{ "id": 4301302, "name": "SOUTHWEST BANK OF ST. LOUIS, Plaintiff-Appellant, v. DIMITRIOS POULOKEFALOS et al., Defendants-Appellees", "name_abbreviation": "Southwest Bank of St. Louis v. Poulokefalos", "decision_date": "2010-06-04", "docket_number": "No. 1\u201409\u20142387", "first_page": "884", "last_page": "892", "citations": [ { "type": "official", "cite": "401 Ill. App. 3d 884" } ], "court": { "name_abbreviation": "Ill. App. Ct.", "id": 8837, "name": "Illinois Appellate Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "175 Ill. App. 3d 812", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 3554255 ], "weight": 3, "year": 1988, "pin_cites": [ { "page": "815-16" }, { "page": "817" }, { "page": "817" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/175/0812-01" ] }, { "cite": "339 Ill. App. 3d 230", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 2468893 ], "year": 2003, "pin_cites": [ { "page": "233" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/339/0230-01" ] }, { "cite": "250 Ill. App. 3d 641", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 2920828 ], "year": 1993, "pin_cites": [ { "page": "644-45" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/250/0641-01" ] }, { "cite": "378 Ill. App. 3d 781", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 4275305 ], "year": 2007, "pin_cites": [ { "page": "795", "parenthetical": "failure to properly preserve an alleged error by both an objection at trial and a written posttrial motion constitutes a procedural default of that error on review" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/378/0781-01" ] }, { "cite": "296 Ill. App. 412", "category": "reporters:state", "reporter": "Ill. App.", "case_ids": [ 3152680 ], "weight": 2, "year": 1938, "opinion_index": 0, "case_paths": [ "/ill-app/296/0412-01" ] }, { "cite": "352 Ill. App. 3d 1027", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 5457682 ], "year": 2004, "pin_cites": [ { "page": "1040" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/352/1027-01" ] }, { "cite": "378 Ill. App. 3d 554", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 4274736 ], "weight": 2, "year": 2007, "pin_cites": [ { "page": "559" }, { "page": "559" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/378/0554-01" ] }, { "cite": "347 Ill. App. 3d 817", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 3949491 ], "year": 2004, "pin_cites": [ { "page": "826" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/347/0817-01" ] }, { "cite": "107 Ill. 2d 120", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 3134863 ], "year": 1985, "pin_cites": [ { "page": "124" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/107/0120-01" ] }, { "cite": "125 Ill. App. 3d 658", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 3631989 ], "year": 1984, "pin_cites": [ { "page": "662" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/125/0658-01" ] }, { "cite": "333 Ill. App. 3d 480", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 487074 ], "weight": 6, "year": 2002, "pin_cites": [ { "page": "484" }, { "page": "484" }, { "page": "484" }, { "page": "484", "parenthetical": "\"[rjemoval is allowed only if, after the fixture is removed, the realty is the same as it was prior to the tenant's tenancy\"" }, { "page": "484" }, { "page": "484" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/333/0480-01" ] } ], "analysis": { "cardinality": 824, "char_count": 19607, "ocr_confidence": 0.779, "pagerank": { "raw": 9.115162856034739e-08, "percentile": 0.5066708522388758 }, "sha256": "3aa86918f789960a9bf8b0520d11fb93d6929812bdad1d6fd753a73a2aa9f500", "simhash": "1:ce2ce6e7c22b241e", "word_count": 3201 }, "last_updated": "2023-07-14T16:03:46.574655+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "SOUTHWEST BANK OF ST. LOUIS, Plaintiff-Appellant, v. DIMITRIOS POULOKEFALOS et al., Defendants-Appellees." ], "opinions": [ { "text": "JUSTICE FITZGERALD SMITH\ndelivered the opinion of the court:\nPlaintiff Southwest Bank of St. Louis (Bank) instituted a replevin suit against defendants Dimitrios Poulokefalos and Nikolaos Kalouris (Owners or Landlords), individually and as beneficiaries of a land trust. Bank now appeals from an order of the circuit court finding that certain distrained property was permanently attached to real estate such that it had become fixtures and, accordingly, Landlords had a priority interest over the distrained property superior to the Bank\u2019s Uniform Commercial Code lien (810 ILCS 5/9 \u2014 102 (West 2008)). For the following reasons, we affirm.