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06/13/88 Newport Condominium v. Talman Home Federal

June 13, 1988

NEWPORT CONDOMINIUM ASSOCIATION, PLAINTIFF-APPELLEE

v.

TALMAN HOME FEDERAL SAVINGS AND LOAN ASSOCIATION OF CHICAGO ET AL., DEFENDANTS-APPELLANTS



APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, FIRST DIVISION

545 N.E.2d 136, 188 Ill. App. 3d 1054, 136 Ill. Dec. 612 1988.IL.921

Appeal from the Circuit Court of Cook County; the Hon. Joseph Wosik, Judge, presiding.

APPELLATE Judges:

PRESIDING JUSTICE CAMPBELL delivered the opinion of the court. QUINLAN and MANNING, JJ., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE CAMPBELL

Defendants, Talman Home Federal Savings and Loan Association of Chicago and unknown owners (Talman), appeal from a judgment of foreclosure and sale entered on June 12, 1987, in favor of plaintiff, Newport Condominium Association, decreeing that Talman owed Newport $40,085.31 in past-due condominium assessments for condominium unit No. 306--S, located at 4800 S. Chicago Beach Drive, Chicago. Talman, record owner of unit 306--S at the time judgment of foreclosure was entered, does not dispute Newport's right as a lienholder to foreclose the property. Rather, Talman disputes the period of time for which assessments were found due and owing Newport from Talman. On appeal, Talman contends that the trial court erred in finding that a certificate of purchase issued to Talman at a sheriff's sale conveyed constructive title to unit 306--S, thereby imposing liability on Talman for assessments commencing with receipt of the certificate of purchase on July 25, 1983. For the following reasons, we reverse the judgment of the trial court and remand the cause with directions.

The record and briefs indicate the following events which led to Newport's judgment of foreclosure. *fn1 Troy Thompson held a mortgage with Talman, secured by unit 306--S. On March 12, 1982, Talman filed a complaint to foreclose the first mortgage on unit 306--S for default in mortgage payments, naming Newport as an additional party defendant. At the time, Newport also had a lien on unit 306--S for past-due monthly assessments.

On October 7, 1982, judgment of foreclosure was entered in favor of Talman. Subsequently, on November 9, 1982, an amended judgment of foreclosure was entered, which acknowledged that Newport had a subordinate lien on the premises for past-due condominium assessments in the amount of $3,985.19. On January 25, 1983, a sheriff's sale was held at which Talman was the successful bidder and received a certificate of purchase. Pursuant to the judgment, the statutory six-month period of redemption commenced to run on that date and expired on July 25, 1983.

Meanwhile, on March 3, 1983, Troy Thompson, mortgagor, filed a voluntary bankruptcy petition under chapter 11 of the United States Bankruptcy Code which was later converted to a chapter 7 proceeding. On February 20, 1985, the bankruptcy court entered an order abandoning unit 306--S as property of Thompson's estate. Talman contends that it did not receive formal notification of the order of abandonment until May 7, 1985. Thereafter, on May 29, 1985, Talman exchanged its certificate of purchase for the sheriff's deed to unit 306--S.

On June 25, 1985, Newport filed a complaint against Talman to foreclose its lien on unit 306--S for past-due assessments, claiming an amount due of $10,150.96 for monthly assessments from July 25, 1983, to June 18, 1985, plus costs and additional attorney fees. Talman moved to dismiss the complaint on the grounds that the 1982 judgment of foreclosure barred Newport from foreclosing the lien of unpaid condominium assessments that had attached and accrued on unit 306--S from the date of judgment to the date Talman had exchanged its certificate of purchase for the sheriff's deed. Talman further stated that it had not been entitled to a deed to unit 306--S until resolution of the bankruptcy proceedings and modification of the stay. The trial court denied Talman's motion to dismiss, holding that when the six-month statutory redemption period terminated on July 25, 1983, Talman's right to take the deed occurred automatically without need for leave of court and without any violation of the Bankruptcy Code's automatic stay provision.

Thereafter, on February 27, 1986, Newport moved for summary judgment on the foreclosure complaint. The trial court entered partial summary judgment on July 28, 1986, granting Newport leave to file an affidavit in support of its claim for assessments and common expenses. Subsequently, on June 12, 1987, judgment of foreclosure and sale was entered which decreed that Talman owed Newport the sum of $40,085.31, resulting from default in payment of assessments from July 25, 1983, to June 12, 1987. In entering this judgment, the trial court found, inter alia, that: (1) Talman had held constructive title to unit 306--S from July 25, 1983, to June 12, 1987; (2) Talman was obligated for all assessments for common expenses and other charges lawfully assessed by Newport; and (3) Talman had defaulted in payment. Talman appeals from this order.

Preliminarily, we note that the parties agree that Talman, as record owner of unit 306--S, is liable for all monthly assessments due and owing after it exchanged its certificate of purchase for a sheriff's deed on May 29, 1985. The time period in dispute is from July 25, 1983, to May 29, 1985, i.e., from the date the six-month statutory redemption period ended to the date Talman actually secured the sheriff's deed. Talman's position is that it held no title during this period, and, thus, was not liable for monthly assessments that accrued during that time. The trial court held that the certificate of purchase gave Talman constructive title and imposed liability for the assessments.

On appeal, Talman first contends that the determination in an earlier forcible entry and detainer action was res judicata as to the question of when Talman became liable to Newport for condominium assessments. As indicated, in June 1985 Newport filed its complaint against Talman for foreclosure. Approximately two months later Newport also filed a forcible entry and detainer action in the municipal court, seeking to recover $13,655.94 in condominium assessments for the period from January 25, 1983, through July 1, 1985. A ruling was entered in the forcible action on January 16, 1986, in favor of Talman. *fn2 According to Talman, the order determined that Talman was liable only for condominium assessments that had accrued since the issuance of the sheriff's deed on May 29, 1985. Thus, Talman contends that because the forcible action already litigated and resolved the issue as to the period of time for which Talman was liable for payment of condominium assessments to Newport, the issue is barred by res judicata in the foreclosure action.

In response, Newport argues that the only matter determined by the forcible court was possession. By contrast, the issue before the trial court on the foreclosure complaint is a determination of title for the disputed period. Further, Newport contends that the doctrine of res judicata requires that the court have had competent jurisdiction over the matter. A forcible entry ...


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