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04/09/87 the Anna National Bank, v. Gilbert L. Prater

April 9, 1987

THE ANNA NATIONAL BANK, PLAINTIFF-COUNTERDEFENDANT AND SUPPLEMENTAL PLAINTIFF-APPELLEE

v.

GILBERT L. PRATER, JR., ET AL., DEFENDANTS-COUNTERPLAINTIFFS (GOREVILLE STATE BANK ET AL., SUPPLEMENTAL DEFENDANTS-APPELLANTS)



APPELLATE COURT OF ILLINOIS, FIFTH DISTRICT

506 N.E.2d 769, 154 Ill. App. 3d 6, 107 Ill. Dec. 26 1987.IL.473

Appeal from the Circuit Court of Union County; the Hon. D. D. Bigler, Judge, presiding.

APPELLATE Judges:

JUSTICE JONES delivered the opinion of the court. KARNS, P.J., and KASSERMAN, J., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE JONES

Plaintiff, Anna National Bank , brought the instant supplementary action following a foreclosure action in which its mortgages on certain farm property in Union County, Illinois, were foreclosed against defendants, Gilbert and Nancy Prater (Praters). ANB had sought and obtained an order in the foreclosure proceeding placing it in possession of the subject property. In its supplementary action ANB sought a declaration of its rights to a crop of soybeans growing on the foreclosed property at the time the order of possession was entered. Joined as defendants in the supplementary action were Noble White, a farm tenant of the Praters who had planted the soybeans in question, and Goreville State Bank , which had loaned money to Noble White for production of the soybeans and had taken a security interest in the soybean crop. Also joined as a defendant was Behiemer & Kissner, Inc. , a grain elevator, which held the proceeds of the crop claimed by the parties. The trial court entered summary judgment in favor of ANB, finding that the interest of ANB in the soybean crop as "rents, issues and profits" of the property subject to ANB's mortgages was superior to the interests of supplemental defendants Praters, Noble White, and GSB. On appeal supplemental defendants Noble White and GSB assert that their rights to the crop in question were not concluded by the trial court's order placing ANB in possession of the mortgaged premises where they were not joined as parties in the main foreclosure proceeding in which it was entered. In addition, they contend that the trial court erred in entering summary judgment for ANB where GSB had a superior claim to the soybean crop as a current year crop lender under section 9-312(2) of the Uniform Commercial Code (Ill. Rev. Stat. 1983, ch. 26, par. 9-312(2)) and where a material question of fact existed as to the validity of the farm lease between Noble White and the Praters. We reverse and remand the cause for further proceedings.

On June 7, 1984, ANB filed a complaint to foreclose its mortgages on four tracts of property in Union County, Illinois, owned by mortgagors Gilbert and Nancy Prater. Each of the mortgages specifically entitled the mortgagee, upon default, to "all rents, issues, proceeds and profits" of the real estate subject to the mortgages. On July 11, 1984, the Praters filed an answer in which they alleged, inter alia, "that the property has been leased for farming purposes to Noble White and that the same are [ sic ] being occupied for the purpose of planting crops." No joinder of Noble White as a defendant was made, and, on August 22, 1984, ANB filed an application to be placed in possession of the mortgaged premises. (See Ill. Rev. Stat. 1983, ch. 110, par. 15-301 et seq.) In its application ANB alleged that "the mortgaged premises are occupied, according to . . . the answer of defendants Prater, pursuant to a lease for farming purposesto Noble White for the purpose of planting crops." On September 17, 1984, the trial court granted ANB's application to be placed in possession. The court observed that notice of the application to be placed in possession had been given to the "owner" of the premises and that the mortgagee's application to be placed in possession had not been denied under oath by the defendants Praters. See Ill. Rev. Stat. 1983, ch. 110, par. 15-303.

