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05/06/94 DANIEL WEINBERGER AND MARY LOU WEINBERGER

May 6, 1994

DANIEL WEINBERGER AND MARY LOU WEINBERGER, PLAINTIFFS-APPELLANTS,
v.
BELL FEDERAL SAVINGS AND LOAN ASSOCIATION, F/K/A BELL SAVINGS AND LOAN ASSOCIATION, DEFENDANT-APPELLEE.



APPEAL FROM THE CIRCUIT COURT OF COOK COUNTY. HONORABLE JOHN HOURIHANE, JUDGE PRESIDING.

Rehearing Denied June 16, 1994.

Murray, McNULTY, Cousins, Jr.

The opinion of the court was delivered by: Murray

PRESIDING JUSTICE MURRAY* delivered the opinion of the court:

The facts are stated as follows:

"Daniel and Mary Lou Weinberger (Plaintiffs) filed a four-count class action suit alleging breach of mortgage contract, unjust enrichment, and violation of the Illinois Consumer Fraud Act and Deceptive Business Practices Act, (Ill. Rev. Stat. 1991, ch. 121-1/2, pars. 261-72; 815 ILCS 505/1 et seq. (West 1992)). After a hearing on Bell Federal Savings and Loan Association's (Defendant's) 2-619 motion to dismiss (Ill. Rev. Stat. 1991, ch. 110, par. 2-619; 735 ILCS 5/2-619 (West 1992)), the trial court reconsidered an earlier 2-615 motion to dismiss (Ill. Rev. Stat. 1991, ch. 110, par. 2-615; 735 ILCS 5/2-615 (West 1992), which he had previously denied and dismissed plaintiffs' third amended complaint with prejudice. Plaintiffs appealed."

For the following reasons we conclude that the trial court's order must be reversed and the cause remanded.

In their appeal, Weinbergers charge the trial court was in error in dismissing their third amended complaint against defendant Bell Savings and Loan Association (Bell). Plaintiffs request that the cause be remanded with directions to proceed further. (It is to be noted that no class has been as yet certified in the case.)

Plaintiffs' third amended complaint filed February 8, 1991, alleges, among other things, the following:

"(1) That Bell improperly escrowed an additional one-sixth of Weinbergers' estimated tax and insurance assessment as authorized by the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C.A., sec. 2601, for mortgages created after 1974. Weinbergers allege that their mortgages were created prior to 1974 and that such increase in their mortgages were violative of their mortgage agreement with Bell. Their mortgages were executed before the said RESPA."

We believe the law compels a reversal and remandment to the trial court's dismissal of the Weinbergers' complaint for a determination by the trial court of what Bell and its mortgagors intended by the following provision of their mortgage contract dated September 16, 1965, and prior to the enactment of the Federal Real Estate Settlement Procedure Act. (See 12 U.S.C.A., par. 2601, et seq.)

"To provide for payments of taxes, assessments and insurance premiums, stipulated to be paid hereunder, the Mortgagor shall deposit with the Mortgagee on each monthly payment date an amount equal to one-twelfth of the annual taxes and assessments levied against said premises and 1/12th premium on all such insurance, as estimated by the Mortgagee. All such deposits as made are pledged as additional security for the payment of the principal mortgage indebtedness. If default is made in the payment of said deposits, the Mortgagee may, at its option, charge the same to the unpaid balance of the mortgage indebtedness and the same shall bear interest at the same rate as the principal mortgage indebtedness. As taxes and assessments become due and payable and as insurance policies expire, or premiums thereon become due, the Mortgagee is authorized to use such deposits for the purpose of paying taxes or assessments, or renewing insurance policies or paying premiums thereon. In the event any deficit shall exist or the deposits are so reduced that the remaining deposits together with the monthly deposits will not provide sufficient funds to pay the then current calender year's estimated taxes or the estimated insurance premium on the last day of said year, the Mortgagee may, at its option, either declare immediately due and payable or add to the unpaid balance of the mortgage indebtedness secured hereby such a sum which shall, together with the remaining deposits and monthly deposits, provide sufficient funds to pay one year's estimated taxes or insurance premiums on the last day of said year."

The trial court did not indicate what that provision means when the mortgagee tries to extract an additional one-half of one-sixth from the mortgagor in addition to that provided by the above which both the mortgagor and mortgagee agreed to.

The plaintiffs' third amended complaint alleges in paragraphs 11 and 12 the following:

"11. The named Plaintiffs are informed and believe and upon such information and belief state the fact to be that subsequent to the adoption of the Act, (Federal Real Estate Procedure Act), the Defendant, notwithstanding the provision of the Illinois Savings and Loan Act and in breach of its then existing mortgage loan contract with the named Plaintiffs, required the named Plaintiffs to pay to Defendant, and the said Plaintiffs to avoid penalties under the contract did pay, monthly deposits not only of the one-twelfth (1/12th) of the ensuing annual taxes as estimated by the Defendant, but also an additional sum of one-twelfth (1/12th) of one-sixth (1/6th) thereof, not as a part of Defendant's said estimated annual taxes but rather as a new and separate addition to the tax escrow.

12. The uncertified class which the named Plaintiffs represents consist of persons who like the named Plaintiffs made mortgage loans from the Defendant secured by like promissory notes and mortgage indentures containing the same tax deposit provisions as contained in Exhibits 1 and 2 hereof and who, as were the named Plaintiffs, were also required by the Defendant to make monthly tax deposits which included not only an amount equal to 1/12th of the annual taxes and assessments levied against their mortgaged premises as estimated by the Defendant, but also an additional sum equal to 1/12th of 1/6th of the said estimated annual taxes and assessments upon said properties not as part of Defendant's said estimate but rather as a new and separate addition to the tax escrow, and/or other additional sums, none of which were or are provided for in the mortgage indenture or otherwise."

The trial court held no fact hearing as to the parties' intent and merely granted Bell Savings and Loan's motion to dismiss pursuant to section 2-615 of Illinois Civil Practice Act. (Ill. Rev. Stat. 1991, ch. 110, par. 615.) Such a motion admits not only the facts alleged in a complaint, but all reasonable inferences that can be drawn therefrom. Davis v. Martel Laboratory Service, Inc. (1989), 189 Ill. App. 3d 128, 392 N.E.2d 72.

The trial Judge, in granting Bell's motion, described the amount over the 1/12th estimate provided by the above mortgage and its provision as a "cushion." A "cushion" as used in connection with taxes is defined by Webster's Third New International Dictionary as "something to mitigate the effects of ...


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