Metropolitan Life Ins. Co. v. American Nat. Bank and Trust Co.

• Decision Date: 29 November 1978
• Citation: 224 Ill.Dec. 511,288 Ill.App.3d 760,682 N.E.2d 72
• Parties: , 224 Ill.Dec. 511, 35 UCC Rep.Serv.2d 1037 METROPOLITAN LIFE INSURANCE COMPANY, a New York corporation, Plaintiff and Counterdefendant-Appellant, v. AMERICAN NATIONAL BANK AND TRUST COMPANY, As Trustee Under Trust Agreement Dated
• Court: United States Appellate Court of Illinois

Page 72

682 N.E.2d 72

288 Ill.App.3d 760, 224 Ill.Dec. 511,

35 UCC Rep.Serv.2d 1037

METROPOLITAN LIFE INSURANCE COMPANY, a New York corporation, Plaintiff and Counterdefendant-Appellant, v. AMERICAN NATIONAL BANK AND TRUST COMPANY, As Trustee Under

Trust Agreement Dated November 29, 1978 and known as Trust

No. 45275; Woodfield Hotel Limited Partnership, A Revoked

Illinois Limited Partnership; Woodfield Hotel Corporation,

A Dissolved Delaware Corporation; Boston Safe Deposit

Company Of Boston, A Massachusetts Corporation, As Trustee

of the U.S. West Master Trust; U.S. West Master Trust;

Interstate Hotels Corporation, A Delaware Corporation;

Jones Lang Wootton Realty Advisors, A New York Corporation,

Defendants (Bank One Chicago, N.A., Successor by Merger with

Bank One, LaGrange f/k/a First Illinois Bank & Trust,

Defendant and Counterplaintiff Intervenor-Appellee).

No. 1-96-1356.

Appellate Court of Illinois,

First District, Fifth Division.

May 2, 1997.

Timothy J. Patenode and Thomas J. Meier, Katten Muchin & Zavis, Chicago, for Appellant.

Paul M. Bauch, Edwin J. Reisinger, Bell Boyd & Lloyd; and Laurie K. Breitenstein, Chocago, for Appellee.

Justice SOUTH delivered the opinion of the court:

Appellant, Metropolitan Life Insurance Company (Met Life), appeals from an order of the circuit court of Cook County denying its cross-motion for summary judgment and granting appellee's, Bank One Chicago, N.A. (Bank One), motion for summary judgment.

On September 19, 1980, Met Life loaned $13,500,000 to the American National Bank and Trust Company of Chicago (Trustee). At that time, the Trustee held legal title to the real property, buildings and improvements now commonly known as the Woodfield Hilton Hotel, a 452-room hotel located at 3400 West Euclid Avenue, Arlington Heights, Illinois (the Hotel). George J. Ablah (Ablah) and the Magnum Hotel Corporation (Magnum) owned the beneficial interest in the land trust.

To secure the promissory note evidencing the loan, the Trustee executed a mortgage, assignment of rents, security agreement and Uniform Commercial Code (UCC-1) financing statement. To further secure the promissory note, Ablah and Magnum executed a security agreement. The security agreement granted Met Life a security interest in the hotel's existing and after-acquired furniture On or about May 3, 1985, Ablah and Magnum entered into an agreement to sell the hotel real property and personalty to USW Arlington Hotel Corporation (USW). On or about June 25, 1985, the sale agreement was amended to provide for the transfer of the hotel F & E to the Magnum Hotel Trust (Grantor Trust).

[224 Ill.Dec. 513] and equipment (F & E). Met Life perfected its security interest in the hotel F & E by filing UCC-1 financing statements with the Illinois Secretary of State's office.

Pursuant to the parties' security agreement, Ablah and Magnum had to obtain Met Life's authorization before the hotel could be sold. On June 28, 1985, after review of the sale agreement, Met Life consented to the sale by letter. On or about July 1, 1985, USW closed the purchase of the hotel, thereby acquiring ownership of the hotel real property and the hotel F & E. Subsequent to the sale, nearly all of the transferred F & E was replaced.

In February of 1987, USW established a $500,000 revolving line of credit with Bank One's predecessor, First Illinois Bank & Trust (First Bank), to cover taxes and insurance payments. To secure its obligations to First Bank, USW executed a series of security agreements granting First Bank a security interest in the hotel F & E.

On or about March 22, 1988, USW revoked and terminated the Grantor Trust and distributed the hotel F & E to the Woodfield Hotel Limited Partnership (the Partnership), its sole shareholder. USW then filed articles of dissolution, dissolving itself as a corporation.

Between 1990 and 1992, First Bank became Bank One. Bank One subsequently made new loans to the Partnership and required the Partnership to execute new security agreements. The last security agreement was executed on February 1, 1990. The 1990 security agreement granted Bank One a security interest in existing and after-acquired F & E. Bank One perfected its security interest by filing a UCC-1 financing statement on March 7, 1990.

