M. Ecker & Co. v. LaSalle Nat. Bank

• Decision Date: 13 December 1994
• Docket Number: No. 1-93-4160,1-93-4160
• Citation: M. Ecker & Co. v. LaSalle Nat. Bank, 645 N.E.2d 335, 268 Ill.App.3d 874, 206 Ill.Dec. 330 (Ill. App. 1994)
• Parties: , 206 Ill.Dec. 330 M. ECKER & CO., Plaintiff, v. LaSALLE NATIONAL BANK, as Trustee, et al., Defendants. (Ken Lee Hardware Company, Counterplaintiff-Appellant; Inter-American Insurance Company, Counterdefendant-Appellee).
• Court: Appellate Court of Illinois

Page 335

645 N.E.2d 335

268 Ill.App.3d 874, 206 Ill.Dec. 330

M. ECKER & CO., Plaintiff, v.LaSALLE NATIONAL BANK, as Trustee, et al., Defendants. (Ken Lee Hardware Company, Counterplaintiff-AppellantInter-American Insurance CompanyCounterdefendant-Appellee).

No. 1-93-4160.

Appellate Court of Illinois First District, Second Division.

Dec. 13, 1994.

Much, Shelist, Freed, Denenberg & Ament, P.C., Chicago (Arthur E. Rosenson and Wendy B. Kahn, of counsel), for appellee.

Jonathan D. Moses, Chicago, for appellant.

Justice HARTMANdelivered the opinion of the court:

This appeal arises from a 1991 lawsuit filed by Inter-American Insurance Company(Inter-American) to foreclose a mortgage it held on property owned by a land trust with LaSalle National Bank as trustee(LaSalle Trust).Jackson/Green Limited Partnership(Jackson/Green) held the beneficial interest in the LaSalle Trust.Ken-Lee Hardware Company(Ken-Lee) countersued to foreclose a mechanic's lien that it recorded against the same property.Ken-Lee appeals the circuit court's order denying its motions for summary judgment and for leave to amend its counterclaim, and granting Inter-American's motion for partial summary judgment.Ken-Lee questions whether the court erred when it held, as a matter of law, that Ken-Lee's mechanic's lien was subordinate to Inter-American's mortgage lien, in improperly resolving an existing factual conflict by granting summary judgment to Inter-American, and in denying leave to amend its counterclaim.

On September 28, 1989, LaSalle Trust gave Inter-American a note and mortgage on real estate owned by the trust and located at 820W. Jackson Boulevard in Chicago (Jackson property).To further secure its obligations, LaSalle Trust assigned all rents and leases to Inter-American, but expressly prohibited it from collecting the rents unless and until a default occurred and Inter-American took possession of the premises.The mortgage did not permit Inter-American to possess, sell or manage the Jackson property nor did it convey title or any other ownership rights.On November 22, 1989, Inter-American recorded its mortgage on the Jackson property.

On March 12, 1990, Ken-Lee entered into a contract with TKO Construction Company(TKO), Jackson/Green's corporate general partner, to provide materials for renovating the building located on the Jackson property.TKO was the "construction manager" for the building and had exclusive authority to request and approve work under the contract.Pursuant to the contract, Ken-Lee supplied materials to the building until August 27, 1990, but stopped deliveries that day because it deemed payments amounting to $123,403.95 to be delinquent.

In late 1990, Arc Ventures (Arc), the building's major tenant, contacted Ken-Lee and requested that it complete delivery of certain goods promised in the contract.Ken-Lee agreed, provided that the deliveries were made directly to Arc and paid for by Arc.As a result, Ken-Lee made additional deliveries to Arc at the subject property from November 26, 1990 until July 29, 1991 without Jackson/Green's or TKO's knowledge or consent.

On May 17, 1991, LaSalle Trust and Inter-American entered into a settlement agreement when Jackson/Green defaulted on the mortgage note.Under the terms of the agreement, title to the Jackson property was transferred to American National Bank and Trust Company of Chicago.Inter-American Real Estate Holding Company held the beneficial interest.

On June 6, 1991, Ken-Lee filed a notice of mechanic's lien for $123,403.95 and designated August 27, 1990 as the date on which it completed performance under the contract.Ken-Lee never sought to amend this completion date in its notice of lien.On October 16, 1991, Inter-American filed suit to foreclose upon the mortgage.On July 27, 1992, Ken-Lee countersued to foreclose upon its mechanic's lien.In doing so, Ken-Lee again expressly designated August 27, 1990 as the date on which it completed performance.

Almost two years after it filed its notice of lien, on May 14, 1993, Ken-Lee moved for leave to file an amended counterclaim in order to allege that the date it completed work under the contract was July 29, 1991, when it made its final delivery to Arc, instead of August 27, 1990.Ken-Lee also moved for summary judgment on the proposed amended counterclaim, arguing that its lien, filed June 6, 1991, was filed within four months of the new date of completion and, under the Mechanics Lien Act (Act)(770 ILCS 60/0.01 et seq.(West 1992)), was superior to Inter-American's mortgage lien.Alternatively, Ken-Lee contended that Inter-American was an owner of the Jackson property and, thus, its mechanic's lien was superior even if it completed all work under the contract on August 27, 1990 because, under section 60/7 of the Act(770 ILCS 60/7(West 1992)), a mechanic's lien can be filed up to two years after completion of performance and still be enforceable against an owner of the property.