\nBACKGROUND\nLandlords own a commercial building located at 1975 Cornell Avenue in Melrose Park, Illinois (the Premises). In December 2003, Landlords entered into a lease agreement (the Lease) with Converters Extruded Films, Inc. (Original Tenant), leasing the premises for a term of five years, from February 1, 2004, to January 31, 2009. The lease included a provision (section 9.1.12) stating that, at termination:\n\u201call alterations, additions, floor covering and carpeting thereto and all decorations, fixtures, furnishings, partitions, heating, ventilating and cooling equipment and other equipment, which are permanently affixed to the Premises, which (if not then the property of the Landlord) shall thereupon become the property of Landlord without any payment to tenant.\u201d\nIn 2003, Original Tenant installed various large pieces of equipment to be used in the commercial production of plastics. Owner Pou-lokefalos testified at trial that the equipment was brought in piece by piece, reassembled and welded by Original Tenant. According to Owners, the equipment included silos and large extruding machines that ran from floor to ceiling, were bolted to the floor, the ceiling rafters and joists, and the walls, along with a series of pipes, tubes, and conduit carrying raw materials and electricity to the machinery. The assembly required removing some rafters in the ceiling and replacing them with new rafters. After the silos were installed, a wall was built to divide the space rented by Original Tenant. Owner Poulokefalos testified that he discussed with Original Tenant that the machinery could never be removed because it required the removal of some of the rafters. As a result, Original Tenant considered purchasing the building.\nTwo years later, however, Original Tenant sold its business to C. Extruded Films, L.L.C., a Missouri limited liability company (Second Tenant). On December 5, 2005, Original Tenant assigned its lease to Second Tenant, and Second Tenant remained in possession of the premises thereafter.\nOn December 5, 2005, Bank loaned Second Tenant $1 million (the loan). The loan was secured by a commercial security agreement between Bank and Second Tenant, pursuant to which Second Tenant granted a security interest in all equipment, inventory and other property of Second Tenant. The security agreement and financing statement genetically identified \u201cfixtures\u201d as property security for the loan. Shortly thereafter, on December 20, 2005, Bank filed its UCC financing statement with the Missouri Secretary of State. However, Bank did not record its UCC financing statement with the Cook County recorder of deeds.\nSecond Tenant ceased paying rent in September 2008 and abandoned the leasehold in October 2008. In doing so, it abandoned 12 plastic extruding machines and 3 silos that were attached to the floors, ceilings and duct work, as well as heavy duty electrical systems and piping connecting the machinery.\nLandlords filed a complaint and distress warrant on December 11, 2008, seeking to distrain the plastic extruding machines and silos still in Landlords\u2019 possession for past-due rent and property taxes. Landlords claimed a landlords\u2019 lien on the equipment in the amount of $235,000. The distrained property was inventoried in an exhibit to the distress warrant. On December 12, 2008, Bank filed a replevin lawsuit seeking attachment of the same property sought by Landlords to satisfy its rent claim. The two causes were consolidated on January 21, 2009.\nA bench trial of Bank\u2019s replevin complaint was heard on December 29, 2008. At trial, Landlords claimed a priority interest over the trade fixtures and leasehold fixtures abandoned by Second Tenant by virtue of its landlord\u2019s lien for unpaid rent and section 9.1.12 of the lease. Bank claimed a priority interest by virtue of its UCC financing statement.\nAt trial, owner Poulokefalos testified that it was the intent of both himself and Original Tenant at the signing of the lease that Original Tenant would bring equipment into the building. However, there was no specific agreement about what would happen to the equipment at the termination of the lease other than section 9.1.12 of the lease, which he understood to mean \u201cwhatever is bolted in the floor stays with the building.\u201d Poulokefalos testified that the removal of the dis-trained property would cause substantial damage to the real estate. He testified that the electrical panels, conduit, and air pipes servicing the equipment were attached to the walls and ceilings. According to Poulokefalos, at the time of the lease signing, the space in question was 50,000 square feet of open space. Original Tenant informed Pou-lokefalos that it needed a wall built. However, it had to install equipment before building the wall or it would be unable to bring the equipment in. Accordingly, a wall was constructed after Original Tenant installed the equipment at a cost of $30,000. Now, this wall must be removed in order to remove the equipment. Many rafters supporting the ceiling over a 24,000-square-foot area used by Original Tenant would also have to be removed and replaced at substantial cost that could exceed the value of the equipment. The equipment itself, welded together, would have to be dismantled by cutting it into pieces with a blowtorch, relegating it to scrap. Unbolting the equipment from the floors would leave many holes in the floor.