Court Opinion

ID: 9735184
Source: CourtListenerOpinion
Date Created: 2023-08-26 18:04:37.359356+00
Date Added: 2024-06-11T18:26:55.888036
License: Public Domain

JUSTICE STEIGMANN, dissenting: While I have no disagreement with the majority’s assessment of the present law applicable to this case and the result it compels, I respectfully dissent because I conclude the law must be changed. While I am normally very reluctant to advocate judicial modification of the law, this case is the exception for two reasons: (1) as shown by the absence of any statutory citations in the majority opinion, the law in this area is all judge-made to begin with, thus modification would not be infringing upon any legislative prerogatives, and (2) the result which the present law compels is truly unconscionable. A short version of the events in this case is the following. In June 1974, Miller entered into an installment contract for deed with Wines, wherein Wines conveyed five acres, including a residence, to Miller. The purchase price was $28,000. The contract provided for installment payments, with the deed to be conveyed by Wines to Miller upon final payment. Wines retained the right to mortgage the property to the extent of the unpaid balance of the contract. Under the terms of the contract, Miller took possession of the real estate and resided thereon. By November 13, 1984, Miller had paid over $23,500 to Wines on this contract, leaving an unpaid balance of approximately $4,500. On November 13, 1984, Wines executed a mortgage with the Fireman’s Fund Mortgage Corporation in order to secure a loan to Wines in the amount of $35,000. The mortgage Wines executed to the mortgage company listed as security the real estate which was the subject matter of Wines’ contract with Miller. On November 13, 1984, Miller signed a document entitled, “Subordination of Real Estate Contract,” through which Miller purportedly subordinated his $24,500 interest in this real estate to the mortgage company. In exchange Miller got — nothing! When questioned at oral argument, counsel for the mortgage company was unable to suggest how Miller benefitted in the slightest from executing the subordination agreement. Instead, the mortgage company claims that under the law, any such benefit to Miller need not be shown as long as somebody benefitted, namely, Wines. In its brief to this court, the mortgage company argues (one hopes “tongue-in-cheek”) that the subordination agreement “is clear and unambiguous.” By reviewing the early pages of the majority opinion, the reader can judge for herself whether the subordination agreement is “clear and unambiguous.” It seems to me that the agreement is an example of legalese at its worst, clearly (and probably intentionally) beyond the ken of all but the most intelligent and financially sophisticated laymen. This record shows that Wines wanted to borrow $35,000 and that the mortgage company was happy to lend Wines that money, as long as it had the collateral of a 100% interest as first mortgagor in the real estate upon which Miller was living. That interest protected the mortgage company in the event that Wines defaulted on the loan. Wines in fact did so. It is clear from this record that Miller derived no benefits of any kind from signing the subordination agreement. This is not a case in which some relative or close friend is, in effect, cosigning a note to secure a loan. There is no hint in this record that Miller and Wines had anything other than an arm’s-length business relationship. Instead, this is a case in which the mortgage company knew that Miller was going to be asked by Wines to sign the subordination agreement, and it knew that Miller would derive no benefit therefrom, while signing away what is likely to be the major financial asset of his life. Miller testified that he signed the agreement because Wines told him he had to in order to permit Wines to mortgage the equity that Wines had left on the property. Whatever the evidence may be concerning Miller’s motivation for signing the subordination agreement, there is no conflict that Miller got nothing for his doing so. At all times, there was one party to this three-way transaction that knew precisely what was taking place: the mortgage company. Yet the mortgage company would have this court become its accomplice in stripping Miller of his land and home based upon the legal charade the mortgage company engineered. I simply do not think this court can be any part of it. This case demonstrates that the time has come to require a mortgage company to insure that a subordinated land owner such as Miller has knowingly and voluntarily waived the extent of his interest in the land in question before a court in litigation of this kind will give effect to any such subordination agreement. It is not necessary at this point to speculate as to what steps a mortgage company should take in order to demonstrate the knowing and voluntary nature of any such waiver. I am confident that legal counsel employed by such companies, given the incentive of making their mortgages stick, will figure it out. The imposition of an affirmative duty in a civil law context, upon a person who is an expert in the law and who has the resources to execute that duty to insure a knowing and intelligent waiver by a third party who may be unsophisticated, is not unprecedented. This court recently had occasion to impose such a duty upon executors of estates who seek to apply the doctrine of estoppel to bar a legatee from contesting provisions of a will under which that legatee inherits a home which had been her long-term residence. (See In re Estate of Nichols (1989), 188 Ill. App. 3d 724, 544 N.E.2d 430.) Before that doctrine of estoppel, normally applicable to probate cases, could be applied to such a person, this court stated the following: “By this holding, we are placing an affirmative duty upon executors of estates to take whatever steps they deem necessary in order to demonstrate that an occupant of a residence that passes to that occupant under a will, such as plaintiff in this case, has knowingly and intelligently elected to receive the benefits given to her under that will.” (Emphasis added.) Nichols, 188 Ill. App. 3d at 727, 544 N.E.2d at 432. The majority in this case concludes its opinion by stating the following: “The harshness of the results of the trial court’s ruling and our decision is recognized. However, any other result would invite chaos into the field of contract law.” 197 Ill. App. 3d at 454. If this case is an example of what passes for law and justice in the “field of contract law,” then it deserves the chaos the rule I am proposing might cause. Surely at some point the courts must tell the business community that unconscionable injustices will not be tolerated further merely because the courts have gotten into the habit of doing so. The rule now proposed would not be prospective only. I would apply it to this case and reverse and remand to the trial court to give the mortgage company an opportunity to demonstrate a knowing and voluntary waiver of Miller’s rights when he signed the subordination agreement. I am aware that such changes in the law are normally made prospective only. However, this is not the normal case. Further, I would regard any argument that the mortgage company might make in this case that holding them to this new standard would be unjust to be little more than a bad joke.