Appeal from Circuit Court of De Witt County. No. 84L31. Honorable James A. Hendrian, Judge Presiding.
As Corrected July 31, 1995. As Corrected August 4, 1995.
Honorable Frederick S. Green, J., Honorable James A. Knecht, P.j., Concurring, Honorable John T. McCULLOUGH, J., Specially Concurring
The opinion of the court was delivered by: Green
JUSTICE GREEN delivered the opinion of the court:
On December 10, 1984, plaintiff Prairie Production Credit Association (PCA) obtained a judgment by confession in the circuit court of De Witt County against defendants Henri J. and Barbara J. Bianucci for $67,864.14 plus costs, which included an attorney fee in the sum of $1,400. On December 20, 1984, defendants filed a petition in the Bankruptcy Court of the Central District of Illinois under chapter 13 of the Bankruptcy Code (Code) (11 U.S.C. § 1301 et seq. (1988)) seeking protection under the Code. The proceeding was subsequently changed to a proceeding under chapter 7 of the Code (11 U.S.C. § 701 et seq. (1988)). The trustee in bankruptcy abandoned the residence property of the defendants as having no value beyond the liens upon it.
On September 19, 1991, plaintiff filed a motion in the foregoing proceedings in the circuit court of De Witt County seeking to revive the December 10, 1984, judgment by confession. Defendants filed a response supported by affidavits. After a hearing at which no evidence was presented, the circuit court entered an order on February 11, 1992, finding that the December 10, 1984, judgment was "still in force and effect, [had] not [been] reversed or set aside, and [had] not been paid by defendants." The circuit court then set forth that the judgment was revived and ordered execution to issue. Defendants appealed to this court.
We reversed and remanded with directions. ( Prairie Production Credit Association v. Bianucci (1992), 234 Ill. App. 3d 1072, 600 N.E.2d 523, 175 Ill. Dec. 592 (Bianucci I).) We held that (1) a motion to revive a judgment against one who subsequently is discharged in bankruptcy lies to obtain an in rem declaration of the reviving of the lien of the judgment, to the extent that the judgment has not been paid; (2) the enforceability of the judgment is at issue in such proceeding; and (3) under the facts presented, State laws did not defeat or void the judgment lien, even though the personal liability of the judgment debtors had been discharged in the bankruptcy proceeding.
At the time of the Bianucci I decision, a request by defendants to open the bankruptcy proceeding to obtain a determination that the lien of plaintiff's judgment was void was then pending in the Federal court system. Accordingly, we opted to not decide whether that lien was void under the Code. We concluded that, in any event, the order of revival should recite that the revived judgment had only in rem effect. We reversed and remanded with directions to the circuit court to await the ultimate decision in the Federal courts. If the Federal courts decided that issue, our mandate required that the circuit court proceed accordingly. We also ordered that if the Federal courts did not decide the issue, the circuit court would have to decide it and rule accordingly.
In the case of In re Bianucci (7th Cir. 1993), 4 F.3d 526, the order of the United States District Court for the Central District of Illinois declining to open the bankruptcy proceeding was affirmed. The circuit court of De Witt County then proceeded to hold an evidentiary hearing. That court then entered an order on September 13, 1994, finding that a lien in the sum of $10,000 remained on the abandoned residential property and ordered the judgment in issue revived to that extent enforceable only in rem. Plaintiff has appealed from that judgment and defendants have cross-appealed. We affirm.
The circuit court supported its judgment order with a concise memorandum opinion. It first addressed the defendants' contention that any lien possessed by plaintiff was rendered void by the provisions of sections 506(a) and (d) of the Code (11 U.S.C. §§ 506(a), (d) (1988)). We mentioned those provisions in Bianucci I. The court concluded that the decision in Dewsnup v. Timm (1992), 502 U.S. 410, 116 L. Ed. 2d 903, 112 S. Ct. 773, conclusively determined that any lien-voiding aspects of sections 506(a) and (d) were not applicable. The opinion then explained that the court found that through negotiations with the trustee, plaintiff had been permitted to file an unsecured claim in the sum of $43,401.87, upon which it received a dividend of 5.375% or the sum of $2,332.67, and that this left a balance of its original judgment, less receipts from other collateral, of $10,000. We subsequently explain the circuit court's reasoning in greater detail. We agree with that reasoning.
On appeal, plaintiff asserts that it should have been awarded the full amount of the original judgment it obtained plus interest and costs, less the sums it received from other collateral, and the dividend of $2,332.67. As they did in the circuit court, defendants contend that under sections 506(a) and (d), plaintiff's judgment lien was void. They also contend that having filed and obtained a dividend from an unsecured claim, plaintiff has waived any right to a claim of any secured lien. We do not agree that plaintiff has waived any right to a lien but we agree with the circuit court that the amount of that lien has been reduced to a sum which the circuit court could have properly found to be $10,000.
Section 506(a) of the Code has a substantial bearing upon our decision. It states as follows:
"An allowed claim of a creditor secured by a lien on property in which the estate has an interest, or that is subject to setoff under section 553 of this title, is a secured claim to the extent of the value of such creditor's interest in the estate's interest in such property, or to the extent of the amount subject to setoff, as the case may be, and is an unsecured claim to the extent that the value of such creditor's interest or the amount so subject to setoff is less than the amount of such allowed claim. Such value shall be determined in light of the purpose of the valuation and of the proposed disposition or use ...