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La Salle Nat'l Bank v. Ill. Hous. Dev.

OPINION FILED SEPTEMBER 23, 1986.

LA SALLE NATIONAL BANK, AS TRUSTEE, PLAINTIFF-APPELLEE,

v.

THE ILLINOIS HOUSING DEVELOPMENT AUTHORITY ET AL., DEFENDANTS-APPELLANTS.



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

JUSTICE HARTMAN DELIVERED THE OPINION OF THE COURT:

Defendants, Illinois Housing Development Authority and Harris Trust and Savings Bank (collectively IHDA), appeal a summary judgment entered in favor of plaintiff La Salle National Bank (La Salle), which found that La Salle had the right to prepay its obligation to IHDA on a mortgage. We are asked to decide whether there exists a material issue of triable fact or an ambiguity in the mortgage contract which should have precluded entry of summary judgment.

La Salle is trustee under an Illinois land trust holding legal title to a parcel of land on the north side of Chicago. On October 1, 1971, La Salle and IHDA entered into a mortgage agreement with an accompanying mortgage note under which IHDA loaned La Salle $4,485,000 to be used for the development of a 180-apartment complex on the land. IHDA raised the money for the loan by issuing bonds pursuant to a bond resolution. The bond resolution provides for repayment of the bonds over a period from 1972 to 2015. The mortgage was to run until the year 2015. Under a regulatory agreement also executed on October 1, 1971, 60 apartments were to be reserved for rental to low- and moderate-income families, a limitation to remain in force for the duration of the mortgage and note. In addition, La Salle, IHDA, and the Secretary of Housing and Urban Development (HUD) entered into an interest reduction contract whereby HUD agreed to make payments to IHDA on a portion of the interest owed on the principal loan which could be attributed to the low- and moderate-income housing.

On July 18, 1982, La Salle filed a complaint seeking a declaration of its right to prepay its obligation to IHDA. IHDA filed a verified answer asserting, inter alia, that the mortgage and note did not allow for prepayment. La Salle moved for summary judgment. Memoranda were filed in support of and in opposition thereto.

The circuit court found that HUD was a necessary party. La Salle filed an amended complaint adding HUD as a party. HUD's answer denied that it was an interested party and maintained that any right of La Salle to prepay its obligation was a matter of State law.

At the hearing on the motion for summary judgment, the circuit court recognized the fact that prepayment would end the obligation to provide low- and moderate-income housing. Nevertheless, it found that there were no material issues of fact and that La Salle had the right to prepay its obligation. The court granted summary judgment in La Salle's favor. This timely appeal followed. An order was entered staying enforcement of the judgment pending the outcome of this appeal.

IHDA maintains that summary judgment in La Salle's favor was improper because the contract provisions which form the basis of the judgment do not permit La Salle's prepayment of its mortgage or, alternatively, the provisions are ambiguous as to the right to prepay. The contract language central to this dispute is paragraph 5 of the mortgage, which provides:

"5. That the Mortgagor [La Salle] will not make any advance principal payments in advance of the dates scheduled for redemption or prepayment of the Bonds issued by the Mortgagee [IHDA] for the purpose of obtaining funds with which to make this Mortgage Loan. With respect to any advance principal payment permitted by Mortgagee, the Mortgagor shall pay an amount equal to the aggregate of [a computed sum] * * *."

Also involved is the language contained in paragraph 207 of the bond resolution which states that the bonds issued by IHDA "shall be subject to redemption, at the option of * * * [IHDA], * * * on July 1, 1984, or on any date thereafter."

IHDA contends, and it is undisputed, that although it had the option to allow redemption of the bonds under paragraph 207, IHDA did not exercise this option. IHDA also maintains that no schedule for redemption was established. IHDA argues that La Salle may prepay under paragraph 5 only after the "dates scheduled for redemption" and, since there was no schedule, La Salle was not entitled to prepay.

In contraposition, La Salle insists that paragraph 207 of the bond resolution sets forth a schedule for redemption with the first date for redemption being July 1, 1984. That date having passed, La Salle contends that the circuit court correctly found that it has the right to prepay under paragraph 5 of the mortgage.

• 1-3 Summary judgment is a salutary procedure in the administration of justice (Allen v. Meyer (1958), 14 Ill.2d 284, 152 N.E.2d 576), but must be cautiously granted so that the respondent's right to trial is not usurped in the presence of material evidentiary conflicting facts and inferences. The function of the procedure is to determine the existence or absence of triable issues of fact, not to try them. (Stines v. Otis Elevator Co. (1982), 104 Ill. App.3d 608, 610, 432 N.E.2d 1298; Diomar v. Landmark Associates (1980), 81 Ill. App.3d 1135, 1138-39, 401 N.E.2d 1287.) The moving party for summary judgment must affirmatively show a clear legal right thereto, free from doubt. If any facts upon which reasonable persons may disagree are identified, or inferences may be fairly drawn from those facts leading to differing conclusions, the circuit court must deny the motion and direct that the resolution of those facts and inferences be made at trial. (Ill. Rev. Stat. 1983, ch. 110, par. 2-1005; Nolan v. Johns-Manville Asbestos & Magnesia Materials Co. (1979), 74 Ill. App.3d 778, 794, 392 N.E.2d 1352; Littrell v. The Coats Co. (1978), 62 Ill. App.3d 516, 519-20, 379 N.E.2d 293; Century Display Manufacturing Corp. v. D.R. Wager Construction Co. (1977), 46 Ill. App.3d 643, 648, 360 N.E.2d 1346.) Where facts are not in dispute, however, and the only issue raised is the construction of contract language, summary judgment is properly employed to resolve that issue. Peters & Fulk Realtors, Inc. v. Shah (1986), 140 Ill. App.3d 301, 305, 488 N.E.2d 635; Bates v. Select Lake City Theater Operating Co. (1979), 78 Ill. App.3d 153, 154, 397 N.E.2d 75, appeal denied (1980), 79 Ill.2d 625; Simone Corp. v. Builders Architectural Products (1975), 28 Ill. App.3d 595, 597, 328 N.E.2d 723.

Paragraph 5 of the instant mortgage demonstrates that the parties contemplated the possibility of prepayment. The language clearly and unambiguously provides that the right to prepay cannot arise, however, unless IHDA permits such advance payment and then not until after the "dates scheduled for redemption" of the bonds. To "schedule" is to assign a fixed time in the future to do something. (Webster's Third New International Dictionary 2028 (1981).) To schedule bonds for redemption requires an overt act creating that fixed time.

Paragraph 5 of the mortgage does not expressly authorize advance principal payments prior to the dates scheduled for redemption or prepayment of the bonds. Rather, La Salle seeks to have the inference drawn that, because La Salle is denied the right to make advance principal payments prior to those dates, it has the right to make such payments anytime thereafter, namely, after July 1, 1984. This conclusion, La Salle argues, is reflected in the second sentence of paragraph 5 which reads, in part, that "[w]ith respect to any advance principal payment permitted by Mortgagee [IHDA], the Mortgagor [La Salle] shall pay an amount equal to the aggregate of a [computed sum]." That second sentence, however, affirmatively ...


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