Mercantile All-In-One Loans, Inc. v. Menna

• Decision Date: 22 August 1978
• Docket Number: No. 77-583,ALL-IN-ONE,77-583
• Citation: 380 N.E.2d 944,20 Ill.Dec. 735,63 Ill.App.3d 931
• Parties: , 20 Ill.Dec. 735 MERCANTILELOANS, INC., Plaintiff-Separate-Appellant, v. Albert MENNA et al., Defendants-Petitioners-Appellees, v. Frank SKACH and Paul B. Javaras, Respondents-Appellants.
• Court: United States Appellate Court of Illinois

Page 944

380 N.E.2d 944

63 Ill.App.3d 931, 20 Ill.Dec. 735

MERCANTILE ALL-IN-ONE LOANS, INC., Plaintiff-Separate-Appellant, v. Albert MENNA et al., Defendants-Petitioners-Appellees, v. Frank SKACH and Paul B. Javaras, Respondents-Appellants.

No. 77-583.

Appellate Court of Illinois, First District, Second Division.

Aug. 22, 1978.

Philip S. Aimen, Chicago, for plaintiff-separate-appellant.

Stanley M. Cahn and Clarence K. Graves, Chicago, for respondents-appellants.

Sneider & Troy, Chicago (Richard J. Troy, Chicago, of counsel), for defendants-petitioners-appellees.

DOWNING, Justice:

This is an appeal pursuant to Supreme Court Rule 304(b)(3) ( Ill.Rev.Stat.1975, ch. 110A, par. 304(b)(3)) from the vacating of a decree of foreclosure and sale under the provisions of section 72 of the Civil Practice Act (Ill.Rev.Stat.1975, ch. 110, par. 72). The issues presented on appeal are: (1) whether the court erred in finding the affidavit for service by publication defective on its face, thus depriving the court of jurisdiction over the defendants and rendering the decree of foreclosure and sale void; (2) whether the court erred in ordering the sale to third party purchasers vacated and set aside; and (3) whether the court erred in its denial of a motion for an evidentiary hearing on the factual issues raised by the pleadings.

On July 3, 1974, Mercantile All-In-One Loans, Inc. (hereinafter plaintiff) filed suit in the circuit court of Cook County to foreclose a second mortgage and sell certain property in Glenview, Illinois, naming Albert and Ann Menna (hereinafter defendants) as defendants. ¹

Summons was issued on July 5, 1974 and was placed with the sheriff of Cook County for service on July 8, 1974.

On July 19, 1974, the summons was returned, stamped "not found," and noted as follows:

"Unable to contact after several attempts Will not answer the door 2 cars in drive 73 Buick Electra G54671 and 73 or 74 Pont G54670"

On July 31, 1974, an affidavit for service by publication was filed. This affidavit was executed by plaintiff's attorney and was notarized on July 8, 1974. The words "Unknown Owners" were printed in black ink and the affidavit was signed in black ink by plaintiff's attorney. All other writing on the affidavit was in blue ink and recited that upon diligent inquiry, the place of residence of defendants, Albert and Ann Menna, could not be ascertained. It listed their last known place of residence as 1912 Robin Crest Lane, Glenview, Illinois.

On August 14, 1974, a copy of the publication notice as it appeared in the Chicago Daily Law Bulletin on August 5, August 12, and August 19, 1974, was mailed by the clerk of the circuit court of Cook County to defendants, and the clerk's certificate of mailing this notice to defendants was filed with the court. This notice was never returned by the United States Post Office.

Upon failure of defendants to appear or plead, an order of default was entered on September 11, 1974. On the same date, the trial court entered a decree of foreclosure wherein it found the defendants were served by publication notice in a manner and form as required by law, that the court had jurisdiction of the subject matter and of the parties, and that the total amount due plaintiff was $4,914.12.

Pursuant to the decree, a sheriff's sale was held on October 15, 1974, at which John Skach and George Javaras (hereinafter respondents) purchased the subject property for $5,112.00. Notice of this sale had been published in the Chicago Daily Law Bulletin. The sheriff's report of sale and distribution was approved by the court on October 16, 1974.

No redemption having been made within the time prescribed in the foreclosure decree, a Sheriff's Deed to the property was issued to respondents. Subsequently, on October 14, 1975, the Registrar of Titles of Cook County issued an owners duplicate certificates of title to respondents.

On November 17, 1975, defendants filed a petition to vacate the decree of foreclosure and sale pursuant to section 72 of the Civil Practice Act. (Ill.Rev.Stat.1975, ch. 110, par. 72.) Both plaintiff and respondents filed motions to dismiss.

