Athens v. Harris Trust & Savings Bank

FIFTH DIVISION
June 30, 1998

No. 1-97-1941

THOMAS ATHENS, )
) Appeal from
Plaintiff-Appellant, ) the Circuit Court
) of Cook County.
v. )
)
HARRIS TRUST AND SAVINGS BANK, as ) No. 93-CH-9458
Trustee under Trust Agreement Dated )
October 25, 1982, and Known as Trust ) Honorable
No. 41980, et al., ) Lester D. Foreman,
) Judge Presiding.
Defendants-Appellees. )

JUSTICE THEIS delivered the opinion of the court:

Thomas Athens (Athens) appeals an order entered in favor of
Harris Trust and Savings Bank (Harris), as land trustee under a trust
agreement dated October 25, 1982, and known as trust No. 41980.
Athens sought a declaratory judgment that Harris, as land trustee of
trust No. 41980 (the land trust), did not accept a condominium unit
located at 21 Court of Greenway, Northbrook, Illinois (the Northbrook
property), into the land trust. Athens, a judgment creditor of Angelo
Geocaris seeking to foreclose on his judgment lien, sought an order
that, upon the failure of the conveyance, a resulting trust was
created rendering the Geocarises the owners of the Northbrook
property. We affirm the trial court's entry of judgment in favor of
Harris.
This dispute has a textured procedural history. On June 30,
1992, Athens obtained a judgment against Angelo Geocaris in the amount
of $78,969.06. On February 19, 1993, Athens served a citation to
discover assets on Harris and seeking information on trust No. 41980.
Athens filed his second-amended verified complaint in equity for
resulting trust and other relief on July 21, 1994, seeking a
declaration that Angelo and Irene Geocaris held the Northbrook
property in a "resulting trust" and seeking to foreclose on his
judgment lien.
Athens argued that his judgment attached to the Northbrook
property because defendant, Harris as trustee, failed to "accept" the
Northbrook property as required by law and by the terms of the land
trust agreement dated October 25, 1982, identified as trust No. 41980.
Athens maintained that Harris' failure to "accept" the Northbrook
property, together with its "closure" of the trust, warrant imposition
of a resulting trust by which the Geocarises would obtain ownership of
the Northbrook property. Additionally, Athens claimed he was unaware
that the Geocarises were indebted to Harris when he recorded his
judgment lien on July 16, 1992.
Athens filed a motion for summary judgment, as did Harris. In
support of its summary judgment motion, Harris argued that the trust
held title to the Northbrook property, that Harris had a perfected
security interest in the Northbrook property pursuant to collateral
assignment, and that Harris had an equitable lien against the
Northbrook property. The trial court ruled that Harris had not
"accepted" the Northbrook property into the trust and granted Athens'
motion for summary judgment and denied Harris'. In so ruling, the
trial court reasoned that property could not be "foisted" upon the
trust, but must be accepted by it. The trial court concluded that the
affidavit statements of Kenneth Piekut (Piekut), Harris land trust
officer, claiming that Harris did "accept" the Northbrook property,
were incredible given his previous deposition testimony and Harris'
letters to the Geocarises referring to "closed trust" No. 41980.
Harris appealed the trial court's order granting Athens' motion
for summary judgment in the declaratory judgment action. On September
5, 1996, a panel of this court reversed the trial court's entry of
summary judgment in favor of Athens and affirmed its denial of Harris'
motion for summary judgment. The panel found a genuine issue of
material fact remained as to whether the Northbrook property was
"accepted" into the trust.
After a bench trial, the trial court entered judgment in favor of
Harris. The trial court found that Harris, as land trustee, and the
Geocarises as beneficiaries, had intended for the Northbrook property
to be deeded into trust No. 41980 and administered by Harris, subject
to an existing collateral assignment under land trust (collateral
ABI). Under the terms of the collateral ABI, 100% of the beneficial
interest in trust No. 41980 was assigned to Harris as security for
certain business loans guaranteed by Angelo and Irene Geocaris.
The trial court concluded that Harris, as land trustee, had
agreed to act as trustee and to accept title to the Northbrook
property. The court grounded its decision on the intention of the
parties, the particular facts of this case, and on its determination
that Harris, as trustee, was aware of the substance of the transaction
outlined in the letter agreement between an attorney for Harris, Terry
McIlroy (McIlroy), and the Geocaris attorney, Jim Roche (Roche), dated
January 30, 1992. As further evidence of Harris' acceptance, the
trial court noted Piekut's participation in facilitating the
transaction.
Athens filed a motion for reconsideration, which was denied.
Athens now appeals the trial court's determination that Harris, as
trustee of land trust No. 41980, accepted title to the Northbrook
property on January 30, 1992, claiming that the trial court's
determination is against the manifest weight of the evidence and
contrary to law.
The following events informed the trial court's decision. Angelo
and Irene Geocaris had a business lending relationship with Harris.
To facilitate that relationship, the Geocarises executed a trust
agreement at Harris on October 25, 1982, creating land trust No.
41980. On that date, the Geocarises deeded their residence at 159
North Sheridan Road, Winnetka, Illinois (Winnetka property), into
trust No. 41980. That same day, the Geocarises executed a collateral
