CNB Bank & Trust, N.A. v. Rosentreter

Decision Date03 September 2015
Docket NumberNo. 4–14–0141.,4–14–0141.
Citation39 N.E.3d 337
PartiesCNB BANK & TRUST, N.A., f/k/a Carlinville National Bank, Plaintiff–Appellee, v. Frances A. ROSENTRETER, Rick E. Rosentreter, and Douglas G. Rosentreter, as Cotrustees of the Gerald E. Rosentreter Trust B, Defendants–Appellants.
CourtUnited States Appellate Court of Illinois

Jason T.H. Germeraad (argued), of Scott & Scott, P.C., Springfield, for appellants.

Richard L. Heavner (argued), of Heavner, Scott, Beyers & Mihlar, LLC, Decatur, for appellee.

OPINION

Justice APPLETON delivered the judgment of the court, with opinion.

¶ 1 Plaintiff, CNB Bank & Trust, N.A., formerly known as Carlinville National Bank, won a summary judgment on all the counts of its amended complaint, including counts IV, XIII, XIV, and XV. Count IV sought to foreclose a mortgage on tracts 1, 2, 3, 4, 5, and 6, and counts XIII, XIV, and XV sought replevin of some grain bins on tracts 1 and 7. (These seven tracts, all of which are located in Macoupin County, have the following permanent index numbers: 12–000–177–00 (tract 1), 12–000–179–00 (tract 2), 12–000–183–02 (tract 3), 12–000–186–00 (tract 4), 11–000–238–01 (tract 5), 11–000–406–01 (tract 6), and 12–000–177–01 (tract 7).)

¶ 2 Defendants, Frances A. Rosentreter, Rick E. Rosentreter, and Douglas G. Rosentreter, in their capacities as cotrustees of the Gerald E. Rosentreter Trust B, appeal from the summary judgment in plaintiff's favor on counts IV, XIII, XIV, and XV and from the denial of their own motion for summary judgment on those counts. They also challenge other parts of the court's judgment, but let us begin with counts IV, XIII, XIV, and XV.

¶ 3 The cross-motions for summary judgment on count IV raised the question of whether the mortgagor, Frances A. Rosentreter, in her individual capacity, owned more than an undivided 50% of tracts 1, 2, 3, 5, and 6 so as to be able to mortgage those tracts in their entirety. Defendants claim that when Frances A. Rosentreter, in her individual capacity, signed the mortgage in count IV, defendants themselves, in their capacities as cotrustees of the Gerald E. Rosentreter Trust B, owned an undivided 50% of tracts 1, 2, 3, 5, and 6 and that Frances A. Rosentreter therefore succeeded in mortgaging no more than her own undivided 50% of those tracts. (It is undisputed that she personally owned 100% of tract 4 and therefore succeeded in mortgaging all of that tract.) Plaintiff, on the other hand, takes the position that Frances A. Rosentreter, in her individual capacity, owned 100% of tracts 1, 2, 3, 5, and 6 and that she consequently mortgaged all the ownership interest in those tracts by signing the mortgage in count IV. In our de novo review, we do not find it to be clear and free from doubt that either plaintiff or defendants were entitled to a judgment as a matter of law on this question of the ownership of tracts 1, 2, 3, 5, and 6.

¶ 4 As for the replevin counts, counts XIII, XIV, and XV, it is a moot question whether the trial court erred by granting summary judgment in plaintiff's favor on those counts, considering that subsequently, in its written judgment of July 26, 2013, the court held the grain bins were fixtures and that, as such, they were to be sold as components of the real estate. This was the very holding that defendants had sought in their motion for summary judgment on counts XIII, XIV, and XV.

¶ 5 In the original version of this opinion, we reached the foregoing conclusions regarding counts IV, XIII, XIV, and XV, and we stopped short of the remaining issues in this appeal because we did not want to fall into the error of addressing premature issues. See Steel City Bank v. Village of Orland Hills, 224 Ill.App.3d 412, 416, 166 Ill.Dec. 667, 586 N.E.2d 625 (1991) ( [C]ourts do not sit to render advisory opinions on abstract questions of law to guide potential future litigation.”). However, after considering the arguments for and against plaintiff's petition for rehearing, we have come to appreciate that count IV is intertwined with an additional issue in this appeal, the apportionment of the sale price between tracts 1 and 7, in that it is a moot point whether defendants have an ownership interest in tracts 1, 2, 3, 5, and 6 unless a surplus is created by a reapportionment of the sale proceeds between tracts 1 and 7.

¶ 6 In the foreclosure sales, tracts 1 and 7 were sold together, as one unit, because a grain elevator facility straddled those two tracts. But the owners of tracts 1 and 7 were not all the same, and the two tracts were subject to different mortgages. Therefore, the trial court had to decide how to apportion the sale proceeds between the two tracts after they were sold en masse. In this appeal, defendants contend that although tracts 1 and 7 were sold en masse for a fair price, the amount of the sale proceeds the court apportioned to tract 1 was unconscionably low.

