Wells Fargo Bank, N.A. v. Simpson , 2015 IL App (1st) 142925 ( 2015 )

2015 IL App (1st) 142925
FIRST DIVISION
June 1, 2015
Modified upon Denial of Rehearing: August 3, 2015
No. 1-14-2925
WELLS FARGO BANK, N.A., ) Appeal from the Circuit
) Court of Cook County.
Plaintiff-Appellee, )
)
v. ) No. 11 CH 36741
)
BERNADETTE DILLARD SIMPSON, )
)
Defendant-Appellant )
)
(Unknown Heirs and Legatees of Paula Dillard, Deceased; )
Unknown Owners and Nonrecord Claimants; Gerald Nordgren )
as Personal Representative for Paula Dillard, Deceased, ) Honorable
) Alfred M. Swanson, Jr.,
Defendants). ) Judge Presiding.
PRESIDING JUSTICE DELORT delivered the judgment of the court, with opinion.
Justices Connors and Harris concurred in the judgment and opinion.
OPINION
¶1 This case presents two questions regarding property law. The first issue involves the
rights of heirs of deceased mortgagors under consumer-oriented mortgage foreclosure loss
mitigation programs pursuant to our supreme court’s ruling in ABN AMRO Mortgage Group,
Inc. v. McGahan, 237 Ill. 2d 526 (2010), a case which precipitated the adoption of Illinois
Supreme Court Rule 113 (Ill. S. Ct. R. 113 (eff. May 1, 2013)). The second is a quirky deed
recording issue which has vexed title examiners, real estate lawyers, and courts since time
immemorial. It involves the lien priority of a mortgagee when its mortgagor executes successive
deeds to different grantees, but then records them out of chronological order.
No. 1-14-2925
¶2 Paula Dillard purchased a home located in Buffalo Grove, Illinois in 1991. She died in
2008. In 2011, her mortgage lender filed this foreclosure lawsuit because the loan was
delinquent. The lawsuit was eventually amended to name Dillard’s granddaughter, Bernadette
Dillard Simpson, as a defendant. Simpson claimed that ownership of the home had passed to her
on Dillard’s death. Simpson filed an answer to the amended complaint, but she failed to respond
to the lender’s summary judgment motion and lost the case. She tried to undo the resulting
foreclosure by filing several motions to vacate and challenging the sale of the property at the
judicial sale. We agree with the circuit court that she has provided an insufficient basis to vacate
the foreclosure or invalidate the sale, and therefore affirm.
¶3 BACKGROUND
¶4 In the 17 years between 1991 and her death in 2008, Dillard executed no less than 10
successive mortgages with various lenders. 1 The chain of title reveals that each mortgage,
except the last one involved in this case, was released at or about the time the next was executed,
indicating that the 10 mortgages represented a continuous series of refinancings. In 2003, a few
months after executing the seventh mortgage in her individual capacity, she deeded the property
into a trust wherein she was named as the trustee, apparently as part of an estate plan.
¶5 Although this case involves the foreclosure of Dillard’s tenth mortgage, her actions
around the time she signed the eighth mortgage in 2004 frame the issues before us. Simpson
argues that an out-of-order recording happened through no fault of her own, but rather by a
sluggish lender or title company. The record, however, does not reveal whether Dillard
personally undertook these actions, or whether they were done by someone else on her behalf or
1
We take most of the facts from the record of the proceedings below, but take some
from the on-line records of the Cook County recorder of deeds, of which we can take judicial
notice. JP Morgan Chase Bank, N.A. v. Bank of America, N.A., 2014 IL App (1st) 140428, ¶ 44
n.5.
2
No. 1-14-2925
at her direction. For simplicity of expression only, we attribute them all to her. We also follow
the presumption that Dillard (personally or as trustee) executed and delivered the deeds to the
respective grantees on the dates shown on the face of the deeds. Calligan v. Calligan, 259 Ill.
52, 59 (1913) (in the absence of proof to the contrary, the presumption is that a deed was
executed and delivered on the day it is dated); Berigan v. Berrigan, 413 Ill. 204, 214 (1952)
(applying Calligan).
¶6 The relevant actions are as follows:
Date Action
Dillard, as trustee, executes a deed from the trust to herself
July 22, 2004
personally, but does not record it immediately (first deed).
Dillard, in her personal capacity, executes a quit claim deed
August 5, 2004 back to the trust, but does not record it immediately (second
deed).
August 12, 2004 Dillard records the second deed.
Despite the fact she had already signed the second deed
transferring the property back into the trust on August 5 and
August 24, 2004
recorded it on August 12, Dillard now records the first deed.
The recording number is 0423705368.
Dillard records the eighth mortgage on the property with
MERS 2 as mortgagee. The mortgage receives recording
August 24, 2004 number 0423705369, indicating that it was recorded just after
the first deed as part of the closing of the eighth mortgage.
This mortgage was released on May 24, 2006.
Dillard signs a ninth mortgage in her personal capacity. This
April 26, 2006
mortgage was released on July 30, 2007.
2
“MERS” stands for Mortgage Electronic Registration System.
3
No. 1-14-2925
Dillard signs a tenth mortgage with Wachovia Mortgage
Company in her personal capacity. That is the mortgage at
July 24, 2007 issue in this case. On November 18, 2009, Wachovia assigned
the mortgage to plaintiff Wells Fargo Bank, N.A. (Wells
Fargo).
¶7 It appears that the lender for the eighth mortgage required Dillard to temporarily deed the
property out of the trust to ensure that title was vested in Dillard personally when she signed that
mortgage. The problem before us was created when the second deed, back to her trust, was
recorded out of chronological order. While the first deed “sat in a drawer,” it was supplanted by
the second deed, which was recorded first. Accordingly, when Dillard signed the eighth
mortgage in her personal capacity, she had already deeded the property back to her trust and that
deed had been recorded. Common loan closing procedures contain safeguards to ensure this is
not supposed to happen. Presumably, when Dillard signed the eighth mortgage in her personal
capacity, she simultaneously executed a standard affidavit of title incorrectly (or falsely)
certifying she was unaware of any unrecorded deeds. See generally Joseph R. Fortunato, Jr.,
Representing the Seller, in Residential Real Estate § 2.33 (Ill. Inst. for Cont. Legal Educ. 2011).
Apparently due to the closeness in time between August 12 and August 24, and in reliance on the
affidavit of title, the loan for the eighth mortgage closed without MERS or the title insurer
noticing that Dillard had already deeded the property back to the trust. The recorded chain of
title showed Dillard, not the trust, as the last grantee. That remains the status quo even today.
Accordingly, Dillard proceeded to sign and obtain a ninth and tenth mortgage in her personal
capacity notwithstanding the fact that the last executed deed granted the property to her trust.