\nEdward Mundt, Second Tenant\u2019s general manager and chief financial officer, testified that machinery was bolted to the concrete floor with industrial anchor bolts. He did not know if the machinery was attached to the rafters. He could remove the machinery from the building, by breaking it down into several pieces, unbolting it from the floor, and lifting it with a fork truck. It could be moved out of the building through garage doors.\nOn June 10, 2009, the trial court entered a memorandum decision and judgment in which it made the following findings of fact and conclusions of law: (1) the Bank has a perfected security interest in all of its collateral; (2) perfection of the Bank\u2019s security interest in its collateral did not require a fixture filing; (3) Landlords had a perfected landlord\u2019s lien upon the disputed equipment; (4) the Bank\u2019s security interest in its collateral has priority over the landlord\u2019s lien, and the Bank\u2019s security interest is entitled to satisfaction prior to the landlord\u2019s lien; (5) Landlords\u2019 right to possession of all fixtures and equipment permanently attached to the premises is superior to the Bank\u2019s security interest; (6) the disputed equipment cannot be removed from the premises without material damage to the premises; and (7) the disputed equipment is permanently attached to the premises and constitutes trade fixtures. The trial court concluded that the Bank\u2019s security interest is subordinate to the landlord\u2019s lien as to trade fixtures because the Bank did not file a fixture filing.\nThe Bank filed a motion to reconsider and to clarify the memorandum decision. Another hearing was held, after which the court entered a written order clarifying the judgment:\n\u201cTHE COURT FINDS that (1) the twelve (12) blow film extrud-ers identified as Mach #1 to 12, (2) three (3) indoor silos with 50,000 lb. Capacity, and (3) the Landtech Q Series Stretch Wrap (\u2018Trade Fixtures\u2019), as identified on the Equipment List, are so permanently affixed to the real estate that they cannot be removed without material damage, and that they constitute trade fixtures;\nIT IS THEREFORE ORDERED that the Memorandum Decision and Judgment entered on June 10, 2009, is modified so as to provide that the Owners have priority as to the Trade fixtures and that the Bank has priority as to all other items on the Equipment List;\nIT IS FURTHER ORDERED that the Bank may remove all property subject to the Bank\u2019s security interest, except the Trade Fixtures, provided that the Bank shall reimburse the Landlord for any damage to the premises caused by such removal.\u201d\nThe Bank appeals.\nANALYSIS\nBank first contends that the trial court erred in determining that the distrained properties were trade fixtures. Specifically, Bank contends that evidence adduced at trial failed to show that the dis-trained property was permanently attached to the real estate and could not be removed without substantial destruction of the Premises. We disagree.\nIn Illinois, fixtures and trade fixtures are differentiated under the law. A fixture is an item of personal property which is incorporated into or attached to realty. Nokomis Quarry Co. v. Dietl, 333 Ill. App. 3d 480, 484 (2002). Because a fixture is deemed a part of the realty, it cannot be removed by a tenant without incurring liability. Nokomis, 333 Ill. App. 3d at 484. A finding that certain property is a fixture requires the court to consider a number of factors, including the agreement and intent of the parties, the nature of the attachment to the real estate, and whether the property can be removed without damage to the real estate. See Crane Erectors & Riggers, Inc. v. La Salle National Bank, 125 Ill. App. 3d 658, 662 (1984).\nA trade fixture is an item of personal property that is attached to the realty by a tenant for the purpose of carrying on the tenant\u2019s business. Nokomis, 333 Ill. App. 3d at 484. A tenant may only remove a trade fixture from the realty if doing so would not damage the realty. Nokomis, 333 Ill. App. 3d at 484 (\u201c[rjemoval is allowed only if, after the fixture is removed, the realty is the same as it was prior to the tenant\u2019s tenancy\u201d). \u201cIn other words, a fixture is a trade fixture when the tenant leases property and adds a fixture for use in the tenant\u2019s business. Before the lease expires, the tenant would be allowed to remove a trade fixture, so long as the tenant did not damage the realty in the process of the removal.