APPEAL from the Circuit Court of Cook County; the Hon. ARTHUR
L. DUNNE, Judge, presiding.
MR. PRESIDING JUSTICE STAMOS DELIVERED THE OPINION OF THE COURT:
Safeco Insurance Company of America (hereinafter referred to as Safeco) and Continental Casualty Company (hereinafter referred to as Continental) issued performance bonds to Egyptian Construction Company, Inc. (hereinafter referred to as Egyptian) to insure performance of certain construction projects undertaken by Egyptian. Egyptian experienced difficulty in completing the projects and Safeco and Continental agreed to advance funds to Egyptian so that the projects could be completed in an orderly fashion.
On March 7, 1975, Egyptian, Safeco and Continental *fn1 entered into a written agreement containing the terms upon which Safeco and Continental would advance funds for the construction projects. This agreement provides, in relevant part:
"11. The Principals hereby agree to assign all of their right, title and interest in and to the beneficial interest in certain land trusts held by the Sears Bank as additional security to the Surety, said land trusts and the properties therein being described in Exhibit A attached hereto and made a part hereof as though fully set forth herein."
Pursuant to paragraph 11 the security given by Egyptian to Safeco and Continental was comprised of assignments of beneficial interests in land trusts. It is important to note at this point that "Exhibit A" was never attached to the agreement. In fact, it is admitted by the litigants that "Exhibit A" does not exist. Consequently, the agreement purports to incorporate by reference a document which is nonexistent. The assignments and acceptances thereof have been made part of the record on appeal.
On August 1, 1975, a judgment by confession was entered in favor of Material Service Corporation (hereinafter referred to as Material) against Ed Bogdajewicz, president of Egyptian, and Egyptian in the amount of $27,240.96. In order to recover the amount of the judgment, Material commenced citation proceedings in March 1976 to discover the assets of Bogdajewicz and Egyptian. During the pendency of the citation proceedings Material discovered that Egyptian had been the owner of the beneficial interests in the aforementioned land trusts and had assigned those interests to Safeco and Continental. Consequently, Sears Bank and Trust Co., Safeco and Continental became respondents in the citation proceedings.
The citation proceedings continued through December 1976. On January 7, 1977, a hearing was held on the citation proceedings in the circuit court of Cook County. At the conclusion of the hearing the court found that a security interest in favor of Safeco and Continental had not attached due to an insufficient description of the collateral. An order was entered requiring the delivery of the beneficial interests in the land trusts to the sheriff of Cook County for sale in order to satisfy Material's judgment lien.
On February 4, 1977, Safeco and Continental filed a motion to vacate the January 7, 1977, order and a memorandum in support thereof. The motion and memorandum asserted: (1) that Safeco and Continental had a valid security interest in the land trusts; and (2) that the security interest should take priority over Material's judgment lien. On April 15, 1977, Material filed a reply. On May 31, 1977, the circuit court denied the motion to vacate the January 7, 1977, order.
Safeco and Continental presently appeal from the judgment entered on January 7, 1977, and from the May 31, 1977, order which denied the motion to vacate. The sole issue presented for review is whether a valid security interest was created in favor of Safeco and Continental by virtue of the March 7, 1975, agreement. This broad issue may be reduced to two issues of narrower scope:
1. Whether the agreement merely evidenced an agreement to perform at some future date;
2. Whether paragraph 11 of the agreement adequately described collateral so as to conform with section 9-203(1)(a) of the Uniform Commercial Code (Ill. Rev. Stat. 1977, ch. 26, par. 9-203(1)(a)) ("Attachment and Enforceability of Security Interest Proceeds Requisites").
The resolution of these two issues is fundamental to the finding of an enforceable security interest against the debtor or third parties. Section 9-203(1) (Ill. Rev. Stat. 1977, ch. 26, par. 9-203(1)) specifies the requisites for an enforceable security interest. Section 9-203 provides, in relevant part:
"§ 9-203. Attachment and Enforceability of Security Interest Proceeds Requisites.
(1) Subject to the provisions of Section 4-208 on the security interest of a collecting bank and Section 9-113 on a security interest arising under the Article on Sales, a security interest is not enforceable against the debtor or third ...