¶8 When Wells Fargo sued to foreclose the tenth mortgage in 2011, it did not know that
Dillard was deceased. After it learned of her demise, it determined that there was no probate
4
No. 1-14-2925
estate opened for her – despite the fact that she had died three years earlier. Accordingly, it
moved to amend the complaint to name defendant Gerald Nordgren as a special representative in
her stead. See 735 ILCS 5/13-209 (West 2010). On January 31, 2012, the court granted that
motion and specifically substituted Nordgren, in his representative capacity, as a defendant in
place of Dillard. Nordgren conducted an investigation which confirmed that there was no
probate estate opened for Dillard. He also discovered a published obituary which stated that
Dillard was survived by unnamed “children, grandchildren, and great-grandchildren.” Nordgren
located only two possible heirs whom he could identify by name: Alan Dillard, a son, and
Simpson, whom he discovered was living at her dead grandmother’s property, and whom
Nordgren’s associate actually interviewed. Based on his investigation and the fact that no one
had stepped forward to defend the foreclosure case, Nordgren recommended the case proceed as
a default. Wells Fargo then filed a second amended complaint on July 3, 2012 which added
Simpson as a defendant. See 735 ILCS 5/15-1501(b) (West 2012) (providing that a resident or
tenant is a permissible party to a foreclosure case). The record does not reveal why Alan Dillard
was not also named as a defendant in the second amended complaint.
¶9 Simpson filed a pro se appearance and an answer, in which she admitted most of the
allegations of the second amended complaint but claimed lack of knowledge regarding the
allegation that the mortgage was in default. The answer contained no affirmative defenses
whatsoever. Particularly absent from her answer was any defense relating to the out-of-order
deed and the void lien issue which forms the basis for her present appeal. We recognize that in
her second motion to vacate (but not her first), Simpson’s counsel requested leave to file an
amended answer. However, that request was fatally flawed because it did not contain a proposed
amended answer. See First Robinson Savings & Loan v. Ledo Construction Co., Inc., 210 Ill.
5
No. 1-14-2925
App. 3d 889, 892 (1991) (“[A] motion for leave to amend a pleading must be in writing, state the
reason for the amendment, set forth the amendment that is being proposed, show the materiality
and propriety of the proposed amendment, explain why the proposed additional matter was
omitted from earlier pleadings, and be supported by an affidavit.”). She also filed an application
to sue as a poor person, stating she had been unemployed since 2008, which the court granted.
¶ 10 On February 22, 2013, while this case was pending below, our supreme court
promulgated Rule 114 (Ill. S. Ct. R. 114 (eff. May 1, 2013)). This rule requires that motions for
judgment in a foreclosure case include a loss mitigation affidavit attesting to the efforts expended
to comply with any specifically required loss mitigation programs. On March 21, 2013, before
the rule’s May 1 effective date, Wells Fargo filed a motion for summary judgment which did not
include a Rule 114 affidavit. Simpson’s counsel set the motion for hearing on May 21, 2013. In
the meantime, on April 8, 2013, the supreme court rules committee amended the committee
comments to Rule 114 to specifically clarify that the affidavit was required for a foreclosure
motion in any pending case regardless of whether the case was commenced was pending on May
1, 2013. Ill. S. Ct. R. 114, Committee Comments (adopted Apr. 8, 2013). Because this
clarifying amendment also became effective on May 1, 2013, some foreclosure motions filed but
not yet presented for hearing were no longer viable and had to be amended to comply with the
new affidavit requirement. On May 21, the court entered a written order noting that Wells Fargo
withdrew its motion without prejudice because it did not contain a Rule 114 affidavit. Simpson
was present at the May 21 hearing.
¶ 11 Apparently because either the circuit court or Wells Fargo later realized that such an
affidavit was meaningless in a case involving a deceased mortgagor, Wells Fargo refiled the
motion without a Rule 114 affidavit on May 31, 2013, and noticed it for hearing on July 30,
6
No. 1-14-2925
2013. Simpson claims that the motion was heard ex parte, but the certified proof of service in
the record demonstrates that Wells Fargo’s counsel sent timely notice of the motion to Simpson
after it reset the motion for hearing. See Cook Co. Cir. Ct. R. 2.1(c)(i) (Aug. 21, 2000)
(requiring five business days’ notice for motions sent by mail). Therefore, it was not heard ex
parte. See Black’s Law Dictionary 657 (9th ed. 2009) (an ex parte hearing is held “without
notice to” the opposing party.) Simpson did not appear at the summary judgment hearing, and
she has provided no explanation why she did not.
¶ 12 On July 30, 2013, the circuit court granted summary judgment to Wells Fargo and
entered an order of foreclosure and sale. The order included language indicating that it was final
and appealable under Supreme Court Rule 304(a). Ill. S. Ct. R. 304(a) (eff. Feb. 26, 2010).
Dillard harangues Wells Fargo’s law firm for including this language and complains doing so
was improper, but that is not so. Rule 304(a) allows a court the discretion to make an order
appealable which does not terminate the case but which nonetheless is a final judgment as to one
of the claims in the case. The rule states, in part “an appeal may be taken from a final judgment
as to one or more but fewer than all of the parties or claims only if the trial court has made an
express written finding that there is no just reason for delaying either enforcement or appeal or
both.” Id. While a foreclosure order does not entirely terminate a case because the court must
still sell the property and confirm the sale, it is final as to the foreclosure claims for relief within
the meaning of Rule 304(a) in that it terminates (or “forecloses”) the defendant’s basic
ownership interest in the property. Accordingly, an order of foreclosure and sale can be subject
to an interlocutory appeal if the court order includes Rule 304(a) language. In re Marriage of
Verdung, 126 Ill. 2d 542, 555 (1989); North Community Bank v. 17011 South Park Ave., LLC,
7
No. 1-14-2925
2015 IL App (1st) 133672, ¶¶ 7, 11, 29 (noting that “[i]ncluding interlocutory appeal language in
foreclosure orders is relatively uncommon, but nonetheless allowable”).
¶ 13 Shortly after the circuit court granted summary judgment in favor of Wells Fargo,
Simpson, through a newly retained attorney, filed the first of three motions to vacate the
summary judgment and the corresponding order of foreclosure and sale. In her first motion, filed
August 29, 2013, Simpson alleged, among other things, that: (1) she was the executor of
Dillard’s estate and that fact had been a matter of “public record” for several years; (2) she paid
on the mortgage for some time after Dillard’s death and had tried to refinance her grandmother’s
loan; (3) she lived at the property; and (4) she was frustrated at Wells Fargo’s refusal to “put the
deed” to the property into her own name. She requested that the court not only vacate the
foreclosure order, but also order Wells Fargo to comply with various loss mitigation programs
applicable to mortgagors. Despite the fact she had no pending counterclaim requesting such
relief, she also demanded that the court declare her to be the owner of the property. Again, we
note that she was named as a defendant only in her personal capacity because she was an
occupant and potential heir; she never intervened into the case in the capacity as a trustee or
executor. The court denied her first motion to vacate on September 9, 2013.
