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Olympic Fed. v. Witney Development Co.

OPINION FILED APRIL 8, 1983.

OLYMPIC FEDERAL, PLAINTIFF-APPELLEE,

v.

WITNEY DEVELOPMENT CO., INC., ET AL., DEFENDANTS-APPELLANTS. — (EDWIN P. WITWICKI ET AL., DEFENDANTS.)



Appeal from the Circuit Court of Lake County; the Hon. Harry D. Hartel, Jr., Judge, presiding.

JUSTICE UNVERZAGT DELIVERED THE OPINION OF THE COURT:

The plaintiff, Olympic Federal, a federally chartered savings and loan association, successor to Olympic Savings and Loan Association, an Illinois savings and loan association, brought an action against the defendants, Witney Development Co., Inc., Western National Bank of Cicero, as Trustee, Edwin P. Witwicki, and "Unknown Owners," to foreclose a mortgage. The trial court entered an interlocutory order placing the plaintiff in possession of the property as mortgagee, and defendants Witney Development Co., Inc., and Western National Bank of Cicero appealed.

The issues presented for review are: (1) whether, following the denial of the defendants' motion to strike the plaintiff's motion to be placed in possession as mortgagee, the trial court should have granted the defendants' request for leave to respond to or answer the plaintiff's motion to be placed in possession or should have held a hearing on the plaintiff's motion based on the defendants' verified answer, and (2) whether it was error for the plaintiff not to comply with section 2-403 of the Code of Civil Procedure (Ill. Rev. Stat. 1981, ch. 110, par. 2-403), in light of its conversion from a State to a Federal savings and loan association.

Olympic Savings and Loan Association was the mortgagee of certain land located in Grayslake, Illinois, that includes a golf course and country club. The mortgage was dated November 12, 1973. On March 19, 1982, the plaintiff filed a complaint to foreclose that mortgage.

On August 4, 1982, the plaintiff moved the court to place the plaintiff, as mortgagee, in possession of the property and to grant the plaintiff authority to collect the rents, issues, and profits from the property and apply them to the mortgage loan balance. That motion was later amended, motions to strike it were denied, and the court ultimately granted the motion and placed the plaintiff in possession of the premises, staying its order pending a determination of the bond requirement of the plaintiff. From that order the defendants filed this interlocutory appeal.

At the outset, it is necessary to determine the scope of this appeal. The order from which the appeal is taken, entered November 3, 1982, ordered that the plaintiff be placed in possession of the mortgaged premises. Under Supreme Court Rule 307(a)(4) (87 Ill.2d R. 307(a)(4)), such an order is immediately appealable as a matter of right. However, the defendants' contentions of error on appeal are directed largely at earlier orders, including the denial of the defendants' motion to strike the plaintiff's amended motion to be placed in possession and the subsequent denial of the defendants' motion to reconsider the request for time to respond to or answer the plaintiff's amended motion.

Only final judgments or orders are appealable unless the particular judgment falls within one of the specified exceptions. Interlocutory appeals are piecemeal in nature, and Supreme Court Rule 307 provides for some very specific exceptions to piecemeal appeals. (City of Chicago v. Airline Canteen Service, Inc. (1978), 64 Ill. App.3d 417, 428.) An appeal under Rule 307 does not open the door to a general review of all orders entered by the trial court up to that date. (Panduit Corp. v. All States Plastic Manufacturing Co. (1980), 84 Ill. App.3d 1144, 1151.) However, certain other orders may be reviewable. For example, in the case of an interlocutory appeal from the granting of temporary injunctive relief, an appellant may ask the appellate court not only to determine whether the trial court properly exercised its discretion but also whether the complaint upon which the temporary injunction was based was proper to sustain an injunction. (Alfred Engineering, Inc. v. Illinois Fair Employment Practices Com. (1974), 19 Ill. App.3d 592, 600.) The right to injunctive relief necessarily brings into question the sufficiency of the complaint, and the defendant who does not stand on his motion to dismiss the complaint may nevertheless contend on appeal from an interlocutory order that the complaint does not set forth grounds for any relief. (Biehn v. Tess (1950), 340 Ill. App. 140, 145.) Thus, whether an order preceding an interlocutory order from which an appeal is taken may be considered during the interlocutory appeal depends on its relationship to the order appealed from.

• 1 In the case at bar, only orders attendant to the motion to be placed in possession are cognizable on this appeal. Besides the order finally ruling on the motion to be placed in possession, this includes the defendants' motions to strike and motion to reconsider.

