Guertler v. Barlow Woods, Inc.

596 N.E.2d 24, 230 Ill. App. 3d 933, 172 Ill. Dec. 745
CourtAppellate Court of Illinois
DecidedJune 9, 1992
Docket1-91-1301
StatusPublished
Cited by9 cases

This text of 596 N.E.2d 24 (Guertler v. Barlow Woods, Inc.) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Guertler v. Barlow Woods, Inc., 596 N.E.2d 24, 230 Ill. App. 3d 933, 172 Ill. Dec. 745 (Ill. Ct. App. 1992).

Opinion

PRESIDING JUSTICE HARTMAN

delivered the opinion of the court:

Barlow Woods, Inc. (Barlow Woods), appeals the circuit court’s grant of summary judgment in favor of plaintiff, James Guertler. At issue is whether (1) the automatic stay in a bankruptcy action prevents revival of a judgment lien or tolls the statutory seven-year renewal period, and (2) a valid judgment lien originally encumbered the subject real estate.

Guertler filed a complaint in the circuit court of Cook County on July 3, 1990, against Albert Cavazos, Barlow Woods, and others, seeking to wind up the affairs of the C & G Building Rental Partnership (partnership), adjudicate the validity of liens against the partnership property, and quiet title to that property in Guertler’s name. The pleadings establish that Guertler and Cavazos formed the partnership in 1972, and, in the following year, purchased real estate in Stream-wood, Illinois (the real estate), which was conveyed to “ALBERT CAVAZOS AND JAMES GUERTLER, AS TENANTS IN COMMON.” The real estate allegedly was acquired through capital contributions made to the partnership by Guertler; Cavazos did not contribute any capital toward its purchase. A restaurant was constructed on the real estate in 1973 and leased by the partnership between August 1, 1975, and December 7, 1981. During that time, the real estate and building were the sole assets of the partnership.

On August 12, 1979, Barlow Woods made an unsecured loan, evidenced by a promissory note, to Cavazos, individually, which Cavazos failed to repay. On April 1, 1981, Barlow Woods obtained a judgment by confession on the note in the circuit court of Du Page County against Cavazos individually for $120,801.27. A memorandum of that judgment was recorded in Cook County on April 8,1981.

Cavazos filed a petition for relief pursuant to chapter 11 of the Bankruptcy Code (Code) (11 U.S.C. §1101 et seq. (1982)) on December 7, 1981, which later was converted to a proceeding under chapter 7 (11 U.S.C. §701 et seq. (1982)). On July 21, 1982, Barlow Woods filed proof of an unsecured claim for $120,301.27 plus interest in Cavazos’ bankruptcy proceeding. Cavazos was granted a discharge in bankruptcy on September 9,1982.

On February 28, 1989, Guertler filed a motion in bankruptcy court seeking to lift the automatic stay in Cavazos’ bankruptcy action so that he could proceed to quiet title to the Streamwood real estate in his name. The motion was denied by the bankruptcy judge on November 21, 1989, however, because there remained for determination the issue of whether the real estate was “partnership property or is owned in common,” since the estate succeeds to Cavazos’ interest in the partnership which “cannot be considered as lost forever.” Subsequently, a successor trustee was appointed to Cavazos’ bankruptcy estate, who filed an adversary complaint in the bankruptcy proceeding, seeking either to sell the real estate or dissolve the partnership and distribute the proceeds. For whatever reasons may have existed, but are not of record here, the bankruptcy judge sua sponte dismissed the trustee’s adversary proceeding and the underlying chapter 7 action on April 23,1990.

Guertler thereafter filed the July 3, 1990, complaint first mentioned. Barlow Woods was the sole defendant to answer the complaint in the circuit court. Guertler filed a motion for summary judgment against Barlow Woods, seeking a determination that Barlow Woods’ lien against the real estate was “null, void and unenforceable, and cannot be revived.” Barlow Woods responded with a memorandum and exhibits. The summary judgment motion was granted on March 15, 1991. Defaults were entered against all other defendants. Barlow Woods filed its notice of appeal on April 10, 1991. Thereafter, Guertler filed his affidavit supporting the prove up of defaults with 22 attached exhibits. A final judgment was entered on May 7, 1991, quieting title to the real estate in Guertler’s name.

Barlow Woods argues that the circuit court erred in finding that its judgment lien expired by operation of law. A judgment is a lien on the real estate of the individual against whom it is entered. (Ill. Rev. Stat. 1987, ch. 110, par. 12 — 101.) As a limitation on enforcement of liens, however, the statute provides, “no judgment shall be enforced after the expiration of 7 years from the time the same is rendered, except upon the revival of the same.” (Ill. Rev. Stat. 1987, ch. 110, par. 12 — 108(a).) Barlow Woods perfected its lien on April 8, 1981, by recording its judgment against Cavazos in Cook County, and did not attempt to revive that judgment within seven years thereafter. Nevertheless, it is contended by Barlow Woods that any attempt to revive a judgment lien would have violated the automatic stay which became operative with the filing of Cavazos’ bankruptcy or, altematively, that the automatic stay tolled the seven-year period during which the judgment could be renewed. Guertler responds that the judgment expired by operation of law and was not affected by the automatic stay.

Generally, State law defines property rights in the assets of a bankrupt’s estate and is suspended only to the extent of actual conflict with the Code. (Butner v. United States (1979), 440 U.S. 48, 54-55, 59 L. Ed. 2d 136, 141, 99 S. Ct. 914, 917-18.) Absent an actual conflict, the lienholder’s interest is analyzed no differently than would occur otherwise if bankruptcy proceedings were not in progress. Butner, 440 U.S. at 55, 59 L. Ed. 2d at 141, 99 S. Ct. at 918.

The filing of a bankruptcy petition stays “any act to create, perfect, or enforce any lien against property of the estate.” (11 U.S.C. §362(aX4) (1982).) Barlow Woods claims that acts to continue or renew liens violate the automatic stay and are of no effect. The cases cited in support of that proposition, however, are inapposite, as they do not involve the revival of judgment liens, but hold that a continuation statement under the Uniform Commercial Code need not be filed by a creditor to maintain his secured status during the pendency of a debtor’s bankruptcy proceeding. See In re Chaseley’s Foods, Inc. (7th Cir. 1983), 726 F.2d 303; In re Bond Enterprises, Inc. (D.N.M. 1985), 54 Bankr. 366; In re Funding System Asset Management Corp. (W.D. Pa. 1984), 38 Bankr. 351.

A revival of a judgment is not the creation of a new judgment, but merely a continuation of that being revived. (Bank of Edwardsville v. Raffaelle (1942), 381 Ill. 486, 488, 45 N.E.2d 651; Farmers State Bank v. Hansen (1990), 196 Ill. App. 3d 295, 297, 553 N.E.2d 751.) The lien is not enlarged by a judgment’s revival, and the property of the estate available to general creditors is not threatened; indeed, extension under Illinois law merely allows the lienholder to maintain the status quo. (See In re Morton (2d Cir.

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Bluebook (online)
596 N.E.2d 24, 230 Ill. App. 3d 933, 172 Ill. Dec. 745, Counsel Stack Legal Research, https://law.counselstack.com/opinion/guertler-v-barlow-woods-inc-illappct-1992.