First Bank and Trust Co. v. King, No. 5-99-0182
5th District, Rule 23 Order filed January 25, 2000;
Motion to publish granted March 17, 2000.
| FIRST BANK AND TRUST COMPANY OF O'FALLON, ILLINOIS, Plaintiff-Appellee, v. JANET KING, Defendant-Appellant. | Appeal from the Circuit Court of St.Clair County. No. 97-CH-343 Honorable Patrick M. Young, Judge,presiding. |
JUSTICE MAAG delivered the opinion of the court:
This action arose out of the circuit court's February 9, 1999, order granting summary judgment in favor of First Bank &Trust Company of O'Fallon, Illinois (Bank), plaintiff-appellee, against Janet King, defendant-appellant. In that same order,the circuit court denied King's motion to clarify the circuit court's November 24, 1998, order.
The relevant facts are as follows. King was the owner of real estate located in St. Clair County. The Bank held a mortgageon that same property. On September 5, 1997, the Bank filed a complaint for foreclosure against King, John Zajicek, whopaid the 1995 real estate taxes, Diane S. Baker, holder of a second mortgage for an undisclosed amount, and other unknownowners and nonrecord claimants. On that same date, the Bank filed an affidavit for publication stating that it had made adue and diligent inquiry to find King but that she could not be located for service of summons. The Bank filed a certificateof publication that stated that the "Notice of Publication of Notice of Foreclosure" was published in the Legal Reporter inSt. Clair County for three consecutive weeks, the first notice being published on September 17, 1997, and the lastpublication being published on October 1, 1997. King failed to enter an appearance. On November 19, 1997, the circuitcourt entered a judgment of foreclosure and sale. Jurisdiction was premised on defendants being served by publication witha notice in The Legal Reporter, a public and secular newspaper.
For three consecutive weeks beginning on January 7, 1998, and ending January 21, 1998, the Bank published a notice ofsale in The Legal Reporter, and on January 29, 1998, a judicial sale was held. The Bank was the highest bidder. The Bankbid $46,359.45, the amount of money owed to the Bank by King pursuant to the mortgage. A certificate of sale was issuedon January 29, 1998. On February 10, 1998, the sale was confirmed by the circuit court, and a judicial deed was issuedconveying the property to the Bank.
A petition to set aside orders was filed on June 18, 1998, by King. King sought to declare all orders entered pursuant to theforeclosure action void. King alleged that the circuit court lacked personal jurisdiction over her because the Bank failed tomake diligent efforts to locate her prior to resorting to publication. Jeffrey A. and Lea L. Green were also named asadditional defendants. The Greens apparently purchased the property in question from King after the judicial sale. Aresponse to petition to set aside orders was filed on July 6, 1998. In the response, the Bank denied failing to use duediligence. On September 28, 1998, the circuit court determined as follows: "735 ILCS 5/15-1509 [(]c[)] is controling [sic].Defendant cannot challenge the validity of the Judicial Deed. She may only claim an interest in the proceeds of the sale."The circuit court granted King leave to amend to seek the proceeds of the sale.
On October 15, 1998, King filed an amended petition seeking the proceeds of the mortgage foreclosure sale. King claimedthat the Bank did not make a diligent effort to locate her. The Bank filed a motion to dismiss King's amended petition,stating that the payoff on the mortgage at the time of the mortgage foreclosure sale was $46, 359.45 and that the Bank, thehighest bidder at the foreclosure sale, paid precisely that amount for the property in question. Due to these facts, the Bankrequested that King's amended petition be dismissed since there were no proceeds derived from the mortgage foreclosuresale.
The circuit court entered an order on November 24, 1998, stating that the Bank's motion to dismiss amended petition wasgranted on all issues except that the petition would stand on the issue of the correct amount owed to the Bank at the time ofthe mortgage foreclosure sale. On January 21, 1999, the Bank filed a motion for summary judgment stating that King hadadmitted that the amount due the bank on the date of the mortgage foreclosure was, in fact, the correct amount. King filed amotion to clarify on January 25, 1999, seeking a reconsideration of the circuit court's November 24, 1998, order. Allmotions were argued on January 28, 1999, and taken under advisement. On February 9, 1999, the circuit court entered anorder denying King's motion to clarify and granting the Bank's motion for summary judgment. King filed a timely notice ofappeal.
King argues on appeal that the circuit court's orders are void "for lack of personal jurisdiction over Appellant." Morespecifically, King argues that the Bank's failure to exercise due diligence to locate her and personally serve her prior toresorting to service by publication has deprived her of her real estate without due process. King is seeking damages fromthe Bank in the amount of the difference between the fair market value of the real estate in question on the date of thejudicial sale less the amount owed to the Bank pursuant to the mortgage.
