance of the agreement for the sale of the real estate to it, denial of foreclosure by plaintiff and a declaration that its interest in the property was superior to that of all other parties.

After notice to all parties, the trial court granted a motion by Glen Ellyn to sever its foreclosure action from all other pending actions and, after having considered Glen Ellyn's affidavit of prove-up (Ill. Rev. Stat. 1975, ch. 95, par. 22b), entered the decree of foreclosure on May 17, 1976. That decree found the material allegations of the complaint to be true and found that plaintiff had a valid and subsisting lien on the subject property in the total sum of $137,709.57 for principal and interest due for which the mortgagors were in default. It then determined that Glen Ellyn's mortgage was a valid first lien against the property and the interests therein of defendants the State Bank of Geneva, as trustee, Ralph and Rose Cantrell and unknown owners and directed that it be sold on June 24, 1976, to satisfy the sum due. While the decree also found that the State Bank of Geneva, as trustee, Ralph and Rose Cantrell and unknown owners owned the equity of redemption in the real estate foreclosed upon, it failed to adjudicate the date upon which the period of redemption would commence, as required by statute (Ill. Rev. Stat. 1975, ch. 77, par. 18e).

Insofar as it referred directly to defendant Nilles the decree provided "[t]hat the rights and interest of all the other parties, except the interest of ROBERT E. NILLES, INC. (whose priority is yet to be determined), to this cause in and to the property hereinbefore described are inferior to the lien of the Plaintiff * * *." It further provided that "[n]othing contained herein in any part of this Decree shall be deemed to affect any of the rights of ROBERT E. NILLES, INC. * * * in and to the property herein foreclosed."

Glen Ellyn purchased the property at the sale, applying $97,000 of the indebtedness due it for its bid, and on June 24, 1976, the court approved the report of sale and distribution and entered a deficiency judgment in the sum of $40,064.34 against the State Bank of Geneva, as trustee, and Ralph and Rose Cantrell.

The next chapter opened on September 7, 1976, with Glen Ellyn's motion for summary judgment directed to the issues remaining under the complaint to foreclose mortgage and the counterclaim filed by defendant Nilles. The motion alleged there was no justiciable issue of fact, that the proceeds of the mortgage executed by Ralph and Rose Cantrell were the source of funds by which they had purchased the subject property and that it was a purchase money mortgage superior to any interest Nilles might have by virtue of its contract with Ralph Cantrell. Glen Ellyn's motion was supplemented by an affidavit of Ralph Cantrell setting forth that he had applied to Glen Ellyn for a mortgage on or about November 23, 1972, to obtain funds to purchase the property. Loan application and closing statement documents were attached to Cantrell's affidavit which identified the property and the mortgage foreclosed herein and showed disbursement of the $102,500 loan proceeds as follows:

(1) Glen Ellyn Savings and Loan Association for costs and service charges $2,759.25 (2) Life Savings & Loan Association 78,710.89 (3) George J. Klupar 11,000.00 (4) Ralph and Rose Cantrell 10,029.86 ___________ $102,500.00

A second affidavit in support of the motion was submitted by John F. Rosch, who was attorney for Glen Ellyn and its president. It stated Rosch had examined records of Chicago Title and Trust Company and documents in the recorder's office and determined that defendant Ralph Cantrell first acquired a fee interest in the property by a trustee's deed made December 23, 1972, and recorded January 17, 1973, noting that this deed and the subject mortgage were both executed the same day.

In further support of its motion, Glen Ellyn submitted the answers made by Nilles to a request for admission of facts served upon it. There Nilles acknowledged it had entered into the written agreement with Ralph Cantrell on July 10, 1972, and that it was thereafter recorded on December 20, 1972; by not responding to other questions, Nilles further acknowledged that on those dates the record title was not vested in Ralph Cantrell but was held by Melrose Park National Bank, as trustee. Nilles also admitted the Cantrells executed the mortgage in question and received a trustee's deed from the Melrose Park National Bank on December 23, 1972, the mortgage being thereafter recorded on December 26 and the deed on January 17, 1973.

Glen Ellyn's motion for summary judgment was set for hearing for October 22, 1976, and Nilles served notice on the attorney for defendants Ralph and Rose Cantrell that they appear and produce at the hearing some 17 categories of documents and records relating generally to their transactions with Glen Ellyn, trusts in which they had an interest over the past 7 years, improvements made in the Marian Hills Subdivision and numerous other matters relating to their business affairs. On October 22 Nilles also filed an affidavit stating, in substance, that Ralph Cantrell had represented himself to Nilles as the sole owner of the property and had acted towards it consistently with this representation in dealings with the Village of Tower Lakes and others for improvement of the property and its annexation to the village.

As a report of the proceedings has not been furnished relating to the hearing of the summary judgment motion on October 22, 1976, we refer to the record which discloses an order entered November 22, 1976, granting that motion. There the trial court found that the mortgage in issue was a purchase money mortgage, as its proceeds had been used by the mortgagors, the Cantrells, to acquire title to the subject property and that the rights and interest of Nilles under its earlier contract with Cantrell were inferior to the lien of Glen Ellyn's mortgage against the property. Nilles sought reconsideration of the November 22 order alleging the trial court erred in hearing the matter when the Cantrells had failed to appear with the documents requested by Nilles and did not testify at the hearing. Nilles also argued a question of fact remained whether there was a purchase money mortgage and, noting a dispute had arisen between the parties as to what rights of redemption existed, if any, requested the court to clarify its order in that respect.

At this stage of the proceedings, the record discloses that Stephen Deerwester was permitted to intervene and he was added as a plaintiff and counterdefendant by order entered December 28, 1976. Deerwester's motion to intervene set forth that on December 21, 1976, Glen Ellyn had assigned to him all of its right, title and interest in the certificate of sale of the subject property and that on December 27, 1976, another judge of the trial court had executed and delivered to Deerwester a judicial deed to the property which he had recorded on that day.

By an order entered January 3, 1977, the trial court denied Nilles' pending motion for reconsideration of its November 22 order but did take under further advisement that portion of Nilles' motion requesting that its redemption rights be determined. On January 24, 1977, an order appears in the record finding that Nilles' right to redeem expired December ...


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