Peru Federal Savings Bank v. Weiden , 2016 IL App (3d) 140205 ( 2016 )


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  •                                  
    2016 IL App (3d) 140205
    Opinion filed April 15, 2016
    _____________________________________________________________________________
    IN THE
    APPELLATE COURT OF ILLINOIS
    THIRD DISTRICT
    2016
    PERU FEDERAL SAVINGS BANK,                  )       Appeal from the Circuit Court
    )       of the 13th Judicial Circuit,
    Plaintiff,                           )       La Salle County, Illinois,
    )
    v.                                   )
    )
    TINA WEIDEN,                                )
    )
    Defendant-Appellant                  )
    )
    (Olivero and Olivero Law Offices,           )
    )       Appeal No. 3-14-0205
    Defendant-Appellee;                  )       Circuit No. 12-CH-389
    )
    Donald Weiden, Jr.; Midland State Bank;    )
    Successor to Amore Bank, N.A.; Collection   )
    Professionals, Inc.; and Unknown Owners and )
    Nonrecord Claimants,                        )
    )
    Defendants).                         )
    Honorable
    Eugene P. Daugherity,
    Judge, Presiding.
    _____________________________________________________________________________
    JUSTICE LYTTON delivered the judgment of the court, with opinion.
    Presiding Justice O’Brien and Justice McDade concurred in the judgment and opinion.
    _____________________________________________________________________________
    OPINION
    ¶1          Defendants, Donald and Tina Weiden, divorced in 2006. In 2012, plaintiff, Peru Federal
    Savings Bank, foreclosed on the martial residence. Olivero & Olivero Law Offices, the firm that
    represented Donald during the divorce, successfully requested that the surplus funds from the
    sale be awarded to it in satisfaction of a judgment lien for attorney fees. Tina appeals, claiming
    that she had priority based on the dissolution judgment and that her equitable lien should have
    been satisfied first. We reverse and remand with directions.
    ¶2          In August of 1998, Donald and Tina purchased the marital residence and executed a note
    and mortgage with plaintiff. In 2006, the trial court entered a judgment dissolving the Weiden's
    marriage.   The court awarded Donald the marital residence and ordered him to pay Tina
    $34,380.40 for her equitable share in the property.        A marital settlement agreement was
    incorporated into the judgment. Under its terms, Tina agreed to transfer her interest in the
    marital residence to Donald by executing a quitclaim deed, and Donald agreed to refinance the
    mortgage and pay Tina her award of $34,380.40. The agreement provided:
    "TINA shall transfer all ownership interest in and to the marital residence to
    DONALD by executing a Quit Claim Deed and any other necessary documents
    upon the refinance of the mortgage and note. Upon the refinance of the mortgage,
    DONALD shall pay the sum of $34,380.40 within sixty (60) days of the entry of
    the Judgment for Dissolution of Marriage for one-half of the equity in the
    residence."
    The parties also agreed that they were responsible for their own attorney fees.
    ¶3          The law firm of Olivero & Olivero represented Donald during the divorce proceedings.
    Shortly after the dissolution judgment was entered, the firm obtained a memorandum of
    2
    judgment for $18,253 in attorney fees. Olivero & Olivero recorded the judgment with the county
    recorder on June 5, 2008.
    ¶4           In August of 2012, the bank filed a complaint for foreclosure against the marital
    residence. The Olivero law firm was named as a defendant pursuant to its recorded lien. Donald
    and Tina were also listed as defendants as the legal owners of the real estate.
    ¶5           Donald did not file an appearance or otherwise contest the proceedings. Tina filed her
    appearance on September 17, 2012. On October 4, 2012, Olivero & Olivero filed an answer to
    the complaint for foreclosure and asserted its lien against the property. On February 13, 2013,
    the trial court granted the bank’s motion for summary judgment and entered a judgment of
    foreclosure.
    ¶6           Three months later, the sheriff conducted a judicial sale, and the property was sold. The
    winning bid was $35,909.88 more than the amount Donald and Tina owed to Peru Federal.
    Shortly after the sale, the bank filed a motion for approval and set a hearing on distribution of the
    excess funds, stating that Olivero & Olivero was a recorded lienholder.
    ¶7           On October 30, 2013, Olivero & Olivero filed a motion for summary judgment on its lien
    and a petition for fees. In response to the firm’s motion, Tina filed an answer to the petition and
    a cross-petition for distribution, alleging that she had a lien against the property and that her lien
