Bezin v. Ginsburg

• Decision Date: 13 April 1978
• Docket Number: No. 4916,No. 76-1641,D,4916,76-1641
• Citation: 16 Ill.Dec. 595,375 N.E.2d 468,59 Ill.App.3d 429
• Parties: , 16 Ill.Dec. 595 Walter BEZIN and Park Lane Commercial Management Corp., Plaintiffs-Appellants, v. Harold GINSBURG, James Ginsburg, Albert F. Brown and T.B. & Z. Realty & Management Co., Inc. and National Bank of Austin, Trustefendants- Appellees.
• Court: United States Appellate Court of Illinois

Page 468

375 N.E.2d 468

59 Ill.App.3d 429, 16 Ill.Dec. 595

Walter BEZIN and Park Lane Commercial Management Corp. Plaintiffs-Appellants, v. Harold GINSBURG, James Ginsburg, Albert F. Brown and T.B. &amp Z. Realty & Management Co., Inc. and National Bank of Austin, Trust No. 4916, Defendants- Appellees.

No. 76-1641.

Appellate Court of Illinois,First District, Fourth Division.

April 13, 1978.

Richard T. Franch, Eugene R. Wedoff, Chicago, for plaintiffs-appellants; Jenner & Block, Chicago, of counsel.

David Chaimovitz, Lewis W. Schlifkin, Edward A. Berman, Chicago, for defendants-appellees.

LINN, Justice.

Plaintiff, Walter Bezin, current owner of the beneficial interest of property held by the National Bank of Austin as trustee under a land trust agreement, brought an action for declaratory and injunctive relief against defendants, Harold Ginsburg and James Ginsburg, former beneficial owners under the trust; T.B. & Z. Realty and Management Co., Inc. (T.B. & Z.); Albert F. Brown, the lessee of the subject property under leases executed at the direction of the former beneficial owners; and, the trustee. ¹ Bezin sought to have the leases executed by the former beneficial owners declared void and to enjoin the defendants from enforcing the provisions of these leases. Three forcible entry and detainer actions (Nos. 76-M1-717260, 76-M1-712234 and 76-M1-71233), brought by Park Lane Management Corporation (Park Lane), as rental agent of Bezin, for possession of the subject property, were consolidated with the above action by the trial court. ²

The trial court denied Bezin's motion for partial summary judgment and granted the motions of certain defendants for total summary judgment and dismissed other defendants. On appeal, the plaintiffs contend: (1) that the trial court improperly denied Bezin's partial motion for summary judgment; (2) that the court erred in granting the defendants' motions for summary judgment and in declaring the leases valid, because genuine issues of material fact were raised by the pleadings and supporting materials; (3) that the court improperly dismissed the Ginsburgs and T.B. & Z. as party-defendants.

We affirm the decision of the trial court granting summary judgment to the Ginsburgs and Brown and dismissing T.B. & Z. but vacate the dismissal of the complaint as to the Ginsburgs.

FACTS

Background

In July of 1970, Harold Ginsburg created a land trust with the Bank of Austin involving an improved parcel of land located at the southeast corner of State and Division streets in Chicago. Harold Ginsburg named himself sole beneficiary under the trust. He later assigned 50 percent of his beneficial interest in the trust to his son, James Ginsburg, and 50 percent to Louis Bauer; however, Harold Ginsburg retained the power of direction over the trust.

James Ginsburg and Bauer thereafter encumbered their interest in the land trust with a collateral assignment to the First National Bank of Lincolnwood (Bank of Lincolnwood), as security for a $200,000 loan.

As a result of a lawsuit which later ensued between the Ginsburgs, Bauer and others (Bauer v. Ginsburg, No. 73 CH 4923, hereinafter the Bauer case), a restraining order was issued by stipulation of the parties on March 27, 1974, temporarily enjoining the parties to that action from "selling, assigning, transferring, mortgaging or encumbering" the subject property. This order was to remain in effect until June 24, 1974 at which time any party could apply to the court for an order dissolving the injunction. Bezin attempted but was denied leave to intervene in the Bauer case and did not participate in that action.

The Bank of Lincolnwood declared a default on the Ginsburg-Bauer loan and gave notice that it would sell the beneficial interest in the trust property at auction, to satisfy the loan. The sale was held on October 4, 1975, after a postponement resulting from a lawsuit filed by James Ginsburg. On September 30, 1975, and prior to the sale, the two leases in issue in this case were entered into with Brown at the direction of Harold Ginsburg. The leases were signed by Brown and by Harry Leadingham, an employee of T.B. & Z., the purported agent of the trustee. The Brown leases were each for a term of five years, renewable at the option of the lessee for two additional five year periods. The Brown leases were recorded on October 3, 1975, the Friday before the auction sale of the beneficial interest.

