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11/06/87 Plaintiff- v. Thomas E. Doering Et Al.

November 6, 1987

APPELLATE COURT OF ILLINOIS, FIFTH DISTRICT ILLINI FEDERAL SAVINGS AND LOAN ASSOCIATION, PLAINTIFF-APPELLANT

v.

THOMAS E. DOERING ET AL., D/B/A BAN DOR INVESTMENTS, ET AL., DEFENDANTS-APPELLEES



516 N.E.2d 609, 162 Ill. App. 3d 768, 114 Ill. Dec. 454 1987.IL.1657

Appeal from the Circuit Court of Williamson County; the Hon. Robert H. Howerton, Judge, presiding.

APPELLATE Judges:

JUSTICE LEWIS delivered the opinion of the court. KARNS, P.J., and HARRISON, J., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE LEWIS

The instant appeal arises out of a mortgage foreclosure proceeding in which the trial court, after entering an order "approving deficiency and sheriff's report of sale and distribution" of the mortgaged property, granted the motion of certain of the defendants-mortgagors to set aside the order approving deficiency. The trial court set an evidentiary hearing to determine the value of the property, and the plaintiff-mortgagee filed this interlocutory appeal pursuant to Supreme Court Rule 308 (107 Ill. 2d R. 308). The issue on appeal, as certified by the trial court, is "whetherin a foreclosure proceedingthe trial court can set aside a personal deficiency judgment against one or more defendants and order an evidentiary hearing, the purpose of which [is] to determine the actual valuation of the foreclosed real estate." We reverse.

On August 13, 1985, the plaintiff, Illini Federal Savings & Loan Association, filed a complaint of foreclosure against the several defendants, who had various interests in the mortgaged property. On May 12, 1986, the court entered a stipulated order wherein the parties agreed that the plaintiff was owed the amount of $755,197.73 on its promissory note, which was secured by the mortgage being foreclosed. In its judgment of foreclosure and sale entered on May 20, 1986, the trial court found the total amount due, including costs and attorney fees, to be $776,538.78.

On July 15, 1986, the foreclosed premises were sold at a sheriff's sale, at which the plaintiff was the only bidder. The plaintiff's bid of $500,000 was accepted by the sheriff. On that same day the sheriff submitted his report of sale and distribution, which showed a deficiency in the amount of $276,538.78. The report further stated that, upon approval by the court, the property would be sold to the plaintiff and a certificate of sale would be issued and recorded. The trial court entered an order approving the deficiency and the report of sale on July 15, 1986.

On July 26, 1986, defendants Jerry and Cornelia Lanting filed a motion to set aside the order approving deficiency. In their motion, the Lantings objected to the amount of the deficiency, alleging that, during the foreclosure action, the plaintiff had procured an appraisal of the mortgaged premises valuing the property at $700,000. The Lantings maintained that, by reason of this appraisal, the

"deficiency should have been established in the amount of the actual value of the property, being $700,000, less the amount owed, establishing a deficiency in the amount of $76,538.78."

The Lantings requested that the order approving deficiency be vacated, that the court hold an evidentiary hearing to establish the actual value of the premises, and that

"the deficiency be established as the difference between the actual value of the premises and the amount owed, and in an amount not to exceed $76,538.78."

A hearing was held on the Lantings' motion, after which the court vacated the deficiency judgment and set the cause for an evidentiary hearing to determine the value of the premises. The plaintiff subsequently filed an appeal from that order pursuant to Rule 308.

In arguing that the trial court's order vacating the deficiency judgment was proper, the Lantings assert that the trial court had the authority, under its equitable powers in supervising mortgage foreclosure sales, to set aside the deficiency and "establish it at an amount to be determined by the value of the property." They assert, therefore, that the trial court, upon their allegation of inadequate sale price, properly ordered an evidentiary hearing to determine the value of the property so as to set the deficiency based upon the court's determination of value. The Lantings contend that the court's action was necessary to prevent a double recovery by the plaintiff-mortgagee, which would result if the plaintiff were allowed to bid less than the value of the property and then collect the remaining deficiency from the defendants-mortgagors.

Under the statute relating to mortgage foreclosure actions (Ill. Rev. Stat. 1985, ch. 110, par. 15-101 et seq.), a deficiency judgment may be obtained ...


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