APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, SIXTH DIVISION
548 N.E.2d 363, 191 Ill. App. 3d 851, 138 Ill. Dec. 950 1989.IL.1795
Appeal from the Circuit Court of Cook County; the Hon. Thomas J. O'Brien, Judge, presiding.
Rehearing Denied January 10, 1990.
JUSTICE LaPORTA delivered the opinion of the court. EGAN, P.J., and QUINLAN,* J., concur.
DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE LAPORTA
Plaintiff filed suit to quiet title on her home, naming as defendants Maurice Steimberg, Harold Marcus and Annabelle Marcus, who held a trust deed encumbering the property. The defendants filed a counterclaim to foreclose on the trust deed. Following trial the court held in favor of plaintiff, found that she had received no consideration for executing the trust deed and found defendants were not entitled to the foreclosure sought in the counterclaim.
Defendants filed this appeal and raise these issues: (1) whether plaintiff in fact did receive consideration for the trust deed so that defendants are entitled to foreclose the mortgage lien against the property, and (2) regardless of whether or not plaintiff received consideration, were defendants entitled to foreclose the trust deed against the undivided one-half interest in the property owned by plaintiff's husband at the time the trust deed was executed and delivered? Plaintiff adds the issue of whether plaintiff proved the affirmative defense of laches and therefore whether the foreclosure action was barred by laches.
Plaintiff and Stuart Banks were married in 1965 and purchased the residence in Homewood, Illinois, in 1969, subject to a purchase money mortgage to St. Paul Federal Savings & Loan Association. In 1976, their marriage was failing and plaintiff and Banks separated. Plaintiff remained in the family home with their children and continued to make the mortgage payments to St. Paul Federal Savings & Loan while Banks moved to another residence. Plaintiff and Banks were divorced in 1982. As part of the property settlement, Banks quitclaimed the house to plaintiff.
For some time prior to their marriage, Banks worked for H & M Truck and Auto Parts (Truck) and H & M Auto Electric (Electric). These businesses were owned by defendants. In 1977, Banks and Fred Goldstein, who was the son-in-law of the defendants, agreed to buy the stock of the two businesses and defendants agreed to sell them. At that time Banks and Goldstein also were the only shareholders of Stugo, Inc., an Illinois corporation. Stugo, Inc., also was named as a purchaser in the agreement. A written agreement was executed on or about July 8, 1977, by Banks, Goldstein and Stugo, Inc., and provided in pertinent part: (1) that in consideration of the sale of the stock, purchasers were to execute four promissory notes payable to the defendants, all for a total principal value of $1,467,472.49; (2) that purchasers Banks and Goldstein were to personally guarantee payment of the four notes; and (3) that as additional security for the promissory notes, Banks agreed that he and his wife, plaintiff, would execute a second mortgage on their residence in Flossmoor and Goldstein agreed that he and his wife would execute a second mortgage on their home in Des Plaines. The closing took place on December 31, 1977.
On December 29, 1977, Banks and plaintiff jointly executed a trust deed dated December 31, 1977, on their home to the defendants, which deed was delivered to defendants at closing and subsequently recorded. The trust deed recites consideration of $1 and "to secure payment of the principal amount plus interest" of the four promissory notes given by Stugo, Inc., Banks and Goldstein for the purchase price of the businesses. The trust deed "conveyed and warranted" all their interest in the property and was subject to the St. Paul mortgage.
At the time the trust deed was executed by Banks and plaintiff, they were living separate and apart from each other. Subsequently, in late 1982, Banks and plaintiff were divorced, and as part of the property settlement on October 20, 1982, Banks executed a quitclaim deed for the Flossmoor property to plaintiff and she assumed responsibility for payment of the first mortgage. The quitclaim deed to plaintiff was made subject to the trust deed recorded January 10, 1978, to secure notes for $1,467,472.49 and was also subject to the purchase money mortgage recorded August 28, 1969, to secure a note for $25,000.
The record discloses that at the time Banks and Goldstein entered into the agreement to purchase the businesses from the defendants, plaintiff and Banks were separated from each other. Plaintiff testified that because title to their home was in joint tenancy, Banks assured her that her signature on the trust deed required by the defendants was just a formality.
Within two years of closing on the purchase of the businesses, Banks, Goldstein and Stugo, Inc., defaulted on their obligations on all of the promissory notes. Exchange National Bank held a first lien against all assets of the companies and moved to foreclose on the lien on all assets of the businesses, subsequently selling the assets to one Bernie Hirsch. Exchange National Bank took no action against plaintiff since she had not participated in the negotiations for agreement to purchase the businesses nor had she agreed to assume any responsibility for the repayment of defendants' business loans with the Exchange National Bank which Banks and ...