ABI, assigning 100% of the beneficial interest in trust No. 41980 to
Harris as security for various business loans.
After the Geocarises suffered business setbacks, they entered
into an agreement with Harris on February 13, 1990, providing terms by
which they would repay their existing indebtedness to Harris.
Pursuant to paragraph 5(a) of that agreement, the parties agreed that
if the Geocarises' Winnetka property were sold, certain of the
proceeds would be applied to the Geocarises' indebtedness to Harris.
However, an amount of the proceeds of the sale not to exceed $600,000
could be used by the Geocarises to purchase a new residence, provided
Harris was given a first lien in the new residence to secure the
remaining indebtedness.
Thereafter, the Geocarises decided to sell their Winnetka
property and purchase the condominium unit at issue, the Northbrook
property, for $200,000. By a letter agreement dated January 30, 1992,
between McIlroy and Roche, the Geocarises and Harris set forth the
details of the transaction by which the Northbrook property would be
substituted for the Winnetka property as the collateral securing their
indebtedness. The Winnetka property was to be sold and deeded out of
trust No. 41980 at a closing on the morning of February 3, 1992, with
approximately $200,000 of the proceeds of that sale being reserved for
the Geocarises' purchase of the Northbrook property.
The letter agreement further provided that the Northbrook
property was to be deeded into trust No. 41980 on the afternoon of
February 3, 1992, following the sale of the Winnetka property that
same morning. Through this transaction, Harris could maintain its
first lien position pursuant to the existing collateral assignment,
which Harris had not released and which stood as security for the
Geocarises' remaining indebtedness to Harris. The letter agreement
also provided that Roche was to hold in trust the specified amount
from the sale of the Winnetka property on the morning of February 3,
1992, until after the Geocarises had closed on their purchase of the
Northbrook property that afternoon and the sellers of the Northbrook
property had deeded it into trust No. 41980.
On the day the parties signed the letter agreement, there is
evidence in the record to suggest that Roche met with McIlroy, Frank
Slocum (Slocum), the Harris lending officer working with the
Geocarises and, eventually, with Piekut. Though Piekut did not recall
the detail of that meeting, he acknowledged that his files contained a
letter to him from Roche dated January 31, 1992, referencing that
meeting of January 30, 1992, at Harris' land trust office. Piekut
further testified that he had no reason to doubt that he met with
Roche and Slocum. The letter referencing the meeting also enclosed a
standard form "Harris Bank Direction To Convey," further suggesting
that Piekut facilitated the transaction by providing Roche the forms
necessary to complete it. Neither Piekut nor anyone else at Harris
objected to having the Northbrook property deeded into trust No.
41980.
The sale of the Winnetka property and the purchase of the
Northbrook property were completed as planned on February 3, 1992.
Pursuant to the letter agreement, the sellers of the Northbrook
property executed a quitclaim deed in trust (deed in trust), deeding
the Northbrook property into trust No. 41980. The deed in trust,
which expressly provided that Harris as land trustee was the title
owner of the Northbrook property, was duly recorded on February 6,
1992. An erroneous notation on the deed in trust instructed the
recorder's office to return the instrument to Roche, not to Harris.
As a result, Harris did not receive the deed in trust until
approximately one and one-half years later.
Upon the sale of the Winnetka property, Harris Trust marked
"closed" the trust file on trust No. 41980. The trust file was
administratively "closed" because the trust file did not yet contain
the deed in trust of the newly purchased and substituted Northbrook
property. The only parcel of real estate in trust No. 41980 on
February 3, 1992, was the Winnetka property which had been deeded out
of the trust.
Piekut explained that marking a trust file "closed" constitutes
an administrative notation on the file, and the file is then
transferred from one drawer to another. Jim Perner (Perner) of Harris
testified that it was not uncommon in land trust financing and
conveyances for deeds in trust to take many months to be returned from
the recorder's office to the land trust file. Upon receipt of the
deed in trust, Harris then reopens the file and assesses
administrative fees owed, as it did in this case, from the time the
deed in trust was executed.
On June 30, 1992, approximately five months after the Northbrook
property was deeded to trust No. 41980 and recorded, Athens obtained a
judgment against Angelo Geocaris. Some months later still, Athens
served a citation to discover assets on Harris seeking information
pertaining to trust No. 41980. In its partial answer, Perner, unaware
of the letter agreement and of the deed to the Northbrook property,
stated that the trust file for trust No. 41980 was administratively
"closed." Based upon Harris' review of the file, the Geocarises also
received information indicating that the trust file for trust No.
41980 had been administratively "closed." Despite the designation of
the trust file as "closed," Perner testified that Harris had never
resigned as land trustee of trust No. 41980 or declined to accept the
Northbrook property. Perner said he himself had never accepted the
conveyance to the Northbrook property. But Piekut, who also possessed
