Frankel v. Otiswear, Inc.
| Decision Date | 27 June 1991 |
| Docket Number | No. 1-89-3534,1-89-3534 |
| Citation | 216 Ill.App.3d 204,576 N.E.2d 955,160 Ill.Dec. 1 |
| Parties | , 160 Ill.Dec. 1 Kathy FRANKEL, Plaintiff-Appellant, v. OTISWEAR, INC., an Illinois corporation and Skokie Federal Savings and Loan Association, Defendants-Appellees. |
| Court | United States Appellate Court of Illinois |
Murphy & Boyle Chartered (Robert D. Boyle and Morgan F. Murphy III, of counsel), and Mark R. Valley, Chicago (Mark R. Valley, of counsel), for plaintiff-appellant.
Wm. Carlisle Herbert, E. Glenn Rippie, Karen A. Dort, Hopkins & Sutter, Chicago, for defendant-appellee Resolution Trust Corp., having been substituted for Skokie Federal Sav. and Loan Ass'n.
Plaintiff, Kathy Frankel, appeals the order of the circuit court of Cook County denying her motion for a rehearing pursuant to section 2-1203 of the Code of Civil Procedure (the Code) (Ill.Rev.Stat.1987, ch. 110, par. 2-1203), and her alternative request to file a fourth amended complaint against defendants, Otiswear, Inc. and Skokie Federal Savings and Loan Association. In addition, plaintiff challenges the trial court's dismissal of her third amended complaint pursuant to section 2-615 of the Code. Ill.Rev.Stat.1987, ch. 110, par. 2-615.
The following issues are before this court for review: (1) Whether this court has jurisdiction over this cause; (2) whether plaintiff's claims are barred by collateral estoppel; (3) whether the trial court erred when it dismissed count II of plaintiff's third amended complaint that prayed for the court to impose a constructive trust on the treasury note; (4) whether the trial court properly dismissed count XI of plaintiff's third amended complaint which was an action for replevin of the treasury note; (5) whether the trial court erred when it dismissed count XII of plaintiff's third amended complaint for negligence against Skokie Federal Savings and Loan Association; and (6) whether plaintiff has waived her right to assert allegations that Skokie Federal Savings and Loan Association violated suretyship laws, whether its security interest in the collateral was perfected, and whether renewals of the treasury note by it may be maintained pursuant to the hypothecation agreement.
We affirm.
On July 21, 1986, plaintiff executed a hypothecation agreement which assigned a treasury note to Otiswear, Inc. (Otiswear), in order to allow it to pledge the treasury note as collateral for loans. A hypothecation agreement is an agreement whereby one party pledges specific property as collateral or security for a debt. The lender is not given title to the pledged property; however, the lender may sell the pledged property upon the debtor's default. Black's Law Dictionary 669 (5th ed. 1979).
The hypothecation agreement states, in pertinent part:
Contemporaneous with the signing of the hypothecation agreement, Otiswear signed a treasury note due on June 30, 1987, in the Approximately 1 year after obtaining the loan from the First National Bank of Morton Grove, Otis asked Skokie Federal Savings and Loan Association (Skokie Federal) to refinance the debt of Otiswear. Unbeknownst to plaintiff, Otis used the hypothecation agreement to obtain a $150,000 line of credit from Skokie Federal. Otis agreed to maintain the treasury note as collateral for the loan. A majority of the proceeds of the loan from Skokie Federal were paid to the First National Bank of Morton Grove to close out its loan. Then, the First National Bank of Morton Grove transferred its interest in the treasury note to Skokie Federal. After the treasury note matured, Skokie Federal purchased a substitute treasury note from the proceeds of the treasury note identified in the hypothecation agreement.
[160 Ill.Dec. 3] amount of $92,000, payable to the First National Bank of Morton Grove. Pursuant to the hypothecation agreement, plaintiff pledged the treasury note as collateral for a loan to Otiswear. Plaintiff was given stock in Otiswear by its owner, Steven Otis, in consideration for her execution of the hypothecation agreement.
