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March 24, 1995


Appeal from the Circuit Court of Williamson County. No. 91-L-162. Honorable William H. Wilson, Judge, presiding.

The Honorable Justice Chapman delivered the opinion of the court: Maag, P.j., and Welch, J., concur.

The opinion of the court was delivered by: Chapman

JUSTICE CHAPMAN delivered the opinion of the court:

Candace Cantrell was injured in an automobile accident by an intoxicated driver and filed a personal injury action against Arlene and Wayne Wendling as the licensees and owners of a dram shop. She also named the DuQuoin State Bank (the Bank), mortgagee of the Wendling's dram shop, as a party defendant pursuant to section 6-21 of the Liquor Control Act of 1934 (235 ILCS 5/6-21 (West 1992)). On the first appeal of this case, this court reversed the trial court's order allowing the Bank's section 2-615 (735 ILCS 5/2-615 (West 1992)) motion to dismiss. ( Cantrell v. Wendling (1993), 249 Ill. App. 3d 1093, 620 N.E.2d 9, 189 Ill. Dec. 350.) On remand the Bank filed a motion for summary judgment arguing that it was not, within the meaning of the Liquor Control Act, an owner of the dram shop premises nor was it a permitter of the occupation of the premises. The trial court granted the Bank's motion for summary judgment. Plaintiff appeals and we affirm.

Section 6-21 of the Liquor Control Act provides in pertinent part:

"Every person who is injured within this State, in person or property, by any intoxicated person has a right of action in his or her own name, severally or jointly, against any person, licensed under the laws of this State or of any other state to sell alcoholic liquor, who, by selling or giving alcoholic liquor, within or without the territorial limits of this State, causes the intoxication of such person. Any person * * * owning, renting, leasing or permitting the occupation of any building or premises with knowledge that alcoholic liquors are to be sold therein, or who having leased the same for other purposes, shall knowingly permit therein the sale of any alcoholic liquors that have caused the intoxication of any person, shall be liable, severally or jointly, with the person selling or giving the liquors." (Emphasis added.) (235 ILCS 5/6-21(a) (West 1992).)

The trial court ruled:

"The facts, which are undisputed, are that the Bank held a mortgage on a Dram Shop, known as The Chalet. The mortgagors were in default on the mortgage. The mortgage, and note, provided that the Bank, as mortgagee, could, as a result of the default, exercise its rights under the mortgage and take possession of the property. The Bank did not exercise its rights under the mortgageand note, and did not take possession of the property, nor did it take any other action as a result of the default.

Plaintiff's position is that the fact that there was a default, which gave the Bank the option, or right, to declare such and to take possession, even though the Bank chose not to exercise its rights and took no action as a result of the default, makes the Bank an "owner. . .or one permitting the occupation of any building or premises. . ." and thus liable under the Dram Shop Act.

Based upon the above cases, and reasoning, this Court finds that the Motion for Summary Judgment, filed herein by the defendant, DuQuoin State Bank, should be, and is hereby, granted."

The trial court relied upon the reasoning of Marcon v. First Federal Savings & Loan Association (1978), 58 Ill. App. 3d 811, 374 N.E.2d 1028, 16 Ill. Dec. 253, in reaching its decision. In Marcon, property owners filed suit against the mortgagors of adjacent property and the mortgagee of that property, seeking recovery for damage to their building caused by fire which originated on the adjacent property. The trial court granted the mortgagee's motion for summary judgment, and the appellate court affirmed, holding that the mortgagee could not be held liable for damages to the adjacent property because it did not have actual possession and control of property. ( Marcon, 58 Ill. App. 3d at 813, 374 N.E.2d at 1030.) The court in Marcon held, as a matter of law, that only a mortgagee exercising dominion and control over the property could be held responsible for damages to third parties caused by the unsafe conditions on the property, and the court further held that constructive possession was insufficient and that there must be actual possession and control to impose such liability. Finally, the court in Marcon determined that the unexercised rights of the defendant were insufficient to impose liability on it and that, while the terms of the mortgage may give the mortgagee the right upon default to take possession of the property, the right does not reach fruition until the mortgagee acquires actual possession and control.

Plaintiff contends that Marcon's holding is quite distinct from the issue at bar. Plaintiff argues that the trial court in this case erred in finding that the Bank holding the defaulted mortgage and note on the Wendlings' dram shop was not an owner of the premises within the meaning of the Act. Plaintiff argues that upon the Wendlings' breach of their promise to pay the note, the Bank was entitled under the note or the mortgage to control and enjoy the benefits of the property. The Bank was further entitled to take possession and defend its right thereto against the mortgagor or anyone else. Plaintiff contends that the Bank is an owner under the Act because upon the Wendlings' default the Bank's lien on the premises ripened into a right to possession with color of title.

In the instant case the trial court acknowledged that Marcon did not involve a dram shop or the Liquor Control Act, but it found the reasoning in Marcon applicable to this case: The law does not compel a mortgagee to exercise its rights, and a mortgagee, after default, may disregard the mortgage completely. As noted by the trial court, in this case the Bank took no action to enforce its rights under the mortgage, and as the record shows, the Bank did not even take constructive possession of the real estate.

In Wendt v. Myers, also relied on by the trial court, the supreme court held that the Liquor Control Act requires a meaningful degree of control over the premises, or other factors indicating involvement in the business of selling intoxicating liquors, before liability under the Act can attach. ( Wendt v. Myers (1974), 59 Ill. 2d 246, 252, 319 N.E.2d 777, 780; see also Linson v. Crow (1975), 33 Ill. App. 3d 377, 342 N.E.2d 350; Andersen v. Wirt (1974), 22 Ill. App. 3d 983, 317 N.E.2d 600.) In Wendt the plaintiff alleged that the defendant, Richter, was liable in a dram shop action because Richter was a seller under a contract for deed of premises used by the purchaser as a dram shop. There was no allegation that the contract ...

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