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Lester v. Arlington Hts Fed. S & L Ass'n

OPINION FILED JANUARY 24, 1985.

WILLIAM A. LESTER, ESQ., TRUSTEE, PLAINTIFF-APPELLANT,

v.

ARLINGTON HEIGHTS FEDERAL SAVINGS & LOAN ASSOCIATION, DEFENDANT-APPELLEE.



Appeal from the Circuit Court of Du Page County; the Hon. Robert A. Nolan, Judge, presiding.

JUSTICE SCHNAKE DELIVERED THE OPINION OF THE COURT:

This is an appeal by the plaintiff, William A. Lester, Esq., acting as the trustee for the bankrupt estate of Daniel E. Harper, from a judgment dismissing his two-count complaint against the defendant, Arlington Heights Federal Savings & Loan Association, on the grounds of collateral estoppel.

The trial court held that the issue of whether the defendant had breached its loan commitment agreement with Daniel Harper had been previously adjudicated in a foreclosure action where Harper and the defendant were co-defendants. The issue on appeal is whether the trial court erred in applying the doctrine of collateral estoppel under the facts of this case.

On September 2, 1981, the plaintiff filed a two-count complaint against the defendant in the circuit court of Du Page County. The complaint alleged that on or about July 29, 1974, Harper and the defendant entered into a loan commitment agreement which the defendant breached by refusing to fund the loan. Count II was based on the same breach of contract, but alleged the breach was wilful, intentional and vexatious and asked for punitive damages. On October 1, 1981, the defendant filed a motion to dismiss the plaintiff's complaint on the basis that the issue of breach of contract had been previously adjudicated in a foreclosure action.

The prior foreclosure action was filed on March 7, 1975, by McElvain-Reynolds Co., a Delaware corporation, in the circuit court of Lake County, against numerous defendants who allegedly held interests junior to McElvain-Reynolds' mortgage. The property foreclosed upon was the same property that Harper had pledged as security under the July 29, 1974, loan commitment with the defendant.

In its foreclosure complaint, McElvain-Reynolds named the present defendant, Arlington Heights Federal Savings & Loan, as a co-defendant alleging that it held:

"a claim to right, title or interest in the mortgaged premises as a beneficiary, as mortgagee in the mortgage recorded as Document No. 1674970, as assignee under Assignment of Rents recorded as Document No. 1674971 and as holder of the indebtedness secured by Trust Deeds recorded as Documents 1674972, 1674973, 1674974 and 1674975."

and:

"as Trustee under Trust Deeds recorded as Documents 1674972, 1674973, 1674974 and 1674975."

Harper, as a co-defendant in the prior foreclosure action, filed an answer to this allegation, stating:

"That Defendant admits that ARLINGTON HEIGHTS FEDERAL SAVINGS AND LOAN ASSOCIATION * * * has a claim to right, title or interest in the mortgaged premises as a beneficiary; as mortgagee in the mortgage recorded as Document No. 1674970; as assignee under Assignment of Rents recorded as Document No. 1674971; as holder of indebtedness secured by Trust Deeds recorded as Documents Nos. 1674977, 1674973, and 1674975; and as Trustee under Trust Deeds recorded as Documents 1674972, 1674973 and 1674975."

The defendant, Arlington Heights Federal Savings & Loan, then filed a reply to Harper's answer which stated:

"ARLINGTON hereby alleges that it recorded the Trust Deeds and (mortgage) as described therein as a preliminary step with reference to a certain loan commitment entered into by and between DANIEL E. HARPER and ARLINGTON; that the conditions contained in said commitment have to this date never been complied with, and, accordingly it has not paid ...


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