Concord Air, Inc. v. Malarz
49 N.E.3d 26
Ill. App. Ct.2015Background
- Concord-Air, Inc. (plaintiff) filed a foreclosure action against the property at 1313 E. Westleigh Rd.; plaintiff later filed its own foreclosure complaint after a prior foreclosure (Harris foreclosure) had extinguished its interest according to title reports.
- In the Harris foreclosure, BMO Harris Bank obtained a judgment, was the successful bidder at judicial sale, and title passed to LaSalle Holdings; Chicago Title bought from LaSalle as trustee after obtaining a title commitment showing no outstanding claim by Concord‑Air.
- Service in the Harris foreclosure was by publication after process-server affidavits indicated unsuccessful personal service at a Pheasant Lane address; a Secretary of State corporation-report in the Harris file identified a different registered agent and address (Linder Ave.).
- Concord‑Air later moved to quash service in the Harris foreclosure, alleging defective service by publication (failure to serve the registered agent at the Secretary of State address and other statutory defects); the trial court eventually quashed service as to Concord‑Air and vacated the judgment as to it.
- Chicago Title moved to dismiss Concord‑Air’s later complaint under 735 ILCS 5/2-619(a)(9), asserting it was a bona fide purchaser for value relying on the title commitment; the trial court granted dismissal, but the appellate court reversed and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Chicago Title had inquiry notice of Concord‑Air's claim because the Harris record showed defective service by publication | The Harris record (process affidavits + Secretary of State report) showed inconsistencies (wrong person/address; dissolved corporation with registered agent) that put a purchaser on inquiry notice of a jurisdictional defect | Chicago Title argued there was nothing in the Harris record giving inquiry notice and that it reasonably relied on the title commitment; also raised forfeiture and bona fide purchaser defenses | Held: The Harris foreclosure record contained apparent defects that gave Chicago Title inquiry notice; bona fide purchaser protection was unavailable; dismissal reversed |
| Whether plaintiff forfeited its inquiry‑notice claim by not raising it in trial court | Concord‑Air had raised defects and lack of diligence below; appellate claim is a restatement focused on inquiry notice | Chicago Title asserted forfeiture/waiver because the specific inquiry‑notice theory was first argued on appeal | Held: No forfeiture — the inquiry‑notice argument is sufficiently related to issues litigated below and was considered by the trial court |
| Whether a defect in service that appears on the face of the record can defeat a purchaser’s claim of title stability/public policy favoring finality | Concord‑Air: when jurisdictional defect is apparent from the record, public‑policy finality does not protect later purchasers | Chicago Title: public policy of finality and the title commitment should protect purchasers; distinguishing prior precedent | Held: Public‑policy concerns yield when the record affirmatively shows a jurisdictional defect; Thill controls and supports denying bona fide purchaser protection |
| Scope of remedy for successful challenge to foreclosure where the challenger is a junior lienholder (versus owner) | Concord‑Air sought to set aside extinguishment of its lien and obtain foreclosure relief | Chicago Title argued equities and statutory provisions might limit Concord‑Air to proceeds rather than dispossessing an innocent purchaser | Held: Court reversed dismissal but reserved determination of appropriate remedy to trial court on remand (equitable balancing and statutory arguments left open) |
Key Cases Cited
- State Bank of Lake Zurich v. Thill, 113 Ill. 2d 294 (Ill. 1986) (a jurisdictional defect that appears on the face of the record defeats protection of innocent purchasers)
- Daniels v. Anderson, 162 Ill. 2d 47 (Ill. 1994) (bona fide purchaser takes free of interests of which he has notice)
- Petta v. Host, 1 Ill. 2d 293 (Ill. 1953) (policy favoring recording and protection of purchasers)
- Bank of New York v. Unknown Heirs & Legatees, 369 Ill. App. 3d 472 (Ill. App. Ct. 2006) (defective affidavit of publication can give inquiry notice to subsequent purchasers)