On March 24, 1976, defendants filed an amended section 72 petition which alleged that they had no knowledge of the foreclosure proceedings until October 27, 1975, when they received a notice of respondents' petition for a writ of assistance; that plaintiff attempted personal service on defendants only once on July 19, 1974, which showed a lack of due diligence; that at the time the decree was entered, defendant Albert Menna was under a mental disability which was unknown to the court but was known or should have been known to plaintiff since some of the payments on the note came from a disability insurance policy; that plaintiff tried to hide the foreclosure proceedings from defendants by failing to join or inform First Federal Savings and Loan Assn., the holder of the first mortgage, of the proceedings, and by failing to inform defendants of the proceeding when plaintiff talked to defendant Ann Menna on the telephone in May 1974; that it was unknown to the court that defendants' equity in the subject property was in excess of $50,000, and thus the sale to respondents for $5,112.00 was grossly inadequate; and that defendants had tendered respondents the amount they had paid plus interest. ²

On April 14, 1976, respondents filed a motion to dismiss defendants' amended petition relying on section 72(5) which protects the rights of third party purchasers, not parties to the original action, who purchased property in reliance upon a court decree unless a lack of jurisdiction affirmatively appears from the record proper. Ill.Rev.Stat.1975, ch. 110, par. 72(5).

On April 26, 1976, plaintiff also filed a motion to dismiss defendants' petition alleging that due diligence was exercised in attempting to personally serve defendants; a notice of the foreclosure proceedings was mailed to defendants prior to the entry of the decree; that defendants hired an attorney in May 1974, after they learned or should have learned of the proceedings; and that defendants' tender of the purchase price plus interest to respondents contradicted defendants' own allegations that they had made the payments due plaintiff.

In a supplemental memorandum filed by defendants on July 2, 1976, defendants alleged that the court lacked jurisdiction to enter the foreclosure decree since the affidavit made by plaintiff for service by publication was false in that it was sworn to on July 8, 1974, the same date the summons was issued, but at a time when service had not yet been attempted.

On July 9, 1976, respondents filed a reply memorandum alleging that the affidavit was not falsely sworn since the affidavit was not filed until July 31, 1974, a time subsequent to the return of the summons and after diligent inquiry had been made. Therefore, on the date the summons was filed, it spoke the truth. Respondents further alleged that the improper date of July 8, 1974, appearing on the affidavit was a ministerial defect which does not affect the jurisdiction of the parties and subject matter, especially insofar as a third party is involved who purchased the property after the decree of foreclosure was entered with its finding of jurisdiction over defendants.

On July 13, 1976, the Honorable Walter P. Dahl orally granted defendants' section 72 petition to vacate the decree of foreclosure and sale. The trial court stated that under section 72(5) there was a very narrow basis upon which he could vacate the decree when there has been a sale to a bona fide purchaser, and that the only basis on which he could do anything was if a jurisdictional error appeared on the face of the record. The trial court found that a jurisdictional error did exist and gave the following reason:

"The sheriff, as an officer of the court, has to make and attempt to procure service. It is only after some inquiry like that is made by an officer that you can then say on the face of the record, there has been diligent inquiry made; there has been an attempt to make service; and we cannot find the defendant. Then you publish. * * * I say on the face of this record, it is clear that anybody looking at it could have said, 'Well, there was no attempt to make any service of summons on these people here. There was an affidavit filed before the summons was issued."

The trial court went on to state the following:

"There is really no question that the law is clear that the Appellate Courts of our State have to an extreme degree protect (Sic ) the rights of third-party purchasers at judicial sales, but the facts in this case are pretty clear that the third party purchasers in this sale can in no way be injured."

On February 10, 1977, plaintiff, having been granted leave by the trial court, filed newly discovered evidence which consisted of an affidavit by an employee of Chicago Law Bulletin Company, who stated that at the time plaintiff's attorney first delivered his affidavit, only the words "Unknown Owners," plaintiff's attorney's signature, the seal of notary public, and the date of July 8, 1974 appeared on the affidavit. Then on July 31, 1974, plaintiff's attorney instructed affiant to insert defendants' names and address on the affidavit. Plaintiff's attorney then filed this affidavit on July 31, 1974 with the clerk of the circuit court of Cook County. Plaintiff's attorney admitted that he should have reaffirmed or had the affidavit renotarized. At the time of this hearing, the case had been reassigned to the Honorable Raymond K. Berg, who denied respondents' motion for reconsideration and adopted Judge Dahl's oral ruling of July 13, 1976.

The record indicated that prior to this time, on April 28, 1975, the chancery division of the circuit court of Cook County issued an announcement to all lawyers handling mortgage foreclosures concerning the signing of affidavits for publication before they have...