\u201d Nokomis, 333 Ill. App. 3d at 484.\nOn review of a bench trial, we will not disturb the trial court\u2019s findings of fact unless they are against the manifest weight of the evidence. Chicago Investment Corp. v. Dolins, 107 Ill. 2d 120, 124 (1985). A finding is against the manifest weight of the evidence only when an opposite conclusion is apparent or when the findings appear to be unreasonable, arbitrary, or not based on the evidence. Webb v. Mount Sinai Hospital & Medical Center of Chicago, Inc., 347 Ill. App. 3d 817, 826 (2004). \u201cA trial court\u2019s judgment following a bench trial will be upheld if there is any evidence supporting it.\u201d Nokomis, 333 Ill. App. 3d at 484.\nHere, the trial court found that all of the distrained property were fixtures that had been \u201cpermanently attached to the Premises, including floors, ceilings, and heavy duty electrical systems and cannot be removed without substantial destruction of the leasehold.\u201d The property distrained by Owners was itemized on the distress warrant and inventory. Prior to trial, Owners abandoned their claim to an inventoried fork lift truck, conceding that the fork lift was not attached to the real estate. The remaining inventoried property consisted mainly of huge manufacturing machines, known as blow film extruders, used to manufacture large rolls of plastic, and silos used to feed raw plastic pellets to the extruders. Owner Poulokefalos testified at trial that the blow film extruders and silos were bolted to the floors, ceilings, and walls. The electrical fixtures and air pipes were attached in the same way. He testified that, at the time the distrained property was installed, the building was permanently modified to accommodate installation and connection of the equipment to the real estate: ceiling rafters were removed and relocated, and a permanent interior wall was built after the silos were installed. Owner further testified that the removal of the extruders and silos would affect the structural integrity of the building and destroy the equipment itself. Specifically, Owner testified that, to remove the large equipment, he would have to remove rafters as well as destroy part of the wall. He also testified that removal of the equipment would leave many holes in the cement floor.\nBank relies on Mundt\u2019s testimony that the silos, compressors and extruders could be removed without materially damaging the building. Bank asserts that the \u201cLandlords offered no evidence to establish that removal of the Bank\u2019s Collateral from the Premises would damage the building.\u201d Our review of the record leads us to conclude differently. The building owner, Poulokefalos, who was present at the time the equipment was installed, testified that the property would be substantially damaged upon removal of the equipment. Mundt, on the other hand, who was not present when the equipment was installed, testified that the equipment could simply be unbolted from the floor and lifted out the door. A trial court is in a superior position to observe the witnesses while testifying, to judge their credibility, and determine the weight of their testimony. Cyclonaire Corp. v. ISG Riverdale, Inc., 378 Ill. App. 3d 554, 559 (2007). Accordingly, a trial court\u2019s findings of fact are entitled to great deference by this court. Cyclonaire Corp., 378 Ill. App. 3d at 559. Moreover, resolving conflicts relating to the credibility of witnesses and the weight to be afforded their testimony is the province of the trial court. 1350 Lake Shore Associates v. Casalino, 352 Ill. App. 3d 1027, 1040 (2004). Here, the trial court heard the evidence presented at trial and resolved conflicts in favor of Owners. The trial court\u2019s finding that removal of the equipment would cause destruction to the building was not against the manifest weight of the evidence.\nNext, Bank contends that the trial court erred in finding that Owners\u2019 interest in the distrained property had priority over Bank\u2019s unperfected UCC lien. Specifically, Bank relies on Cottrell v. Gersen, 296 Ill. App. 412 (1938), to argue that a landlord\u2019s right to distrain the personal property of a tenant for nonpayment of rent does not extend to grant Landlords a lien upon the tenant\u2019s property. We disagree.\nInitially, we note that Bank has waived this argument by failing to raise it at the trial level. See Addis v. Exelon Generation Co., 378 Ill. App. 3d 781, 795 (2007) (failure to properly preserve an alleged error by both an objection at trial and a written posttrial motion constitutes a procedural default of that error on review). Waiver aside, we find Bank\u2019s argument unpersuasive.