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FIRSTSOUTH, F.A. v. LASALLE NATL. BANK

April 24, 1991

FIRSTSOUTH, F.A., etc., Plaintiff,
v.
LaSALLE NATIONAL BANK, etc., et al., Defendants


Milton I. Shadur, United States District Judge.


The opinion of the court was delivered by: SHADUR

MILTON I. SHADUR, UNITED STATES DISTRICT JUDGE

 Midwest Concrete Products Co. ("Midwest") has moved for summary judgment under Fed. R. Civ. P. ("Rule") 56 on its mechanic's lien counterclaim in this mortgage foreclosure action initially brought by FirstSouth Federal Savings & Loan Association ("FirstSouth"). FirstSouth later became, via corporate name change, FirstSouth, F.A. At this point, however, Federal Deposit Insurance Corporation ("FDIC") has taken over this litigation as manager of the FSLIC Resolution Fund, as successor to Federal Savings and Loan Insurance Corporation as FirstSouth's receiver. This memorandum opinion and order deals with a critical issue of timing that has emerged from the parties' briefing of Midwest's summary judgment motion.

 Illinois law teaches that the priority of claims as between a contractor or subcontractor on the one hand and a mortgagee on the other is a function of the priority as between (1) the date of recording of the mortgage -- the date when the contractor or subcontractor is deemed to have constructive notice -- and (2) the date of execution of the underlying contract pursuant to which the materials or services were provided by the contractor or subcontractor. *fn1" At least that is so where timely notice is given by the lien claimant and the claimed mechanic 's lien is timely recorded in accordance with the Mechanics' Lien Act, which was undisputedly the case here. *fn2"

 In this instance the mortgage under which FDIC claims its interest was dated February 22, 1984 and recorded with the DuPage County Recorder of Deeds on February 24, 1984. As for the construction contract, that was entered into between Whitehall Park Venture as owner and Milton N. Zic Associates ("Zic Associates") as contractor and as architect. But that was not an arms' length transaction, for both those entities were controlled by the late Milton Zic ("Zic"). Consequently Zic was the only one who signed the contract -- the American Institute of Architects ("AIA") Standard Form of Agreement Between Owner and Contractor ("Agreement") -- and he did so in two capacities: as President of Whitehall Park Development Corp., the general partner in Whitehall Park Venture, and as the principal in his own Zic Associates firm.

 Midwest asserts that Zic (wearing his Zic Associates hat) then assigned the contractor's interest in the agreement to still another of his controlled entities, Milton N. Zic Construction Co. ("Zic Construction") in accordance with Paragraph 16.3 of the Agreement:

 
The parties hereto agree that Contractor may assign this Contract to Milton N. Zic Construction Co. However, full responsibility and obligation of all contents of this Contract to the Owner will remain with Milton N. Zic Associates.

 There is no document reflecting such an assignment, although some external documents (construction draw papers) bearing dates beginning in late March 1984 listed Zic Construction as the contractor.

 Where the dispute between the parties arises is in determining just when the Agreement was actually executed and delivered. As originally prepared with typewritten inserts in the printed AIA form, it began this way (underlining indicates the typed insertions in the printed AIA form):

 
AGREEMENT
 
made as of the 1st day of February in the year of Nineteen Hundred and Eighty Four

 As executed, though, a diagonal line was struck through "1st" and "23rd" was handwritten in just above that typewritten date. With Zic having since died, his widow Jacqueline Zic ("Jacqueline") has executed an affidavit in support of Midwest's summary judgment motion, but Midwest has been met with a motion to strike that affidavit. Before this Court may turn to Midwest's Rule 56 motion, this opinion must perforce address FDIC's motion to strike.

 Jacqueline's affidavit identifies herself as having assisted Zic in preparing various documents relating to the construction of improvements at the Whitehall Park Development (she was a notary public and notarized a number of documents calling for such treatment). Here is what her affidavit states as to the critical date of contract execution:

 
3. On February 22, 1984, a contract was entered into between Whitehall Park Venture as owner and Milton N. Zic Associates as general contractor for construction of improvements at the property commonly known as 1950 West 35th Street, Oak Brook, Illinois (hereinafter referred to as the "subject premises"). A true and correct copy of the executed contract is attached as Exhibit B to Midwest's Motion for Summary Judgment.

 But even apart from Jacqueline's unexplained reference to February 22 rather than 23 (which is the date quite clearly reflected in the handwritten interlineation), that affidavit cannot be credited. Here is what Jacqueline testified to on November 20, 1990, when she was deposed by FDIC after Midwest had filed her affidavit (Jacqueline Dep. 68-71):

 
Q. Now, you say [in the affidavit]:
 
"On February 22, 1984, a contract was entered into between Whitehall Park Venture as owner and Milton N. Zic Associates as general contractor. . . ."
 
What do you mean by "a contract was entered into?"
 
A. That a contract was signed.
 
Q. On the 22nd of February, 1984?
 
A. I believe that was the day. Yes, it was made up on that day.
 
Q. Did you prepare this document?
 
A. No, the secretary.
 
Q. Now, if you'll look to page 8 of the document marked as Exhibit 6, it says at the top "Article 16," and then down at the bottom it has some signatures.
 
A. Yes.
 
Q. Were you present when this document was signed?
 
A. No.
 
Q. You didn't notarize this document, did you?
 
A. No.
 
Q. Do you know where it was signed?
 
A. No.
 
Q. The signatures on the bottom, the first one says "Owner, Whitehall Park Venture by Whitehall Park Development Corporation as General Partner and Owner's Agent, By:"
 
Whose signature is that? Do you know?
 
A. It's Milton Zic's signature.
 
Q. And then the signature on the right side under "Contractor, Milton N. Zic Associates," whose signature is that?
 
A. It's Milton Zic's signature.
 
Q. You don't know for a fact, do you, that this document was signed on ...

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