¶ 14 On October 11, 2013, Simpson filed a second motion to vacate, raising similar arguments
as in her first motion. The motion was labeled as a motion to reconsider the denial of the first
motion to vacate. 3 Simpson’s second motion added a new argument – that the mortgage was
3
It was procedurally improper for Dillard to file more than one motion to vacate or
reconsider the foreclosure order, because the July 30, 2013 order contained Rule 304(a) language
making it final and appealable. See Ill. S. Ct. R. 274 (eff. Oct. 14, 2005); Sears v. Sears, 85 Ill.
2d 253, 258-59 (1981) (a second post-judgment motion is not authorized by statute or supreme
court rule and must be denied). However, to provide a complete review of all the issues
presented, and because the court later vacated the Rule 304(a) language from the foreclosure
8
No. 1-14-2925
void because the mortgagor, Dillard, had no ownership interest in the property when she signed
the mortgage – only her trust did. Accordingly, Simpson argued, Wells Fargo had no valid lien
on the property.
¶ 15 The circuit court stayed the sale during the briefing of the second motion to vacate. On
November 22, 2013, after briefing, the court denied the second motion to vacate and dissolved
the stay of the sale. However, on January 28, 2014, Simpson filed a third motion to vacate,
raising similar issues as she did in her earlier two motions. Simpson’s first, second, and third
motions to vacate included no copy of Dillard’s will, Dillard’s trust, an affidavit of heirship, or
any other documents demonstrating that Simpson had acquired title to the property, other than
her own conclusory affidavit to that effect. Wells Fargo noted this glaring omission in response
to the motions, but Simpson never cured the problem by presenting that documentation.
Accordingly, the appellate record now before us is bereft of any of these critically important
documents. Simpson also filed a motion to compel discovery of materials related to her
unsuccessful loan modification efforts, a motion which was doubly problematic because: (1) she
had no right to modify her late grandmother’s loan; and (2) discovery relating to anything other
than the conduct of the sale was irrelevant because she had already lost the case. See Parkway
Bank & Trust Co. v. Korzen, 2013 IL App (1st) 130380, ¶ 60 (affirming denial of belated
discovery request because “when the foreclosure has been entered, the defendant has lost the
case for all intents and purposes”). On February 4, 2014, the court denied the third motion to
vacate and the motion to compel discovery.
¶ 16 The property did not sell for enough to pay the outstanding balance on the mortgage,
resulting in a deficiency. See 735 ILCS 5/15-1508(e) (West 2012). Wells Fargo moved for
order, we will excuse this potential forfeiture issue and review the second motion to vacate on
the merits. See infra ¶ 16.
9
No. 1-14-2925
confirmation of the sale. Simpson opposed this motion, essentially repeating, for a fourth time,
the same bases she used to attack the foreclosure order three times earlier. The circuit court
again rejected Simpson’s defenses. It issued a written opinion on September 22, 2014, finding
that the last recorded deed in the chain of title at the time Dillard signed the mortgage granted the
property to Dillard personally, and that therefore the mortgage was a valid lien against the real
estate.
¶ 17 In the same opinion, the circuit court, acting sua sponte, vacated the language in the
original foreclosure order making it final and appealable under Rule 304(a). The court stated
that language was included “inadvertently” and that it “determined” that it had been “erroneously
included.” As we explained in North Community Bank, 2015 IL App (1st) 133672, ¶¶ 11, 29,
including Rule 304(a) language in foreclosure orders is generally disfavored, because courts
recognize that many foreclosure defendants do not truly appreciate the importance of judicial
proceedings and do not appear to defend themselves until late in the process. However, because
a case with a deceased mortgagor does not implicate that policy concern, lenders will often
include the language in foreclosure orders involving deceased mortgagors. The original
foreclosure order had been entered on July 30, 2013, so it became final when no appeal was filed
by August 29, 2013, 30 days later. See Ill. S. Ct. R. 303(a)(1) (eff. May 30, 2008). Accordingly,
Wells Fargo should have been able to justifiably rely on the fact that the order could never be
appealed. Doubtless, the trial court judge vacated the Rule 304(a) language not only because it
had been “inadvertently” included in the original order, but also to ensure Simpson could create a
full record and avoid jurisdictional problems on appeal. Nonetheless, retroactively changing the
rules of the game in this manner to Wells Fargo’s detriment raises a legitimate jurisdictional
question. However, because: (1) the situation is so unusual; (2) the court specifically found the
10
No. 1-14-2925
Rule 304(a) language was “inadvertently” included; (3) Wells Fargo revested the court with
jurisdiction by continuing to litigate on the merits while failing to object on this basis (see People
v. Kaeding, 98 Ill. 2d 237, 241 (1983)); and (4) the ultimate result would be the same under
either approach, we will review the appeal of the motions to vacate on the merits.
¶ 18 The order confirming the sale terminated the case on September 22, 2014, and this appeal
followed.
¶ 19 ANALYSIS
¶ 20 On appeal, Simpson contends that the trial court erred by: (1) refusing to vacate the
judgment of foreclosure and sale on the basis that the lender’s failure to issue a Rule 114
affidavit was fatal to its ability to foreclose; (2) refusing to vacate the judgment of foreclosure
and sale on the basis of the allegedly ineffective lien; and (3) confirming the sale
notwithstanding the ineffective lien and the lack of a Rule 114 affidavit.
¶ 21 Our consideration begins with a review of the law applicable to foreclosure cases
involving a deceased mortgagor. Our supreme court recently recognized that the Illinois
Mortgage Foreclosure Law (735 ILCS 5/15-1501 et seq. (West 2012)) “fails to address what
procedure a mortgagee must follow or who must be named, if anyone, in lieu of the mortgagor,
when the mortgagor is deceased.” McGahan, 237 Ill. 2d at 532. The court further stated that
because the Mortgage Foreclosure Law is silent as to the requirements to follow where the
mortgagor is deceased, “we would normally look to the general rules of civil procedure to
ascertain what would be required.” Id. Under those rules, a lawsuit filed against a deceased
person is a nullity and does not confer jurisdiction on the court. Id. at 529. The McGahan court
explained that mortgage foreclosure cases are quasi in rem proceedings and thus cannot proceed
without someone named as a defendant who represents the deceased mortgagor. Where a court
11
No. 1-14-2925
has duly appointed an executor or administrator of the decedent’s estate, that person is named in
substitution for the deceased. However, when there is no executor or administrator, to avoid the
nullity rule “and confer jurisdiction on the circuit court, a [foreclosure] plaintiff may proceed
under section 13-209 of the Code of Civil Procedure and substitute the deceased party’s personal
representative.” Id.
