Bank of New York v. Unknown Heirs and Legatees

Second Division
December 5, 2006
No. 1-05-2299
BANK OF NEW YORK, Acting Solely ) Appeal from the
as Trustee for ) Circuit Court of
EQCC Trust 2001-2, ) Cook County,
) Chancery Division
Plaintiff-Appellee, )
)
(Sheila Portlock and )
Dewey J. Hall, )
Intervenors-Appellees). )
)
v. ) No. 03 CH 12460
)
UNKNOWN HEIRS AND LEGATEES, if any, ) Honorable
of Ruth Hatch a/k/a Ruth Slater, ) Martin S. Agren
UNKNOWN OWNERS, and NONRECORD ) Judge Presiding
CLAIMANTS, )
)
Defendants-Appellants )
JUSTICE HALL delivered the opinion of the court:
Defendant Jesse M. Hatch appeals, pro se, the trial court's
order granting the motion to reconsider of plaintiff, Bank of New
York, acting solely in its capacity as trustee for EquiCredit
Corporation(EQCC) Trust 2001-2, and the motion to vacate of
intervenors Sheila Portlock and Dewey J. Hall. For the reasons
that follow, we reverse and remand.
This appeal arises from proceedings relating to a
foreclosure complaint filed by plaintiff bank. On July 28, 2003,
plaintiff filed a complaint to foreclose a mortgage secured by
residential property of the decedent Ruth Hatch, also known as
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Ruth Slater.
The complaint named as defendants the unknown heirs and
legatees, if any, of Ruth Hatch, a/k/a Ruth Slater, unknown
owners and nonrecord claimants. On November 7, 2003, plaintiff
filed an affidavit as required by section 2-206(a) the Code of
Civil Procedure (Code) (735 ILCS 5/2-206(a) (West 2004)), for
service by publication. Plaintiff then served the unknown heirs
of Ruth Hatch by publication in the Chicago Daily Law Bulletin on
November 11, 18, 25, 2003.
On December 4, 2003, defendant, an inmate currently serving
a natural-life sentence at the Joliet Correctional Center, filed
a pro se motion1 to dismiss the foreclosure complaint, alleging
that he was one of Ruth Hatch's heirs (her son) and that service
by publication was insufficient as to him because plaintiff
failed to conduct a proper investigation to locate his
whereabouts and effect personal service upon him prior to service
by publication. Attached to the motion was an affidavit from
defendant averring that he mailed a copy of the motion to
plaintiff's attorneys' office.
On December 8, 2003, defendant wrote the clerk of the court
inquiring as to the status of his motion to dismiss. On December
1
In his pro se appellant brief, defendant maintains he
filed all his pleadings from prison.
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12, 2003, another of Ruth Hatch's sons, Hosie Hatch, filed an
answer and appearance, along with an application to sue or defend
as an indigent person.
On January 14, 2004, plaintiff mailed defendant a notice of
motion advising him that the case was set for hearing in February
2004, at which time plaintiff would move for entry of orders for
summary judgment, default, judgment of foreclosure and sale, and
appointment of a foreclosure sale officer.
On February 3, 2004, defendant filed a supplemental motion
to dismiss for insufficiency of service of process. In the
supplemental motion, defendant argued that plaintiff's pleadings
were not signed by an attorney of record and therefore should be
stricken. He also argued that the action should be dismissed
because the insufficient service defrauded defendants out of
their right to be served with copies of the summons and complaint
thereby preventing them from setting forth reasonable and
informed answers and defenses.
On February 5, 2004, at a hearing on plaintiff's motion for
judgment of foreclosure and sale, counsel for defendant's
brother, Elijah R. Hatch, was granted leave to file substitute
appearance on his behalf and given seven days to answer or
otherwise plead. The matter was then continued to February 26,
2004.
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On February 26, 2004, a judgment for foreclosure and sale
and related orders were entered. On the same date, the trial
court also entered summary judgment in favor of plaintiff and
against Hosie Hatch and Elijah R. Hatch. The trial court entered
the judgment for foreclosure and sale without ruling upon
defendant's prior motion to dismiss and supplemental motion to
dismiss.
Elijah R. Hatch was appointed the supervised administrator
of Ruth's estate on April 8, 2004. On May 28, 2004, defendant
again wrote the clerk of the circuit court inquiring as to
whether his pro se motions to dismiss had been ruled upon and if
not, to alert the trial court to his inquiry and request for a
ruling in the matter.
On July 13, 2004, the subject property was sold at auction
to third-party bidder Thuruthikara Kurian for an amount in excess
of the debt secured by the property. The judicial sale was
approved by the trial court on August 19, 2004, with a 30-day
stay on possession.
