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David v. Russo

OPINION FILED NOVEMBER 10, 1983.

ANNA MARIE DAVID ET AL., PLAINTIFFS-APPELLANTS,

v.

JOHN RUSSO ET AL., DEFENDANTS-APPELLEES.



Appeal from the Circuit Court of Cook County; the Hon. Richard L. Curry, Judge, presiding.

JUSTICE LINN DELIVERED THE OPINION OF THE COURT:

Plaintiffs, Anna Marie and Paula David, appeal from the decision of the circuit court of Cook County awarding defendants, John and Mary Russo, the sum of $22,542.63 as reimbursement for funds expended by the Russos while constructive trustees of a parcel of residential property in which plaintiffs held the beneficial interest. Plaintiffs raise the following issues on appeal: (1) whether the accounting ordered by the appellate court in an earlier, related case should include reimbursement for expenditures made after the time period reviewed in the prior appellate court decision; (2) whether defendants breached their duty as constructive trustees when they ignored a court order and made repairs to the property without prior authorization from the trial court; and (3) whether the trial court erred in computing the amount of reimbursement plaintiffs owed to defendants.

We affirm the decision of the trial court but reduce the amount awarded to defendants as reimbursement for their expenses.

FACTS

This appeal is an outgrowth of earlier litigation between the same parties. The first action resulted in the creation of a constructive trust with defendants, John and Mary Russo, named as constructive trustees of a parcel of residential real estate for the benefit of Anna Marie and Paula David, orphaned minors. (David v. Russo (1980), 91 Ill. App.3d 1023, 415 N.E.2d 531.) Facts from the earlier case necessary to an understanding of this appeal are summarized below.

Testimony in the earlier case established that the parents of the plaintiffs, unable to obtain financing to purchase a home in Mount Prospect, Illinois, reached an agreement with their friends the Russos whereby the Russos, acting as agents for the Davids, provided the $2,000 down payment, obtained the mortgage, and held legal title to the property as security while the Davids, owners of the beneficial title, paid all mortgage, tax, and special assessment payments on the house. The Davids' monthly payments, each for an amount greater than the monthly sum owed to the mortgagee bank, were made directly to the Russos, who in turn deposited the payments in a savings account from which the bank automatically deducted the proper amount each month.

Nancy David, the girls' mother, died in 1972; their father Edward died in 1977. Having no income, the David girls defaulted in their monthly payment to the Russos. The Russos then filed a forcible detainer action against them, claiming that the Davids had been nothing more than renters of the property for 10 years. In response the Davids sued for the imposition of a constructive trust on the ground that although the Russos held legal title to the property, the Davids held the equitable title and therefore were the true owners. During the pendency of these actions, the Davids were able to rent the property and thus make the necessary payments to the Russos until December 1978, when the tenants moved and no other tenants could be found.

The house was vacant for two months, December 1978 and January 1979. The Russos continued to make mortgage payments during those two months and then petitioned the trial court to grant them possession of the property. The petition, granted on February 6, 1979, also relieved the Davids from making any further payments to the Russos.

When the Russos went to inspect the property later in February, they discovered that extensive damage to the house had resulted both from frozen and burst water pipes in the bathroom and basement and from what appeared to be wanton destruction by vandals. On May 23, 1979, the trial court reached a decision in the constructive trust action, finding that a partnership existed between the Davids and the Russos and ordering that the property be sold and the proceeds divided between the parties. Both sides appealed from that judgment.

Believing that they had at least a 50% interest in the property, the Russos filed a further petition in the trial court, complaining about the condition of the property and requesting that the Davids be ordered to reimburse them for the mortgage payments made during the two months the house was vacant. On June 8, 1979, the trial court entered the following order:

"IT IS HEREBY ORDERED, ADJUDGED AND DECREED

A) that judgment is entered for the Defendants John and Mary Russo, and against the plaintiffs in the amount of $650. Execution is stayed until a final determination by the appellate courts> and a final accounting.

B) that the Defendants John and Mary Russo,

1. will make all mortgages, taxes, assessments, insurance and other legitimate expenses ...


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