First Division June 26, 2006
No. 1-05-1829
U.S. BANK N.A., as Trustee for New Century Home ) Appeal from Equity Loan Trust, Series 2002-A Asset Backed ) the Circuit Court Pass through Certificates Series 2002-A, ) of Cook County ) Plaintiff-Appellee, ) 02 CH 14953 ) v. ) ) Honorable ANTHONY B. PHILLIPS, ) Paul A. Karkula, ) Judge Presiding Defendant-Appellant. JUSTICE McBRIDE delivered the opinion of the court:
Defendant Anthony Phillips appeals, pro se, from the denial of his APetition to
Vacate a Void Judgment and Collateral Attack Under Authority of Illinois Statute.@ For
the reasons that follow, we affirm.
On December 31, 2001, defendant obtained a mortgage for $255,000 from New
Century Mortgage Corporation (New Century) to purchase a parcel of property
commonly known as 2024 East 171st Court in South Holland, Illinois. The mortgage
and corresponding note were owned by plaintiff, U.S. Bank N.A., as trustee for New
Century, and serviced by Ocwen Federal Bank, FSB (Ocwen).
On August 14, 2002, plaintiff filed a complaint to foreclose defendant's mortgage,
alleging that defendant had failed to pay the monthly installments on the mortgage since
June 1, 2002. Defendant was personally served on September 9, 2002, but did not
appear or otherwise answer the complaint. On October 28, 2002, the circuit court
entered an AOrder of Default@ against defendant, as well as a AJudgment for Foreclosure 1-05-1829
and Sale@ (Judgment) ordering the subject real estate to be sold at a judicial sale.
On February 5, 2005, defendant sent a letter to Ocwen, purporting to tender
payment for the entire balance of the mortgage by an enclosed ABonded Bill of
Exchange@ (Bill). The Bill stated that A[t]he obligation of the *** Secretary of Treasury ***
arises out of the want of consideration for the pledge and by the redemption of the
pledge under HJR-192, Public Law 73-10 and 59 S.Ct. 847.@ Attached to the Bill were
instructions on how to process it with the United States Treasury Department. The
instructions stated that defendant had established a APersonal Treasury UCC Contract
Trust Account@ through the Treasury Department, and that the Bill was a negotiable
instrument that should be mailed to the Secretary of the Treasury (Secretary) for
redemption.
On February 8, 2005, defendant was sent a ANotice of Sale,@ stating that,
pursuant to the Judgment entered on October 28, 2002, the subject property would be
sold at a judicial sale on March 8, 2005. On March 1, 2005, defendant filed a pro se
AMotion to Vacate Sale with Prejudice,@ claiming that the Bill had been dishonored
Athrough failure to process such tender in total satisfaction of the proclaimed liability.@
Defendant, citing section 3-603 of the Uniform Commercial Code (Code) (810 ILCS 5/3-
603 (West 2004)), argued that although the Bill had been dishonored, his obligation on
the mortgage was discharged because he had tendered payment. The record contains
no indication as to the disposition of defendant's motion.
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Plaintiff purchased the subject real estate at a judicial sale on March 8, 2005. On
March 21, 2005, the circuit court entered an order approving the judicial sale and
directing the sheriff of Cook County to evict defendant from the subject property.
On April 13, 2005, defendant filed a pro se APetition to Vacate a Void Judgment
and Collateral Attack Under Authority of Illinois Statute.@ In that petition, defendant
claimed that the judgment against him was void because he had tendered payment and
was therefore discharged of his obligation to pay the mortgage. The circuit court denied
the petition, and defendant filed this appeal.
On appeal, defendant contends that the circuit court erred in denying his petition.
He specifically claims that the Bill was a valid negotiable instrument and, therefore,
argues that the court lacked jurisdiction to enter the order approving the judicial sale
because he had tendered payment through that Bill and was therefore discharged of his
obligation under the mortgage.
Although we have found no Illinois cases dealing with the issue presented in this
appeal, we do find the California Appellate Court's recent decision in McElroy v. Chase
Manhattan Mortgage Corp., 134 Cal. App. 4th 388, ___ P.3d ___, 36 Cal. Rptr. 3d 176
(2005), instructive. In McElroy, plaintiff defaulted on a loan secured by a deed to his
property and attempted to redeem the loan by tendering to defendant a ABonded Bill of
Exchange Order@ (Bill) that is virtually identical to the Bill at issue in this appeal.
McElroy, 134 Cal. App. 4th at 390, ___ P.3d at ___, 36 Ca. Rptr. 3d at 177. Attached to
the Bill were instructions stating that the Bill was a negotiable instrument that could be
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processed by mailing it to the United States Treasury Department and that plaintiff had
established a APersonal UCC Contract Trust Account@ with the Treasury Department.
