Appeal from the Circuit Court of Cook County; the Hon. Albert
Green, Judge, presiding.
JUSTICE BILANDIC DELIVERED THE OPINION OF THE COURT:
This is an action to quiet title to real property and a counterclaim to foreclose on two real estate mortgages on the same property.
Third-party defendants George Clayton Mikelson and his wife, Shirley (hereinafter the Mikelsons), owned a parcel of residential real estate in Cook County. It was encumbered by three mortgages. The first and second mortgages were owned by George Gee, as trustee for Orland State Bank, and Orland State Bank (hereinafter collectively Orland). The third mortgage was owned by an unidentified entity not involved in this proceeding.
Upon default, the owner of the third mortgage instituted a foreclosure action which did not join the first and second mortgage holders as parties. The record reveals that the property is worth about $250,000. The two prior mortgages secure notes in the principal sum of $40,000 each, for a total of $80,000.
Plaintiffs Josephine Skach and George B. Javaras (hereinafter plaintiffs) were the successful bidders at the foreclosure sale of the third mortgage and eventually acquired title by a sheriff's deed for the sum of $22,416.
At this point, it is appropriate to note that plaintiffs are not the real parties in interest. The record reveals that they are nominees for Frank Skach, Josephine's husband, and Paul Javaras, George's brother, who are associated in the purchase of residential real estate at foreclosure sales. Frank Skach has over 25 years' experience in such transactions and has purchased over 100 properties in this manner.
Having acquired title through a sheriff's deed, plaintiffs now seek to extinguish the lien of the first and second mortgages and the equity of the Mikelsons by this action to quiet title. Counterplaintiffs Gee and Orland assert the priority of the liens of their first and second mortgages by their foreclosure action.
The trial court denied cross motions for summary judgment. After trial, the court entered judgment for Gee and Orland on plaintiffs' suit to quiet title and entered a judgment of foreclosure and sale with respect to the first and second mortgages.
The principal issue we are asked to determine is whether the lien of the first and second mortgages is valid and binding against the plaintiffs. Plaintiffs also contend that the court erred in denying their motion for summary judgment; in entering judgment of foreclosure and sale; and in assessing fees and costs against them.
The Mikelsons executed two trust deeds to secure notes in the principal sum of $40,000 each, payable at a stated rate of interest with a fixed maturity date. Both trust deeds were executed and recorded prior to plaintiffs' acquisition of title through a sheriff's deed.
The record reveals that the Mikelsons substituted numerous collateral promissory notes for the original notes ($40,000 each) secured by the trust deeds, and that the Mikelsons and Orland intended the substituted notes to be secured by the two trust deeds. At the time plaintiffs came into title, the balances due on the notes substantially exceeded the $80,000 secured by the two trust deeds. Orland does not seek a mortgage or security interest beyond the $80,000 principal amount set forth in the trust deeds, plus interest and costs. No third-party rights intervened prior to Orland's security interest.
Plaintiffs seek to void the lien of Orland's mortgages on the ground that they do not comply with section 11 of "An Act concerning conveyances" (Ill. Rev. Stat. 1983, ch. 30, par. 10), in that they did not state the correct amount or due date of the debt caused when the new notes were substituted for those specified in the trust deeds. Plaintiffs admit having a title report disclosing Orland's mortgages and being aware of them from the public records prior to acquiring title. However, they did not have knowledge of the exact balance due and were prevented from obtaining such knowledge because State law prohibits banks from disclosing such information. (Ill. Rev. Stat. 1983, ch. 17, par. 360.) Nevertheless, they were aware of the ceiling of $80,000.
Orland contends that the recorded trust deeds complied with section 11 of "An Act concerning conveyances" (Ill. Rev. Stat. 1983, ch. 30, par. 10), and that plaintiffs had actual and constructive ...