Quinn v. Pullman Trust and Sav. Bank

• Decision Date: 11 September 1968
• Docket Number: Gen. No. 52149
• Parties: Howard B. QUINN and Charlotte J. Quinn, Plaintiffs-Appellants, v. PULLMAN TRUST AND SAVINGS BANK, a corporation, Defendant-Appellee.
• Court: United States Appellate Court of Illinois

Page 791

240 N.E.2d 791

98 Ill.App.2d 402

Howard B. QUINN and Charlotte J. Quinn, Plaintiffs-Appellants, v. PULLMAN TRUST AND SAVINGS BANK, a corporation, Defendant-Appellee.

Gen. No. 52149.

Appellate Court of Illinois, First District.

Sept. 11, 1968.

Samuel E. Hirsch, Chicago, for plaintiffs-appellants.

Wildman, Harrold, Allen & Dixon, Thomas D. Allen, of counsel, Chicago, for defendant-appellee.

CRAVEN, Justice.

This is an appeal from a judgment of the circuit court of Cook County entered on motion for summary judgment by defendant against an amended complaint by plaintiffs as beneficial owners of real estate in Cook County which was held by defendant-bank as trustee under land trusts created by plaintiffs.

Plaintiffs, after creating the land trusts of real estate with defendant as trustee, borrowed from defendant $175,000, evidenced same by a 90-day note, and pledged an assignment of their beneficial interests of the trusts as security for the loan. Plaintiffs contend the written instruments of assignment constituted second real estate mortgages. An assignment of rents, issues and profits from the properties also was made as part of the pledge. The note contained a provision giving defendant-bank payee the power to sell the pledged property, without advertisement, demand of payment or notice, at public or private sale or sales, in case the note or any liability of the makers was not paid at maturity. It permitted the payee or assigns to purchase and provided that the net proceeds, after the sale expenses, be applied on the liabilities of the makers and the surplus, if any, paid to the makers.

Upon failure of plaintiffs to pay the note when due, the bank sold the beneficial interests in the six trusts after posting three public notices of the sale for one week. Plaintiff Howard B. Quinn and his attorney were present at the sale. Defendant-bank purchased the beneficial interests for the full amount of the indebtedness and later sold them to third parties.

Plaintiffs filed suit claiming the instruments constituted a mortgage, that the sale of the beneficial interests was a strict foreclosure of real estate wherein the statutory provisions for foreclosure were not followed, and prayed for an accounting of all sums received from the sales. Defendant filed a motion for summary judgment, which the trial court granted, and entered judgment for defendant.

The agreements with the bank transferring the real estate to the bank were in the usual form of land trusts, providing that the rights of the beneficiaries were 'deemed to be personal property, and may be assigned and transferred as such.' Illinois courts have for some time recognized the creation of the so-called 'land trusts.' Under such trusts the trustee holds legal and equitable title to real estate subject to full powers of direction and control in the trust beneficiaries. The trustee has duties to deal with the real estate on direction of the beneficiaries, and at the end of the trust period specified to sell any property remaining in the trust and divide the proceeds among the beneficiaries.

The interest of the beneficiaries of the trusts is personal property and the Statute of Uses does not apply to land trusts. Chicago Title & Trust Co. v. Mercantile Trust & Sav. Bank, 300 Ill.App. 329, 20 N.E.2d 992. Whether a merger of the legal and equitable estates results depends upon the intention of the parties as set forth in the trust agreement. Equity will prevent or permit a...