On Saturday, October 4, 1975, the public sale of the beneficial interest took place. Bezin and all other bidders signed copies of the terms of sale and letters of opinion distributed by the Bank of Lincolnwood which expressly stated that the bank made no warranties as to the existence of leases on the property. Bezin admittedly never examined the title to the trust property, nor inquired about outstanding leases, nor was he represented by an attorney at the sale. The Ginsburgs and their attorney were present at the sale but made no mention of the Brown leases recorded the previous day. Bezin prevailed at the sale and purchased the entire beneficial interest for $450,000. Bezin deposited $50,000 with the Bank of Lincolnwood at the auction and paid the balance at closing on October 20, 1975.

Present Litigation

On February 3, 1976, Bezin filed this action seeking a declaratory judgment that the Brown leases were invalid. He also sought other related relief. The verified complaint stated three bases for the requested relief: (1) that T.B. & Z. was not authorized to execute the Brown leases on behalf of the trustee; (2) that the defendants had entered into the Brown leases as a fraud on the prospective purchasers of the beneficial interest at the public sale; (3) that the Brown leases were executed in violation of the restraining order in the Bauer case. Brown answered the complaint, the Ginsburgs answered and asked to be dismissed and T.B. & Z. moved to dismiss. Brown also filed a counterclaim which sought a declaration that the leases were valid and he also sought related injunctive relief.

On May 10, 1976, Bezin moved for partial summary judgment based on his claim that T.B. & Z. lacked authority to execute the Brown leases on behalf of the trustee. Attached to this motion as an exhibit was a letter dated April 23, 1973, from Bauer, then a beneficiary of the trust, to the trustee attempting to revoke the power of direction held by Harold Ginsburg. Also attached to Bezin's motion was the transcript of the deposition testimony of Harry Leadingham, an employee of T.B. & Z. who signed the Brown leases on behalf of T.B. & Z. On appeal the defendants vigorously contest the propriety of considering the Leadingham deposition, taken by Bezin in the case of Brown v. Milano (75 MI-749978), a forcible detainer action involving one of the stores in the trust property. Bezin had unsuccessfully attempted to intervene in this forcible detainer case.

Brown filed a verified answer to Bezin's motion for partial summary judgment alleging that Brown negotiated the leases at arms length and in good faith and for valuable consideration; that Bezin acquired the beneficial interest with knowledge of the Brown leases; and that Bezin had no standing to question the validity of leases executed prior to his purchase of the beneficial interest. The Ginsburgs also filed a sworn answer to Bezin's motion, supported by the affidavit of James Ginsburg. The purport of the answer affidavit and attached exhibits was that Bezin had no standing to challenge the validity of the Brown leases having bought the beneficial interest without warranties as to leases; that Bauer's unilateral attempt to revoke Harold Ginsburg's power of direction was ineffective; and that T.B. & Z. had authority to execute leases on behalf of the trustee. The Ginsburgs objected to the consideration of the Leadingham deposition because it had been taken in a separate lawsuit to which Bezin was not a party. They attached several letters to the trustee from Turner, Bailey and Zoll, Inc. regarding the latter's management duties and adopted all the pleadings on file with the court as part of their answer.

Thereafter both the Ginsburgs and Brown filed motions for summary judgment. Attached to the Ginsburg motion were a copy of the trust agreement and the first assignment of the beneficial interest. The Ginsburgs asserted that, when the Brown leases were executed Harold Ginsburg had the sole power of direction including control of the management and leasing of the premises; that the leases were executed by Brown; and that the security deposit required under the leases had been properly paid. They adopted all pleadings on file as part of their motion for summary judgment. The Ginsburgs requested that the leases be declared valid and that they be dismissed because they no longer had any interest in the land trust or the leases.

In response to the Ginsburg motion, Bezin replied that the leases were invalid and that no evidence was presented indicating defendants' authority to sign leases on behalf of the trustee. Bezin incorporated his own motion for partial summary judgment in response to the Ginsburg motion.

Brown's motion for summary judgment alleged essentially that the leases were validly executed and performed; that Brown paid the required security deposit; that Bezin consummated the purchase of the beneficial interest subject to the existing leases. Brown adopted all the pleadings on file in support of his motion and attached a copy of the terms of sale document signed by Bezin at the auction sale. Bezin's reply stated that the leases were invalid and incorporated his own motion for summary judgment as his answer.

On September 17, 1976, after considering the above pleadings and the deposition of Bezin which had been filed by the defendants, the trial court entered a judgment order denying Bezin's motion for partial summary judgment, granting the defendants' motions for summary judgment and...