Court Opinion

ID: 7019046
Source: CourtListenerOpinion
Date Created: 2022-07-24 04:33:37.38607+00
Date Added: 2024-06-11T16:10:30.109474
License: Public Domain

Mr. JUSTICE SIMON, dissenting: I do not construe Victor v. Hillebrecht (1950), 405 Ill. 264, 90 N.E.2d 751 to authorize Devon to acquire the certificate on the Zarkin house for itself individually. Doing so was a breach of Devon’s fiduciary duty. Both Victor and the majority here stress that the trustee may buy only in a sale over which it has no control. The trustee in Victor bought on the open market. Here, in contrast, whatever the form of the transaction, Devon’s purchase of the certificate amounted in reality and in equity to a redemption. Devon controlled the sale by its right to redeem: the possibility it might exercise that right forced Home Federal to part with the certificate for less than the property was worth. Devon used its position to obtain the property under an arrangement unavailable to anyone else except the Zarkins. There are still other differences between the facts in Victor and this case. The trustee in Victor bought a share of the beneficial interest in the trust, thereby aligning his personal interest with the trust’s. Devon bought an interest adverse to the trust, an especially strong lien on the trust property. Victor says that a trustee may not buy an encumbrance on the trust property, or a claim adverse to the beneficiary. 405 Ill. 264, 269. The court emphasized that all the beneficiaries of the trust benefitted from his act. The Zarkins enjoyed no apparent benefit here. I do not view Victor as establishing principles which control this case. Devon did not have to sit on its hands and lose the money it had loaned the Zarkins. As assignee for security, Devon individually had an equity of redemption to the extent of its interest — a security interest. It was not inhibited from buying the certificate to protect itself. But when Devon, the trustee, in effect redeemed the trust property, it did so as trustee, in behalf of all concerned — the Zarkins as ultimate beneficiaries as well as Devon itself as beneficiary for security. I would therefore remand for the circuit court to consider the present facts, the contractual relations between the Zarkins and Devon, and general trust, mortgage, and other relevant law, and determine whether Devon has any remaining duties to the Zarkins. Absent contractual arrangements to the contrary, if the property on a fair sale brings more than what Devon paid for the certificate, the amount of its secured debt, and appropriate incidental sums to which Devon may be entitled, I would order whatever is left paid to the Zarkins.