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Becovic v. Harris Trust & Savings Bank

OPINION FILED OCTOBER 5, 1984.

HUSEIN BECOVIC ET AL., PLAINTIFFS AND COUNTERDEFENDANTS-APPELLANTS,

v.

HARRIS TRUST & SAVINGS BANK, TRUSTEE, DEFENDANT-APPELLEE (VINCENT O'MALLEY ET AL., DEFENDANTS AND COUNTERPLAINTIFFS AND COUNTERDEFENDANTS-APPELLEES AND CROSS-APPELLANTS; CYNTHIA R. MILLER, DEFENDANT AND COUNTERPLAINTIFF-APPELLEE AND CROSS-APPELLEE).



Appeal from the Circuit Court of Cook County; the Hon. Arthur L. Dunne, Judge, presiding.

JUSTICE SULLIVAN DELIVERED THE OPINION OF THE COURT:

This appeal is from a partial summary judgment entered for defendant Cynthia Miller (Miller) on her counterclaim seeking a declaration that she is the sole beneficial owner of certain property held in trust by defendant Harris Trust & Savings Bank under trust number 35945 (the Harris trust), and a judgment against defendants Vincent and Christina O'Malley (the O'Malleys) for an amount due under a certain note. The sole issue before us is the propriety of that order.

It appears from the pleadings and documents attached thereto that this action arises from the sale of a 36-unit apartment building (the property). For some time prior to May 1, 1974, Miller and her husband, Joseph, were the beneficial owners thereof, with title being held by the National Bank of Albany Park as trustee. Various transactions then occurred, as evidenced by the following documents, each dated May 1, 1974.

1. The National Bank of Albany Park, through a nominee, conveyed title to La Salle National Bank, as trustee under trust number 46985 (the La Salle trust). It appears that the beneficiary of that trust was David Kaufman (Kaufman).

2. La Salle National Bank, as maker and in its capacity as trustee, executed a bearer note in the principal amount of $329,500 (the La Salle note). The note recites that it is secured by a trust deed under trust No. 46985 and further states:

"It is agreed at the election of the holder * * * hereof and without notice, the principal sum remaining unpaid hereon, together with accrued interest thereon, shall become at once due and payable * * * in case of default on the payment of principal or interest when due in accordance with the terms hereof or in case at anytime hereafter the right to foreclose the trust deed shall accrue to the legal holders hereof under any of the provisions contained in said trust deed."

The note also states that "[t]he makers, sureties, guarantors and endorsers of the note, jointly and severally, do hereby waive demand, presentment for payment, notice of non-payment and protest * * *." The O'Malleys signed the note as guarantors.

3. La Salle National Bank, as trustee, also executed a trust deed (the La Salle trust deed) for the property in favor of Chicago Title & Trust Co., as trustee, to secure the above note. Paragraph 15 thereof (the due-on-sale clause) provides in pertinent part:

"Time is of the essence hereof and if default be made in performance of any covenant herein contained or in making any payment under said Note or any extension or renewal thereof * * * or if the Mortgagor or Guarantor shall sell said property under a contract for deed or in any other manner transfer title or beneficial interest to said property, then and in any of said events, the Mortgagee is hereby authorized and empowered, at its option, * * * to declare, without notice, all sums secured hereby immediately due and payable whether or not such default be remedied by the Mortgagor or Guarantor, and apply toward the payment of said mortgage indebtedness of the Mortgagee to the Mortgagor or Guarantor, and said Mortgagee may also immediately proceed to foreclose said mortgage."

No signature other than that of a La Salle National Bank officer appears on the trust deed.

4. A trust agreement, No. 35945, between Harris Trust & Savings Bank and the O'Malleys, the first page of which bears the date May 1, 1974, recites that Harris Bank, as trustee, "is about to take title" to the property and names the O'Malleys as beneficiaries thereunder. Inserted under the declaration of the O'Malleys' rights is a provision stating, "SUBJECT TO: Collateral Assignment dated June 21, 1974 to Cynthia R. Miller." The agreement was executed on July 17, 1974. Although it is agreed that, at some time, title to the property was transferred from the La Salle trust to the Harris trust, there is no document in the record evidencing that transaction.

5. An assignment by the O'Malleys to Miller of the beneficial interest in the Harris trust (the collateral assignment), the first page of which also bears the date May 1, 1974, provides in pertinent part:

"This Assignment is made and given as collateral security for payment in full of (i) all principal and interest in that certain Note of the Assignor or its agents, dated May 1, 1974, in the original principal amount of $329,500 * * *.

Upon nonpayment at maturity (whether by acceleration or otherwise) of the principal or interest on the indebtedness secured hereby, or at any time or times or from time to time thereafter, said Collateral Assignee may: (a) exercise any one or more of all of the rights or remedies set forth in the Note hereinabove described * * * and, in addition, * * * shall have full power and authority to exercise all the rights of a secured party under the Uniform Commercial Code of Illinois. Any requirement of the Code for reasonable notice shall be met if such notice is mailed, postage prepaid, to the Assignor at the address of the Assignor as shown on the records of the Collateral Assignee at least 5 days prior to the time of the sale, disposition or other event or thing giving rise to the requirement notice."

The assignment was accepted by Miller on June 21, 1974, and received by Harris Bank on July 3, 1974.

After possessing the property, collecting the rents, and making the required payments for approximately five years, the O'Malleys entered into a contract for sale of the subject property to plaintiffs, Husein and Ese Becovic (the Becovics). The document was made "subject to the rights that Cynthia R. Miller who ...


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