¶ 7 The apportionment of the sale proceeds between tracts 1 and 7 matters for purposes of count IV because unless a substantially greater amount of the sale proceeds is reapportioned to tract 1 and less to tract 7, the controversy over count IV is academic and of no practical significance. The reason is that plaintiff also won a summary judgment on counts I, II, and III of the amended complaint—deservedly so, defendants agree—and the mortgages in counts I, II, and III pledge the same six parcels of land (tracts 1, 2, 3, 4, 5, and 6) as the mortgage in count IV, which is junior to the mortgages in counts I, II, and III. The total amount owed on the mortgages in counts I, II, and III exceeds, by $2,770,903.43, the total amount that tracts 1, 2, 3, 4, 5, and 6 fetched in the foreclosure sale—unless, out of the $9.1 million that tracts 1 and 7 fetched together, quite a bit more is reapportioned to tract 1, as defendants request.

¶ 8 Because it would be pointless to address count IV in isolation, we have granted plaintiff's petition for rehearing insomuch as it urges us to address the apportionment of sale proceeds between tracts 1 and 7. We agree with defendants that the trial court's apportionment of only $151,666.67 of the sale proceeds to tract 1, out of the $9.1 million for which tracts 1 and 7 sold together, is unconscionably low. This apportionment rested on a misconception of the law, i.e., that a forced sale was “at arm's length” and that consequently the bid for tract 1 could not be regarded as “grossly inadequate.” The court ordered that, in the public auction, tracts 1 and 7 first would be offered separately and then together and that how they ultimately would be sold—separately or together—would depend on which method generated the higher sale proceeds. As it turned out, the sale en masse did. After confirming the sale en masse, the court used the separate bids as indicia of the proportional fair market values of the two tracts. A foreclosure sale, however, is a forced sale (Deutsche Bank National v. Burtley, 371 Ill.App.3d 1, 8, 308 Ill.Dec. 510, 861 N.E.2d 1075 (2006) ), and “it is unusual for land to bring its full, fair market value at a forced sale” (NAB Bank v. LaSalle Bank, N.A., 2013 IL App (1st) 121147, ¶ 20, 368 Ill.Dec. 429, 984 N.E.2d 154 ). See also Horney v. Hayes, 11 Ill.2d 178, 185, 142 N.E.2d 94 (1957) (“It has long been recognized that property does not bring its full value at forced sales * * *.”).

¶ 9 On the basis of its erroneous assumption that bids in a foreclosure sale were evidence of fair market value and that such bids therefore could not be considered grossly inadequate, the trial court apportioned only $151,666.67 of the sale proceeds to tract 1 and the remaining $8,948,333.03 to tract 7. The court's finding that these amounts reflected the fair market value of tracts 1 and 7 is against the manifest weight of the evidence, and the apportionment is an abuse of discretion. We remand this case with directions to reapportion the $9.1 million between those two tracts in accordance with the valuations of an accredited rural appraiser, Mark Akers, since his unrebutted testimony was the only probative evidence offered on the fair market values of tracts 1 and 7. Given his testimony and his written appraisals, the reapportionment should be $6,006,000 to tract 1 and $3,094,000 to tract 7.

¶ 10 Therefore, we reverse the trial court's judgment, and we remand this case for further proceedings. Until defendants, as cotrustees, prove they had an ownership interest in tracts 1, 2, 3, 5, and 6 at the time Frances A. Rosentreter, in her individual capacity, executed the mortgage that is the subject of count IV, the remaining issues in this appeal are premature.

¶ 11 I. BACKGROUND
¶ 12 A. The Amended Complaint and the Defendants

¶ 13 The amended complaint has 21 counts and names 21 defendants, 3 of whom appeal. (It is not that there is one count devoted to each defendant; the equivalence between the number of counts and the number of defendants is fortuitous.)

¶ 14 Counts I to XII seek foreclosure. Counts XIII to XVI seek replevin. Counts XVII to XXI are for breach of contract.

¶ 15 Defendants (by which we mean the three defendants in this appeal) are parties only to counts I to IV and counts XIII to XVI. Of those counts, defendants challenge only the outcomes on counts IV, XIII, XIV, and XV—although, as we have mentioned, defendants raise other issues, too.

¶ 16 B. The Foreclosure Counts (Count I to XII)

¶ 17 Of the 12 foreclosure counts, only count IV is at issue in this appeal. Nevertheless, to understand some of the arguments in this appeal, it helps to have an awareness of the nine tracts of land and the various mortgages and mortgagors to which counts I to XII pertain. So, before going further, we will briefly summarize the foreclosure counts, counts I to XII.

¶ 18 1. Count I (Tracts 1, 2, 3, 4, 5, and 6)

¶ 19 On January 17, 2006, several makers issued a note in the principal amount of $639,000 to Rabobank, N.A. The makers were Pleasant View Farms, Inc.; Gerald E. Rosentreter; Frances A. Rosentreter; Rick E....

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