Appeal from the Circuit Court of Cook County. No. 98-CH-6000 Honorable Albert Green, Judge Presiding.
The opinion of the court was delivered by: Justice Theis
Joseph Butera and Paul Butera (the Buteras) filed an action for declaratory judgment, seeking a binding declaration that the Buteras were "insureds" under the title insurance policy issued by the Attorneys' Title Guaranty Fund, Inc. (ATG), and to hold ATG liable for the back property taxes on the property at issue. On cross-motions for summary judgment, the circuit court granted judgment in favor of ATG.
On appeal, the Buteras raise two issues: (1) whether the Buteras, as beneficiaries of a land trust that is covered by an owner title insurance policy naming the trustee of the trust as the insured, are also insured under the language of the policy after conveying the property to a corporation for no consideration and then again conveying the property to the corporation's sole shareholders, the beneficiaries individually, for no consideration; and (2) whether the beneficiaries under a land trust "retain an estate or interest in land" for continued policy coverage after the two conveyances of the property. After careful review, we affirm.
On March 11, 1968, Joseph Butera, Paul Butera and Giovanni Butera executed a trust agreement with the Chicago Title and Trust Company, trust No. 51843 (Trust), in connection with the ownership of certain real estate. Pursuant to the trust agreement, Joseph, Paul and Giovanni Butera were the beneficiaries under the Trust. Giovanni Butera assigned his interest to Paul and Joseph Butera on February 1, 1974, and is now deceased. On July 1, 1986, pursuant to a trustee's deed, the Trust became the legal titleholder of property commonly known as 4716 North Nagle Avenue, Harwood Heights, Illinois (Harwood Heights property). On July 11, 1986, ATG issued an owner title insurance policy, policy No. 2029762 (the Policy), covering the property at issue in Harwood Heights in the amount of $937,500. The policy named the trustee of the Trust, "Chicago Title and Trust Co.," as the insured.
On December 23, 1993, the trustee conveyed the property in Harwood Heights by trustee's deed to Joe and Paul, Inc. On November 30, 1995, Joe and Paul, Inc., conveyed by warranty deed the Harwood Heights property to the Buteras. According to Paul Butera's affidavit, Paul and Joseph Butera were the only shareholders of Joe and Paul, Inc. Joe and Paul, Inc., dissolved after that conveyance on January 2, 1996. Each of these conveyances stated that it was accompanied by consideration in the amount of $10 and "other good and valuable considerations."
On November 21, 1997, First American Title Insurance Company informed the Buteras that there was a lien on the Harwood Heights property from 1978 in the amount of $14,378 plus penalties. In the policy, ATG only listed as an exception the lien of taxes for the year 1985 and thereafter. ATG did not except any unpaid real estate taxes prior to 1985 on the Harwood Heights property. The Buteras contend that ATG is liable for these unpaid real estate taxes.
Summary judgment is appropriate when all of the pleadings, depositions, admissions and affidavits demonstrate that there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. 735 ILCS 5/2-1005(c) (West 1998); Wagemann Oil Co. v. Marathon Oil Co., 306 Ill. App. 3d 562, 566-67, 714 N.E.2d 107, 110 (1999). The appropriate standard of review of a granting of summary judgment is de novo. Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill. 2d 90, 102, 607 N.E.2d 1204, 1209 (1992). Additionally, the construction of an insurance policy is a question of law subject to de novo review. State Farm Mutual Automobile Insurance Co. v. Villicana, 181 Ill. 2d 436, 441, 692 N.E.2d 1196, 1199 (1998).
At issue here is the interpretation of the title insurance policy terms. The Policy contains the following definition of "insured":
"(a) 'insured': the insured named in Schedule A, and, subject to any rights or defenses The Fund may have had against the named insured, those who succeed to the interest of such insured by operation of law as distinguished from purchase including, but not limited to, heirs, distributees, devisees, survivors, personal representatives, next of kin, or corporate or fiduciary successors."
The insured named in schedule A is "Chicago Title and Trust Co.," the trustee. None of these terms are defined within the Policy.
Title insurance policies are subject to the same rules of construction as other insurance policies. 9 J. Appleman & J. Appleman, Insurance Law & Practice §5201 (1981). The language in a title policy is construed in accordance with the common understanding of the words used, and because a title policy is drawn by the insurer, ambiguities and uncertainties in the policy are construed in favor of the insured. 9 J. Appleman & J. Appleman, Insurance Law & Practice §5201 (1981). Where the words in an insurance policy are clear and unambiguous, courts should give effect to the plain and obvious meaning of those words. Dinges v. Lawyers Title Insurance Corp., 106 Ill. App. 3d 188, 190, 435 N.E.2d 944, 946 (1982). However, "[a]s with any insurance policy, courts are not to distort the language of the title policy to create ambiguities in order to rewrite the policy." Oak Park Trust & Savings Bank v. Intercounty Title Co., 287 Ill. App. 3d 647, 651, 678 N.E.2d 723, 725 (1997).
The Buteras first contend they are "insureds" under the Policy because they succeeded to interest in the property by transfers that were "by operation of law." According to their interpretation of the policy language, the plain and ordinary meaning of "purchase" denotes a transfer only for valuable consideration and, therefore, "by operation of law" means every method of acquiring property that is not for valuable consideration. Because the Buteras transferred the property twice, each time without consideration, they argue that these transfers were by operation of law. ATG contends the term "purchase" has a more technical definition in real estate law, which is the intended definition here. ATG argues that "purchase" in real estate law covers any acquisition of title by the voluntary act of the parties.
Black's Law Dictionary provides two definitions for "purchase": (1) "[t]he act or an instance of buying" (A purchaser is one who obtains property for money or other consideration) and (2) "[t]he acquisition of real property by one's own or another's act (as by will or gift) rather than by descent or inheritance." Black's Law Dictionary 1248 (7th ed. 1999). Because "purchase" is able to be defined in at least two different, reasonable ways, we find the term to be ambiguous. Insurance Co. v. Brown, 315 Ill. App. 3d 1168, 1173, 734 N.E.2d 964, 968 (2000). Therefore, to interpret the phrase "by operation of law as distinguished from purchase," we must place the words in context to discern the meaning of the entire policy provision. Douglas v. Allied American Insurance, 312 Ill. App. 3d 535, 539, 727 N.E.2d 376, 380 (2000). When interpreting the policy language, the court must construe an insurance policy as a whole, giving words their plain, ordinary and popular meaning, at the same time striving to fulfill the intent of the parties. Outboard Marine, 154 Ill. 2d at 108, 607 N.E.2d at 1212.
The Buteras also claim to be "distributees" and, therefore, insureds under the Policy. They argue that the term "distributee" is very broad and may encompass the recipient of property from a trust. While the Policy uses the term generally, a distribution from a trust does have a specific meaning. Black's Law Dictionary defines a trust distribution as "[t]he cash or other property paid or credited to a trust beneficiary." Black's Law Dictionary 488 (7th ed. 1999). Here the first transfer was a distribution not to the beneficiaries of the trust but, rather, to a separate entity, Joe and Paul, Inc. The Buteras do ...