APPEAL from the Circuit Court of Cook County; the Hon. JOHN F.
HECHINGER, Judge, presiding.
MISS PRESIDING JUSTICE MCGILLICUDDY DELIVERED THE OPINION OF THE COURT:
This is an appeal by Karen and Leon Zarkin (Zarkins), defendants in an action to foreclose a real estate mortgage, of various orders entered by the Circuit Court of Cook County.
On March 13, 1976, Leon Zarkin executed a land trust agreement with the Devon Bank, as trustee, covering the real estate commonly known as 6647 North Francisco Avenue, Chicago, Illinois. This trust was known as Trust No. 2732, and Leon Zarkin was the owner of the beneficial interest of the trust.
On December 23, 1977, Home Federal Savings and Loan Association of Chicago (mortgagee) filed a complaint to foreclose its mortgage on the above described trust property which had been executed on March 17, 1976, by Devon Bank as trustee under Trust No. 2732 (trustee). In addition to the trustee, the Zarkins, who were in possession of the premises, were also named as defendants.
The trustee was served with summons on December 29, 1977, and the Zarkins were served on January 5, 1978. Devon Bank filed its appearance and answer in the suit as a collateral assignee of the trust. The answer alleged that Leon Zarkin had assigned his beneficial interest in the trust to Devon Bank as security for a loan which was in default.
On June 8, 1978, the court entered a decree of foreclosure. The court found that the mortgagee had a valid lien on the property in the amount of $63,254.50. It also found that Devon Bank was entitled to an equitable lien in the amount of $14,626.25, but that said lien was subordinate to the lien of the mortgagee. Concerning the period of redemption, the decree stated:
"It is ordered, adjudged and decreed that the last of the owners of the equity of redemption has been duly served with summons on December 29, 1977; and that the period of redemption shall expire and terminate twelve (12) months after said date, or six (6) months after the date of sale, whichever is later."
On July 13, 1978, the sheriff sold the property at public sale to the mortgagee, who was the highest bidder. The sum bid was equal to the amount due the mortgagee pursuant to the decree plus certain necessary costs and expenses. Subsequent to the court's approval of the report of sale and distribution of proceeds, the sheriff issued his certificate of sale to the mortgagee. Pursuant to the terms of the decree, the period of redemption expired on January 13, 1979, six months after the date of sale.
On January 5, 1979, eight days prior to the expiration of the period of redemption, Devon Bank purchased the certificate of sale from the mortgagee. Upon learning of this action, the Zarkins immediately filed a petition alleging that Devon Bank, as the owner of the equity of redemption, had redeemed the property thus terminating the Zarkins' right of redemption. The Zarkins asserted that Devon Bank's action was a breach of the fiduciary relationship which existed between the trustee and the beneficiary, and that Devon Bank would unjustly profit from said breach. The Zarkins therefore requested that the redemption period be extended to permit them to sell the premises.
Devon Bank responded to these allegations by arguing that it purchased the certificate of sale in its individual capacity and not in its capacity as trustee. It additionally contended that the purchase in no way interfered with the Zarkins' statutory right to tender the redemption price to the sheriff, thus terminating the rights of the holder of the certificate.
On February 9, 1979, the circuit court denied the Zarkins' petition, and they appeal. The following issues are raised on appeal:
1. Whether the decree of foreclosure incorrectly adjudicated the redemption period.
2. Whether Devon Bank's purchase of the certificate of sale prematurely terminated the redemption period.
3. Whether the trustee breached its fiduciary duty to the beneficiary when it purchased the certificate.
The Zarkins first argue that the foreclosure decree incorrectly adjudicated the date for the commencement of the redemption period. The decree provided that the last of the owners of the equity of redemption were served on December 29, ...