Willard v. Northwest Nat. Bank of Chicago

• Decision Date: 27 September 1985
• Docket Number: No. 83-1532,83-1532
• Citation: 92 Ill.Dec. 92,484 N.E.2d 823,137 Ill.App.3d 255
• Parties: , 92 Ill.Dec. 92, 42 UCC Rep.Serv. 1179 William WILLARD and Pauline Willard, Plaintiff-Appellant, v. NORTHWEST NATIONAL BANK OF CHICAGO, and Donald Wiedemann, Defendants-Appellees.
• Court: United States Appellate Court of Illinois

Page 823

484 N.E.2d 823

137 Ill.App.3d 255, 92 Ill.Dec. 92,

42 UCC Rep.Serv. 1179

William WILLARD and Pauline Willard, Plaintiff-Appellant, v. NORTHWEST NATIONAL BANK OF CHICAGO, and Donald Wiedemann Defendants-Appellees.

No. 83-1532.

Appellate Court of Illinois First District, Fifth Division.

Sept. 27, 1985.

Rehearing Denied Nov. 6, 1985.

Jeffrey Strange, Northbrook, for plaintiff-appellant.

Earl Weiss, Levin & Rosen, Ltd., Skokie, for defendant-appellee Donald Wiedemann.

David A. Kallick, Hurley & Kallick, Ltd., Northbrook, for defendant-appellee Northwest Nat. Bank of Chicago.

LORENZ, Justice:

This is an appeal from three orders which disposed of consolidated actions. Plaintiffs William and Pauline Willard filed their complaint against Northwest National Bank seeking to void the Bank's sale of their residence; later, Donald Wiedemann filed a petition for forcible detainer against the Willards, and the circuit court consolidated the actions. The Willards, appeal, first, from an order dismissing their complaint for failure to state a cause of action against the Bank, second, from the entry of summary judgment in favor of Wiedmann based on the prior dismissal, and third, from the award of possession to Wiedemann. Facts pertinent to our disposition follow.

In 1972, William Willard conveyed his residence into a land trust, naming Northwest National Bank as trustee and himself as beneficiary. On the same day, he assigned his beneficial interest to Northwest as security for a loan of $10,000. Although William and Pauline had been married for three years, Pauline Willard did not sign the deed in trust, nor the assignment, nor has she since signed any document relating to the property or the trust. By 1978, William owed Northwest more than $50,000 and the full amount was secured by an assignment of the beneficial interest in the trust. In 1979, William defaulted on the loan and sued Northwest for usury.

In November of 1981, Northwest notified William that on December 15, 1981, it would sell the assignment of beneficial interest pursuant to section 9-504 of the Illinois Uniform Commercial Code. William filed a motion in the usury case seeking to enjoin the sale, but after a hearing on December 14th, the trial court denied the motion for a preliminary injunction. William filed a notice of appeal, and on December 15, 1981, the appellate court stayed the sale. However, the appellate court vacated its stay on January 11, 1982. On January 22, Northwest sold the beneficial interest in the trust to Norman Oyen for $72,000. Oyen, as beneficiary, directed Northwest, as trustee, to convey the property from the trust; later, Oyen conveyed the property to Robert Krumlauf, and Krumlauf conveyed it to Wiedemann.

In February of 1982, William Willard filed for protection in bankruptcy. The Willards filed the instant cause in April of 1982. On June 9th, Wiedemann served a demand for possession, and the next day, Wiedemann filed his forcible detainer action. In September, the bankruptcy court modified its stay so as to permit the forcible detainer action to proceed. As noted earlier, the circuit court consolidated the forcible detainer into this case.

The Willards alleged in counts one and two of their complaint that Northwest was a fiduciary with respect to William Willard, and that Northwest breached its duty of loyalty. Count three recited that Northwest failed to notify William of the "January 27 [sic], 1982" sale, in violation of section 9-504 of the Illinois Uniform Commercial Code. The Willards stated in count four that Pauline Willard had not signed the deed in trust, and so the trust, the assignments of beneficial interest, and the sale were void by virtue of Pauline's homestead right.

In its motion to dismiss, Northwest stated: that the complaint failed to allege facts which would establish that Northwest had a fiduciary duty; that under Public Act 82-891, Northwest did not breach any fiduciary duty; that Northwest fully complied with the Illinois Uniform Commercial Code in conducting the sale of the beneficial interest; that Pauline never held title to the property and so had no homestead right; that the Willards were not entitled to an injunction because Northwest no longer had any interest in the property; and that the Willards failed to allege damages.

On March 24, 1983, the trial court held that the Willards failed to state a cause of action, and dismissed Northwest from the case. The order specified that "there was no violation" of section 9-504 of the Commercial Code, and that Pauline Willard "had no Homestead right in the property". On April 12, the trial court granted Wiedemann's motion for summary judgment against the Willards based on the prior dismissal. After a hearing on June 13, 1983, the trial court awarded possession to Wiedemann. The Willards appeal.

