First Bank of Oak Park, Defendant-Appellee)
515 N.E.2d 182, 161 Ill. App. 3d 676, 113 Ill. Dec. 373
Appeal from the Circuit Court of Cook County; the Hon. Albert Green, Judge, presiding. 1987.IL.1346
JUSTICE RIZZI delivered the opinion of the court. McNAMARA, P.J., and WHITE, J., concur.
DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE RIZZI
Plaintiff, First Bank of Oak Park, as trustee under land trust No. 11797 (trustee), appeals from the denial of its application for a temporary restraining order and preliminary injunction to halt an Illinois Commercial Code sale of the beneficial interest in the land trust by defendant, First Bank of Oak Park (bank). Trustee also appeals the dismissal of its petition to determine the interest, attorney fees and legal costs assessed against it by bank to satisfy a note secured by the assignment of the beneficial interest in the land trust. We affirm in part, and reverse and remand in part.
This cause of action originated as a complaint to foreclose a mechanic's lien filed by Interstate Electric Supply Company on April 8, 1981, against the property located at 8383 West Belmont, River Grove, Illinois. On June 16, 1981, Contractors and Engineers, Inc., filed a counterclaim in the mechanic's lien action seeking to enforce a mechanic's lien in the amount of $379,337. The only allegation concerning the bank in both the complaint and counterclaim was that it had an interest in the subject premises against which the mechanics' liens had been filed. Bank was the holder of a $450,000 note secured by a mortgage which constituted a first lien against the property. Bank also held an assignment of the beneficial interest in the land trust which resulted from a construction loan agreement executed between bank and trustee. Trustee is the legal title holder to the property.
On October 30, 1981, Interstate Electric's complaint was dismissed with prejudice. The counterclaim of Contractors and Engineers, Inc., remained pending. Thereafter, on October 30, 1981, the trial court entered a judgment of foreclosure and order of sale of the subject of the land trust. The order of foreclosure and sale indicated that trustee and bank, along with various other defendants, were in default. Bank subsequently moved to vacate the default, and on January 18, 1982, the trial court entered an order amending the October 31, 1981, order of foreclosure and sale to state:
"The First Bank of Oak Park is found to have a valid and existing first mortgage lien on the subject premises in the amount of $470,600.09 principal and interest through December 16, 1981; title fees of $1,210.00: architectural fees of $2,055.00: interest, costs and attorney fees in an amount to be determined by the Court, which mortgage is superior to all other liens on the subject premises."
Trustee and Louis Ranallo, the then sole beneficiary of the land trust, also filed a motion to vacate the default, open the judgment of foreclosure and order of sale and for leave to defend. In December 1981, prior to the hearing on trustee's motion, Mark A. Condic, Jr., petitioned the trial court to intervene in the mechanic's lien action. Condic sought to stay the enforcement of the foreclosure and alleged that he had loaned money to Ranallo, secured by the assignment of the beneficial interest in the land trust, but subject to the prior assignment to the bank. By order dated January 19, 1982, the trial court granted trustee's motion to vacate the default, open the judgment of foreclosure and order the sale as amended. The trial court denied Condic's petition to intervene. The record reflects that the trial court, trustee and the other parties to the mechanic's lien action proceeded as if the order of January 19, 1982, had vacated the decree of foreclosure. The case was subsequently set for trial on several occasions.
On August 3, 1983, bank scheduled a sale of the beneficial interest in the land trust pursuant to the provisions of the Illinois Commercial Code (Code) (Ill. Rev. Stat. 1985, ch. 26, par. 1-101 et seq.) and the terms of the land trust. Trustee and Ranallo filed a motion for a temporary restraining order and preliminary injunction on August 19, 1983, seeking to stay enforcement of the Code sale. Trustee's motion was granted by order dated August 19, 1983. The order provided for the filing of a response, a reply brief and a hearing date of September 7, 1983. Following a hearing, the temporary restraining order was dissolved and bank agreed to provide trustee with notice of the Code sale date. No Code sale was ever held.
Thereafter, on October 15, 1983, bank was advised that the beneficial interest in the land trust had been transferred from Ranallo to Mark A. Condic III. Condic had obtained a loan and used the proceeds to retire the note secured by the assignment of the beneficial interest in the land trust. Bank was further advised that Condic was paying the interest and attorney fees calculated by it for the retirement of the note under protest.
On November 30, 1983, trustee filed a petition in the mechanic's lien case requesting the trial court to determine the proper amount of attorney fees and interest required to retire the note and redeem the assignment of the beneficial interest in the land trust. By order dated January 27, 1984, the trial court determined that (1) it lacked jurisdiction over the subject matter of trustee's petition, (2) bank had not proceeded to foreclosure and sheriff's sale under its land trust deed, but rather had exercised its right to proceed under the Code and (3) the trust deed had been released and the note satisfied. Trustee's petition was then stricken. On the same day, the trial court granted bank's motion to be dismissed from the case on the ground that trustee's note had been paid and bank had released "its right, title and interest to the subject premises by a Release Deed dated October 11, 1983." No objection was filed by trustee to bank's motion for dismissal from the mechanic's lien case. No appeal has been taken from the order of dismissal. Trustee subsequently filed a motion for reconsideration which was denied. This appeal followed.
Trustee argues that the trial court misconceived bank's remedies and trustee's rights, in the context of the security agreement, which covered both personal and real property interests. According to trustee, this misconception by the trial court resulted in (1) the erroneous denial of trustee's motion for injunctive relief, (2) the loss of trustee's redemption right in the res of the land trust and (3) the trial court's dismissal of trustee's petition to determine attorney fees and interest.
We initially note that bank possessed two types of collateral for its note: realty and personalty. The realty, res, was pledged pursuant to a land trust deed and the personalty, beneficial interest, was pledged pursuant to the "Assignment Under Land Trust." The land trust deed provided for a remedy of foreclosure on the real property collateral in the event of default. The assignment supplied bank with the right to sell the beneficial interest ...