In August of 1992, Bank One extended to the Partnership a new $500,000 revolving line of credit. To evidence the loan, the parties executed a business-purpose revolving promissory note (Promissory Note), a business loan agreement, a borrowing base addendum and a UCC-1 financing statement. Although the 1992 promissory note made reference to a 1992 security agreement, Bank One and the Partnership failed to execute a 1992 security agreement.

On December 1, 1992, the Partnership defaulted under Met Life's mortgage. On January 20, 1993, Met Life filed a complaint to foreclose its mortgage against the hotel's real property and personalty. On February 2, 1993, the Partnership stipulated to the entry of a decree of foreclosure and sale of the hotel real property and personalty.

On or about March 1, 1993, the Partnership defaulted under Bank One's 1992 promissory note. On March 25, 1993, Bank One moved to intervene in Met Life's foreclosure action. Upon intervention, Bank One filed a counterclaim asserting a prior security interest in the hotel F & E, and it requested the court to award Bank One the proceeds from the sale of the hotel F & E.

By agreement between Met Life and Bank One, the circuit court entered an order on April 1, 1993, that $500,000 of the proceeds from the sale of the hotel F & E shall be reserved for later determination of the validity and relative priority of the parties' liens. Thereafter, Met Life filed an amended complaint asking the circuit court to declare that its security interest in the hotel F & E was superior to Bank One's and to order the turn-over of the proceeds to Met Life. On April 6, 1993, Met Life purchased the hotel at public auction.

On October 18, 1995, Bank One filed a motion for summary judgment pursuant to section 2-1005(c) (735 ILCS 5/2-1005(c) (West 1994)). On December 13, 1995, Met Life filed a response to Bank One's motion and cross-motioned for summary judgment. On January 4, 1996, Bank One filed its reply to Met Life's response and cross-motion. On March 6, 1996, the circuit court granted Bank One's motion for summary judgment, denied Met Life's motion for summary judgment, and ordered Met Life to pay Bank One In denying Met Life's motion for summary judgment, the circuit court found that Met Life acquired a valid perfected security interest in the hotel F & E of the original owners, Ablah and Magnum. Nevertheless, Met Life lost its security interest when it consented to the transfer of the F & E to USW, through the Grantor Trust, in the consent letter. The circuit court found that it was not disputed that Met Life failed to obtain a new security agreement and file a new financing statement after the transfer of the hotel F & E. The circuit court also noted that since nearly all of the transferred F & E was replaced after 1985, it was impossible for Met Life to currently have an interest in the after-acquired F & E.

[224 Ill.Dec. 514] the $500,000 in proceeds reserved from the foreclosure sale of the hotel F & E.

In granting Bank One's motion for summary judgment, the circuit court found that although Bank One and the Partnership failed to execute a new security agreement in 1992, Bank One maintained a perfected security interest in the hotel F & E pursuant to its 1990 security agreement's dragnet clause. The circuit court found that the 1990 security agreement's dragnet clause remained in force because Bank One did not receive written notice of termination from the Partnership. Met Life appeals. We affirm in part, and reverse in part.

OPINION

As a preliminary matter, Bank One has requested that this court take judicial notice that Bank One has obtained a money judgment against the Partnership and that Bank One has a judgment lien upon the Partnership's assets. On August 27, 1996, Bank One filed a complaint against the Partnership alleging that the Partnership owed Bank One $450,000 and interest totaling $151,527.54 and further interest accruing at a per diem rate of $153.13. On November 13, 1996, a consent order was entered in the circuit court of Cook County in favor of Bank One and against the Partnership in the amount of $610,102.82.

This court may take judicial notice of public documents that are included in the records of other courts. NBD Highland Park Bank, N.A. v. Wien, 251 Ill.App.3d 512, 190 Ill.Dec. 713, 622 N.E.2d 123 (1993). Accordingly, Bank One's request that we take judicial notice that Bank One has obtained a money judgment against the Partnership and that Bank One has a judgment lien upon the Partnership's assets is granted.

Summary judgment is proper where "the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." 735 ILCS 5/2-1005(c) (West 1994). Summary judgment is to be granted only where the evidence, when construed most strongly against the moving party, establishes clearly and without doubt the movant's right to relief. Signal Capital Corp. v. Lake Shore National Bank, 273 Ill.App.3d 761, 210 Ill.Dec. 388, 652 N.E.2d 1364 (1995). Summary judgment is particularly appropriate where all parties file for summary judgment. Signal, 273 Ill.App.3d 761, 210 Ill.Dec. 388, 652 N.E.2d 1364. This court reviews the propriety of an order granting summary judgment de novo, independent of the circuit court's reasoning on the issues presented. Pagano v. Occidental Chemical Corp., 257 Ill.App.3d 905, 196 Ill.Dec. 24, 629 N.E.2d 569 (1994). "If, from a review of the pleadings and evidentiary material before the [circuit] court, [this court] determines that a material issue...