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Inter. Elec. Supply Co. v. Cont. & Eng.

OPINION FILED DECEMBER 1, 1986.

INTERSTATE ELECTRIC SUPPLY COMPANY, PLAINTIFF,

v.

CONTRACTORS AND ENGINEERS, INC., DEFENDANT AND COUNTERPLAINTIFF-APPELLANT (FIRST BANK OF OAK PARK, TRUSTEE, DEFENDANT AND COUNTERDEFENDANT-APPELLEE).



Appeal from the Circuit Court of Cook County; the Hon. Rosemary Duschene LaPorta, Judge, presiding.

JUSTICE LORENZ DELIVERED THE OPINION OF THE COURT:

Plaintiff brought suit against defendant corporation and defendant bank to foreclose an alleged mechanic's lien on a certain improved real estate. Defendant corporation, in turn, filed a counterclaim against its co-defendant bank to foreclose its mechanic's lien on the same property. In granting counterdefendant's motion for involuntary dismissal, the trial court specifically extinguished counterplaintiff's mechanic's lien claim. This appeal is taken from the aforementioned dismissal order, as well as the trial court's subsequent denial of counterplaintiff's motion to vacate the same. For the reasons stated herein, the cause is reversed and remanded to the trial court for further proceedings.

This appeal involves two mechanic's lien foreclosure actions: the instant cause and one entitled Cold Spring Granite Co. v. Pioneer Development Corp. (hereinafter referred to as the Cold Spring case.) Although both suits were pending at the same time in the circuit court of Cook County with regard to certain improved real estate located in River Grove, Illinois, the mechanic's lien claim involving counterplaintiffs here was filed three years after the Cold Spring case was initiated.

The instant suit is the direct result of a complaint filed on March 23, 1981, by Interstate Electric Supply Company (hereinafter referred to as Interstate) against Contractors and Engineers, Inc. (hereinafter referred to as Contractors and Engineers), and the First Bank of Oak Park (hereinafter referred to as the bank) to foreclose a mechanic's lien. On June 16, 1981, Contractors and Engineers filed a counterclaim against co-defendant bank, owners of the subject property as trustees and mortgagees, to foreclose its mechanic's lien in the amount of $379,130. Humboldt Glass Company (hereinafter referred to as Humboldt Glass), another mechanic's lien claimant in this suit and a party in the Cold Spring case, was also served with Contractors and Engineers' counterclaim. Humboldt Glass was subsequently held by order of court to be in default for failure to plead or answer.

On October 30, 1981, the trial court entered a decree of foreclosure and sale finding, inter alia, that Contractors and Engineers had a valid mechanic's lien claim on the subject real estate for work performed thereon. The bank next petitioned the court, pursuant to section 72, to vacate said decree of foreclosure and sale. On January 18, 1982, however, the court merely vacated the default order entered against the bank, *fn1 made certain modifications to the decree of foreclosure and sale, and continued the sheriff's sale of the subject property, scheduled to be held on December 16, 1981, until further order of the court.

Humboldt Glass, meanwhile, also filed motions to vacate the default order entered against them, to quash service of summons, and to vacate the decree of foreclosure and sale. On January 19, 1982, the court not only denied all such motions but further explained the effect of its decision to vacate the default order entered against the bank on the decree of foreclosure and sale. At the request of counsel for Contractors and Engineers, the trial judge clarified that although he was staying the sale order to allow the bank, owner of the subject property, additional time in which to prove its allegations, the decree of foreclosure and sale itself would remain in effect. The judge thereafter entered a second decree granting the bank its motion to vacate the default order. However, no order was ever entered vacating the decree of foreclosure and sale.

On September 3, 1982, the bank moved to consolidate the instant cause with the Cold Spring case. Said motion was denied as were subsequent motions filed by both the bank and Humboldt Glass to vacate the decree of foreclosure and sale. The court further declared that the January 18, 1982, judgment as amended or modified would stand as security for future orders, judgments, or amendments.

On January 28, 1983, the court granted Humboldt Glass a mechanic's lien on the subject real estate in the amount of $32,500 in the Cold Spring case. Humboldt Glass then petitioned the court to preserve its judgment and lien priority in the instant cause of action. Said petition was granted and on February 10, 1983, the decree of foreclosure and sale entered in the instant cause on October 30, 1981, was amended to add a paragraph acknowledging the judgment and lien priority entered in favor of Humboldt Glass in the Cold Spring case.

On March 29, 1983, Humboldt Glass obtained a judgment of foreclosure and sale in the Cold Spring case. Said decree specifically provided in relevant part:

"F. that the period of redemption shall expire six (6) months after said Sheriff's Sale, and that thereafter Defendants in this cause and all persons claiming under them, or either of them, shall be forever barred and foreclosed from all right to redeem and claim an interest in and to said premises * * *."

On July 26, 1983, Humboldt Glass proceeded with the sale of the property. Both the sale and distribution resulting therefrom were approved by order of the court.

On or about March 27, 1984, the bank moved to dismiss Contractor and Engineers' mechanic's lien claim in the instant case. In said motion, counterdefendant argued that since Humboldt Glass had obtained an order of foreclosure and sale of the subject property in the Cold Spring case, and since the period of redemption from said sale had expired January 27, 1984, all parties to the instant action, including Contractors and Engineers, had been divested of ownership and their lien claims extinguished. Contractors and Engineers contended that not only had it not been a party in the Cold Spring proceedings, but that its lien claim had been recorded more than two years prior to the entry of the March 29, 1983, judgment of foreclosure and sale in favor of Humboldt Glass in that case. Contractors and Engineers further maintained in their answer to the bank's motion for involuntary dismissal that the decree entered pursuant to the Cold Spring proceedings specifically applied to the party defendants named therein and, as such, could not affect its claim in the instant action. After conducting a hearing on the matter, the court entered judgment in favor of the bank and specifically extinguished Contractors and Engineers' mechanic's lien claim.

Contractors and Engineers next moved to vacate said order of dismissal on the grounds that: (1) the court failed to take into consideration the fact that a stay order had been entered in the instant case which effectively precluded all interested parties from proceeding with a sale of the subject property; (2) Humboldt Glass, by virtue of petitioning the court to include its mechanic's lien claim in the decree of foreclosure and sale entered in the instant case, became subject to the stay; (3) in light of the pending prohibition to proceed with said sale in the instant case, Humboldt Glass' action to proceed with the sale of the property in the Cold Spring case was improper and void; (4) the trial judge explicitly informed counsel for Contractors and Engineers on January 10, 1982, that the court's decision to vacate ...


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