Appeal from Circuit Court of Cumberland County. No. 86LM21. Honorable H. Dean Andrews, Judge Presiding.
As Corrected May 31, 1995.
Honorable Carl A. Lund, J., Honorable Frederick S. Green, J., Honorable Robert J. Steigmann, J. Green and Steigmann, JJ., concur.
The opinion of the court was delivered by: Lund
JUSTICE LUND delivered the opinion of the court:
The First National Bank in Toledo appeals an order of the circuit court of Cumberland County dismissing its petition to revive a judgment obtained against defendant John Adkins in 1987. The basis for the court's decision was that defendant had received a discharge in bankruptcy in February 1991 and plaintiff's petition to revive was not filed until after seven years had elapsed from the date of the judgment. We now reverse this decision.
The operative facts are as follows. On March 24, 1987, plaintiff secured a judgment against defendant for $11,385.14, and a memorandum of that judgment was recorded. On November 13, 1990, defendant filed a voluntary petition in bankruptcy. Plaintiff was listed as a secured creditor. Defendant claimed a homestead exemption in his residential property. The notice of the bankruptcy sent to creditors indicated there were no assets and creditors should not file claims unless notified to do so. The record does not show whether any such notification was made. In its ruling, the trial court indicates that the real estate subject to this controversy was abandoned by the bankruptcy trustee and no claims of creditors were allowed or disallowed. The parties also indicate (although the record does not show) that the automatic stay in the bankruptcy proceeding was lifted at plaintiff's request on January 3, 1991.
On June 2, 1993, in an apparent attempt to collect on its judgment, plaintiff filed a motion seeking to have the circuit clerk issue a certified copy of the judgment for enforcement purposes. On June 2, 1993, and July 19, 1993, plaintiff filed motions to bring in new parties. These motions sought to bring in the First National Bank of Lerna and First Federal Savings & Loan Association in Mattoon, which had mortgages on real estate owned by defendant, to determine the relative priorities of their liens. Both these institutions moved to quash the summonses issued to them on grounds that until an execution issues and a levy is made, any attempt to join them as parties was premature. These motions were granted, and plaintiff's motions to bring in new parties were dismissed. The clerk was ordered to issue a certified copy of the judgment. Plaintiff filed a petition to revive the judgment on May 27, 1994. Defendant filed a response in which he raised the defense of discharge in bankruptcy and stated that the lien of plaintiff's judgment had expired. He also alleged that the revival proceeding was in violation of the injunction issued by the Federal bankruptcy court.
At the hearing on plaintiff's petition, arguments of counsel were heard. In addition, defendant testified that his property was worth approximately $32,000 in November 1990 and that the balance on the first mortgage was about $29,800. He also stated taxes owing on the property when he filed his bankruptcy petition were $323.74. He also claimed his homestead exemption in the bankruptcy proceeding. He asked the court to determine the value of the property, deduct the first mortgage, taxes, and homestead exemption and find that there was no equity for plaintiff's lien to attach to. The trial court issued a letter ruling on August 22, 1994, in which it dismissed the petition to revive judgment as having been filed too late. The court stated there were two issues to decide: (1) whether revival in rem can be sought after the seven-year period has expired where there is no personal liability on the debtor; and (2) whether a lien exists in the first place if, after the memorandum of judgment is filed, the debtor files a bankruptcy petition and the property to which the lien attaches is not worth more than the value of all liens and exemptions that are prior to the judgment lien. The court answered the second question first, finding the judgment lien did survive the bankruptcy and that defendant could not avoid the lien by reason of the fact there might be no equity in the real estate beyond the amount of prior liens and his homestead exemption. As to the question of whether the petition to revive was filed too late, the court found as follows:
"I find that revival in rem can be sought while the judgment is still enforcible [sic]. If the Petition to Revive is filed, for example, before the end of the first seven years, revival can occur. However, if the Petition to Revive is filed after the expiration of the seven years, the judgment lien has expired when the petition is filed. No enforceable lien then exists on the property. A title examiner can ignore the memo in reviewing title problems related to the property. Since the judgment had expired when the Petition to Revive was filed and no personal liability still remained, there is nothing to revive even for in rem effect only. The plaintiff had no right to proceed to enforce the judgment when the Petition to Revive was filed even limiting enforcement to in rem effect. Therefore, the Petition to Revive is dismissed because it was filed more than seven years from the entry of the original judgment."
Plaintiff filed its notice of appeal on September 9, 1994. We note the following relevant provisions of the Code of Civil Procedure (Code) (735 ILCS 5/1-101 et seq. (West 1992)). Section 12-101 of the Code (735 ILCS 5/12-101 (West 1992)) provides: "A judgment is not a lien on real estate for longer than 7 years from the time it is entered or revived." Section 12-108(a) of the Code (735 ILCS 5/12-108(a) (West 1992)) states:
"(a) Except as herein provided, no judgment shall be enforced after the expiration of 7 years from the time the same is rendered, except upon the revival of the same by a proceeding provided by Section 2-1601 of this Act; but real estate, levied upon within the 7 years, may be sold to enforce the judgment at any time within one year after the expiration of the 7 years."
Section 13-218 of the Code (735 ILCS 5/13-218 (West 1992)) states:
"Judgments in a circuit court may be revived as provided by Section 2-1601 of this Act, within 20 years next after the date of such judgment and not after; and the provisions of Section 13-217 of this Act shall apply also to this Section."
This is a case of first impression. The sole issue confronting us in this appeal is whether a judgment may be revived after the seven-year period of enforceability has expired, when an intervening bankruptcy has discharged personal liability of the debtor. Cases have held that revival may take place in this situation where the revival proceeding is brought within the seven-year period. For example, in Farmers State Bank v. Hansen (1990), 196 Ill. App. 3d 295, 553 N.E.2d 751, 143 Ill. Dec. 44, a judgment was entered against defendants in 1982. Subsequently, they filed a chapter 7 proceeding in bankruptcy and received a discharge. All their real estate was abandoned by the bankruptcy trustee. Prior to the expiration of seven years from the entry of the judgment, plaintiff filed a petition to revive the judgment, and an order of revival was entered by the trial court within that period. The revival was limited to in rem effect and only as to real estate owned by defendants at the time they filed their bankruptcy proceeding. On appeal, the appellate court affirmed, noting that the revival was accomplished within the seven-year period of enforceability. In response to defendants' argument that their bankruptcy discharge prevented revival, the court noted the ...