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01/28/94 SEAWAY NATIONAL BANK v. ERVIN CAIN

January 28, 1994

SEAWAY NATIONAL BANK, PLAINTIFF-APPELLEE,
v.
ERVIN CAIN, DEFENDANT-APPELLANT.



Appeal from the Circuit Court of Cook County. The Honorable Francis S. Barth, Judge Presiding.

Released for Publication March 18, 1994.

Egan, McNAMARA, Rakowski

The opinion of the court was delivered by: Egan

PRESIDING JUSTICE EGAN delivered the opinion of the court:

The defendant, Ervin Cain, appeals from a finding in favor of the plaintiff, Seaway National Bank (Seaway), on Cain's two count counterclaim; count I alleged a violation of the Consumer Fraud Act (Ill. Rev. Stat. 1991, ch. 121 1/2, par. 262); count II was a claim for restitution.

On January 4, 1977, Seaway loaned Cain $12,900, secured by a trust deed and installment note, to finance Cain's purchase of a parcel of commercial real estate improved with a gasoline station, located at 1800 East 79th Street in Chicago. Cain agreed to pay Seaway $138.63 per month for principal and interest. For the real estate taxes, the installment note contained a separate provision that read:

"[Cain] also agrees to deposit monthly at the same time as principal and interest payments are due hereunder, into an account to be designated by the [Seaway], a sum equal to 1/12th of the annual costs for real estate taxes (as determined from time to time by [Seaway]) which sums may be used from time to time for payment on account of such obligations."

On February 14, 1983, Seaway filed a complaint to foreclose the mortgage, alleging that Cain was in default as of October 15, 1982.

On November 8, 1983, Judge Albert Porter entered an order of default, judgment of foreclosure, and order of sale. The property was sold to Seaway at a sheriff's sale and approved by Judge Porter on January 11, 1984. On September 26, 1984, Cain filed a motion to quash the return of service and, alternatively, a motion to vacate the order of default, judgment of foreclosure, order of sale, and sheriff's sale. In his affidavit, Cain alleged that he was not aware of the foreclosure action and that Seaway accepted his monthly payments during the entire pendency of the foreclosure action and sheriff's sale. Seaway answered that Cain's payments were received but were untimely and that certain payments were applied to accrued interest. Seaway maintained that Cain was not current in his mortgage payments for the years 1982 and 1983 and stated that it instructed counsel not to pursue the foreclosure action while Cain was making payments.

On June 17, 1985, Judge Charles Freeman vacated the order of default, judgment of foreclosure and sale, and approval of sale that had been entered by Judge Porter. On October 17, 1985, Seaway filed its amended complaint, alleging that $26,749.32 was due for principal, interest, and real estate taxes. The complaint did not set forth any breakdown for the amount that was allegedly due, but stated only, "There remains due and owing the Plaintiff as of September 5, 1985 the sum of $26,749.32 on the Principal Note described above, which includes amounts advanced for real estate taxes, negative escrow balance of $188.98 and interest of $3,181.58 due from December 5, 1983 to October 5, 1985." Cain answered the amended complaint and denied all allegations.

On March 5, 1986, Seaway filed a motion for summary judgment and a motion for default of mortgage. The motion was granted by Judge George Marovich and then vacated by Judge Freeman because Cain did not receive notice of the motion or the hearing. After Cain responded to Seaway's motion for summary judgment and appeared at the hearing, Judge Freeman granted the motion for summary judgment and entered an order of default. Judge Freeman's order of June 16, 1986, stated that the foreclosure and sheriff's sale would be stayed if Cain posted a $20,000 appeal bond. On July 10, 1986, Cain filed a notice of appeal but failed to file a bond. On July 22, 1986, the sheriff conducted a public sale, and Seaway was the successful bidder. On July 29, 1986, Judge Freeman approved the sale. By contract dated January 12, 1987, Seaway sold the property to a third party.

On March 12, 1988, this court reversed summary judgment in favor of Seaway by an unpublished order. (134 Ill. 2d R. 23.) The order held that material facts were in dispute and that summary judgment was inappropriate.

After remand, on September 14, 1990, Cain filed his amended answer and also filed a counterclaim based on Seaway's alleged violation of the Consumer Fraud Act. Cain alleged that an "escrow" account was established for the payment of real estate taxes pursuant to the terms of the installment note; that this account was a "special account"; that the monies deposited in this account should not have been commingled with Seaway's other deposits; and that this account created a trustee-beneficiary relationship between Seaway and Cain. Cain also alleged that Seaway breached its fiduciary obligations to Cain because Seaway either failed to deposit his tax payments into the special account or failed to pay the taxes when they became due and that Seaway failed to advise Cain of its failure to pay taxes and of the subsequent forfeiture and redemption. Cain further alleged that Seaway wrongfully claimed that he was in default and accelerated the due date of the principal balance.

Trial began on January 10, 1992, before Judge Francis Barth. Seaway's attorney informed the Judge that the trial would focus only on Cain's counterclaim and that the original foreclosure action would be dismissed pursuant to an agreement. Seaway's attorney explained why the foreclosure action was being dismissed: that the foreclosed property had been sold. He also expressly said that the agreement was made with the clear understanding that the foreclosure had not been wrongful, that it had been done pursuant to the original ...


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