The standard of review for the entry of summary judgment is de novo. See Shull v. Harristown Township, 223 Ill. App. 3d819, 824, 585 N.E.2d 1164, 1167 (1992). Pursuant to section 2-206 of the Code of Civil Procedure, service by publicationis allowed in actions affecting property. 735 ILCS 5/2-206 (West 1996). The statute requires a plaintiff to file an affidavitshowing that the defendant "on due inquiry cannot be found *** so that process cannot be served upon him or her" and"stating the place of residence of the defendant, if known, or that upon diligent inquiry his or her place of residence cannotbe ascertained." The defendant may challenge such affidavit by filing an affidavit showing that upon due inquiry he couldhave been found. Upon the defendant's challenge, the plaintiff must produce evidence establishing due inquiry. SeeHousehold Finance Corp. III v. Volpert, 227 Ill. App. 3d 453, 454-55 , 592 N.E.2d 98, 99 (1992).
The record reveals the following facts surrounding the Bank's attempts at personal service of process on King. The Bank'scounsel, Chadwick Kasten, filed an affidavit for publication on September 5, 1997. Within the affidavit, Kasten stated thathe had made a "due and diligent inquiry" to find King and that "upon due inquiry" she could not be found so that processcould be served upon her "nor on diligent inquiry can the places of residence of any of *** [the defendants] be ascertained."Tom Tschudy, the Bank's vice president, signed an affidavit stating: "The collection department of the bank has maderepeated, but unsuccessful attempts to locate Janet King. It is my belief that she has left the local area." Gene Smith, aprivate investigator employed by Kasten to ascertain whether the residence that is the subject of the aforementionedmortgage was occupied or vacant, signed an affidavit also. Smith's affidavit stated as follows: "I visited the home on July18, 1997. I knocked on the door and there was no answer. I looked in the windows. There was no furniture or any otheritems in the house to suggest that the home was occupied. *** In my opinion, the home is vacant."
On November 7, 1997, Kasten filed a certificate of service stating that he served a copy of the complaint of foreclosure, theaffidavit as to unknown owners and nonrecord claimants, the affidavit for publication, the notice of publication of notice offoreclosure, the notice of foreclosure, the notice of lis pendens, an attorney affidavit, the motion for default and judgment offoreclosure and sale, and a notice of hearing, by depositing said documents in the United State Post Office mailbox in anenvelope plainly addressed to Ms. Janet King, P.O. Box 24163, University City, MO 63130-0163, with postage fullyprepaid on November 7, 1997. There is no evidence in the record that this envelope was returned to Kasten. We also notethat the invoice from Kasten to the Bank states that on September 30, 1997, he drafted and mailed a letter to Janet King.
Once the Bank filed the affidavit pursuant to the language used in the statute, it became incumbent upon King to file anaffidavit stating that upon "due inquiry" she could have been found. King did nothing until June of 1998, when she filed thepetition to set aside the sale of the property. In fact, she never filed an affidavit or even suggested in her petition that upon"due inquiry" she could have been found. The only address in the record is a post office box address in Missouri.Additionally, the property that is the subject of this appeal appeared to be vacant when the Bank sent a private investigatorto the residence. The allegation in her petition that states that "[p]laintiff did not make a diligent effort to attempt to locatethe whereabouts" of King was merely conclusory. Since King did not properly challenge the Bank's affidavit that she couldnot be found, we conclude that the trial court's findings were correct.
Although King appears to suggest that notice by publication is never appropriate, even when a property owner cannot belocated, the legislature has determined otherwise. See 735 ILCS 5/2-206 (West 1996). We also reject King's argument thatnotice by publication is a violation of due process. Numerous cases are found in which similar contentions have been madeand decided adversely. These cases hold that service by publication satisfies the requirement of due process of law. SeeSchultz v. Walker, 130 F.2d 907, 909 (7th Cir. 1942), and cases cited therein.
King also claims that she is entitled to damages from the Bank for the difference between the fair market value of herproperty on the date of the judicial sale less the amount owed to the Bank pursuant to the mortgage. We note from theoutset that King has failed to cite any authority for this proposition. We also note that King failed to present an appraisal ofthe property in question to the trial court and that the record is devoid of any information concerning the fair market valueof the property on the date of the judicial sale.
The law is clear that the Bank is entitled to a priority lien on the proceeds from the sale of the property in question. Section15-1301 of the Illinois Mortgage Foreclosure Law states as follows:
"[F]rom the time a mortgage is recorded it shall be a lien upon the real estate that is the subject of the mortgage for allmonies advanced or applied or other obligations secured in accordance with the terms of the mortgage or asauthorized by law, including the amounts specified in a judgment of foreclosure in accordance with subsection (d) ofSection 15-1603." 735 ILCS 5/15-1301 (West 1996).
What King fails to understand is that section 15-1509 of the Illinois Mortgage Foreclosure Law bars all claims of partiesand nonrecord claimants after the vesting of title after a foreclosure sale except against the proceeds of the sale. 735 ILCS5/15-1509 (West 1996). Section 15-1509(c) reads as follows:
"(c) Claims Barred. Any vesting of title by a consent foreclosure pursuant to Section 15-1402 or by deed pursuant tosubsection (b) of Section 15-1509, unless otherwise specified in the judgment of foreclosure, shall be an entire bar of(i) all claims of parties to the foreclosure and (ii) all claims of any nonrecord claimant who is given notice of theforeclosure in accordance with paragraph (2) of subsection (c) of Section 15-1502, notwithstanding the provisions ofsubsection (g) of Section 2-1301 to the contrary. Any person seeking relief from any judgment or order entered in theforeclosure in accordance with subsection (g) of Section 2-1301 of the Code of Civil Procedure may claim only aninterest in the proceeds of sale." (Emphasis added.) 735 ILCS 5/15-1509 (West 1996).
