Uptown Federal Savings & Loan Ass'n v. Vasavid

418 N.E.2d 831, 94 Ill. App. 3d 531, 49 Ill. Dec. 811, 1981 Ill. App. LEXIS 2310
CourtAppellate Court of Illinois
DecidedMarch 11, 1981
Docket80-683
StatusPublished
Cited by11 cases

This text of 418 N.E.2d 831 (Uptown Federal Savings & Loan Ass'n v. Vasavid) 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
Uptown Federal Savings & Loan Ass'n v. Vasavid, 418 N.E.2d 831, 94 Ill. App. 3d 531, 49 Ill. Dec. 811, 1981 Ill. App. LEXIS 2310 (Ill. Ct. App. 1981).

Opinion

Mr. JUSTICE McNAMARA

delivered the opinion of the court:

Petitioner, Hung Kit Ng, is a contract purchaser of mortgaged property held in a land trust. He appeals from an order of the trial court which both denied his petition to vacate a foreclosure decree and sale, and confirmed the Sheriff’s report of sale of the mortgaged premises to a third-party purchaser. On appeal, petitioner contends that he was a necessary party to the foreclosure proceedings and that improper joinder permits him to vacate the foreclosure decree; that he was never properly joined because service to him by publication was ineffective for lack of due diligence to ascertain his name and address; that he is a nonrecord claimant under the statute and as such he possessed the right to redeem from the sale. Petitioner contends in the alternative that he should have been permitted the “right to cure” the mortgagor’s default pursuant to statute; that his right to redeem has not been waived by the waiver of redemption clause in the mortgage instrument; and that the existence of a bona fide purchaser does not affect his rights because at the time he filed his petition, a deed had not yet issued to the purchaser.

The property at issue here consists of a 12-unit apartment building held in a land trust by the Chicago Title and Trust Company as trustee. The beneficiaries of the trust and the vendors of the property are Mr. and Mrs. Narish Vasavid. The property is registered under the Torrens Act. On September 27, 1977, respondent Uptown Federal Savings and Loan registered in Torrens a mortgage between itself and the Vasavids.

On March 12, 1978, the Vasavids entered into an installment sales contract for the subject property with petitioner. The contract recited that the property was subject to a mortgage, that it was in trust and that the vendors were the beneficiaries. The contract provided for immediate possession in petitioner, the right to collect rents and the obligation to pay taxes and utilities on the property. At the closing, petitioner received an agreement for the trustee’s deed, wherein upon completion of his performance the deed was to be delivered into another land trust, of which another corporation was to be the trustee and petitioner was to be the beneficiary.

Petitioner did not register the contract or any affidavit of this acquired interest with Torrens despite provision in the Act for such a filing. Nor did petitioner divulge his identity to the corporate trustee, which held both legal and equitable title to the property. The trust agreement provided that the trustee’s only duty when served with process is to relay notice to the beneficiaries and to any other persons designated by the beneficiaries to receive notice. The trust instrument listed only the names of the Vasavids as ones entitled to notice from the trustee.

Immediately after the installment contract transaction, the Vasavids defaulted in mortgage payments to Uptown. Petitioner continued to make his monthly payments in excess of $1,000 to the Vasavids. Approximately eight months later, Uptown commenced foreclosure proceedings.

Uptown named as defendants the Vasavids, the corporate trustee, the registrar of titles, and all “unknown owners.” In compliance with the statutory requirements for service, Uptown filed an affidavit asserting that upon due diligence the names and addresses of “unknown owners” could not be ascertained. Uptown then served such “unknown owners” by publication. The corporate trustee defaulted, and publication was resorted to for the Vasavids, who could not be found. On November 7, 1979, the trial court entered an order of default and a decree of foreclosure and sale.

Approximately two weeks later, petitioner’s then counsel spoke with Uptown’s attorney and advised him of petitioner’s interest in the property as an undisclosed contract purchaser. On December 11, 1979, a judicial sale of the property was conducted where a stranger to the proceedings, Kalman Goldberg, purchased the property. Petitioner’s counsel attended the judicial sale and observed in silence as the property was sold to Goldberg. The mortgage instrument provided for disclosure to Uptown by the Vasavids of any property conveyance and the correlative right in Uptown to increase the interest rate to the purchaser of the property.

On January 4,1980, petitioner filed a motion to vacate the foreclosure decree. On January 22, 1980, the trial court denied plaintiff’s motion. By new counsel, petitioner again sought to vacate the decree, to intervene and redeem from the sale. The trial court also denied this motion, and the sale was confirmed.

Initially we briefly address petitioner’s contention that he is a non-record claimant and that therefore Uptown erroneously attempted to join him as an “unknown owner” pursuant to the Civil Practice Act. (Ill. Rev. Stat. 1977, ch. 110, par. 29.) Although the legislature in 1961 passed the nonrecord claimant statute (Ill. Rev. Stat. 1977, ch. 95, par. 23.1 et seq.) to make joinder of all interested persons easier by removing the due diligence prerequisite to service by publication, the procedure is not exclusive. The “unknown owner” joinder provisions of the Civil Practice Act remain a viable method of joinder, and Uptown’s attempted service was proper. See Bernard, Legal Aspects of 1961 Mortgage and Redemption Law Legislation in Illinois, 43 Chi. B. Rec. 229 (1962).

We next consider whether the trial court properly denied petitioner’s motion to vacate the foreclosure decree. It is fundamental that a judgment ordinarily may be attacked at any time by a necessary party who was not given proper notice of the proceedings. (Janove v. Bacon (1955), 6 Ill. 2d 245, 128 N.E.2d 706; First Federal Savings & Loan Association v. Brown (1979), 74 Ill. App. 3d 901, 393 N.E.2d 574.) Where, however, the defects are not apparent from the face of the record, and a bona fide purchaser has intervened, the necessary party will be precluded from attacking the otherwise void foreclosure judgment. (Janove v. Bacon; Greenwald v. McCarthy (1948), 402 Ill. 135, 83 N.E.2d 491; First Federal Savings & Loan Association v. Brown.) In Greenwald our supreme court held that a mortgage foreclosure decree and sale could not be vacated by an allegedly necessary party who argued that service by publication was defective. There, as here, the party had filed an affidavit alleging that upon due diligence the names and addresses of unknown owners could not be ascertained. There, as here, a third party who was not a party in the foreclosure proceeding purchased the mortgaged property at a judicial sale prior to the motion to vacate the decree. And there, as here, it was argued that the affidavit of compliance with the due diligence requirements of the Civil Practice Act was false. The Greenwald court noted that the alleged jurisdictional defect required inquiry beyond the face of the record and thus concluded that the innocent purchaser’s right could not be affected. We follow the holding of Greenwald and rule that plaintiff was not entitled to vacate the foreclosure decree and sale after the purchaser, Kalman Goldberg, acquired the property without notice of any interest held by petitioner.

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Bluebook (online)
418 N.E.2d 831, 94 Ill. App. 3d 531, 49 Ill. Dec. 811, 1981 Ill. App. LEXIS 2310, Counsel Stack Legal Research, https://law.counselstack.com/opinion/uptown-federal-savings-loan-assn-v-vasavid-illappct-1981.