The circuit court denied Ken-Lee's motion to amend its counterclaim, finding it untimely and unfairly prejudicial.The court also denied Ken-Lee's motion for summary judgment and granted Inter-American's motion for partial summary judgment, ruling that Inter-American's mortgage lien had priority over Ken-Lee's mechanic's lien.Ken-Lee timely filed this appeal.

I.

As a preliminary matter, because Ken-Lee claims the circuit court erred in denying its motion for summary judgment, Inter-American asserts that the denial of Ken-Lee's summary judgment motion is neither final nor appealable.Where, as here, the court granted Inter-American's motion for summary judgment at the same time it denied Ken-Lee's motion, the resulting order is final because it entirely disposes of the litigation.Duldulao v. St. Mary of Nazareth Hospital Center(1987), 115 Ill.2d 482, 494, 106 Ill.Dec. 8, 505 N.E.2d 314.

II.

Ken-Lee first argues that the circuit court erred in denying its motion for summary judgment and finding its mechanic's lien subordinate to Inter-American's mortgage lien because Inter-American was an owner of the Jackson property for purposes of the Act since the mortgage agreement assigned Inter-American all rents and leases.As a result, Ken-Lee concludes that under the Act its rights are superior to Inter-American's since its lien was filed within two years of its last date of performance.Inter-American replies that it was merely a mortgagee of the Jackson property and never an "owner" within the meaning of the Act.

This court must determine de novo whether the record supports the conclusion that no genuine issue of material fact exists in a summary judgment proceeding.(Larson v. Decatur Memorial Hospital(1992), 236 Ill.App.3d 796, 176 Ill.Dec. 918, 602 N.E.2d 864;Myers v. Health Specialists, S.C.(1992), 225 Ill.App.3d 68, 167 Ill.Dec. 225, 587 N.E.2d 494.)The entire record must be evaluated to determine whether such facts exist.(Webber v. Armstrong World Industries, Inc.(1992), 235 Ill.App.3d 790, 175 Ill.Dec. 889, 601 N.E.2d 286.)Genuine issues of material fact cannot be resolved by means of summary judgment.(Vajda v. Arthur Andersen & Co.(1993), 253 Ill.App.3d 345, 191 Ill.Dec. 965, 624 N.E.2d 1343.)Where there are no disputed fact questions, nor differing inferences which may be drawn from undisputed facts, summary judgment is proper.Larson, 236 Ill.App.3d at 800-01, 176 Ill.Dec. 918, 602 N.E.2d 864;First State Bank of Round Lake v. Busse(1984), 126 Ill.App.3d 577, 81 Ill.Dec. 939, 467 N.E.2d 1061;LaSalle National Bank v. Illinois Housing Development Authority(1986), 148 Ill.App.3d 158, 161, 101 Ill.Dec. 373, 498 N.E.2d 697.

Under section 60/1 of the Act, a mechanic's lien extends to an estate in fee, for life, for years, or any other estate or any right of redemption, or other interest which the owner may have at the time of making such contract or may subsequently acquire.(770 ILCS 60/1(West 1992).)Accordingly, the "owner," as used in the Act, means the owner of any interest in the land.(Sorg v. Crandall(1908), 233 Ill. 79, 84, 84 N.E. 181.)The holder of an equitable interest in the land, including a beneficiary under a land trust, is an "owner" within the meaning of the Act.Dunlop v. McAtee(1975), 31 Ill.App.3d 56, 59, 333 N.E.2d 76.

In the instant case, Inter-American was not an "owner" within the meaning of the Act because it did not hold either legal or equitable title as a mortgagee of the Jackson property.A mortgage does not convey a legal estate to the mortgagee but merely gives the holder of the mortgage a lien on the property.Board of Directors of Olde Salem Homeowners' Association v. Secretary of Veterans Affairs(1992), 226 Ill.App.3d 281, 288, 168 Ill.Dec. 361, 589 N.E.2d 761, appeal denied(1992), 146 Ill.2d 623, 176 Ill.Dec. 793, 602 N.E.2d 447.

Nonetheless, Ken-Lee maintains that this particular mortgage created an "ownership" interest because it contained an assignment of rents provision.Consequently, Ken-Lee presents a question of first impression: whether an assignment of rents clause in a mortgage conveys an interest in property such that the mortgagee's status changes from secured creditor to owner under the Act.The assignment of rents clause at issue here provides, in pertinent part, as follows:

"Assignment of Rents and Leases

19.To further secure Mortgagor's Obligations, Mortgagor sells, assigns and transfers to the Mortgagee all the rents, issues and profits now due and which may become due under or by virtue of any lease, whether written or verbal, or any letting of, or of any agreement for the use or occupancy of the premises or any part of the premises, which may exist or which may be entered after this date or which may be made or agreed to by the Mortgagee under the powers granted in this Mortgage, it being the intention to establish an absolute transfer and assignment of all of such leases and agreements, and all the proceeds of...