Corcoran v. Rotheimer

2022 IL App (1st) 201374

216 N.E.3d 281

465 Ill.Dec. 1030

Florence CORCORAN, AS Successor TRUSTEE OF the SECOND AMENDED FILIP ROTHEIMER REVOCABLE TRUST DATED SEPTEMBER 12, 2012; Sunnyside Chicago Apartments, LLC, an Illinois Limited Liability Company, Plaintiffs-Appellees,

v.Philip ROTHEIMER, Kriemhilde Silvia Vince, and Chicago Title Land Trust Company, as Trustee of Trust No. 5903, Defendants,

(Kriemhilde Silvia Vince, Defendant-Appellant).

No. 1-20-1374

Appellate Court of Illinois, First District, Fourth Division.

Filed June 9, 2022

Peter M. King, William H. Jones, and Jeffrey M. Mathis, of King & Jones, of Chicago, for appellant.

Jeffrey Strange and Richard Gilbaugh, of Jeffrey Strange and Associates, of Wilmette, for appellees.

JUSTICE MARTIN delivered the judgment of the court, with opinion.

¶ 1 A dispute between their children is something no parent wishes. Philip Rotheimer (Philip), Kriemhilde Silvia Vince (Silvia), and Florence Corcoran (Florence) are siblings and the adult children of Filip Rotheimer (Filip). Filip died September 13, 2015, age 94.

¶ 2 During his lifetime, Filip acquired various parcels of real estate. This dispute between siblings concerns their competing claims to proceeds from the sale of one of those parcels. To resolve this dispute, we must determine if the circuit court properly found that Filip's assignment of his beneficial interest in a land trust was effective.

¶ 3 I. BACKGROUND

¶ 4 In 1962, Filip purchased a multi-unit building located at 4751-59 North Sheridan Road in Chicago (the Sheridan Property). Filip created a land trust dated October 18, 1962, with Oak Park National Bank as trustee, and deeded the Sheridan Property into the trust. Filip retained the beneficial interest in the land trust, which was designated Land Trust 5903. The land trust changed trustees several times, eventually being transferred to Chicago Title Land Trust Company (Chicago Title), which acted as trustee until the Sheridan Property was sold in June 2018.

¶ 5 The land trust agreement provided that, in the event of Filip's death, Philip and Silvia would become joint tenants with rights of survivorship. The agreement further provided that no assignment of the beneficial interest in the land trust would be binding on the trustee until it was "lodged" with the trustee:

"No assignment of any beneficial interest hereunder shall be binding on the trustee until the original or a duplicate of the assignment is lodged with the trustee, and every assignment of any beneficial interest hereunder, the original or duplicate of which shall have not been lodged with the trustee, shall be void as to all subsequent assignees or purchasers without notice."

¶ 6 On January 22, 1998, Filip established the Filip Rotheimer Revocable Trust (Revocable Trust). Filip named himself as the grantor and trustee and named Silvia, Philip, and Florence as his beneficiaries. Florence was also designated as successor trustee.

¶ 7 In July 2005, Filip amended the survivorship provisions of the land trust to provide that in the event of his death, his beneficial interest would pass to Silvia and Philip as tenants in common. The amended survivorship provisions further provided that during his lifetime, Filip could "sell, assign, transfer, pledge, or otherwise dispose of all or any part" of his beneficial interest in the land trust.

¶ 8 On October 4, 2006, Filip formed a limited liability company, Sunnyside Chicago Apartments, LLC (Sunnyside LLC). The sole member of Sunnyside LLC was the Revocable Trust. This trust was amended on two occasions, with the last amendment occurring on September 12, 2012.

¶ 9 In October 2006, Filip obtained a loan from Washington Mutual Bank for $1.47 million, secured by a note and mortgage on the Sheridan Property. In connection with the loan, Filip directed the land trustee to execute a document titled "Irrevocable Right to Approve Trust Document" (Irrevocable Right to Approve). This document gave Washington Mutual Bank, as lender, the right to approve the land trustee's execution of any instruments relating to or concerning the trust agreement and Sheridan Property, providing in relevant part:

"Right To Approve. Beneficiary hereby grants to Lender the right to approve the execution by the Land Trustee of any and all instruments which relate to or concern the Trust Agreement or the Property, including, without limitation, the following: ***

(f) assignments, security agreements or pledges of beneficial interest under the Trust Agreement; (g) all contracts purporting to affect or relate to the Trust Agreement or the Property; (h) all documents to be filed or recorded in public records; (i) letters, notices, contracts, documents, or any written instruments; *** Beneficiary agrees that it will not seek or obtain the execution by Land Trustee of any of the above-described instruments without Lender's prior written approval. The exercise of Lender's aforesaid right to approve must be evidenced in writing by a consent in form satisfactory to the Land Trustee or by a written consent to any applicable letter of direction to the Land Trustee, which consents are to be executed by an officer of Lender. Lender agrees to approve the execution of any such instrument which is expressly permitted under the Loan Documents to be executed by the Land Trustee." (Emphasis in original.)