the authority to accept conveyances into land trusts at Harris, said
he did not formally accept the conveyance to the Northbrook property
until Harris received the deed in trust. However, Piekut also stated
that there is no formal procedure for acceptance.
In this case, the trial court found that Harris accepted title to
the Northbrook property on the date of the letter agreement between
the Geocarises and Harris. In so doing, the trial court determined
that the Northbrook property was held in land trust No. 41980. In a
bench trial, the trial judge weighs the evidence and makes findings of
fact. Kalata v. Anheuser-Busch Cos., 144 Ill. 2d 425, 433, 581 N.E.2d 656, 660 (1991). A reviewing court will defer to the trial judge's
findings of fact when they are dependent upon the credibility of
witnesses, unless the findings are against the manifest weight of the
evidence. Kalata, 144 Ill. 2d at 433, 581 N.E.2d at 660. A ruling is
against the manifest weight of the evidence when the opposite
conclusion is clearly apparent. Grossinger Motorcorp, Inc. v.
American National Bank & Trust Co., 240 Ill. App. 3d 737, 747, 607 N.E.2d 1337, 1344 (1992). Questions of law are reviewed de novo.
Statler v. Catalano, 293 Ill. App. 3d 483, 486, 691 N.E.2d 384, 386
(1997).
Simply put, Athens contends that the trial court dispensed with
the "acceptance" requirement in this case when it found that Harris
accepted the Northbrook property into the trust. However, Athens
mischaracterizes the nature of the "acceptance" required of Harris as
trustee in this instance. Athens suggests that some other overt,
formal act of "acceptance" is required and is lacking. We do not
agree. The letter agreement between the Geocarises and Harris
detailed the terms of the transaction at issue. The record suggests
that Harris trust officer Piekut supplied the necessary forms to
complete the transaction after being informed that the Northbrook
property was a single-family residence, the type of property known by
him to be acceptable as the subject of a land trust administered by
Harris. The deed in trust to the Northbrook property was duly
recorded and showed Harris as the titleholder. Consequently, we
conclude that Harris did accept the Northbrook property as the subject
property of trust No. 41980 as of the date of the letter agreement,
January 30, 1992.
Athens further argues that the trial court's determination that
Harris accepted the Northbrook property on January 30, 1992, four days
before the deed for the Northbrook property into the trust was
prepared and signed, was against the manifest weight of the evidence
and contrary to law. Athens claims the terms of the trust agreement
itself prohibit acceptance prior to the conveyance of the property.
As to this claim, Athens relies on the following language contained in
the trust agreement: "that when it [Harris] has taken the title
thereto, or accepted title to any other real estate deeded to it as
trustee hereunder, it will hold it ***." Athens maintains that this
language shows that the Northbrook property had to be deeded to the
land trustee prior to acceptance, and therefore, that acceptance could
not have occurred prior to the preparation and signing of the deed in
trust.
This argument is specious for several reasons. First and
foremost, the mechanics of this particular transaction required
Harris, as trustee, to accept the Northbrook property as the
appropriate subject of trust No. 41980 prior to the execution and
delivery of the deed in trust. The trial court correctly looked to
the testimony of those involved, to the existing land trust agreement,
to the letter agreement, to the collateral assignment, to the meeting
at Harris' land trust office, and to Harris' land trust administration
practices to determine that "acceptance" was not absent in this
instance.
Second, trust officer Piekut's failure to recall the meeting of
January 30, 1992, at Harris' land trust office regarding the
Northbrook property does not lead to the legal conclusion that Harris,
as trustee, did not "accept" the Northbrook property at that time.
Nor does the fact that Harris may not have followed scrupulously its
own internal procedures undermine the effect of the parties clear
intentions and conduct. To conclude otherwise would elevate form over
substance.
Finally, we do not agree that Harris' delayed receipt of the deed
in trust should govern the outcome of this case. Athens correctly
notes the distinction between Harris' acceptance, as trustee, of the
property as the appropriate subject of a land trust and its acceptance
of the actual conveyance of the property. However, the distinction
under the peculiar facts of this case is largely formal. Athens
confuses the concept of acceptance as used in the more general context
of grantor and grantee relationships with the concept of acceptance
more appropriate in this particular factual context: a specific land
trust agreement, collateral ABI, and letter agreement between the
Geocarises and Harris.
In this case, the conveyance of the Northbrook property imposed
not a burden, but a benefit in the form of collateral securing the
Geocarises' outstanding indebtedness to Harris as trustee. The
benefit flowing from the conveyance and Harris' acceptance of it was
evidenced by the collateral ABI and the letter agreement.
Consequently, we conclude that Harris evidenced its intent to accept
title to the Northbrook property upon conveyance through its attorney
by the letter agreement dated January 30, 1992. Therefore, we affirm
the trial court's order entering judgment in favor of Harris.
Affirmed.
HOFFMAN, P.J., and HARTMAN, J., concur.