\nAt issue here is the application of rules of priority between Landlords\u2019 lien and Bank\u2019s asserted security interest in fixtures. The priority of parties\u2019 respective security interests is a question of law. Travelers Insurance Co. v. First National Bank of Blue Island, 250 Ill. App. 3d 641, 644-45 (1993). Our review of questions of law is de novo. See, e.g., Du Page County Board of Review v. Department of Revenue, 339 Ill. App. 3d 230, 233 (2003).\nA landlord\u2019s distress remedy arises under section 9 \u2014 301 of the Code of Civil Procedure, which provides:\n\u201cIn all cases of distress for rent, the landlord, by himself or herself, his or her agent or attorney, may seize for rent any personal property of his or her tenant that may be found in the county where such tenant resides, and in no case shall the property of any other person, although the same may be found on the premises, be liable to seizure for rent due from such tenant.\u201d 735 ILCS 5/9\u2014 302 (West 2008).\nIllinois law grants a landlord a common law lien on a tenant\u2019s property for the nonpayment of rent that is perfected by the filing of a distress warrant and inventory with the clerk of the court. 735 ILCS 5/9 \u2014 302 (West 2008); First State Bank of Maple Park v. De Kalb Bank, 175 Ill. App. 3d 812, 815-16 (1988). Here, Landlords properly filed a distress warrant along with a written inventory and photographs. Cottrell is inapposite to the case at bar, where the parties in Cottrell failed to initiate the distress proceedings by filing a distress warrant. Cottrell, 296 Ill. App. 412. Unlike Cottrell, Landlords in the instant case properly initiated and prosecuted a distress proceeding by filing a complaint and copy of the distress warrant along with an inventory to the clerk of the court, served process on Second Tenant, and obtained a default judgment. Accordingly, after determining that the distrained items were fixtures, the trial court did not err in deciding that Landlords had perfected their lien by filing and prosecuting the distress warrant.\nMoreover, the trial court did not err in finding that the perfected landlord\u2019s lien is superior to Bank\u2019s unperfected security interest with respect to all fixtures permanently attached to the premises. The lien priorities between a landlord\u2019s lien and a UCC lien are governed by non-UCC principles. First State Bank of Maple Park, 175 Ill. App. 3d at 817. \u201cApplying [these] non-UCC principles, generally a lien which is first in time has priority [citation] and is entitled to prior satisfaction out of the property it binds.\u201d First State Bank of Maple Park, 175 Ill. App. 3d at 817.\nBank established at trial that it filed a UCC financing statement with the Missouri Secretary of State claiming a security interest in property belonging to the tenant. However, the filing was insufficient to perfect its security interest in fixtures located on Landlords\u2019 property, where a fixture filing was also required in the Cook County recorder of deeds. 810 ILCS 5/9 \u2014 501 (West 2008). Accordingly, Bank did not perfect its security interest in the fixtures, and the trial court correctly concluded that the perfected landlord\u2019s lien has priority over Bank\u2019s unperfected UCC lien under the common law rule of first in time, first in right.\nFor the foregoing reasons, we affirm the judgment of the circuit court of Cook County.\nAffirmed.\nTOOMIN, EJ., and HOWSE, J, concur.\nBank filed its financing statement with the Missouri Secretary of State. Tenant Two is organized under the laws of the State of Missouri, and is a \u201cregistered organization,\u201d as defined in section 9 \u2014 102(70) of the Illinois Uniform Commercial Code (810 ILCS 5/9 \u2014 102(70) (West 2008)). Pursuant to section 9 \u2014 370(e), the location of a registered organization is the state of organization. Therefore, Bank\u2019s UCC financing statement was properly filed in the State of Missouri. This is not at issue in this appeal.\nThis cause, LaSalle Bank, N.A. U/T/A No. 4020 v. C. Extruded Films, LLC, 08L13689, was filed in the circuit court of Cook County.\nA default judgment in the amount of $235,410.26 was entered against Second Tenant on February 26, 2009.", "type": "majority", "author": "JUSTICE FITZGERALD SMITH" } ], "attorneys": [ "Richard C. Jones, Jr. and Tina M. Jacobs, both of Law Office of Jones & Jacobs, of Chicago, for appellant.", "Robert J. Wagner, of Robert J. Wagner, EC., of Crystal Lake, for appellee." ], "corrections": "", "head_matter": "SOUTHWEST BANK OF ST. LOUIS, Plaintiff-Appellant, v. DIMITRIOS POULOKEFALOS et al., Defendants-Appellees.\nFirst District (5th Division)\nNo. 1\u201409\u20142387\nOpinion filed June 4, 2010.\nRichard C. Jones, Jr. and Tina M. Jacobs, both of Law Office of Jones & Jacobs, of Chicago, for appellant.\nRobert J. Wagner, of Robert J. Wagner, EC., of Crystal Lake, for appellee." }, "file_name": "0884-01", "first_page_order": 900, "last_page_order": 908 }