¶ 10 In December 2006, Filip directed his attorney, Mark Glickman, to prepare a document assigning his beneficial interest in the land trust to Sunnyside LLC. Glickman, following Filip's wishes, drafted a short document, which Filip signed, that purported to assign Filip's beneficial interest to Sunnyside LLC. This document was not lodged with land trustee Oak Park National Bank.

¶ 11 By 2011, North Star Trust Company (North Star Trust) had become the successor land trustee to Oak Park National Bank, and KeyBank Real Estate Capital (KeyBank) had become the successor lender to Washington Mutual Bank. North Star Trust advised Filip that there were issues with his 2006 assignment, as it had not been lodged with then land trustee Oak Park National Bank. In response, Filip prepared a new assignment document using North Star Trust's assignment form. North Star Trust advised Filip that KeyBank likely would not consent to the assignment being lodged unless an assignment fee of $10,000 was paid.

¶ 12 Filip refused to pay the fee, and, as North Star Trust predicted, KeyBank refused to waive the fee. Unable to obtain a consent to the assignment from KeyBank, attorney Glickman prepared another assignment of beneficial interest document for Filip's signature, which Filip signed and dated September 14, 2011. This document too was never lodged with land trustee North Star Trust.

¶ 13 By the time of Filip's death in September 2015, Chicago Title had become the successor land trustee. At no time since the creation of the land trust did Filip lodge an assignment of his beneficial interest with any of the various trustees. The Sheridan Property was sold in June 2018, satisfying the mortgage obligation on the property.

¶ 14 A dispute between the siblings arose over who was entitled to the Sheridan Property and ultimately its proceeds. Florence claimed that Filip's beneficial interest in the land trust had been successfully transferred to Sunnyside LLC through his purported assignments. Florence contended that Filip's rights were now hers, by virtue of her status as successor trustee of Filip's second amended Revocable Trust.

¶ 15 Silvia and Philip claimed a right to the Sheridan Property, and thus the proceeds from its sale, because of their status as holders of Filip's beneficial interest in the land trust, inasmuch as his interest passed to them because of the trust survivorship provisions. Silvia and Philip contended that Filip's attempts at assigning his beneficial interest in the land trust to Sunnyside LLC were ineffective because of Filip's failure to lodge the assignment documents with any of the various land trustees. They also claimed that the assignments were ineffective because of language contained in the Irrevocable Right to Approve, which they interpreted as prohibiting a change in the status of the land trust beneficial interest without the lender's approval. Filip failed to obtain such approval; consequently, Silvia and Philip contend that this failure rendered the assignments invalid.

¶ 16 In 2015, Florence filed a declaratory action in the circuit court of Cook County, requesting the court find that Filip successfully assigned his beneficial interest in the land trust to Sunnyside LLC. During the litigation, the parties filed cross-motions for summary judgment. The court found in favor of Florence, granting her judgment, and denied relief to Silvia.

¶ 17 In reaching its judgment, the circuit court found that "the term in the land trust relating to lodging an assignment does not determine whether or not an assignment of beneficial interest is effective as between the parties." The court concluded that Filip's assignment of his beneficial interest was effective, despite the requirement that the assignment be lodged with the trustee.

¶ 18 The circuit court next determined that language in the Irrevocable Right to Approve did not preclude giving effect to Filip's assignment of his beneficial interest. The court held that the Irrevocable Right to Approve concerned the lender's right to approve execution of certain documents by the land trustee, not documents executed by Filip. In other words, the lender retained the authority to approve or disapprove documents executed by the land trustee, not those executed by Filip. Therefore, the Irrevocable Right to Approve did not require the lender to approve the assignment for it to be effective.

¶ 19 On December 10, 2020, the circuit court entered an order finding that Sunnyside LLC was entitled to the $1,783,053.47 proceeds from the sale of the Sheridan Property. The sale proceeds had previously been deposited, pursuant to court order...