OPINION

Initially, we observe that careless practice has unnecessarily complicated this case. Defendant Northwest failed to specify whether its motion to dismiss was brought under section 2-615 or section 2-619 of the Code of Civil Procedure. The differences between the two sections are important: 2-615 is limited to the pleadings, whereas 2-619 allows for the consideration of affirmative matters which would defeat a claim. (See Ill.Rev.Stat.1983, ch. 110, pars. 2-615 and 2-619.) We have criticized joint analysis of these sections in the past (see Davis v. Weiskopf (1982), 108 Ill.App.3d 505, 64 Ill.Dec. 131, 439 N.E.2d 60 and cases cited therein), and some of the reasons for our criticism appear here. The trial court considered factual matters in deciding the motion, but the order of dismissal purports to find that plaintiffs failed to state a cause of action. As a result, the parties reargue every argument raised below as if it were dispositive. Furthermore, much of the factual matter was improper even under 2-619. Few of the facts appear in affidavits as required; instead, the assertions and counter-assertions of the attorneys are treated as fact. In order to decide the merits of this appeal, we have reduced the briefs and record to their essentials, and have applied principles appropriate to the procedural posture of the case.

A motion to dismiss accepts as true all well-pleaded facts, and should be granted only where "it clearly appears that no set of facts can be proved which will entitle plaintiffs to recover." (Fitzgerald v. Chicago Title & Trust Co. (1978), 72 Ill.2d 179, 187, 20 Ill.Dec. 581, 380 N.E.2d 790.) We construe pleadings liberally to see that substantial justice is done between the parties. People ex rel. Scott v. College Hills Corp. (1982), 91 Ill.2d 138, 145, 61 Ill.Dec. 766, 435 N.E.2d 463.

Plaintiff William Willard first contends that he stated a cause of action for breach of fiduciary duty in counts one and two of his complaint. We agree that plaintiff stated a cause of action under Home Federal Savings & Loan Association v. Zarkin (1982), 89 Ill.2d 232, 59 Ill.Dec. 897, 432 N.E.2d 841. However, any cause of action for breach of fiduciary duty under these circumstances is barred by Public Act 82-891 (the Act). (Ill.Rev.Stat.1983, ch. 148, pars. 81-84.) The Act provides that the trustee of a land trust shall not be considered to have breached any fiduciary duty by dealing with the trust property as a creditor. (Ill.Rev.Stat.1983, ch. 148, pars. 82-84.) Accordingly, we affirm the dismissal of counts one and two of plaintiff's complaint.

Plaintiff contends that the Act is unconstitutional because it retroactively destroys a vested right and because it amounts to special legislation. In Sanelli v. Glenview State Bank (1985), 108 Ill.2d 1, 90 Ill.Dec. 908, 483 N.E.2d 226 (opinion on rehearing), our supreme court examined Public Act 82-891, and held that retroactive application was constitutional. We consider Sanelli to be dispositive of plaintiff's arguments concerning retroactivity.

With respect to special legislation, our supreme court has set forth this standard: "If there is a reasonable basis for differentiating between the class to which the law is applicable and the class to which it is not, the General Assembly may constitutionally classify persons and objects for the purpose of legislative regulation or control, and may pass laws applicable only to such persons or objects." (Illinois Coal Operators Association v. Pollution Control Board (1974), 59 Ill.2d 305, 311, 319 N.E.2d 782, quoting People ex rel. County of Du Page v. Smith (1961), 21 Ill.2d 572, 578, 173 N.E.2d 485.) The legislature found that land trustees frequently loan money to their beneficiaries, accepting the trust property as security, and that land trustees would be encouraged to make such loans if they were free from fiduciary duties. (Ill.Rev.Stat.1983, ch. 148, par. 81.) We cannot say that this is an unreasonable basis for treating land trustees as a separate class, and we conclude that the statute is constitutional.

Plaintiff contends that count three of his complaint stated a cause of action for violation of the Uniform Commercial Code. He argues that section 9-504(3) of the Code imposed a duty upon defendant Northwest to furnish reasonable notice of the January 22 sale of collateral. Plaintiff admits that he received notice of the December 15 date, but he maintains that Northwest was required to notify him of the new date of sale after the appellate stay was vacated. Defendant Northwest responds that notice of the December 15 date was adequate because that notice warned, "The bank shall have the right to adjourn the sale before, during or after commencement of the bidding." Defendant also argues that plaintiff failed to allege any injury from the manner in which the sale was conducted, and would not be entitled to relief in any case, because the sale was conducted in a commercially reasonable manner.

Section 9-504(3) of the Uniform Commercial Code requires the secured party to send "reasonable notification of the time and...