Subsequently, on September 23, 1984, ANB filed a motion for entry of a temporary restraining order without notice. In its motion ANB alleged that at the time the mortgagee's application to be placed in possession had been granted, a soybean crop had been growing on the mortgaged premises and:

"on Friday, September 21, 1984, and Saturday, September 22, 1984, during the hours of night, defendants [Praters] harvested or caused to be harvested, or someone by or on their behalf using their equipment harvested or caused to be harvestedapproximately 100 acres of the soybean crop, thereby violating [the order placing mortgagee in possession]."

ANB further alleged:

"Noble White is admitted in the pleadings . . . by defendants Prater[s] to have been a lessee of the premises; there is no written lease on file whatsoever and no written lease or other basis for the interest of the mortgagor or the mortgagor's lessee to have priority . . . over the interest . . . of ."

ANB, therefore, sought entry of an order restraining the Praters and Noble White, as well as those acting in concert with them, from entering upon the mortgaged premises or severing or attempting to sever or harvest any soybeans from the premises. On September 23, 1984, the trial court granted ANB's motion of that date and entered the TRO requested by ANB.

On September 28, 1984, ANB filed a motion for summary judgment for foreclosure of its mortgages and for sale of the mortgaged premises. Subsequently, on October 1, 1984, Noble White filed a petition for leave to intervene as a party defendant in the foreclosure proceeding and a motion to dissolve the TRO of September 23, 1984, insofar as it applied to him as lessee of the subject premises. Accompanying both motions was a document entitled "Farm Lease," which purported to be a written farm lease entered into on May 10, 1984, between the Praters and Noble White. The term of the lease was stated to be from May 10, 1984, to December 31, 1984, and the lease provided that the tenant "agrees to use the land and machinery [described in the lease] for agricultural purposes and to pay as rent the sum of $60,000.00 no later than June 15, 1984." The real estate described in the lease included the four tracts of property in Union County that were the subject of ANB's foreclosure proceeding.

In his petition to intervene and his motion to dissolve the TRO, Noble White alleged that he was a lessee of the subject property pursuant to the written lease with the Praters, that the lease was in effect at the time the mortgagee ANB was placed in possession of the property, and that Noble White, by reason of the lease, had a superior right to the soybean crop growing upon the premises when the order of possession was entered. Noble White sought, therefore, to have the TRO dissolved as to him so that he could enter upon the property to harvest the soybean crop and have the monies from the sale of the soybeans released to him.

At a hearing on the motions held on October 1, 1984, Noble White testified that he was a son-in-law of the Praters and that he had farmed land owned by them in Union County and Johnson County pursuant to the farm lease entered into on May 10, 1984. Prior to planting crops on the leased premises in May or June 1984, Noble White had obtained financing from GSB to produce that year's crops and had given GSB a security interest in the crops. GSB's security interest had been perfected by filing in both Union County and Johnson County. Noble White testified that on Friday, September 21, 1984, he had begun harvesting the crops from the property subject to the foreclosure proceeding and had completed harvesting between 80 and 100 acres of soybeans. Approximately 140 acres of soybeans remained to be harvested. He had been "rained out" on Saturday, September 22, and when he had returned to continue harvesting soybeans on Monday, September 24, he had been prevented from entering the property by a guard. Noble White testified that the Praters had no interest in the soybeans growing on the land, as he had rented the farm on a cash rent basis for the 1984 crop year.

On cross-examination Noble White stated that he had paid the Praters $15,000 of the cash rent and then had given them a note for the balance of $45,000 by the middle of June when it was due. He stated that the $15,000 had been paid "in a series of checks" at "different times." Of the $20,000 that he had paid the Praters to date, approximately $8,000 had been paid to them directly in the form of checks or drafts, and he had also paid "light bills and phone bills." Noble White stated that on Friday, September 21, while he was harvesting the soybeans in question, his father-in-law, Gilbert Prater, had been present helping him fix his combine and had driven one of the combines part of the time. Upon further cross-examination Noble White acknowledged that the last three or four pages of the written farm lease, which contained descriptions of some of the property covered by the lease, were on legal-size paper that was longer than the first ...


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