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10/28/87 Arcadia Upholstering, Inc. v. 165 Restaurant

October 28, 1987

ARCADIA UPHOLSTERING, INC., PLAINTIFF-APPELLANT

v.

165 RESTAURANT, INC., ET AL., DEFENDANTS-APPELLEES



APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, THIRD DIVISION

516 N.E.2d 523, 163 Ill. App. 3d 129, 114 Ill. Dec. 368 1987.IL.1600

Appeal from the Circuit Court of Cook County; the Hon. Dennis W. Horan, Judge, presiding.

APPELLATE Judges:

PRESIDING JUSTICE McNAMARA delivered the opinion of the court. WHITE and FREEMAN, JJ., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE MCNAMARA

Plaintiff Arcadia Upholstering, Inc., brought an action in detinue against defendants, 165 Restaurant, Inc., Canal Randolph Associates, Inc., and La Salle National Bank as trustee, for the value of, or return of, restaurant booths. The trial court granted Canal Randolph's and La Salle's motions to dismiss on the basis that plaintiff did not have a superior property interest under section 9-301(1)(c) of the Uniform Commercial Code (Ill. Rev. Stat. 1985, ch. 26, par. 9-301(1)(c).) The trial court denied plaintiff's request for discovery, and assessed attorney fees and costs against plaintiff for failure to appear at a hearing. Plaintiff appeals from these orders, contending that Canal Randolph converted the restaurant booths in which plaintiff had a superior security interest, that La Salle had knowledge of plaintiff's interest in the booths, and that the assessment of attorney fees was an abuse of discretion. (165 Restaurant is not a party to this appeal, and the record on appeal does not indicate its present status.)

Canal Randolph originally rented the property at issue to 400 Restaurant. In November 1982, the 400 Restaurant entered into a security agreement with Canal, giving Canal a security interest in "the following described goods and any and all additions and accessions thereto (hereinafter called the 'collateral'): all of the trade fixtures, equipment, utensils, furnishings, accessories, chattels, and personal property." On November 10, 1982, plaintiff and 400 Restaurant entered into an agreement providing that plaintiff would construct restaurant booths. On March 31, 1983, plaintiff entered into a security agreement and chattel mortgage with 400 Restaurant to secure an indebtedness of $10,000 remaining to be paid by 400 Restaurant for the booths. On May 5, 1983, Canal Randolph filed a financial statement with the Secretary of State pursuant to the Uniform Commercial Code in order to perfect its security interest in the collateral. On May 12, 1983, plaintiff filed a financing statement regarding the booths with the Cook County recorder of deeds.

Subsequently, 400 Restaurant defaulted in the payment of its rent and vacated the property. Canal Randolph terminated the lease and took possession of its property and collateral, and consequently had possession of the booths. In May 1984, Canal Randolph leased the property to 165 Restaurant.

On September 5, 1984, Canal Randolph sold the property to La Salle as trustee. The sale, which was accomplished through land trust transactions, was completed on November 1, 1984, when Canal Randolph assigned its entire beneficial interest in the property to Citibank.

The contract of sale between Canal Randolph and La Salle provides that the sale included "all building equipment, fixtures and personalty . . . located on or in the Real Estate." The agreement also stated that Canal Randolph "represents and warrants to Purchaser that, as of the date hereof, . . . [Canal Randolph] is the owner of the Equipment."

On February 12, 1986, plaintiff filed the present action in detinue. On March 14, 1986, the complaint was dismissed for want of prosecution. On April 3, 1986, the court permitted plaintiff to reinstate the action, and on May 20, 1986, plaintiff filed its third amended complaint. Plaintiff seeks to recover the booths on their value. On June 30, 1986, Canal Randolph and La Salle filed motions to dismiss pursuant to section 2-619 of the Code of Civil Procedure (Ill. Rev. Stat. 1985, ch. 110, par. 2-619), on the basis that La Salle had a property interest in the booths superior to that of plaintiff.

Pursuant to an agreed order, the motion to dismiss was set for hearing on July 16, 1986. Plaintiff did not appear at that hearing. After hearing defendants' arguments, the trial court granted the motions to dismiss the action with prejudice.

On July 31, 1986, plaintiff filed a motion to vacate the order of dismissal, and the court subsequently granted that motion. After hearing arguments from all parties, on October 17, 1986, the trial court again granted defendants' motions to dismiss. The court found that plaintiff could not show a property interest superior to La Salle's interest. The trial court also ordered plaintiff to pay $400 each to La Salle and Canal Randolph as attorney fees incurred as a result of plaintiff's failure to appear at the July 16 hearing.

Plaintiff first contends that it has a security interest in the booths. In order to recover the booths or their value in detinue, plaintiff must show that its property interest in the booths is superior to La Salle's property interest. (L & LC Trucking Co. v. Jack Freeman Trucking Co. (1976), 36 Ill. App. 3d 186, 343 N.E.2d 716; Keen v. City of Chicago (1970), 130 Ill. App. 2d 300, 264 N.E.2d 721.) Plaintiff argues that its security interest in the booths was created on March 31, 1983, when the previous tenant, 400 Restaurant, signed a security agreement conveying to plaintiff its interest in the booths for collateral purposes. Plaintiff asserts that this gave it a purchase money ...


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