APPEAL from the Circuit Court of Will County; the Hon. THOMAS
W. VINSON, Judge, presiding.
MR. PRESIDING JUSTICE SCOTT DELIVERED THE OPINION OF THE COURT:
This appeal comes to us after an order was entered by the circuit court following supplementary proceedings to discover assets in the nature of a garnishment. That order determined that certain funds were available as assets of the defendant, Recreational Retail Builders, Inc. (hereinafter Builders), to satisfy a stipulated judgment entered in favor of the plaintiff, Heritage Bank of Bolingbrook (hereinafter Heritage). The issue raised on this appeal is presented with a factual background spanning several years in time. That background follows.
In September of 1973, Builders purchased a tract of land in Will County for development as an amusement and mercantile establishment. In order to have the subject tract of land annexed to the nearby Village of Bolingbrook with the appropriate zoning classification for the anticipated development, Builders negotiated an annexation agreement with the village. That agreement was approved by the Bolingbrook village council with an ordinance unanimously adopted on February 5, 1974. Agreements of this type are authorized by the Municipal Code. Ill. Rev. Stat. 1979, ch. 24, par. 11-15.1-1 et seq.
In the meantime, an Illinois limited partnership was being formed under the name of Old Chicago Town Partners (hereinafter Chicago Partners). The agreements which document the organization of the partnership indicate that Builders was a general partner. The stated purpose of Chicago Partners was the development of the same real estate purchased by Builders in 1973. As its contribution to the partnership assets, Builders executed its deed to the subject tract on February 7, 1974. In addition, on February 13, 1974, Builders assigned to Chicago Partners:
"All intangible property now or hereafter owed or held by [Builders] in connection with the Project including, but not by way of limitation, * * * all * * * contract rights [and] agreements * * *."
On the same day as the assignment was executed, the February 7 deed was filed of record.
Two days later, on February 15, 1974, the annexation agreement previously approved by the Bolingbrook village council was signed by each of the parties: Builders, the village, and others. Among its provisions, the agreement obligated Builders to repave and improve portions of Illinois Route 53, solely at Builders' cost and expense; provided, however, that if other lands adjacent to Route 53 benefiting from the repaving and improvement were subsequently annexed to the village, Builders would be entitled to "recapture" a percentage of the highway improvement cost. Such a procedure for recapture in subsequent annexations is contemplated by section 30-1204A of the Bolingbrook Municipal Code. *fn1
As one might anticipate, a subsequent annexation did occur. On August 27, 1974, after approval by the Village of Bolingbrook, an annexation agreement was entered into between the village and two other parties, the Louis Joliet Bank of Joliet (hereinafter Joliet Bank) and the partnership of E.N. Maisel and Associates (hereinafter Maisel). Joliet Bank was the owner as trustee of the land annexed and Maisel was the party intending to develop the same real estate. In paragraph nine of the August annexation agreement, Maisel agreed to pay over to the village a portion of the cost of improving Illinois Route 53, that portion to be paid in increments as the construction progressed. The village in turn would pay over the recaptured funds according to its previous agreement with Builders.
Chronologically, the next event of significance occurred in April of 1975. At that time, Builders sold tenant improvements in the amusement and mercantile development to Big Top Popcorn, Inc. (hereinafter Big Top). Big Top paid for the improvements with two installment notes payable to Builders, which notes were secured with purchase money security interests in the improvements. A month later, Builders assigned its interest in the notes to Heritage, granting to Heritage the right of full recourse should Big Top default on its obligation.
In December of the same year, 1975, an agreement was entered into between Builders, Maisel, and the Village of Bolingbrook. The agreement recited that a secondary source of water supply was needed to serve the emergency fire flow requirements of both the Maisel development and the Builders development. To fulfill that need, Maisel and Builders agreed to jointly construct a 12-inch water main 3,600 feet in length. To finance the water project, an escrow account was established at Joliet Bank. Maisel agreed to deposit $100,000 in the escrow account on behalf of Builders, which the parties acknowledged to be the amount owing to Builders as the first increment of the highway recapture monies; Maisel also agreed to deposit $50,000 in the escrow account as its contribution to the cost of constructing the water main. The water main agreement does not make reference to the Chicago Partners, and there is no indication that Builders was acting for the limited partnership as one of its general partners. A subsequent instrument dated February 10, 1976, involving only Builders and Chicago Partners, recites that the former was acting on behalf of and as agent for the latter in entering into the water main agreement. By the same instrument, Builders assigns all its rights and obligations under the water main agreement and escrow to Chicago Partners. The instrument further recites that Builders "has not heretofore assigned, transferred, pledged, hypothecated or otherwise encumbered the Agreements or any of its rights thereunder, and that it has the full right and power to make this assignment."
In 1976 financial difficulties for Chicago Partners led to the filing of a petition for arrangement under chapter XII of the Federal Bankruptcy Act. The statement of affairs filed with the United States District Court for the Northern District of Illinois listed the assets of the limited partnership, and included in that list was the $150,000 in the savings account escrow at Joliet Bank designated for water main construction. Found nowhere on the schedule of assets was any mention of the unpaid increments of the "recapture fund" payable from Maisel to the village and then to Builders as a result of the highway construction. As an adjunct to the bankruptcy proceeding, and because the lenders demanded new management to continue and extend Chicago Partners' line of credit, the limited partnership was reorganized and Builders' interest therein was converted from that of a general partner to that of a Class C limited partner. In the same agreement that converted the partnership interest of Builders, the retiring general partner, the following appears:
"(Builders) hereby assigns, transfers and conveys to (Chicago Partner) its successors and assigns, all of (Builders') right, title and interest in and to the following:
c. Any and all claims against contractors, subcontractors or others relating to the construction and operation by (Chicago Partners) its ...