McElroy, 134 Cal. App. 4th at 390, ___ P.3d at ___, 36 Cal. Rptr. 3d at 177. The Bill
expressly stated that the Secretary's obligation to honor the Bill arose Aout of the want of
consideration for the pledge and by the redemption of the pledge under Public
Resolution HJR-192, Public Law 73-10 and Guaranty Trust Co. of N.Y. v. Henwood,
307 U.S. 247, 59 S. Ct. 847, 83 L. Ed. 1266 (1939).@ McElroy, 134 Cal. App. 4th at 392,
___P.3d at ___, 36 Cal. Rptr. 3d at 178-79. Defendant refused to process the Bill and
subsequently sold plaintiff's property at a foreclosure sale. McElroy, 134 Cal. App. 4th
at 390, ___ P.3d at ___, 36 Cal. Rptr. 3d at 178.
On review, the court found that the Bill was not a negotiable instrument because
it was not made Apayable to order or to bearer@ as required by the California Uniform
Commercial Code and that it was not a check because it was not drawn on a bank.
McElroy, 134 Cal. App. 4th at 392, ___ P.3d at ___, 36 Cal. Rptr. 3d at 179. The court
further found that, although the Bill purported to identify the source of the Secretary's
obligation to honor the Bill, the cited sources did not establish any such obligation.
McElroy, 134 Cal. App. 4th at 392-93, ___ P. 3d at ___, 36 Cal. Rptr. 3d at 179.
Therefore, the court concluded that the Bill was a Aworthless piece of paper@ that
amounted to no tender at all and found that the foreclosure was proper. McElroy, 134
Cal. App. 4th at 393-94, ___ P. 3d at ___, 36 Cal. Rptr. 3d at 179-81.
In this case, the Bill tendered by defendant is not a negotiable instrument
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because it is not made Apayable to bearer or to order,@ as required by section 3-104 of
the Uniform Commercial Code. 810 ILCS 5/3-104(a)(1) (West 2004); see also Krajcir v.
Egidi, 305 Ill. App. 3d 613, 621 (1999). Additionally, although a check may be a
negotiable instrument even when not made payable to bearer or to order (810 ILCS 5/3-
104(c) (West 2004)), the Bill is not a check because it is not drawn on a bank (810 ILCS
5/3-104(f) (West 2004)).
We have also reviewed the sources identified in the Bill as giving rise to the
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First Division June 26, 2006
No. 1-05-1829
U.S. BANK N.A., as Trustee for New Century Home ) Appeal from Equity Loan Trust, Series 2002-A Asset Backed ) the Circuit Court Pass through Certificates Series 2002-A, ) of Cook County ) Plaintiff-Appellee, ) 02 CH 14953 ) v. ) ) Honorable ANTHONY B. PHILLIPS, ) Paul A. Karkula, ) Judge Presiding Defendant-Appellant. JUSTICE McBRIDE delivered the opinion of the court:
Defendant Anthony Phillips appeals, pro se, from the denial of his APetition to
Vacate a Void Judgment and Collateral Attack Under Authority of Illinois Statute.@ For
the reasons that follow, we affirm.
On December 31, 2001, defendant obtained a mortgage for $255,000 from New
Century Mortgage Corporation (New Century) to purchase a parcel of property
commonly known as 2024 East 171st Court in South Holland, Illinois. The mortgage
and corresponding note were owned by plaintiff, U.S. Bank N.A., as trustee for New
Century, and serviced by Ocwen Federal Bank, FSB (Ocwen).
On August 14, 2002, plaintiff filed a complaint to foreclose defendant's mortgage,
alleging that defendant had failed to pay the monthly installments on the mortgage since
June 1, 2002. Defendant was personally served on September 9, 2002, but did not
appear or otherwise answer the complaint. On October 28, 2002, the circuit court
entered an AOrder of Default@ against defendant, as well as a AJudgment for Foreclosure 1-05-1829
and Sale@ (Judgment) ordering the subject real estate to be sold at a judicial sale.
On February 5, 2005, defendant sent a letter to Ocwen, purporting to tender
payment for the entire balance of the mortgage by an enclosed ABonded Bill of
Exchange@ (Bill). The Bill stated that A[t]he obligation of the *** Secretary of Treasury ***
arises out of the want of consideration for the pledge and by the redemption of the
pledge under HJR-192, Public Law 73-10 and 59 S.Ct. 847.@ Attached to the Bill were
instructions on how to process it with the United States Treasury Department. The
instructions stated that defendant had established a APersonal Treasury UCC Contract
Trust Account@ through the Treasury Department, and that the Bill was a negotiable
instrument that should be mailed to the Secretary of the Treasury (Secretary) for
redemption.
On February 8, 2005, defendant was sent a ANotice of Sale,@ stating that,
pursuant to the Judgment entered on October 28, 2002, the subject property would be
sold at a judicial sale on March 8, 2005. On March 1, 2005, defendant filed a pro se
AMotion to Vacate Sale with Prejudice,@ claiming that the Bill had been dishonored
Athrough failure to process such tender in total satisfaction of the proclaimed liability.@
Defendant, citing section 3-603 of the Uniform Commercial Code (Code) (810 ILCS 5/3-
603 (West 2004)), argued that although the Bill had been dishonored, his obligation on
the mortgage was discharged because he had tendered payment. The record contains
no indication as to the disposition of defendant's motion.
-2- 1-05-1829
Plaintiff purchased the subject real estate at a judicial sale on March 8, 2005. On
March 21, 2005, the circuit court entered an order approving the judicial sale and
directing the sheriff of Cook County to evict defendant from the subject property.