When interpreting a statute, we must ascertain and give effect to the intention of the legislature. The most reliable indicatorof legislative intent is the language of the statute, which is given its plain and ordinary meaning. When the language of thestatute is clear and unambiguous, we must give it effect as it is written, without reading into it exceptions, limitations, orconditions that the legislature did not express. We should not, under the guise of statutory construction, add requirements orimpose limitations that are inconsistent with the plain meaning of the statute. Since the construction of a statute is an issueof law, our review is de novo. See Peterson v. Aldi, Inc., 288 Ill. App. 3d 57, 63, 679 N.E.2d 1291, 1295 (1997).
Section 15-1509 plainly states that King may claim only an "interest in the proceeds of the sale." 735 ILCS 5/15-1509(West 1996). It is undisputed that the Bank paid the exact amount for King's property as she owed the Bank. Hence, theBank's priority lien was paid, and there were no "proceeds" from which King could recover. There is no language containedwithin section 15-1509 that states that any amounts are recoverable if the fair market value exceeds the amount owed to theBank. Hence, when reviewing the statute, it is clear that the legislature intended to grant the property owner a claim againstany amount greater than that secured by the mortgage and to bar all other claims.
Similar arguments have been made in other cases. In Illini Federal Savings & Loan Ass'n v. Doering, 162 Ill. App. 3d 768,516 N.E.2d 609 (1987), this court determined that absent evidence of mistake, fraud, or a violation of duty by the officerconducting the sale, a mere inadequacy of price alone is not sufficient cause for setting aside a judicial sale. It is clear thatthe law intends to provide stability and permanency to judicial sales, and [S]ince "'[i]t has long been recognized [citationomitted] that property does not bring its full value at forced sales, and that price depends on many circumstances fromwhich the debtor must expect to suffer a loss' [citation], it follows that '[m]ere inadequacy of price is no reason for upsettinga judicial sale unless there are other irregularities.'" Doering, 162 Ill. App. 3d at 771-72, 516 N.E.2d at 611-12. The Doeringcourt stated that there is no requirement that foreclosed property be sold for its appraised value, which may or may notreflect the price that could be obtained upon sale of the property. The court has, however, long had the discretion todisapprove a judicial sale "where the amount bid is so grossly inadequate that it shocks the conscience of a court of equity."Levy v. Broadway-Carmen Building Corp., 366 Ill. 279, 288, 8 N.E.2d 671, 676 (1937).
Additionally, in Lyons Savings & Loan Ass'n v. Gash Associates, 189 Ill. App. 3d 684, 545 N.E.2d 412 (1989), thedefendant submitted fairly recent appraisals by affidavit that showed the value of the premises at 25% to 45% in excess ofthe judicial sale. Affidavits were tendered by the plaintiff placing the value just below the bid price. The Gash Associatescourt affirmed the trial court's determination that the bid was not grossly inadequate.
Even though the disparity between the defendants' appraisal and the bid price was greater in the decision of ResolutionTrust Corp. v. Holtzman, 248 Ill. App. 3d 105, 618 N.E.2d 418 (1993), than it was in the Gash Associates case, the courtnoted that the appraisal in the Holtzman case was more remote in time and was of less probative value. The Holtzman casestates: "We do not believe that the General Assembly intended to require an extended evidentiary hearing after each sheriff'ssale. To determine the extent of the hearing to be afforded the mortgagor, the court should look to the [mortgagor's] petitionor motion and if there is an allegation of a current appraisal or other current indicia of value which is so measurablydifferent than the sales price as to be unconscionable, then a hearing should be afforded the defendant. On the other hand, ifthe allegation of unconscionability rests on an appraisal rendered remote in time, the requisite of a formal hearing is notrequired ***." (Emphasis added.) Holtzman, 248 Ill. App. 3d at 115, 618 N.E.2d at 425-26.
King did not intervene in this case until more than four months subsequent to the time that the judicial deed was issued tothe Bank. Additionally, when King filed her petition to set aside, she never offered an appraisal of the property nor did sheclaim that she possessed an appraisal of the property in order to show that the amount that the Bank paid for the propertywas unconscionable. Again, King has merely made conclusory allegations that are not supported by any evidence containedwithin the record on review. Hence, pursuant to the Holtzman case, a formal hearing was not required.
Section 15-1509 bars all claims of parties and nonrecord claimants after the vesting of title after a foreclosure sale, exceptagainst the proceeds of sale. The Bank's priority lien was for the exact amount that the Bank paid for the property. Sincethere were no "proceeds" for King to claim and because King offered no proof of the value of the property in question, weaffirm the circuit court's orders entered on February 9, 1999.
Affirmed.
GOLDENHERSH, P.J., and KUEHN, J., concur.