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Advance Mort. Corp. v. Concordia Mut. Life

OPINION FILED JULY 25, 1985.

ADVANCE MORTGAGE CORPORATION, PLAINTIFF-APPELLEE AND CROSS-APPELLANT,

v.

CONCORDIA MUTUAL LIFE ASSOCIATION, DEFENDANT-APPELLANT AND CROSS-APPELLEE.



Appeal from the Circuit Court of Cook County; the Hon. Thomas R. Rakowski, Judge, presiding.

JUSTICE LINN DELIVERED THE OPINION OF THE COURT:

Rehearing denied August 28, 1985.

Plaintiff, mortgage servicer/lender, entered into a "Purchase and Servicing Agreement" with defendant (Investor), whereby plaintiff agreed to sell to defendant certain mortgages on which plaintiff would collect all payments due and make diligent effort to cause the mortgaged premises to be insured and the taxes levied thereon to be paid in accordance with the requirements of the mortgage.

Following an assignment of a particular mortgage and a subsequent default by the mortgagor, plaintiff paid out of its own funds taxes and insurance premiums on the mortgaged premises, resulting in an escrow overdraft totaling $11,145.44. Defendant instituted foreclosure proceedings and, without consulting plaintiff, submitted its payoff letter into the closing escrow without including a demand for those advances paid by plaintiff.

Plaintiff brought an action for reimbursement of the money it had advanced for taxes and insurance premiums. The parties filed cross-motions for summary judgment, and plaintiff's motion was granted.

Defendant appeals, and plaintiff cross-appeals for prejudgment interest on the judgment in the amount of $2,230.00.

We affirm the decision of the trial court and grant prejudgment interest as requested by plaintiff in its cross-appeal.

BACKGROUND

In May 1964, plaintiff, Advance Mortgage Corporation (Advance), a mortgage servicer and lender, entered into a "Purchase and Servicing Agreement" with defendant/Investor, Concordia Mutual Life Association (Concordia). The agreement contained the following relevant provisions:

"4(d) Advance shall make diligent effort to cause the improvements on the mortgaged premises to be insured in accordance with the requirements of each Mortgage in such amounts and in such manner as may reasonably be required by Investor; provided that Advance shall be required to pay insurance premiums only out of funds paid by the mortgagor or furnished by Investor for such purpose. * * *

(e) Advance shall make diligent effort to cause all taxes, assessments and other charges levied against the mortgaged premises to be paid in accordance with the requirements of the mortgages; provided that Advance shall be required to pay such taxes, assessments or other charges only out of funds paid by the mortgagor or furnished by Investor for such purpose."

In February 1965, Advance assigned a mortgage to Concordia. The mortgage provided, in pertinent part, as follows:

"If default be made in the payment of any of the aforesaid taxes or assessments or in * * * maintaining insurance and paying the premiums therefor, * * * Mortgagee may, at its option, and without any obligation on its part so to do, pay said taxes and assessments, * * * pay such premiums * * *. All amounts expended by Mortgagee hereunder shall be secured hereby and shall be due and payable by Mortgagor to Mortgagee forthwith on demand, with interest thereon * * *.

Upon a foreclosure sale of said premises, * * * the proceeds of such sale shall be applied ...


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