Plaintiff was not informed of the aforementioned transactions involving Skokie Federal. Otis later defaulted on his commercial line of credit at Skokie Federal. After plaintiff's relationship with Steven Otis deteriorated, plaintiff filed suit against him, Otiswear, and Skokie Federal in an effort to recover the treasury note. However, Steven Otis is no longer a defendant in this action.
On March 9, 1988, plaintiff filed a complaint for a writ of mandamus, and a complaint for permanent and preliminary injunctive relief. The subject matter of the complaint was the treasury note owned by plaintiff.
On April 8, 1988, plaintiff filed an amended complaint which included, inter alia, count I for the imposition of a constructive trust on the treasury note, count II for replevin of the treasury note against Skokie Federal, count IV for negligence, and count V against Skokie Federal for conversion. Skokie Federal filed an answer to the amended complaint and a counterclaim against Steven Otis. In paragraph 5 of Skokie Federal's counterclaim, it alleged that Otis represented that he was the sole owner of the treasury note free from any lien, security interest, encumbrance, or claim.
On June 24, 1988, the trial court granted defendants' motion to strike count I of the amended complaint and granted plaintiff 14 days to file an amended pleading. This order made no rulings on any other issues raised in defendants' motion.
On July 12, 1988, plaintiff filed a second amended complaint, to which Skokie Federal filed an answer. On March 27, 1989, the trial court dismissed plaintiff's second amended complaint.
On April 21, 1989, plaintiff filed a third amended complaint. Count II prayed for the imposition of a constructive trust on the treasury note, count XI was an action for replevin of the treasury note, and count XII was a complaint for negligence against Skokie Federal.
Skokie Federal then filed a motion to dismiss pursuant to section 2-615 of the Code. (Ill.Rev.Stat.1987, ch. 110, par. 2-615.) Skokie Federal based its motion to dismiss upon allegations that the third amended complaint failed to state causes of action, that the hypothecation agreement barred any claim for wrongful possession, and that it owed no duty to plaintiff. On September 27, 1987, the trial court dismissed plaintiff's third amended complaint with prejudice.
The trial court made the following ruling:
"It is not apparent from what has been pled[ ] * * * that this litany of grievances * * * amounts to a fraudulent scheme when the events are extracted from a relationship three years in duration.
* * * There is no allegation that the sole purpose of all of these events that are listed in this complaint were toward the purpose of manipulating the hypothecated agreement, and there is no suggestion that the sole purpose of the representations Additional doubt as to the existence of any scheme arises from the recent disclosure that the hypothecation agreement was executed in exchange for an agreement for stock in the company. Simply stated, the promise to pay back, the note being used as collateral, was a promise of future conduct, which cannot constitute a material misrepresentation in support of alleged fraud. The facts alleged here do not demonstrate any fraudulent scheme. * * * There is no constructive trust which can arise from this scattershot allegation because no fraud has been established. There is no constructive trust because the hypothecation agreement is clear and unambiguous on its face, and the Plaintiff cannot be given credit for not knowing what she clearly had known when she signed it.
[160 Ill.Dec. 4] were in aid of any illegal contract.
For all of these reasons, Defendant's motion to strike and dismiss the complaint with prejudice is granted."
Plaintiff timely filed a motion for a rehearing pursuant to section 2-1203 of the Code (Ill.Rev.Stat.1987, ch. 110, par. 2-1203), which sought to vacate the trial court's dismissal order entered on September 27, 1989, or, alternatively, to grant plaintiff leave to file a fourth amended complaint on November 28, 1989. On November 28, 1989, the trial judge denied plaintiff's motion. A timely notice of appeal was filed on December 22, 1989.
On February 1, 1990, the Office of Thrift Supervision placed Skokie Federal into receivership and appointed the Resolution Trust Corporation (the RTC) its receiver. The RTC as Skokie Federal's receiver is now a proper defendant in this action.
OPINIONDefendants have correctly noted that plaintiff failed to include a statement of the jurisdictional basis for this appeal in her brief as required by Illinois Supreme Court Rule 341(e)(4)(i), which reads as follows:
"(e) The appellant's brief shall contain the following parts in the order named:
* * * * * *
(4) A statement of jurisdiction:
(i) In a case appealed * * * as a matter of right from the Appellate Court, a...
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