¶ 22 A few years after it issued McGahan, our supreme court promulgated Rule 113,
recognizing that after McGahan, the legislature had not amended any statutes to facilitate or
regulate the naming of special representatives for deceased mortgagors. Ill. S. Ct. R. 113(i) (eff.
May 1, 2013). The rule provides in part:
“In all mortgage foreclosure cases where the mortgagor or
mortgagors is or are deceased, and no estate has been opened for
the deceased mortgagor(s), the court shall, on motion of a party,
appoint a special representative to stand in the place of the
deceased mortgagor(s) who shall act in a manner similar to that
provided by section 13-209 of the Illinois Code of Civil Procedure
(735 ILCS 5/13-209).”
The court below complied with Rule 113(i) and sections 2-1008(b)(2) and 13-209 of the Code of
Civil Procedure (735 ILCS 5/2-1008(b)(2), 13-209 (West 2012)) by appointing Gerald Nordgren
as special representative.
¶ 23 Appointment of the special representative was necessary because Simpson is not, as she
repeatedly has claimed, the executor of Dillard’s estate. Under paragraph 3(L) of the second
amended complaint, Simpson was not named as a defendant in any representative capacity, but
rather only because she was “believed to be an heir of Paula Dillard, deceased, and may have
12
No. 1-14-2925
some interest in the subject real estate [which is] subordinate and inferior to the interest of the
Plaintiff herein.”
¶ 24 Simpson’s affidavit in support of her motion to vacate asserted that Dillard executed a
will naming Simpson as executor, that the will was duly filed with the clerk of the circuit court
of Cook County, and that she is the executor of Dillard’s estate. She claims that because the will
was a “public record,” Wells Fargo had constructive knowledge of her status as executor.
However, merely filing a will neither creates a decedent’s estate nor makes someone an executor.
An executor is named only after an estate case is opened, the court admits the will to probate by
order, and then enters a second order declaring someone to be the executor. 755 ILCS 5/6-4, 6-8
(West 2012). Nothing in the record shows that anyone ever opened a probate estate for Dillard,
and the on-line docket of the clerk of the circuit court of Cook County shows that no estate was
ever opened for her. 4 In fact, the Probate Act of 1975 (755 ILCS 5/1-1 et seq. (West 2012))
specifically provides that Simpson may now be disqualified from ever serving as executor
because she failed to request the will be admitted to probate within 30 days of filing it with the
court. The applicable statute reads:
“Within 30 days after a person acquires knowledge that he is
named as executor of the will of a deceased person, he shall either
institute a proceeding to have the will admitted to probate in the
court of the proper county or declare his refusal to act as executor.
If he fails to do so, except for good cause shown, the court on its
4
We may take judicial notice of the on-line docket report of probate division filings
issued by the clerk of the circuit court of Cook County. See, e.g., All Purpose Nursing Service v.
Human Rights Comm’n, 205 Ill. App. 3d 816, 823 (1990) (citing People v. Davis, 65 Ill. 2d 157
(1976)); Boston v. Rockford Memorial Hospital, 140 Ill. App. 3d 969, 972 (1986). The docket
report is a matter of record which this court may take judicial notice, and its contents are not
difficult to ascertain.
13
No. 1-14-2925
motion or on the petition of any interested person may deny him
the right to act as executor and letters of office may be issued by
the court as if the person so named were disqualified to act as
executor.” 755 ILCS 5/6-3(a) (West 2012).
¶ 25 Simpson could have supplanted Nordgren’s involvement by opening an estate for her
grandmother, but she did not do so. Accordingly, only Nordgren, not Simpson, was a proper
representative for Dillard in this foreclosure case. See Ill. S. Ct. R. 113(i) (eff. May 1, 2013).
¶ 26 That brings us to the issue of Simpson’s standing to challenge anything regarding the
foreclosure of Dillard’s mortgage in light of Nordgren’s appointment as special representative.
As noted above, we have no copy of the will or trust to discern what, if any, powers either
document bestowed upon Simpson. Additionally, this matter is clearly one that should have
been pled as an affirmative defense, and her answer contains no such defense.
¶ 27 For the sake of discussion, we will assume Dillard’s will contained a standard pour-over
trust provision. Persons often place their property into a revocable inter vivos trust to facilitate
transfer on death and avoid probate. “An inter vivos trust is defined as a transfer of property
during the lifetime of the settlor and to become effective in his lifetime as contrasted with a
testamentary trust which takes effect at the death of the settlor.” Kahn v. First National Bank of
Chicago, 216 Ill. App. 3d 272, 278 n.1 (1991). The companion provision, a pour-over trust, is “a
provision in a will in which the testator leaves the residue of his estate to a trustee of [an inter
vivos] trust for purpose of that pour-over trust.” Kahn, 216 Ill. App. 3d at 278 n.2. Under
Illinois law, real estate devised under a will passes directly to the devisee on the death of the
testator. Trustees of Schools v. Clippinger, 404 Ill. 202, 204 (1949). “ ‘[T]itle to real property
passes to, and vests in, the devisees immediately on the testator’s death and not at the probate of
14
No. 1-14-2925
the will,’ ” unless the will postpones the vesting of title. In re Estate of Hall, 127 Ill. App. 3d
1031, 1034 (1984) (quoting 96 C.J.S. Wills § 1099, at 821 (1957)); see also Ill. Rev. Stat. 1981,
ch. 30, ¶ 505(a) (now 760 ILCS 15/5(a) (West 2012)) (providing that an asset becoming subject
to the trust by reason of a will becomes subject to the trust as of the date of the death of the
testator even though there is an intervening period of administration).
¶ 28 Under this authority, if we were to take Simpson’s conclusory assertions at face value,
she came into title upon Dillard’s death, subject, of course, to any valid liens. However, mere
ownership is not enough, because Simpson did not carry out the steps necessary to perfect that
ownership in any public records. We acknowledge that special representative Nordgren never
“owned” the property. However, his presence gave the court subject matter jurisdiction.
McGahan, 237 Ill. 2d at 537-38. As we have no copy of the will or trust, the record before us
only supports Nordgren’s ability to stand in place of Simpson in this foreclosure litigation.
Simpson criticizes Wells Fargo for insisting that she should have produced a copy of the will in
the court below, and derides Wells Fargo’s argument about the missing will as a mere “gripe.”
She reasons that because the will was a “public record,” there was no need for her to produce it.
Far from being a “gripe,” it is the proverbial elephant in the courtroom. We are perplexed why
Simpson relies so strongly on the will but has never produced it. It is certainly true that a court
can take judicial notice that a will has been filed with the probate court. In re Estate of Gebis,
186 Ill. 2d 188, 196 (1999) (citing In re W.S., 81 Ill. 2d 252, 256-57 (1980)). It is equally true
that a court can take notice that no estate has been opened to admit the will to probate. Id.
