Court of Appeals of Illinois, First District, Sixth Division
Appeal from the Circuit Court of Cook County. No. 11 M1 115374. Honorable Patrick O'Brien, Judge Presiding.
FOR APPELLANT(s): Sidor Law, Ltd., Matthew A. Sidor, Chicago, IL.
FOR APPELLEE(s): Kaplan, Papadakis & Gournis, P.C., Stacie E. Barhorst, Chicago, IL.
PRESIDING JUSTICE HOFFMAN delivered the judgment of the court, with opinion. Justices Hall and Lampkin concurred in the judgment, with opinion.
[¶1] The intervening petitioners, Allen Shapiro and Tiptop Builders (petitioners), appeal from a circuit court order for a turnover of funds from the defendant, SVI Themed Construction Solutions (SVI), to the plaintiff, Sign Builders, Inc., in satisfaction of an underlying judgment obtained by Sign Builders against SVI. The petitioners argue that the allowance of the turnover was error, because they possessed a perfected security interest in SVI's assets which predated and otherwise took priority over the lien arising from the underlying judgment. For the reasons that follow, we affirm.
[¶2] In March of 2011, Sign Builders filed a breach of contract action against SVI seeking to recover amounts allegedly due for merchandise and services it provided to SVI. SVI failed to answer or otherwise appear, and the court entered a default judgment against it and set the matter for a prove-up hearing on July 13, 2011. When SVI failed to appear at the prove-up, the court entered judgment in favor of Sign Builders in the amount of $11,303, plus costs.
[¶3] On November 20, 2013, Sign Builders issued a citation to discover assets against The Private Bank, seeking information relating to any accounts or property held on behalf of SVI. Service of the citation was effectuated upon a representative of Private Bank at some time in early December of 2013.
[¶4] On December 17, 2013, the petitioners filed a petition to intervene in the underlying action between Sign Builders and SVI, alleging that they held a " superior perfected" lien under the Uniform Commercial Code (UCC) (810 ILCS 5/1-101 et seq. (West 2010)) on all property owned by SVI and that they could be adversely affected by any disposition of such property. On February 4, 2014, the court granted the petition to intervene.
[¶5] On February 25, 2014, the court entered an order referencing a proposed petition by Sign Builders for a turnover of all SVI assets held by Private Bank. The order set a briefing schedule for this petition and mandated that " Tiptop" produce a copy of any loan, note or other evidence of SVI's indebtedness to it and that, in the interim, all funds being held by Private Bank remain frozen.
[¶6] On March 8, 2011, the petitioners filed their objection to the turnover of any funds held by Private Bank, again claiming that they maintained a superior perfected interest on all property owned by SVI. The petitioners attached a " Demand Line of Credit" note (Note) dated February 9, 2007, executed by SVI and payable to Shapiro as nominee, in the amount of $200,000 plus accrued interest. The note was secured by an agreement (security agreement), also dated February 9, 2007, which assigned as collateral all of SVI's assets, " including *** inventory, chattel paper, accounts, equipment and general intangibles" as further specified therein. The location of the collateral was identified as SVI's address, 6115 Monroe Court in Morton Grove. The petitioners also attached three UCC financing statements (hereinafter UCC liens), two of which were dated February 28, 2007, and the third dated December 7, 2011, identifying Shapiro as the secured creditor. Finally, the petitioners submitted an affidavit by Shapiro, averring that the petitioners maintained a superior perfected interest in all property owned by SVI by virtue of the Note, and that, as of March 17, 2014, SVI owed the petitioners $268,053.
[¶7] The Note did not contain any particular terms as to payment installments, but provided that " [t]he indebtedness evidenced by this Note shall immediately be due and payable upon demand" of lender Shapiro. The Note further ...