On September 7, 2004, defendant filed a motion to vacate the
judgment of foreclosure and sale. On October 15, 2004, he filed
a motion for hearing and/or ruling upon his motion for relief
from judgment. The trial court maintained it first became aware
of defendant's existence the first week of November 2004, when a
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letter from defendant postmarked September 28, 2004, made its way
to the court.
On December 16, 2004, Thuruthikara Kurian sold the subject
property to Sheila Portlock and Dewey J. Hall pursuant to a
warranty deed.
On February 8, 2005, pursuant to section 2-1401 of the Code
of Civil Procedure (Code) (735 ILCS 5/2-1401 (West 2002)), the
trial court granted defendant's motion for relief from judgment
on the grounds that plaintiff failed in its obligation to make
the court aware of defendant's existence. The trial court
determined that plaintiff knew of defendant's existence prior to
the judgment of foreclosure and sale, and as early as December 4,
2003, when it received defendant's pleadings, and yet had failed
to serve defendant personally, make him a party defendant, or
make the court aware of his existence. The trial court then
vacated the judgment of foreclosure and sale declaring it void ab
initio.
In response, the plaintiff filed a motion to reconsider, and
the purchasers Sheila Portlock and Dewey J. Hall were granted
leave to intervene and to file their motion to vacate.
On May 31, 2005, the trial court granted the plaintiff's
motion to reconsider and the intervenors' motion to vacate. The
trial court determined that the intervenors' interest in the
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subject property was protected by section 2-1401(e) of the Code
(735 ILCS 5/2-1401(e) (West 2002)), which protects bona fide
purchasers of property from the effects of an order setting aside
a judgment affecting title to the property if the purchasers were
not parties to the original action and a lack of jurisdiction did
not affirmatively appear in the record. Defendant now appeals.
ANALYSIS
As an initial matter, plaintiff requests that we strike
defendant's brief because its length exceeds that allowed by
Supreme Court Rule 341(a) (see Official Reports Advance Sheet No.
21 (October 17, 2001), R. 341(a), eff. October 1, 2001). In
light of defendant's pro se status and our desire to decide this
case on the merits rather than a technicality, we decline
plaintiff's request.
Turning to the merits, defendant raises a number of issues
on appeal. However, based on our disposition of the case, we
need only address one issue: whether the trial court obtained
personal jurisdiction over defendant by publication prior to
entry of the judgment of foreclosure and sale. For the reasons
that follow, we find that the trial court failed to obtain such
personal jurisdiction over defendant, and therefore, we reverse
and remand.
In the trial court's order granting the plaintiff's motion
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to reconsider and the intervenors' motion to vacate, the court
claimed to have properly obtained personal jurisdiction over
defendant by relying on service by publication pursuant to
section 2-206(a) of the Code (735 ILCS 5/2-206(a) (West 2004)).
Personal jurisdiction acquired by means of publication is
only allowed in certain limited cases and then only after strict
compliance with the statutory prerequisites governing such
service. Bell Federal Savings & Loan Association v. Horton, 59
Ill. App. 3d 923, 926, 376 N.E.2d 1029 (1978). In order for a
trial court to obtain personal jurisdiction over a defendant by
publication, section 2-206(a) of the Code requires a plaintiff to
file an affidavit stating that the defendant "on due inquiry
cannot be found *** so that process cannot be served upon him or
her" and "stating the place of residence of the defendant, if
known, or that upon diligent inquiry his or her place of
residence cannot be ascertained." 735 ILCS 5/2-206(a) (West
2004). Thus, due inquiry and due diligence are statutory
prerequisites for service by publication. Home State Savings
Association v. Powell, 73 Ill. App. 3d 915, 917, 392 N.E.2d 598
(1979).
Our courts have determined that these statutory
prerequisites are not intended as pro forma or useless phrases
requiring mere perfunctory performance, but, on the contrary,
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require an honest and well-directed effort to ascertain the
whereabouts of a defendant by inquiry as full as circumstances
permit. See Graham v. O'Connor, 350 Ill. 36, 41, 182 N.E. 764
(1932); City of Chicago v. Leakas, 6 Ill. App. 3d 20, 27, 284
N.E.2d 449 (1972). Where the efforts to comply with these
statutory provisions have been casual, routine, or spiritless,
service by publication is not justified. Home State Savings
Association, 73 Ill. App. 3d at 917; Bell Federal Savings & Loan
Association, 59 Ill. App. 3d at 927.
