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07/17/87 Pickus Construction & v. Bank of Waukegan

July 17, 1987

PICKUS CONSTRUCTION & EQUIPMENT COMPANY, INC., PLAINTIFF-APPELLEE AND CROSS-APPELLANT

v.

BANK OF WAUKEGAN, DEFENDANT (INTERCOUNTY TITLE COMPANY OF ILLINOIS, DEFENDANT-APPELLANT AND CROSS-APPELLEE)



APPELLATE COURT OF ILLINOIS, SECOND DISTRICT

511 N.E.2d 228, 158 Ill. App. 3d 141, 110 Ill. Dec. 393 1987.IL.1011

Appeal from the Circuit Court of Lake County; the Hon. Stephen E. Walter, Judge, presiding.

APPELLATE Judges:

JUSTICE REINHARD delivered the opinion of the court. UNVERZAGT and WOODWARD, JJ., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE REINHARD

Defendant, Intercounty Title Company of Illinois (Intercounty), appeals from a judgment of the circuit court of Lake County enjoining it from drawing upon a letter of credit issued on behalf of plaintiff, Pickus Construction & Equipment Co., Inc. (Pickus). Pickus cross-appeals from that part of the judgment denying its request for attorney fees.

Pickus filed a complaint for injunctive relief against Intercounty and the Bank of Waukegan. Intercounty filed an answer; the Bank of Waukegan did not file an answer and is not a party in this appeal. The cause proceeded to trial on the parties' stipulation to the facts alleged in the complaint. It is alleged therein that on January 7, 1986, Able Drywall and Decorating, Inc. (Able), a subcontractor of Pickus on a project on property owned by Vine/Greenbay Partnership, Ltd. (Vine/Greenbay), filed a mechanic's lien against the property. On February 10, 1986, an agent of Vine/Greenbay sent Able a demand letter to commence suit pursuant to section 34 of "An Act relating to contractors' and material men's liens, known as mechanics' liens" (the Mechanics' Liens Act) (Ill. Rev. Stat. 1985, ch. 82, par. 34). The complaint states that on February 10, 1986, Pickus and Intercounty entered into a title indemnity-escrow agreement whereby a letter of credit would be provided by Pickus to Intercounty to insure the payment, discharge, satisfaction, or removal of the mechanic's lien on or before February 10, 1987. A letter of credit was issued by the Bank of Waukegan for up to $13,757.10.

It is further alleged that Able failed to file suit to enforce the lien within 30 days of receipt of the notice of the demand letter, that the lien was thereby forfeited, and that Intercounty, notwithstanding this, has made a demand on the Bank of Waukegan to draw upon the letter of credit. Pickus sought injunctive relief to prevent Intercounty from drawing upon the letter of credit and for return of the letter of credit.

On October 29, 1986, the trial court entered a permanent injunction against Intercounty ordering that Intercounty take no action on the letter of credit and that Intercounty return the letter of credit. The court found that Pickus' obligations underlying the letter of credit shall cease. Specifically, the judgment recited that Pickus had complied with the requirements of section 34 of the Mechanics' Liens Act (Ill. Rev. Stat. 1985, ch. 82, par. 34), and, as a result of Able's failure to file suit, the court did not have jurisdiction over the subject matter of the mechanic's lien because the lien was forfeited pursuant to statute.

Although no transcript of the October 29, 1986, proceedings has been provided us on appeal, Pickus represents, and Intercounty apparently does not dispute, that Pickus made an oral motion on October 29, 1986, for attorney fees pursuant to section 2-611 of the Code of Civil Procedure (Ill. Rev. Stat. 1985, ch. 110, par. 2-611). The judgment granting the permanent injunction contains a finding that Pickus' "request for fees is denied."

Intercounty contends in its appeal that even though Able failed to commence a lawsuit within 30 days of the receipt of the demand letter to enforce its lien, thereby forfeiting the lien pursuant to section 34 of the Mechanics' Liens Act, the lien was not released and remained a cloud on the title until Pickus took action in accordance with section 35 of the Mechanics' Liens Act (Ill. Rev. Stat. 1985, ch. 82, par. 35). Intercounty maintains that section 35 provides a statutory remedy for release of a mechanic's lien that would clear title, analogous to the satisfaction of judgment procedure provided in section 12-183 of the Code of Civil Procedure (Ill. Rev. Stat. 1985, ch. 110, par. 12-183); and, as Pickus did not avail itself of the procedure provided in section 35, it has failed "to pay, discharge, satisfy or remove" Able's mechanic's lien as set forth in the title indemnity-escrow agreement, and the trial court improperly enjoined Intercounty from proceeding on the letter of credit.

Section 34 of the Mechanics' Liens Act provides:

"Upon written demand of the owner, lienor, or any person interested in the real estate, or their agent or attorney, served on the person claiming the lien, or his agent or attorney, requiring suit to be commenced to enforce the lien or answer to be filed in a pending suit, suit shall be commenced or answered filed within 30 days thereafter, or the lien shall be forfeited. Such service may be by registered or certified mail, return receipt requested, or by personal service." (Ill. Rev. Stat. 1985, ch. 82, par. 34.)

It has been stated that the notice provision in section 34 is jurisdictional, and section 34 is in the nature of a statute of limitations and was intended to force the issue on the validity of claims filed. M. L. Ensminger Co. v. Chicago Title & Trust Co. (1979), 74 Ill. App. 3d 677, 678, 393 N.E.2d 663; see also Keith Young & Sons Construction Co. v. Victor Citizens Housing, ...


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