{ "id": 2874546, "name": "Lake City Corporation, Plaintiff-Appellee, v. Michigan Avenue National Bank of Chicago et al., Defendants.-(National Republic Bank of Chicago, Defendant and Counterclaimant-Appellant.)", "name_abbreviation": "Lake City Corp. v. Michigan Avenue National Bank", "decision_date": "1975-10-16", "docket_number": "No. 61050", "first_page": "100", "last_page": "104", "citations": [ { "type": "official", "cite": "33 Ill. App. 3d 100" } ], "court": { "name_abbreviation": "Ill. App. Ct.", "id": 8837, "name": "Illinois Appellate Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "377 U.S. 964", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 6256841, 6257161, 6255599, 6256563, 6255293 ], "opinion_index": 0, "case_paths": [ "/us/377/0964-04", "/us/377/0964-05", "/us/377/0964-02", "/us/377/0964-03", "/us/377/0964-01" ] }, { "cite": "29 Ill.2d 617", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 2822626 ], "pin_cites": [ { "page": "622" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/29/0617-01" ] }, { "cite": "336 Ill.App. 516", "category": "reporters:state", "reporter": "Ill. App.", "case_ids": [ 2424698 ], "year": 1975, "pin_cites": [ { "page": "523" } ], "opinion_index": 0, "case_paths": [ "/ill-app/336/0516-01" ] }, { "cite": "30 Ill.App.2d 492", "category": "reporters:state", "reporter": "Ill. App. 2d", "case_ids": [ 5788486 ], "pin_cites": [ { "page": "495" } ], "opinion_index": 0, "case_paths": [ "/ill-app-2d/30/0492-01" ] }, { "cite": "43 Ill.2d 347", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 2844071 ], "opinion_index": 0, "case_paths": [ "/ill-2d/43/0347-01" ] } ], "analysis": { "cardinality": 516, "char_count": 11483, "ocr_confidence": 0.723, "pagerank": { "raw": 7.559736688980635e-08, "percentile": 0.4485278871470885 }, "sha256": "15055e18ea387ba87ba4d388d0172467915548ee26ec3bb2c978951159466356", "simhash": "1:33f72886776e5c80", "word_count": 1874 }, "last_updated": "2023-07-14T15:25:47.184380+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "Lake City Corporation, Plaintiff-Appellee, v. Michigan Avenue National Bank of Chicago et al., Defendants.\u2014(National Republic Bank of Chicago, Defendant and Counterclaimant-Appellant.)" ], "opinions": [ { "text": "Mr. PRESIDING JUSTICE McGLOON\ndelivered the opinion of the court:\nPlaintiff, Lake City Corporation, filed suit in the circuit court of Cook County to recover certain real estate. The land had formerly been held in a land trust of which defendant Michigan Avenue National Bank of Chicago was the trustee. Defendant, National Republic Bank of Chicago, the owner of tire property, filed a cross-complaint against defendant Michigan Avenue seeking the market value of the property plus the trustee\u2019s fees, real estate taxes and attorneys fees expended on the property. After a bench trial, the court ordered Republic to reconvey the real estate to Michigan as trustee with the beneficial interest exclusively in plaintiff, and in return, plaintiff was to pay Republic the real estate taxes and trustee\u2019s fees expended. Attorneys fees were not awarded. Republic appeals from the trial court\u2019s order, raising the issues of whether the trial court erred by acting in the matter, and whether the court erred by not entering a judgment on the cross-complaint for the value of the beneficial interest.\nWe affirm.\nThe record reveals the following pertinent facts. In 1967, Lee J. Snitoff assigned his beneficial interest in a land trust to the Lake City Corporation as collateral in a secured transaction. Snitoff defaulted, and on June 30, 1970, the circuit court of Cook County entered an order which adjudged Lake City to be the owner of the beneficial interest of the land trust in question, Michigan Avenue National Bank of Chicago Land Trust No. 1274. Michigan Avenue, the trustee, was notified of the change of ownership, and adjusted its records accordingly.\nTwo years later, on September 27, 1972, National Republic Bank obtained a judgment against Lee J. Snitoff in the circuit court of Cook County, and initiated supplementary proceedings. Michigan Avenue National Bank was served with a summons to appear at a hearing on a citation to discover Snitoff\u2019s assets. An officer from Michigan Avenue\u2019s trust department appeared at the hearing with the bank\u2019s records relating to Snitoff\u2019s land trusts, and particularly trust no. 1274. Republic did not know about trust 1274 until the trust officer disclosed its existence, and the officer did not inform either Republic or the trial court that Snitoff\u2019s interest had already been assigned to Lake City. Acting under the belief that Snitoff, the judgment debtor, owned a beneficial interest in trust 1274, but not having personally examined the trust file which reflected the assignment, Republic\u2019s counsel obtained an order from the trial court which directed Michigan Avenue to \u201cconvey instanter by assignment the interest of the defendant Lee J. Snitoff, in and to said trusts to the Sheriff of Cook County,\u201d to be sold by the sheriff at a public sale. Michigan Avenue then conveyed to the sheriff a 70% beneficial interest in trust 1274, \u201cper Order of Circuit Court of Cook County, Illinois Case No. 72L12789, dated October 27, 1972.