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09/24/87 City National Bank of v. Glover F. Langley Et Al.

September 24, 1987

CITY NATIONAL BANK OF HOOPESTON, PLAINTIFF-APPELLEE

v.

GLOVER F. LANGLEY ET AL., DEFENDANTS-APPELLANTS (IROQUOIS FEDERAL SAVINGS AND LOAN ASSOCIATION ET AL., DEFENDANTS



APPELLATE COURT OF ILLINOIS, FOURTH DISTRICT

514 N.E.2d 508, 161 Ill. App. 3d 266, 112 Ill. Dec. 845

Appeal from the Circuit Court of Vermilion County; the Hon. Paul M. Wright, Judge, presiding. 1987.IL.1421

APPELLATE Judges:

JUSTICE McCULLOUGH delivered the opinion of the court. SPITZ, P.J., and KNECHT, J., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE MCCULLOUGH

Glover and Barbara Langley appeal the granting of the motion to dismiss their petition to vacate default judgment and judgment of foreclosure and sale pursuant to section 2-1401 of the Code of Civil Procedure (Code) (Ill. Rev. Stat. 1985, ch. 110, par. 2-1401). Defendants raise issues concerning timeliness of the judgment, notice, the standard applied by the trial court and whether the trial Judge erred in granting plaintiff's motion to dismiss.

The complicated history of this matter requires an understanding of the factual setting in which this case arose. Defendants previously filed a chapter 13 bankruptcy proceeding, which was dismissed in October 1984, and a chapter 7 proceeding, in which defendants were discharged July 11, 1985. In addition, defendants were parties to a replevin action in Vermilion County circuit court, No. 84 -- LM -- 563, instituted by the bank to recover defendants' automobile, which was pledged as collateral for a note not involved in the case at bar. The bank also brought a replevin action, No. 84 -- LM -- 436, against other defendants in order to resolve a dispute over possession of collateral used to secure two of the four notes involved in the case at bar. Throughout these proceedings, defendants were represented by the same counsel.

City National Bank of Hoopeston (bank) filed a complaint for foreclosure of real estate mortgage on October 9, 1984. The complaint sought to foreclose a second mortgage entered into by defendants April 18, 1984. The mortgage secured a promissory note dated June 3, 1983, for $12,000. The complaint alleges a renewal note in the amount of $10,000 dated June 21, 1984, and indicates the funds were to be used for finishing the defendants' new home in Hoopeston.

On June 13, 1985, leave having been obtained, the bank filed an amended complaint alleging amounts due on three additional notes, two of which were secured by the inventory, furniture and fixtures of defendants' business, Fashion Forum. The bank alleged the amounts due from the four notes totaled $87,919.97.

The circuit court entered default judgment July 29, 1985. Iroquois Federal Savings and Loan Association (Iroquois) assigned its senior mortgage of $46,506.66 to the bank August 1, 1985. On August 2, 1985, Iroquois was dismissed as a defendant. The bank did not notify defendants that it intended to recover the amount of the first mortgage. On August 2, 1985, the court entered judgment for $140,476.20, which included the sum of $3,153.56 for "[expenses] of liquidating clothing inventory and repossessed automobile."

On August 30, 1985, defendants filed a motion to vacate the judgment of foreclosure and sale pursuant to section 2-1301 of the Code (Ill. Rev. Stat. 1985, ch. 110, par. 2-1301). The defendants asserted that their discharge in bankruptcy on July 11, 1985, barred the plaintiff from obtaining any deficiency judgment against them. Paragraph 4 of the motion to vacate alleged that the $140,476.20 judgment did not properly represent the amount they owed to the bank. Defendants also claimed they were entitled to a homestead exemption under section 12-901 of the Code (Ill. Rev. Stat. 1985, ch. 110, par. 12-901). Although the record sheet does not so indicate, attorney Edgar testified that the motion was heard on September 3, 1985, but was not ruled upon. Defendants filed a petition to vacate February 14, 1986. The petition alleged (1) the default judgment was void because it was entered prior to 30 days after service of process; (2) the bank sought recovery exceeding that asked for in the amended complaint; (3) the amount of the judgment was not secured by the second mortgage; (4) defendants were entitled to a homestead exemption. The court granted the bank's motion to dismiss the petition by order filed November 14, 1986. This appeal followed.

Defendants initially argue the default judgment was void because it was entered prior to the expiration of 30 days after service of summons. Supreme Court Rule 101(d) (107 Ill. 2d R. 101(d)) specifies that when defendant is served with a 30-day summons he must answer or file an appearance within 30 days, exclusive of the day of service. Section 1.11 of "An Act to revise the law in relation to the construction of statutes" (Ill. Rev. Stat. 1985, ch. 1, par. 1012) specifies the time for doing any act provided by law shall exclude the first day and include the last unless the last falls on a Saturday, Sunday or holiday.

