Appeal from the Circuit Court of Cook County. The Honorable Joseph Casciato, Judge Presiding.
Released for Publication August 29, 1996.
The Honorable Justice Egan delivered the opinion of the court: Zwick, P.j., and Rakowski, J., concur.
The opinion of the court was delivered by: Egan
JUSTICE EGAN delivered the opinion of the court:
In 1991, the plaintiff, Roderick Development Investment Co., Inc., filed a second-amended complaint against the Community Bank of Edgewater (the Bank); Gertrude Shiner Matanky (Gertrude Matanky), individually and as trustee of the Eugene Matanky Insurance Trust (Trust); and Mark Frighetto. This complaint included a conversion count against the Bank and Frighetto, a Bank officer, to recover funds that the Bank refused to distribute to the plaintiff.
Pursuant to the defendants' motions to dismiss and strike the complaint, the judge dismissed the complaint with prejudice and denied the plaintiff's request to file a third-amended complaint. The propriety of the dismissal of the conversion count against the Bank and Frighetto is the only issue on appeal, and the Bank is the only defendant who is a party to this appeal.
In the complaint, the plaintiff alleged the following. On February 29, 1972, Daniel Dragash entered into an agreement with Eugene Matanky to purchase five percent of the Estes-Paulina Joint Venture (Joint Venture), which was a partnership engaged in the development and operation of an apartment building. Eugene Matanky owned 50% of the Joint Venture and sold Dragash 10% of his interest. Jack Langworthy owned the other 50% of the Joint Venture.
Eugene Matanky's agreement with Dragash, which was attached to the complaint, stated that Eugene Matanky was a partner in the Joint Venture. By buying a portion of Eugene Matanky's interest in the Joint Venture, Dragash did not become a partner in the Joint Venture, and "his investment [was] subject to [Eugene] Matanky's rights, duties and obligations under the Partnership Agreement."
On July 30, 1974, Eugene Matanky conveyed his interest in the Joint Venture to the Trust, of which Gertrude Matanky was the trustee. On September 25, 1983, Langworthy and the Trust entered into an agreement to sell the Estes-Paulina apartment building to Joel I. Barnett, Inc. (Barnett or the purchaser). In exchange for the building, Langworthy and the Trust accepted a note or notes from Barnett, under which they would receive periodic payments of principal and interest.
On December 21, 1983, Dragash assigned his share in the Joint Venture to the plaintiff. Apparently, after Eugene Matanky transferred his interest in the Joint Venture to the Trust, Dragash's interest in the Joint Venture was also transformed into an interest in the Trust because, in the assignment to Roderick, Dragash assigned his interest in the Trust rather than an interest in the Joint Venture. Gertrude Matanky's signature on a copy of this assignment, which the plaintiff attached to its complaint, shows that the Trust received a copy of the assignment.
Eugene Matanky's estate and the Trust became indebted to the Bank, and, on August 1, 1984, the Bank entered into an agreement under which it accepted an assignment of proceeds from the apartment building purchase agreement in partial satisfaction of this debt. According to this agreement, which the plaintiff also attached to its complaint, the Trust had assigned 10% of its beneficial interest to Dragash, who had assigned his interest to the plaintiff. The 1984 agreement further provided that, to satisfy their indebtedness to the Bank, the estate and the Trust had agreed to offer the Bank their 50% interest in the purchase agreement, "subject to the interest of Roderick," and the Bank had agreed to accept this 50% interest, "subject to the interest of Roderick." The 1984 agreement further provided that "both parties however, acknowledge the beneficial rights of Roderick to the Real Estate."
According to the 1984 agreement, the Trust and the estate were to direct the Purchaser to make all monthly payments under the purchase agreement to the Bank, and "from said payments," the Bank was to
"make the principal and interest payment on the [installment note], make necessary and appropriate tax and/or insurance escrow deposits required in conjunction with the existing first mortgage or the [installment note] and distribute the balance 50% to Langworthy ('Langworthy Net Payment'), 5% to Roderick and 45% to [the Bank]."
The plaintiff further alleged that, between August 1, 1984, and August 1991, the Bank accepted monthly payments from the Purchaser, and pursuant to the 1984 agreement, paid 50% to Langworthy, paid 5% to Roderick and kept the remaining 45% to satisfy the debt.
Shortly before September 30, 1991, Frighetto told Dragash that the Purchaser would be making a final payment under the purchase agreement and that the plaintiff would receive approximately $30,000, its share of these proceeds. Frighetto spoke with Dragash, who at this time was acting as the plaintiff's agent, to arrange for the wire transfer of funds the Bank owed the plaintiff. Frighetto told Dragash that it was unnecessary for the plaintiff to take any action to receive these funds. On September 24, the Purchaser paid the balance under the purchase agreement to the Bank.
On September 30, the Bank sent the plaintiff a letter in which it informed the plaintiff that it would not distribute any portion of the final payment to the plaintiff. The plaintiff attached this letter to its complaint. In the letter, the Bank explained that, on June 15, 1989, the Trust had assigned all of its interest in the proceeds from the purchase agreement to the Bank. Consequently, all funds that had been available to distribute to the beneficiaries of the Trust would be used by the Bank to reduce the debt the Trust and the estate owed.
The 1989 agreement, which was not attached to the complaint but is in the record states: "The Trust does hereby agree that all proceeds paid to it by [the Purchaser], in excess of $225,724.77 will be paid to [the Bank] to reduce the outstanding indebtedness on the Loan, if it has not already been paid in full." This agreement does not mention the plaintiff's interest in the Trust.
Based on these facts, the plaintiff alleged in count I of its complaint, entitled "Conversion," that any indebtedness of the Trust and the estate was pursuant to an agreement to which it was not a party; it was, however, a third-party beneficiary of the 1984 agreement between the Trust and the Bank, and the Bank breached this ...