The defendants' position is that they were improperly denied the opportunity for a hearing, pursuant to statute, on the issue of whether the plaintiff should have been placed in possession pending resolution of the foreclosure action. The placing of a mortgagee in possession of the mortgaged premises is governed by article 15, part 3 of the Code of Civil Procedure (Ill. Rev. Stat. 1981, ch. 110, par. 15-301 et seq.), formerly section 1 et seq. of "An Act in relation to the rights of mortgagees * * *" (Ill. Rev. Stat. 1981, ch. 95, par. 22b.51 et seq.). Section 15-302 provides that, in proceedings filed for the foreclosure of a mortgage, the court may place the mortgagee in possession of the mortgaged premises. Under section 15-303, the court may do so upon the mortgagee's written application to be placed in possession, supported by affidavit, unless the mortgagee's application is denied under oath. Section 15-305 directs the court promptly to conduct a hearing if the right of the mortgagee to take possession is denied. In that case, in order to place the mortgagee in possession, the court must determine that there is a reasonable probability that the mortgagee will prevail in the final hearing of the foreclosure proceedings.

In the instant case, the plaintiff filed its motion to be placed in possession on August 4, 1982. The defendants moved to strike that motion on the ground that it was substantially insufficient at law. On August 18, 1982, the court by order gave the plaintiff 14 days to amend the motion and granted the defendants seven days to respond to it. (The court's order also gave the defendants seven days from the date of the order to answer the complaint, and the defendants filed their answers on August 24, 1982.) The plaintiff filed an amended motion to be placed in possession on September 3, 1982, and on September 15, 1982, the defendants supplemented their motion to strike. On the same day, the plaintiff's response to that supplemented motion to strike was filed, and the court denied the motion to strike and denied the defendants' request to respond to or answer the plaintiff's amended motion. On September 20, 1982, the defendants filed a motion to reconsider the court's ruling, requesting leave to answer or respond to the plaintiff's amended motion to be placed in possession and indicating that they would deny the plaintiff's right to be placed in possession. The court denied the defendants' motion to reconsider and subsequently entered an order placing the plaintiff in possession.

A major thrust of the defendants' argument is that the plaintiff did not provide the court with a basis for placing it in possession. They liken a mortgagee in possession to a receiver pendente lite, discuss the burden of establishing the need for a receiver, and posit that the plaintiff's motion to be placed in possession did not meet that burden. The defendants apparently are challenging the court's denial of their motion to strike through this line of analysis. Generally, the denial of a motion to strike or dismiss of itself is not an appealable order (Camp v. Chicago Transit Authority (1980), 82 Ill. App.3d 1107, 1110), and the appellate court is without jurisdiction to consider such orders unless specific authority is conferred by statute or rule (Savage v. Schoenstadt (1979), 68 Ill. App.3d 552, 554). However, as we noted, the sufficiency of the plaintiff's motion to be placed in possession is reviewable within this Rule 307(a)(4) interlocutory appeal, since it is the very basis for the order appealed from.

• 2 The cases relied on by the defendants hold that the party seeking the appointment of a receiver has the burden of establishing circumstances that would justify the appointment of a receiver, such as danger to the property or loss from neglect, waste, misconduct, or insolvency, or the insufficiency of the premises to secure the payment of the mortgage debt. (Frank v. Siegel (1931), 263 Ill. App. 316; Stella v. Mosele (1939), 299 Ill. App. 53.) However, the defendants' application of these standards to the placement of a mortgagee in possession is not correct, since section 15-305 unequivocably provides that test — "a reasonable probability that the plaintiff in the foreclosure proceedings will prevail on the final hearing of the cause * * *." This standard arises when a mortgagee's application to be placed in possession is denied under oath and a hearing is called for, but a mortgagee's motion to be placed in possession would not have to allege more than what need be proved when a hearing is held.

The plaintiff's amended motion to be placed in possession set forth the details of the alleged default and also charged that the real estate and building were in a complete state of disrepair, substantially diminishing the value of the property and impairing the security, as described in the accompanying amended affidavit. The alleged default itself indicated that the plaintiff would win the foreclosure hearing, so the motion was sufficient.

In addition to the defendants' challenge to the legal sufficiency of the motion, the defendants believe that they were entitled to respond to the merits of the plaintiff's amended motion after the legal sufficiency of that motion was upheld — after the defendants' motion to strike was denied. They contend that the court's refusal to allow them to controvert the allegations of the plaintiff's motion denied them due process. They further assert that the undenied matter in the verified answer to the complaint also should have precluded the trial court's disposition of the issue without a hearing in that it negated the probability of the plaintiff's ultimate success in the cause. The plaintiff argues that the defendants did, in fact, have a chance to respond, and that by filing the supplemental motion to strike rather than a ...


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