The record shows summons was served June 28, 1985. Since July 28, 1985, fell on Sunday, defendants had the entirety of July 29 in which to answer. However, we disagree with defendant's contention that failure to observe the 30-day rule voided the judgment. A void judgment results when the court is wanting in subject matter or personal jurisdiction or lacks the inherent power to enter the order. (City of Chicago v. Fair Employment Practices Com. (1976), 65 Ill. 2d 108, 357 N.E.2d 1154.) The element of jurisdiction differentiates a void from a voidable judgment. (Herb v. Pitcairn (1943), 384 Ill. 237, 51 N.E.2d 277, rev'd on other grounds (1945), 325 U.S. 77, 89 L. Ed. 1483, 65 S. Ct. 954.) A void judgment shows from its record it is void, whereas a voidable judgment shows from its record that it is good. (Orrway Motor Service, Inc. v. Illinois Commerce Com. (1976), 40 Ill. App. 3d 869, 873, 353 N.E.2d 253, 256.) The record does not reflect the fact that July 28, 1985, occurred on a Sunday. At most, this procedural error resulted in a voidable judgment.

We believe, however, that defendants' conduct following the entry of default judgment effectively waives the issue. There is no question that following the entry of the foreclosure judgment, the defendants continued to negotiate and stipulate with the bank for additional time in which to make other living arrangements. The bank, on the other hand, relied on defendants' statements that they would vacate as agreed, and was delayed in its attempts to have full control of the premises. The assent to the proceedings between July 29 and January 30, plus the bank's change in position to its detriment, estopped the defendants from attacking the voidable judgment. Cf. Noble v. Illinois Central R.R. Co. (1884), 111 Ill. 437, 439; Schmitt v. Wright (1943), 317 Ill. App. 384, 399-400, 46 N.E.2d 184, 191-92; 31 C.J.S. Estoppel sec. 113 (1964).

There is merit to defendants' argument the bank should have notified them of its intent to seek relief exceeding that asked for in the amended complaint. This notice is mandated by section 2-604 of the Code (Ill. Rev. Stat. 1985, ch. 110, par. 2-604) and Supreme Court Rule 105(a) (107 Ill. 2d R. 105(a)).

Defendants argue their petition to vacate sufficiently demonstrated a meritorious defense and due diligence and showed that enforcement of the judgment would be unconscionable. The bank contends the petition to vacate fails to establish due diligence or grounds warranting invocation of the court's equitable powers.

Section 2-1401 (Ill. Rev. Stat. 1985, ch. 110, par. 2-1401) provides a comprehensive statutory procedure by which final orders and judgment can be challenged more than 30 days after their rendition. To be entitled to relief, a petitioner must make specific factual allegations supporting (1) the existence of a meritorious defense or claim; (2) due diligence in presenting the defense or claim to the circuit court in the original action; and (3) due diligence in the filing of the section 2-1401 petition. (Smith v. Airoom, Inc. (1986), 114 Ill. 2d 209, 221, 499 N.E.2d 1381, 1386.) The purpose of a section 2-1401 proceeding is to bring facts not appearing of record to the attention of the trial court which, if known to the court at the time judgment was entered, would have prevented its rendition. Lammert v. Lammert Industries, Inc. (1977), 46 Ill. App. 3d 667, 360 N.E.2d 1355.

When a motion to dismiss is filed against a petition for relief under section 2 -- 1401 the motion admits all well-pleaded facts and attacks only the legal sufficiency of the petition. (Glenn v. People (1956), 9 Ill. 2d 335, 137 N.E.2d 336; Manning v. Meier (1983), 114 Ill. App. 3d 835, 839, 449 N.E.2d 560, 563.) In determining legal sufficiency, the court must accept as true all well-pleaded facts and determine if the petition, viewed in the light most favorable to the petitioner, is sufficient to state a cause of action against the respondents. (Uptown Federal Savings & Loan Association v. Kotsiopoulos (1982), 105 Ill. App. 3d 444, 434 N.E.2d 476.) A motion to dismiss should not be granted unless it clearly appears no set of facts could ever be proved that would entitle the petitioner to recover. Ostendorf v. International Harvester Co. (1982), 89 Ill. 2d 273, 280, 433 N.E.2d 253, 256.

The trial court found defendants failed to show that they had meritorious defenses or exercised due diligence.

On September 3, 1985, the defendants' motion to vacate the judgment and the bank's motion to dismiss the motion to dismiss the heard. At the March 25, 1986, hearing on the motion to dismiss the section 2 -- 1401 petition, defendants' former attorney, Alexander Edgar, testified defendants were concerned at the time of the September 3 hearing that the foreclosure judgment would state there was a deficiency. At that hearing, counsel for both parties agreed that the foreclosure order would be changed to eliminate any reference to a deficiency, and defendants would be allowed to live in the home rent-free while seeking other accommodations. That agreement was represented to the court on September 3, whereupon the judicial sale of the property proceeded. The bank purchased the premises for $141,669.27.

The record shows the following instruments executed ...


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