\u201d Michigan Avenue executed an affidavit contemporaneously with the assignment which stated that Michigan Avenue had made no previous assignments of the beneficial interest. The sheriff of Cook County sold the assigned beneficial interest in trust 1274 and three other land trusts at a public sale to Republic, which was the highest bidder. Republic bid $40,000 for the interests in the land trusts, paid from a portion of its judgment against Snitoff. On November 17, 1972, the trial court confirmed the sale of Snitoffs interest in the land trusts. On February 20, 1973, Michigan Avenue conveyed its legal interest in the real estate it held in trust 1274 to a nominee of Republic, at Republic\u2019s direction. Shortly thereafter, Republic\u2019s nominee conveyed the real estate to Chicago Title & Trust Company as trustee for tire National Republic Bank of Chicago.\nOn May 2, 1973, Lake City filed suit, asking for the return of its real estate from defendant banks. Republic filed a cross-complaint against Michigan Avenue upon the theory that if Republic were compelled to return the property, Michigan Avenue should be liable for the market value of the property because Michigan Avenue acted negligently in allowing the sale to proceed while it knew that Snitoff, the judgment debtor, did not own the property which was sold. Republic also claimed from Michigan Avenue its legal costs in the matter plus the real estate taxes and trustee\u2019s fees paid incidental to its ownership of the beneficial interest. After hearing the evidence and listening to arguments of counsel, the trial court returned the parties to their respective positions before the sale, with the exception that none of the parties could recover its legal fees. Lake City received the land and Republic received from Lake City an amount equal to the taxes and trustee\u2019s fees it paid on the property. Republic appeals.\nAs we view the facts of this case, Republic purchased Snitoff\u2019s interest in trust 1274. Under the law, a purchaser at a judicial sale is subject to the rule of caveat emptor; the court does not warrant the title to the property sold. (Checkley & Company, Inc. v. Citizens National Bank of Decatur (1969), 43 Ill.2d 347.) Since Snitoff owned no beneficial interest in trust 1274 at the time of tire sale, it follows that Republic received only that title which Snitoff owned. In other words, Republic purchased a worthless interest since Lake City owned what was once Snitoff\u2019s interest. Since Snitoff was a judgment debtor before the court, the circuit court had jurisdiction to sell Snitoff\u2019s property at a judicial sale so that the sale of Snitoffs worthless interest in trust 1274 was proper, albeit useless.\nThe legal problem arose when Michigan Avenue conveyed the res of trust 1274 to Republic\u2019s nominee on February 20, 1973. Michigan Avenue was holding the real estate as trustee for Lake City, the acknowledged assignee of SnitofFs beneficial interest. According to the terms of the trust agreement which was introduced into evidence, Michigan Avenue agreed to \u201cdeal with said real estate only when authorized to do so in writing\u201d by the beneficiary of the trust. On February 20, 1973, Republic was not a beneficiary of the trust; the beneficiary was Lake City. Michigan Avenue improperly conveyed the realty to Republic\u2019s nominee without Lake City\u2019s consent.\nLake City\u2019s complaint in chancery prayed for a mandatory injunction directing defendants to return the real estate in question, for a money judgment for reasonable attorneys fees and costs against defendants for their wrongful acts, and for any other just and proper relief. The trial court granted the injunctive relief sought. The applicable rule is well stated at 35 Ill. L. & Pr. Trusts \u00a7 225 (1958):\n\u201cAs a general rule, as long as superior rights of innocent third persons have not intervened and the property can be traced and identified, a cestui que trust may, in chancery, follow and recover, or impress a trust on, trust funds or property which have been diverted, regardless of the form into which they have been converted or into whose hands they have come.