However, taking such notice of a document simply means that there is no need to submit formal
proofs regarding its authenticity. It does not mean that a court can take a party’s word for what
the document contains without a copy of the document actually being produced.
15
No. 1-14-2925
¶ 29 Without seeing the actual will and trust, we cannot determine whether Simpson in fact
inherited the property or whether, for instance: (1) the property was ever placed in the trust; and
(2) the trust reserved to Dillard the power while she was alive to mortgage the property in her
own name notwithstanding the disposition of the property into the trust. Accordingly, we must
presume the trial court acted correctly with respect to issues related to the content of the will and
trust. Foutch v. O’Bryant, 99 Ill. 2d 389, 391-92 (1984) (appellant has the burden to present
sufficiently complete record of the trial court proceedings to support claim of error; without such
record, this court will presume trial court acted correctly).
¶ 30 That analysis resolves much of the underlying basis for Simpson’s contentions in support
of reversal. Nonetheless, she was named as a defendant in her capacity as a resident and
potential heir, and we will examine her contentions of error in that light.
¶ 31 Standard of Review
¶ 32 All of Simpson’s contentions, except the one challenging confirmation of the sale, relate
to the circuit court’s refusal to vacate prior orders under section 2-1301 of the Code of Civil
Procedure (735 ILCS 5/2-1301 (West 2012)). When reviewing such orders,“[t]raditional
considerations of due diligence and whether there is a meritorious defense will remain relevant in
the court’s consideration of whether substantial justice has been done between the parties and
whether it is reasonable to vacate the default.” Wells Fargo Bank, N.A. v. McCluskey, 2013 IL
115469, ¶ 27. We review a circuit court’s denial of a section 2-1301 motion to vacate for an
abuse of discretion. Aurora Loan Services, LLC v. Kmiecik, 2013 IL App (1st) 121700, ¶ 26. A
circuit court abuses its discretion “when it acts arbitrarily without the employment of
conscientious judgment or if its decision exceeds the bounds of reason and ignores principles of
law such that substantial prejudice has resulted.” Marren Builders, Inc. v. Lampert, 307 Ill. App.
16
No. 1-14-2925
3d 937, 941 (1999). While it is true that motion to vacate defaults are routinely granted, they are
also routinely denied when, as here, they merely assert that the defendant has a meritorious
defense without saying what specific defense the defendant intends to raise. See Physicians
Insurance Exchange v. Jennings, 316 Ill. App. 3d 443, 457 (2000) (“To prove the existence of a
meritorious defense or claim, a petitioner must allege facts that would have prevented entry of
the judgment if they had been known by the trial court.”). We again note that Simpson’s first
motion to vacate contained nothing regarding the out-of-order deed issue which is the
cornerstone of her appeal.
¶ 33 Rule 114 Affidavit Requirement
¶ 34 The first alleged error requires us to construe Rule 114. Because Rule 114 is so new,
Illinois courts have had little opportunity to interpret it. The central theme around which
Simpson frames her Rule 114 arguments is that she stands in the place of her grandmother and
succeeds to all the rights her grandmother would have had as a borrower under various pro-
consumer loan modification programs. Simpson claims she is a “mortgagor” under section 15-
1209 of the Mortgage Foreclosure Law (735 ILCS 5/15-1209 (West 2012)) because she is a
“person claiming through a mortgagor as successor.” As such, she contends that Wells Fargo
was forbidden from obtaining a foreclosure order until it had submitted a loss mitigation affidavit
as required by Rule 114. Ill. S. Ct. R. 114 (eff. May 1, 2013) (requiring the plaintiff to file an
affidavit prior to or at the time of moving for a judgment of foreclosure).
¶ 35 We construe supreme court rules in the same manner as we construe statutes. Robidoux
v. Oliphant, 201 Ill. 2d 324, 332 (2002). Accordingly, when interpreting a supreme court rule,
we must ascertain and give effect to the intent of the supreme court for promulgating the rule.
Id. The most reliable indicator of the court’s intent is the rule’s actual language, which should be
17
No. 1-14-2925
given its plain and ordinary meaning. Id. Committee comments to supreme court rules are not
binding but they may be used to determine the application of a rule. Wright v. Desate, Inc., 292
Ill. App. 3d 952, 954 (1997). Our review of the construction of a court rule is de novo. In re
Estate of Rennick, 181 Ill. 2d 395, 401 (1998).
¶ 36 Rule 114 requires foreclosing lenders to file an affidavit specifying: “(1) Any type of
loss mitigation which applies to the subject mortgage; (2) What steps were taken to offer said
type of loss mitigation to the mortgagor(s); and (3) The status of any such loss mitigation
efforts.” Ill. S. Ct. R. 114(b) (eff. May 1, 2013). Subsection (d) of the rule provides the remedy
for a violation. It states: “The court may, either sua sponte or upon motion of a mortgagor, stay
the proceedings or deny entry of a foreclosure judgment if Plaintiff fails to comply with the
requirements of this rule.” Ill. S. Ct. R. 114(d) (eff. May 1, 2013). The committee comments to
the rule explain that our supreme court adopted it in response to a “huge increase” in foreclosure
cases and that it is in the best interests of the public to work out possible mortgage refinancings
rather than foreclose. Ill. S. Ct. R. 114, Committee Comments (adopted Apr. 8, 2013). The
comments further state:
“Toward this end, Rule 114 requires the plaintiff to file an affidavit to document
compliance with any loss mitigation program applicable to the mortgage loan at
issue. The affidavit must be filled out and filed prior to or at the time of moving
for a judgment of foreclosure. As such, the intended purpose of the rule is to
prevent the entry of a judgment of foreclosure where the plaintiff has theretofore
failed to comply with applicable loss mitigation requirements, be they local, state,
or federal. The filing of the affidavit allows the court to review the plaintiff’s
level of compliance with applicable loss mitigation requirements, and, if
18
No. 1-14-2925
necessary, to deny a motion for judgment of foreclosure if said compliance is
lacking.” Id.
¶ 37 This rule is not written in mandatory terms. The “enforcement” section specifically notes
that the court “may,” rather than “shall” deny entry of a foreclosure judgment if the rule is not
satisfied. Ill. S. Ct. R. 114(d) (eff. May 1, 2013). Although the rule serves the important purpose
of helping living mortgagors in the difficult current financial environment, we find that the rule’s
use of the word “may” demonstrates that there is some room for judicial discretion regarding the
level of strictness of its enforcement in especially unusual circumstances such as those presented
by the facts of this case. Here, the mortgagor intending to benefit from the rule is deceased and
can no longer borrow money or participate in a loan modification program. See In re M.I., 2013
IL 113776, ¶ 17 (holding that a statute may be construed as mandatory if “there is negative
language prohibiting further action in the case of noncompliance” or if “the right the provision is
designed to protect would generally be injured under a directory reading”).
