APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, FIRST DIVISION
516 N.E.2d 947, 163 Ill. App. 3d 741, 114 Ill. Dec. 792 1987.IL.1759
Appeal from the Circuit Court of Cook County; the Hon. George M. Marovich, Judge, presiding.
JUSTICE BUCKLEY delivered the opinion of the court. O'CONNOR and MANNING, JJ., concur.
DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE BUCKLEY
Plaintiffs, Edward and Marilyn Slovick, brought this action against All American Bank and Colonial Bank & Trust to set aside the Uniform Commercial Code foreclosure sale of a 100% beneficial interest in a land trust holding title to their family residence. Plaintiffs also alleged that CBT, their trustee, breached fiduciary duties it owed them. In addition, AAB filed a counterclaim to confirm the sale and recover an additional $25,000 that was lent to plaintiffs.
Plaintiffs assigned their beneficial interest in the land trust to AAB as collateral for a mortgage loan on their property. Upon default on the loan, AAB foreclosed on the beneficial interest but did not institute a mortgage foreclosure action. Instead, it sold the beneficial interest under the provisions of section 9-504 of the Illinois Uniform Commercial Code . (Ill. Rev. Stat. 1985, ch. 26, par. 9-504.) AAB was the sole bidder at this sale and acquired the property for a price equal to the unpaid balance on the loan.
The trial court decided the case on cross-motions for summary judgment. It granted AAB's motion and confirmed the validity of the sale. It also granted plaintiffs' motion with respect to the $25,000 loan, holding that AAB's failure to mitigate damages prevented recovery on the loan. Both parties now appeal the court's order granting summary judgment. I
We first consider whether entry of summary judgment for AAB was proper. Summary judgment should be entered only if the pleadings, depositions, admissions, and affidavits on file show that no genuine issue of fact exists and the moving party is entitled to judgment as a matter of law. (Beals v. Huffman (1986), 146 Ill. App. 3d 30, 36, 496 N.E.2d 281, 286.) The court must strictly construe the evidence against the moving party and liberally in favor of the nonmoving party. (Purtill v. Hess (1986), 111 Ill. 2d 229, 240, 489 N.E.2d 867, 871.) Since the party opposing the motion has the right to a trial on material issues of fact, the motion should be granted only when the right to summary judgment is clear and free from doubt. (Beverly Bank v. Alsip Bank (1982), 106 Ill. App. 3d 1012, 1016, 436 N.E.2d 598, 603.) With these general rules in mind, we consider the merits of plaintiffs' arguments.
It is plaintiffs' position that the court erroneously granted summary judgment for AAB because there was a genuine issue of material fact concerning whether they intended to waive their rights under the mortgage foreclosure laws and grant AAB the power to sell their residence through a UCC foreclosure sale when they executed both a first mortgage and collateral assignment of their beneficial interest in the land trust. Plaintiffs contend that they created an equitable mortgage with a right of redemption, not a security interest in personal property, when they assigned their beneficial interest and executed a mortgage.
The controlling case on this issue is Commercial National Bank v. Hazel Manor Condominiums, Inc. (1985), 139 Ill. App. 3d 644, 487 N.E.2d 1145. Commercial National held that a collateral assignment of a beneficial interest in a land trust created a security interest in personal property subject to a UCC foreclosure sale. Plaintiffs argue that Commercial National is distinguishable because, in contrast to the instant case, the collateral assignment of the beneficial interest clearly showed an intention to grant the bank a security interest in personal property. This argument is without merit. The trust agreement, in the instant case, described the beneficial interest which was assigned to AAB as personal property. The agreement specifically provides as follows:
"It is understood and agreed between the parties hereto, and by any person or persons, who may become entitled to any interest under this Trust, that the interest of any beneficiary hereunder shall consist solely of a power of direction to deal with the title to said real estate and to manage and control said real estate as hereinafter provided and the right to receive the proceeds from rentals and from mortgage sales or other Disposition of said real estate and that such rights in the avails of said real estate shall be deemed personal property and may be assigned and transferred as such . . .." (Emphasis added.)
This provision unequivocally shows that when plaintiffs assigned their beneficial interest as collateral, they intended to create a security interest in personal property and not an equitable mortgage with redemption rights. Accordingly, ...