Partel, Inc. v. Harris Trust & Savings Bank

SUPPLEMENTAL OPINION ON DENIAL OF REHEARING

PRESIDING JUSTICE SULLIVAN

delivered the opinion of the court:

In his petition, plaintiff Mendel Margolis (Margolis) contends that (1) we misapplied the presumption of Weiner v. Landry (1970), 131 Ill. App. 2d 221, 264 N.E.2d 828 — that one who bids at a foreclosure sale bids the fair market value of the property; (2) his contract rights were “overlooked”; and (3) we erroneously assumed that Stuart Kaiserman, the court-appointed managing agent, managed the premises until the date of the foreclosure sale.

Concerning the first contention, Margolis maintains that because his bid exactly equaled the combined amount of indebtedness due him, together with the amount of the senior liens, it should be presumed that his bid at the foreclosure sale was limited “to the combined amount of such indebtedness” and that “he would have reduced his bid accordingly by the amount the insurance proceeds would have reduced the indebtedness had they been available to apply to the debt prior to the sheriff’s sale.”

We view this contention to be without merit. Margolis asks the court to assume, in effect, that had he known the insurance proceeds could be applied to the mortgage debt, he would have reduced his bid by that amount. He does not, however, dispute the facts of the case; rather, it appears that he asks us to disregard them — in particular, the fact that the bid was made with the full knowledge of the condition of the premises and of the existence of the insurance proceeds whi<?h had been escrowed pending further court order.

As to Margolis’ subsidiary point, that the court’s application of the Weiner presumption gave Partel “a free $100,000 swing position,” it appears that Margolis assumes the insurance proceeds had already been disbursed to Partel prior to the foreclosure sale. This, too, is contrary to the facts, inasmuch as those proceeds were not awarded until after the sale when they were applied to the deficiency judgment in favor of Partel against the mortgagor — defendant Harris Trust and Savings Bank. Margolis’ assertion would, in essence, require us to assume, contrary to the record, that Partel was not a subordinate lienholder, for only by so doing would it be possible to regard the award of the proceeds as the “free use” of money.

In summary, Margolis did not present facts sufficient to rebut the Weiner presumption, and because he makes no further reference to any in his petition, we adhere to our holding that the debt was satisfied by his bid on the property. As stated in Whitestone Savings & Loan Association v. Allstate Insurance Co. (1971), 28 N.Y.2d 332, 335, 270 N.E.2d 694, 696, he “voluntarily converted the debt into the property and [did] so by taking the property in satisfaction of the debt.” To award Margolis any part of the insurance proceeds would amount to payment beyond the extinguishment of the debt, which the facts indicate was fully known to him at the time that he entered his bid.

Margolis’ second contention, that the court “overlooked” his contract rights to the insurance proceeds, is also without merit. He claims that there were fewer facts in support of the lienholder’s claim to insurance proceeds in Weiner than in the present case. However, as we explained in the opinion, it appears that there was less in favor of Margolis’ right to the insurance proceeds than was shown in Weiner, and thus the conclusion here — that Margolis was not entitled to them — is stronger than in Weiner.

Furthermore, the contract rights of Margolis have not been overlooked. Under clause 3.A. of the mortgage, insurance proceeds available pursuant to foreclosure are “payable to the owner of the certificate of sale [Margolis], owner of any deficiency [Partel] [or] any receiver.” Since there was full satisfaction of Margolis’ debt, the only contract rights to be protected in the present case were those of Partel. That indebtedness was satisfied in part through the award of the insurance proceeds against the deficiency judgment in favor of Partel.

Finally, as to the contention that we erroneously assumed that Stuart Kaiserman managed the premises until the foreclosure sale, we note that Margolis presents no facts to the contrary. Instead, he maintains that we implied his “actions and expenditures were extraneous and unnecessary.” Our opinion, however, carries no such implication. Rather, it is based upon the propositions (1) that Margolis had no judgment against Harris Bank since he in effect owned the property; (2) that he did not seek a judgment against Partel; and (3) that he presents no facts from the record other than those set forth in the opinion. Thus, there is no implication that Margolis’ expenditures were unnecessary; but, rather, that he failed to properly present his claim to the trial court in the form of a legal theory, and he does not show how the record might support any such theory. Margolis’ argument is, therefore, beside the point.

The petition for rehearing is denied.

LORENZ and MEJDA, JJ., concur.