¶ 38 Simpson strongly complains regarding her frustration with dealing with Wells Fargo
regarding a refinancing and suggests that providing a Rule 114 affidavit would demonstrate that
Wells Fargo treated her unfairly. We have no reason to doubt the sincerity of that quite
justifiable frustration. We offer just one example of corporate overdependence on automated
customer communication systems from the record below. Long after Wells Fargo knew its
customer was deceased, rather than simply tell Simpson that she was not the bank’s customer
and was not a good candidate for refinancing because she apparently did not own the property, it
bizarrely sent her standard loan modification letters that would be generated for a living
customer nonsensically addressed to “Dear Paula Dillard Deceased.”
19
No. 1-14-2925
¶ 39 That observation aside, there are several basic flaws with Simpson’s reliance on Rule
114. First, she is not the mortgagor; her grandmother was. The term “modification” implies an
alteration to the original loan benefiting the original borrower, not the borrower’s successor. It
defies logic to conclude that an individual granddaughter of a deceased mortgagor (who left
surviving children and other grandchildren), but who is not the executor of the grandmother’s
estate, should somehow be able to refinance the grandmother’s mortgage, even if the
granddaughter individually inherited the house. For this same reason, we need not resolve the
issue of whether Simpson was eligible for a loan modification such as the federal Home
Affordable Modification Program (HAMP), as she asserts. 5 It is axiomatic that lenders do not
lend money on residential real estate except if the owner, as identified by a title commitment,
signs the corresponding mortgage. Neither a loan modification program nor an initial lender
would have given Simpson a new loan on the property unless she became the record owner and
could demonstrate clear title in her own name. She did not do so at the relevant time, and in fact,
has never done so.
¶ 40 Additionally, we note that living mortgagors whose credit records are damaged by having
a delinquent mortgage do not have much ability to refinance on their own. Their sole recourse is
often to the current lender, and hence to any loss mitigation programs in which that lender
participates. That is one of the policy considerations underlying Rule 114. In contrast, if
Simpson had sufficient income and credit, and was able to clear title in her own name, she could
have simply obtained a new mortgage in the open market.
5
This court has held that to demonstrate that a mortgage was foreclosed in violation of
HAMP, a borrower has the burden to demonstrate that she complied with all of the applicable
requirements of that program. CitiMortgage, Inc. v. Bermudez, 2014 IL App (1st) 122824, ¶ 69.
20
No. 1-14-2925
¶ 41 The loss mitigation affidavit rule was never intended to assist persons like Simpson.
Despite the fact that she voluntarily made payments on someone else’s mortgage and the lender
(not surprisingly) accepted those payments, Simpson never borrowed money from the lender and
she was not the lender’s customer. A Rule 114 affidavit gives courts sufficient information to
resolve foreclosure defendants’ requests that it delay or continue a case because the lender is
reviewing a loan modification application or has disobeyed requirements of an applicable loss
mitigation program. We are aware of no legally mandated loss mitigation program intended for
heirs, legatees, or trust beneficiaries such as Simpson who had no involvement with the original
transaction between the lender and the mortgagor, nor do Simpson’s briefs identify any.
Accordingly, the lack of a Rule 114 loss mitigation affidavit did not prevent the court from
entering the foreclosure judgment. The circuit court did not abuse its discretion by denying the
portions of the motions to vacate based on Rule 114.
¶ 42 The Effect of an Out-of-Order Deed on the Property
¶ 43 Simpson’s second contention of error involves the chronological execution and recording
of the deeds. See supra ¶ 7. She argues that Dillard’s trust, not Dillard, owned the property
when Dillard executed the tenth mortgage, so Dillard’s signature on the mortgage did not create
any lien against the property.
¶ 44 In analyzing this issue, we first note that Simpson admitted a number of facts which
negate these defenses in her answer. The admissions all stem from her failure to deny the
presumed “allegations” contained in every standard mortgage foreclosure complaint. 735 ILCS
5/15-1504(c) (West 2012). That section of the Mortgage Foreclosure Law sets forth a number of
standard, usually noncontroversial facts, common to all mortgage foreclosure scenarios. A
foreclosure defendant who does not specifically deny them has admitted them even though they
21
No. 1-14-2925
are not specifically set forth in the complaint. Korzen, 2013 IL App (1st) 130380, ¶ 43. These
admitted allegations in play here include:
1. “[O]n the date indicated, the obligor of the indebtedness
or other obligations secured by the mortgage was justly indebted in
the amount of the indicated original indebtedness to the original
mortgagee or payee of the mortgage note[.]” 735 ILCS 5/15-
1504(c)(1) (West 2012);
2. “[T]hat the mortgagor was at the date indicated an
owner of the interest in the real estate described in the complaint
and that as of that date made, executed and delivered the mortgage
as security for the note or other obligations[.]” 735 ILCS 5/15-
1504(c)(3) (West 2012); and
3. “[T]hat the mortgage constitutes a valid, prior and
paramount lien upon the indicated interest in the mortgaged real
estate, which lien is prior and superior to the right, title, interest,
claim or lien of all parties and nonrecord claimants whose interests
in the mortgaged real estate are sought to be terminated[.]” 735
ILCS 5/15-1504(c)(7) (West 2012).
¶ 45 Read as a whole, the Mortgage Foreclosure Law establishes a careful balance between a
lender’s interest that a foreclosure case not be bogged down by formalistic proofs over
noncontroversial matters, and a mortgagor’s interest in preserving her property. Lenders benefit
from the law’s establishment of a form complaint which is fairly immune from attack through
pleading motions, and from the streamlined procedure a lender may use to prove up its case.
22
No. 1-14-2925
Borrowers benefit from the many windows of opportunity the law provides them to rescue their
properties out of the foreclosure process and the extraordinary length of time it takes to litigate
even an uncontested case.
¶ 46 The “deemed allegations” form an important part of that balance because they take a
number of normally innocuous and uncontested issues out of play. Simpson presents two
arguments why our analysis should not take her admissions of these three key facts into account.
First, she complains that her answer was hastily prepared on a fill-in-the-blank form by pro bono
attorneys working for various homeowner assistance programs at the courthouse. That may be
true, but one using such services might not justifiably expect that they would be familiar with a
defense as unusual and complex as hers. We cannot establish, as she suggests, a rule that we
should ignore omissions in pleadings filed by persons using pro bono services. Additionally,
when she was later represented by counsel, she did not attempt to amend the answer.
¶ 47 Secondly, she relies on a recent case in which another division of this court found that
enforcement of a deemed allegation was “unjust” and “inconvenient.” Bank of America, N.A. v.