    had priority over all other liens.
    ¶8           Following a hearing, the trial court denied Tina's claim of an equitable lien and found that
    Olivero & Olivero had a valid judgment lien against the property that had been perfected. The
    court then determined that the firm should be paid first from the surplus of the sale and that any
    remaining funds should be shared by Donald and Tina as joint owners in equity.
    ¶9                                               ANALYSIS
    3
    ¶ 10           On appeal, Tina claims that the trial court erred in awarding the surplus proceeds to
    Donald's law firm. She argues that the dissolution judgment awarding her $34,380.40 as her
    equitable share in the marital residence created an equitable lien on the property that has priority
    over the judgment lien recorded by Olivero & Olivero.
    ¶ 11           Under Illinois law, the proceeds resulting from the sale of real estate under foreclosure
    shall be applied as follows: (1) the reasonable expenses of the sale; (2) the reasonable expenses
    of securing possession before the sale; (3) satisfaction of claims in the order of priority
    adjudicated in the judgment of foreclosure or order confirming the sale; and (4) remittance of
    any surplus to the appropriate parties, as ordered by the court. 735 ILCS 5/15-1512 (West 2012).
    Generally, satisfaction of claims in the order of priority is determined by debts, or liens, that
    have been properly recorded. See Heritage Federal Credit Union v. Giampa, 
    251 Ill. App. 3d 237
    , 238-39 (1993). A judgment lien is created when a certified copy of a judgment is filed in
    the office of the county recorder on the real estate of the person against whom it is entered. 735
    ILCS 5/12-101 (West 2012) (a judgment is a lien only from the time a transcript, certified copy
    or memorandum of judgment is filed in the office of the recorder in the county in which the real
    estate is located).
    ¶ 12           Also, equitable liens may be imposed on real property out of considerations of fairness.
    W.E. Erickson Construction, Inc. v. Congress-Kenilworth Corp., 
    132 Ill. App. 3d 260
    , 270-71
    (1985). The essential elements of an equitable lien are: (1) a debt, duty or obligation owing by
    one person to another; and (2) a res to which that obligation attaches. Uptown National Bank of
    Chicago v. Stramer, 
    218 Ill. App. 3d 905
    , 907 (1991). Such liens have been imposed where
    contracts manifest the intent that a particular property or funds be security for a debt whenever
    there has been a promise to convey or assign the property as security. 
    Id. at 907-08.
    While
    4
    express words are not required to create an equitable lien, "it must clearly appear from the
    instrument or the surrounding circumstances *** that the maker of the instrument intended that
    the property therein described is to be held, given, or transferred as security for the obligation."
    Hibernian Banking Ass'n v. Davis, 
    295 Ill. 537
    , 544 (1920).
    ¶ 13           In this case, we find that the dissolution judgment created an equitable lien in Tina's
    interest in the marital property. The dissolution judgment awarded Donald the marital residence.
    In exchange for her interest in the marital property, Tina agreed to execute a quitclaim deed
    giving her interest in the property to Donald, and Donald agreed to refinance the mortgage and
    use those funds to pay Tina. The specific language of the dissolution judgment clearly indicated
    that the martial residence was the security for Tina's equity interest. Upon refinance of the
    mortgage and note, Donald would receive the money necessary to buy Tina's interest in the
    property, and when Tina received her money, she would execute a quitclaim deed releasing her
    interest in the property.         Thus, it is apparent from the judgment and the surrounding
    circumstances that the parties intended that the property would be "held *** as security for the
    obligation." See Hibernian 
    Banking, 295 Ill. at 544
    . The dissolution judgment therefore created
    an equitable lien that has priority over the judgment lien recorded by Olivero & Olivero. On
    remand, Tina should be awarded the excess surplus first and any remaining funds should be used
    to satisfy the law firm's lien.
    ¶ 14                                              CONCLUSION
    ¶ 15           The judgment of the circuit court of La Salle County is reversed. The cause is remanded
    to the trial court to redistribute the surplus proceeds as directed.
    ¶ 16           Reversed and remanded with directions.
    5
    

Document Info

Docket Number: 3-14-0205

Citation Numbers: 2016 IL App (3d) 140205

Filed Date: 4/15/2016

Precedential Status: Non-Precedential

Modified Date: 4/18/2021