On April 13, 2005, defendant filed a pro se APetition to Vacate a Void Judgment
and Collateral Attack Under Authority of Illinois Statute.@ In that petition, defendant
claimed that the judgment against him was void because he had tendered payment and
was therefore discharged of his obligation to pay the mortgage. The circuit court denied
the petition, and defendant filed this appeal.
On appeal, defendant contends that the circuit court erred in denying his petition.
He specifically claims that the Bill was a valid negotiable instrument and, therefore,
argues that the court lacked jurisdiction to enter the order approving the judicial sale
because he had tendered payment through that Bill and was therefore discharged of his
obligation under the mortgage.
Although we have found no Illinois cases dealing with the issue presented in this
appeal, we do find the California Appellate Court's recent decision in McElroy v. Chase
Manhattan Mortgage Corp., 134 Cal. App. 4th 388, ___ P.3d ___, 36 Cal. Rptr. 3d 176
(2005), instructive. In McElroy, plaintiff defaulted on a loan secured by a deed to his
property and attempted to redeem the loan by tendering to defendant a ABonded Bill of
Exchange Order@ (Bill) that is virtually identical to the Bill at issue in this appeal.
McElroy, 134 Cal. App. 4th at 390, ___ P.3d at ___, 36 Ca. Rptr. 3d at 177. Attached to
the Bill were instructions stating that the Bill was a negotiable instrument that could be
-3- 1-05-1829
processed by mailing it to the United States Treasury Department and that plaintiff had
established a APersonal UCC Contract Trust Account@ with the Treasury Department.
McElroy, 134 Cal. App. 4th at 390, ___ P.3d at ___, 36 Cal. Rptr. 3d at 177. The Bill
expressly stated that the Secretary's obligation to honor the Bill arose Aout of the want of
consideration for the pledge and by the redemption of the pledge under Public
Resolution HJR-192, Public Law 73-10 and Guaranty Trust Co. of N.Y. v. Henwood,
307 U.S. 247, 59 S. Ct. 847, 83 L. Ed. 1266 (1939).@ McElroy, 134 Cal. App. 4th at 392,
___P.3d at ___, 36 Cal. Rptr. 3d at 178-79. Defendant refused to process the Bill and
subsequently sold plaintiff's property at a foreclosure sale. McElroy, 134 Cal. App. 4th
at 390, ___ P.3d at ___, 36 Cal. Rptr. 3d at 178.
On review, the court found that the Bill was not a negotiable instrument because
it was not made Apayable to order or to bearer@ as required by the California Uniform
Commercial Code and that it was not a check because it was not drawn on a bank.
McElroy, 134 Cal. App. 4th at 392, ___ P.3d at ___, 36 Cal. Rptr. 3d at 179. The court
further found that, although the Bill purported to identify the source of the Secretary's
obligation to honor the Bill, the cited sources did not establish any such obligation.
McElroy, 134 Cal. App. 4th at 392-93, ___ P. 3d at ___, 36 Cal. Rptr. 3d at 179.
Therefore, the court concluded that the Bill was a Aworthless piece of paper@ that
amounted to no tender at all and found that the foreclosure was proper. McElroy, 134
Cal. App. 4th at 393-94, ___ P. 3d at ___, 36 Cal. Rptr. 3d at 179-81.
In this case, the Bill tendered by defendant is not a negotiable instrument
-4- 1-05-1829
because it is not made Apayable to bearer or to order,@ as required by section 3-104 of
the Uniform Commercial Code. 810 ILCS 5/3-104(a)(1) (West 2004); see also Krajcir v.
Egidi, 305 Ill. App. 3d 613, 621 (1999). Additionally, although a check may be a
negotiable instrument even when not made payable to bearer or to order (810 ILCS 5/3-
104(c) (West 2004)), the Bill is not a check because it is not drawn on a bank (810 ILCS
5/3-104(f) (West 2004)).
We have also reviewed the sources identified in the Bill as giving rise to the
Secretary's obligation to honor the Bill, and find that they create no such obligation. Nor
do they discuss a APersonal Treasury UCC Contract Trust Account@ or the Aredemption
of a pledge.@ The Bill is nothing more than words strung together on a piece of paper
which lack any cohesive meaning and convey nothing. Under these circumstances, we
find no error in the trial court's refusal to acknowledge defendant's Bill as a valid
negotiable instrument.
In reaching this conclusion, we reject defendant's reliance on section 3-603 of the
Code (810 ILCS 5/3-603 (West 2004)) to argue that the court lacked jurisdiction to
approve the sale because he had tendered payment to plaintiff and was thus relieved of
his obligations under the mortgage. As discussed above, defendant did not tender
Apayment@ but, rather, a piece of paper that was entirely lacking in value. Therefore, the
Bill did not discharge defendant's obligation to pay the mortgage, and the circuit court
did not error in approving the judicial sale of the property.
Accordingly, the judgment of the circuit court of Cook County is affirmed.
-5- 1-05-1829
Affirmed.
CAHILL, P.J. and GORDON, J., concur.
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