Adeyiga, 2014 IL App (1st) 131252, ¶ 104. In that case, the court held that a foreclosure
defendant who belatedly contended he did not receive the grace period prelawsuit notice required
by the Mortgage Foreclosure Law would not be held to have admitted the deemed allegation that
“any and all notices of default or election to declare the indebtedness due and payable or other
notices required to be given have been duly and properly given.” 735 ILCS 5/15-1504(c)(9)
(West 2012).
¶ 48 We do not find Adeyiga to be dispositive. The fundamental rule of statutory construction
is to ascertain and give effect to the legislature’s intent. People ex rel. Birkett v. City of Chicago,
202 Ill. 2d 36, 45 (2002). The best indication of legislative intent is the plain and ordinary
23
No. 1-14-2925
meaning of the statutory language. Id. Where the language is clear and unambiguous, we must
apply the statute without resort to other aids of statutory construction. Id. at 45-46. Our supreme
court has spoken clearly on this doctrine, stating:
“To this we can only respond that the policy arguments they
advance are properly addressed to the legislature rather than this
court. ‘ “[W]e do not sit as a superlegislature to weigh the wisdom
of legislation nor to decide whether the policy which it expresses
offends the public welfare.” ’ [Citation.] We must interpret and
apply statutes in the manner in which they are written and cannot
rewrite them to make them consistent with the court’s idea of
orderliness and public policy.” Roselle Police Pension Board v.
Village of Roselle, 232 Ill. 2d 546, 557-58 (2009).
¶ 49 While we recognize Simpson’s concerns, we decline to follow the portion of Adeyiga
which held that the failure to deny a deemed allegation in a foreclosure complaint can be
overlooked (Adeyiga, 2014 IL App (1st) 131252, ¶¶ 99-112). Such a holding is inconsistent with
our supreme court’s interpretation of our and the legislature’s proper roles, as expressed so
frequently in cases such as Roselle Police Pension Board. We instead hold that the failure to
deny a deemed allegation in an answer to a mortgage foreclosure complaint must be given its
normal and usual significance, resulting in the allegation being admitted.
¶ 50 Although Simpson admitted certain allegations regarding the validity of the mortgage
lien, to provide a complete record, we will specifically address the issue on the merits. Even if,
however, we were to take the admitted deemed allegations out of our analysis, the result would
be the same.
24
No. 1-14-2925
¶ 51 In resolving the lien claim, we must determine whether Wells Fargo had notice,
constructive or actual, of Dillard’s trust’s interest when it issued the tenth mortgage. See US
Bank National Ass’n v. Villasenor, 2012 IL App (1st) 120061, ¶ 58 (holding that a bank “must
establish that it acquired an ‘interest in [the] property for valuable consideration without actual or
constructive notice of another’s adverse interest in the property’ ” (quoting In re Ehrlich, 59 B.R.
646, 650 (Bankr. N.D. Ill. 1986))). Actual notice is that knowledge the mortgagee had at the
time of the conveyance. Id. ¶ 59. There is no dispute that Wells Fargo did not have actual notice.
Thus, we must examine whether it had constructive notice.
¶ 52 “Constructive notice is knowledge that the law imputes to a purchaser, whether or not he
had actual knowledge at the time of the conveyance.” Id. The “law does not concern itself with
whether an inquiry is actually carried out; rather, ‘notice is imputed to the subsequent purchaser,
on account of his negligence in not prosecuting his inquiries in the direction indicated.’ ” Id.
(quoting Anthony v. Wheeler, 130 Ill. 128, 135 (1889)).
¶ 53 The general rule in Illinois is that a deed takes effect upon execution. Berrigan, 413 Ill.
at 216-17. However, Wells Fargo relies on a statutory exception to that rule. It contends that the
Illinois Conveyances Act (765 ILCS 5/0.01 et seq. (West 2012)) addresses this specific problem
and requires a contrary result. The court below agreed. Section 30 of the Conveyances Act, a
provision enshrined in Illinois property statutes with language unchanged since at least 1871,
reads:
“All deeds, mortgages and other instruments of writing which are
authorized to be recorded, shall take effect and be in force from
and after the time of filing the same for record, and not before, as
to all creditors and subsequent purchasers, without notice; and all
25
No. 1-14-2925
such deeds and title papers shall be adjudged void as to all such
creditors and subsequent purchasers, without notice, until the same
shall be filed for record.” (Emphases added.) 765 ILCS 5/30
(West 2012).
¶ 54 Wells Fargo relies on this statute and claims that it had no constructive notice because
the out-of-order deeds did not appear as such in the chain of title. The “chain of title” is a
register of “successive conveyances commencing with the patent from the government [down to]
and including the conveyance to the one claiming title.” Capper v. Poulsen, 321 Ill. 480, 482
(1926).
¶ 55 The Illinois Counties Code requires that the county recorder of deeds maintain an index
showing the name of the grantor and grantee in every recorded document, and the page of the
record books in which the corresponding instrument is recorded. 55 ILCS 5/3-5025(4) (West
2012). That index does not necessarily include the date of execution or delivery of deed in the
chain. Id. As such, the fact that a deed was recorded out-of-order will not be highlighted in the
chain.
¶ 56 A purchaser (a term which includes mortgagees such as Wachovia) is charged with
constructive notice of what appears in the chain of title. St. John v. Conger, 40 Ill. 535, 536
(1866). In particular, the prospective purchaser of an interest in real estate is chargeable with
knowledge of what appears in the grantor-grantee index, the legal record required to be
maintained by the recorder of deeds. It is not chargeable with notice of that which appears in
other records which may be kept as a convenience, such as a tract index. Landis v. Miles Homes
Inc. of Illinois, 1 Ill. App. 3d 331, 334-35 (1971) (interpreting Ill. Rev. Stat. 1969, ch. 30, ¶ 29
(now 765 ILCS 5/30 (West 2012))). However, “[r]ecords need not be searched for deeds,
26
No. 1-14-2925
mortgages or other conveyances made by a vendor before he became vested in title and his
vendee is not chargeable with constructive notice of matters shown by records not in the chain of
title.” Glen Ellyn Savings & Loan Ass’n v. State Bank of Geneva, 65 Ill. App. 3d 916, 923
(1978).
¶ 57 When Dillard signed the tenth mortgage, the chronological misordering of the deeds was
not shown by the chain of title, because one checking title records would normally check the
grantor-grantee index to determine the parties involved in the most recent deed, and not review
the actual deeds. In particular, one would not go back through the chain to review documents
recorded around the time of the third prior mortgage. The parties do not contest that the chain of
title still shows that Dillard, not her trust, owns the property.