A defendant may challenge a plaintiff's section 2-206(a)
affidavit by filing an affidavit showing that upon due inquiry,
he could have been found. Household Finance Corp. III v. Volpert,
227 Ill. App. 3d 453, 455, 592 N.E.2d 98 (1992). Upon such a
challenge, a plaintiff must produce evidence establishing due
inquiry. First Bank & Trust Co. v. King, 311 Ill. App. 3d 1053,
1056, 726 N.E.2d 621 (2000).
The record in this case reveals that no more than a cursory
inquiry was made prior to plaintiff filing the affidavit for
service by publication. The record indicates that plaintiff was
in contact with at least two of the decedent's heirs, Hosie Hatch
and Elijah R. Hatch, yet failed to question either of them as to
defendant's existence or whereabouts prior to seeking service by
publication.
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Plaintiff clearly failed to exercise the due inquiry and
diligence required by section 2-206(a) to permit service by
publication upon defendant. See Bell Federal Savings & Loan
Association, 59 Ill. App. 3d at 927 (diligent inquiry required
plaintiff to, among other things, make inquiries of defendants'
neighbors). Moreover, the trial court found that plaintiff knew
of defendant's existence prior to the judgment of foreclosure and
sale, as early as December 4, 2003, when it received defendant's
pleadings, and yet failed to serve defendant personally, make him
a party defendant, or make the court aware of his existence.
Plaintiff's affidavit for service by publication does not
affirmatively establish due inquiry and diligence, and was
therefore insufficient to give the trial court personal
jurisdiction over defendant.
We also find the trial court erred in holding that the
intervenors were bona fide purchasers of the subject property
entitled to protection under section 2-1401(e) of the Code (735
ILCS 5/2-1401(e) (West 2002)). The trial court found that the
intervenors' interest in the subject property was protected by
section 2-1401(e) of the Code, which protects bona fide
purchasers of property from the effects of an order setting aside
a judgment affecting title to the property if the purchasers were
not parties to the original action and a lack of jurisdiction did
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not affirmatively appear from the record. We disagree with the
trial court's finding on this issue, because the lack of
jurisdiction affirmatively appears in the record such that the
sale of the subject property to the intervenors should be set
aside.
In determining whether a lack of jurisdiction is apparent
from the record, reviewing courts look to the whole record, which
includes the pleadings, the return on process, the jury verdict,
and the court's judgment or decree. State Bank of Lake Zurich v.
Thill, 113 Ill. 2d 294, 313, 497 N.E.2d 1156 (1986). In this
case, the lack of jurisdiction affirmatively appears in the
record in the form of plaintiff's defective affidavit and the
allegations set forth in defendant's motions to dismiss for
insufficiency of service, which were sufficient to put the
intervenors on notice that service by publication on defendant
might have been improper. A subsequent purchaser cannot be a
bona fide purchaser for value if he has actual or constructive
notice of the outstanding rights of other parties. City of
Chicago v. Cosmopolitan National Bank, 120 Ill. App. 3d 364, 367,
458 N.E.2d 11 (1983). Moreover, a purchaser having notice of
facts that would put a prudent man on inquiry is chargeable with
knowledge of other facts he might have discovered by diligent
inquiry. In re Application of County Treasurer, 30 Ill. App. 3d
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235, 240, 332 N.E.2d 557 (1975).
In the case at bar, the intervenors had constructive notice
of defendant's interest in the subject property. The intervenors
were bound to inquire into the nature and extent of the
defendant's interest.
In conclusion, we find that the trial court failed to obtain
personal jurisdiction over defendant by publication prior to
entering the judgment of foreclosure and sale, and therefore the
judgment was void ab initio. See In re Marriage of Schmitt, 321
Ill. App. 3d 360, 367, 747 N.E.2d 524 (2001) (where a trial court
does not have personal jurisdiction over a party, any order or
judgment entered against him is void ab initio and subject to
direct or collateral attack at any time). In addition, the
intervenors' interests in the subject property was not protected
by section 2-1401(e) of the Code because a lack of jurisdiction
affirmatively appears from the record. See Pruitt v. Jockisch,
228 Ill. App. 3d 295, 304, 591 N.E.2d 942 (1992) (protection
under section 2-1401(e) of the Code is not available where a lack
of jurisdiction affirmatively appears from the record).
Consequently, we find that the trial court erred in granting the
plaintiff's motion to reconsider and the intervenors' motion to
vacate.
Accordingly, the judgment of the circuit court of Cook
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County is reversed and the cause remanded to the court for
further proceedings consistent with the views expressed herein.
Reversed and remanded.
WOLFSON, P.J., and SOUTH, J., concur.
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