\u201d\nSuch is the rule followed by this court in In re Estate of Joseph (1961), 30 Ill.App.2d 492, 495. The trustee, Michigan Avenue, conveyed the trust res to Republic\u2019s nominee at Republic\u2019s request without the beneficiary\u2019s consent. The trust res was easily traced to another land trust of which Republic held the beneficial interest. The question therefore is whether Republic was a bona fide purchaser. If Republic were a bona fide purchaser, Lake City could not recover its property because \u201c[tjrust property cannot be followed and impressed with the trust as against one who occupies the position of a bona fide purchaser for value without notice of the trust.\u201d 35 Ill. L. & Pr. Trusts \u00a7 226 (1958).\nThe three requirements for one claiming to be a bona fide purchaser are that he purchase the property (a) for value, (b) in good faith, and (c) without notice of the trust. (Pool v. Rutherford (1949), 336 Ill.App. 516, 523; 76 Am. Jur. 2d Trusts \u00a7 269 (1975).) Republic argues that it gave value for the property because its judgment was reduced by the amount of its bid. We need not seriously consider the elements of value and good faith because the record indicates that Republic had notice of Lake City\u2019s beneficial interest in the trust property. Republic\u2019s counsel testified at trial that he spoke with Lake City\u2019s counsel about one week after tire sale, which was before confirmation of tire sale and three months before Michigan\u2019s conveyance of the legal title to Republic\u2019s nominee. During the conversation, Lake City counsel told Republic\u2019s counsel that Lake City owned the beneficial interest in trust 1274 because of the prior assignment and the order of the circuit court which declared Lake City to be the owner of the beneficial interest. Since Republic had actual notice of Lake City\u2019s beneficial interest and the surrounding facts at the time it received the legal title to the property from Michigan Avenue under color of receiving what purported to be Snitoff\u2019s property, we hold that Republic was not entitled to claim the rights of a bona fide purchaser as against Lake City. Accordingly, Lake City was entitled to recover its property and the trial court properly ordered Republic to return the property to Lake City. Republic should not be heard to complain of that portion of the court\u2019s order which directed Lake City to reimburse it for its expenses of real estate taxes and trustee\u2019s fees paid on behalf of the trust property.\nRepublic argues that it had a right to recover the market value of the land from Michigan Avenue because Michigan Avenue, with knowledge of Lake City\u2019s beneficial interest in the trust, negligently allowed Republic to proceed with the sale of Snitoffs interest. Although Michigan Avenue may have unintentionally misrepresented Snitoff\u2019s interest in trust 1274 at the citation hearing, Republic admitted that it had notice of Lake City\u2019s beneficial interest before the judicial sale was confirmed by the court. At that time, Republic knew or should have reasonably known that Snitoff may not have had any interest in trust 1274 and that Michigan Avenue had misrepresented that fact. Yet, Republic proceeded to confirmation of the sale and further actions in the face of its notice of Snitoff\u2019s prior assignment to Lake City. We hold that by so acting, Republic waived any action it may have had against Michigan Avenue resulting from the transaction at bar. Eisenberg v. Goldstein (1963), 29 Ill.2d 617, 622, cert. denied, 377 U.S. 964.\nIt is appropriate to note that although Lake City brought its action against defendants for attorneys fees and costs, the trial court\u2019s order denies all attorneys fees and costs. Since Lake City has not filed a cross-appeal, we need hot discuss the matter further.\nFor the abovementioned reasons, the judgment of the circuit court of Cook County is affirmed.\nJudgment affirmed.\nMcNAMARA and MEJDA, JJ., concur.", "type": "majority", "author": "Mr. PRESIDING JUSTICE McGLOON" } ], "attorneys": [ "Wexler, Wexler and Heller, Ltd., of Chicago, for appellant.", "Maurice J. McCarthy and Anne C. O\u2019Laughlin, both of Chicago, for appellee Michigan Avenue National Bank of Chicago.", "Samuel Morgan, of Chicago, for appellee Lake City Corp." ], "corrections": "", "head_matter": "Lake City Corporation, Plaintiff-Appellee, v. Michigan Avenue National Bank of Chicago et al., Defendants.\u2014(National Republic Bank of Chicago, Defendant and Counterclaimant-Appellant.)\n(No. 61050;\nFirst District (3rd Division)\nOctober 16, 1975.\nWexler, Wexler and Heller, Ltd., of Chicago, for appellant.\nMaurice J. McCarthy and Anne C. O\u2019Laughlin, both of Chicago, for appellee Michigan Avenue National Bank of Chicago.\nSamuel Morgan, of Chicago, for appellee Lake City Corp." }, "file_name": "0100-01", "first_page_order": 128, "last_page_order": 132 }