¶ 58 Our supreme court explained certain principles applicable to these facts in Reed v. Eastin,
379 Ill. 586, 592 (1942). The Reed court stated that it “has long been recognized, however, that
the statute gives a priority to the deed first recorded only where the grantee of the recorded deed
has acted fairly and in good faith.” It also noted that “one having notice of facts which would
put a prudent man on inquiry is chargeable with knowledge of other facts which he might have
discovered by diligent inquiry. Whatever is notice enough to excite attention and put the party
on his guard is notice of everything to which such inquiry might have led and every unusual
circumstance is a ground of suspicion and demands investigation.” Id. Under the facts before
us, we do not believe that the law required Wachovia to delve back to view the actual date
written on a prior deed to verify that it paralleled the corresponding but long-released mortgage.
This result is particularly compelled by the fact that there is a clear privity of interest between
Dillard and her alleged self-declared trust.
27
No. 1-14-2925
¶ 59 Dillard suggests that we should decline to follow case law such as Glen Ellyn Savings &
Loan Ass’n because recorded documents in a chain of title can now be easily examined with just
“one more click of the mouse.” She contends that the grantor-grantee index should no longer be
the last resort for a constructive notice analysis because anyone (for a price) can now easily
retrieve copies of an entire scanned deed from the recorder’s web site. However, the actual
deeds were available for review on microfilm even before present technology made them readily
available from a desktop computer. The line of cases on which we rely are grounded in long-
established equitable principles – principles which the invention of the Internet has neither
undermined nor weakened.
¶ 60 We find Dillard’s reliance on BankChampaign, NA v. Wells Fargo Bank, NA, 2012 IL
App (4th) 110588-U, to be particularly inapposite. In that case, a divided court found that a
mortgage executed by mortgagors personally did not create a valid lien because the mortgagors
only held title as beneficiaries of a land trust. In so holding, the court was apparently aided by
having a complete record including the trust documents at issue, a benefit we do not have here.
Additionally, it appears that the trust in that case owned the property at all pertinent times and
there were no “secret deeds” confusing the chain of title. More importantly, though, the order is
nonprecedential and unpublished under Supreme Court Rule 23 and cannot be cited as authority.
Ill. Sup. Ct. R. 23(e) (eff. July 1, 2011). We remind counsel that citing unpublished Rule 23
orders violates court rules.
¶ 61 Principles of equity also direct that Wells Fargo prevail on this issue. Were Dillard still
alive and disclaiming her mortgage on the basis that her signature was a nullity because of her
secret unrecorded deed to the trust, even though she received a substantial amount of money
from the lender’s reliance on the chain of title and Dillard’s affidavit of title, the resulting
28
No. 1-14-2925
inequity would justify our classifying her position as specious. While we cannot ascribe such an
intent to Simpson, the equitable principles underlying Illinois law regarding priority of liens
applies equally to her. If she were to prevail, she would receive a windfall by acquiring the
subject property free of the lien imposed to fund its purchase, and the lender would be faced with
trying to collect on its decollateralized note from an apparently nonexistent estate. Therefore,
what she requests would also create an inequitable result. Under her theory, property owners
could secretly execute deeds and squirrel them away, then mortgage their property and sign a
false affidavit of title, and later record the secret deed, leaving the lender in the lurch because it
did not examine every document in the chain to find information hidden away in a deed far back
in the chain of title.
¶ 62 While not directly applicable to these particular facts, we are guided also by well-
established Illinois law regarding equitable subrogation in the context of priority of liens. Our
supreme court has described equitable subrogation as a “creature of chancery” utilized “to
prevent injustice and unjust enrichment.” Dix Mutual Insurance Co. v. LaFramboise, 149 Ill. 2d
314, 319 (1992). The Dix court further explained:
“The right of subrogation is an equitable right and remedy which
rests on the principle that substantial justice should be attained by
placing ultimate responsibility for the loss upon the one against
whom in good conscience it ought to fall. [Citation.] Subrogation
is allowed to prevent injustice and unjust enrichment but will not
be allowed where it would be inequitable to do so. [Citation.]
There is no general rule which can be laid down to determine
29
No. 1-14-2925
whether a right of subrogation exists since this right depends upon
the equities of each particular case.” Id.
¶ 63 The mortgage at issue here is the tenth in a series of refinancings by the same owner.
Under standard subrogation principles applicable to refinancing mortgages, the lien of an old
mortgage continues in effect without interruption and the new mortgage does not become
subordinate to an intervening lien attaching between the time of the recording of the old
mortgage and the effective date of the new one. Aames Capital Corp. v. Interstate Bank of Oak
Forest, 315 Ill. App. 3d 700, 709 (2000). While this case does not present a dispute between two
lenders, but instead between Dillard’s successor and a lender, the situation is essentially parallel.
Giving Simpson the relief she seeks would give her a windfall and be grossly inequitable.
¶ 64 Because we resolve the issue of the lien on other grounds, we need not address Wells
Fargo’s separate contention that, by making payments on the ninth and tenth mortgages during
her lifetime, Dillard ratified her liability for those mortgages even though title was held by her
trust.
¶ 65 In sum, both statutory and equitable principles demonstrate that the trial court did not
abuse its discretion in refusing to vacate the foreclosure order on the basis of the out-of-order
deed.
¶ 66 Confirmation of the Judicial Sale
¶ 67 After the property was sold to Wells Fargo at the judicial sale, Simpson repeated the
same arguments against Wells Fargo’s motion to confirm the sale. However, she faced an even
greater burden to overturn the sale than she did with respect to the foreclosure. Our supreme
court recently explained the principles applicable to a reviewing court’s analysis when a
30
No. 1-14-2925
mortgagor challenges a foreclosure by both moving to vacate the sale and challenging
confirmation of the resulting foreclosure sale:
“To vacate both the sale and the underlying default
judgment of foreclosure, the borrower must not only have a
meritorious defense to the underlying judgment, but must establish
under section 15-1508(b)(iv) [(735 ILCS 5/15-1508(b)(iv) (West
2010))] that justice was not otherwise done because either the
lender, through fraud or misrepresentation, prevented the borrower
from raising his meritorious defenses to the complaint at an earlier
time in the proceedings, or the borrower has equitable defenses
that reveal he was otherwise prevented from protecting his
property interests. After a motion to confirm the sale has been
filed, it is not sufficient under section 15-1508(b)(iv) to merely
raise a meritorious defense to the complaint.” McCluskey, 2013 IL
115469, ¶ 26.
¶ 68 Simpson’s challenge to the sale was based on the same defenses she made against the
foreclosure and did not rest on any independent facts regarding the conduct of the sale itself. As
such, it necessarily fails for the same reasons as set forth in our analysis above regarding the
motions to vacate. See id.
¶ 69 CONCLUSION
¶ 70 All this leads inexorably to several conclusions. Simpson failed to show sufficient cause
to vacate the foreclosure or prevent the sale. The mortgage was a valid lien on Dillard’s and the
31
No. 1-14-2925
trust’s interest in the property, and whoever took title on Dillard’s death took it subject to the
mortgage lien. That lien was validly enforced through the foreclosure proceedings.
¶ 71 Affirmed.
32