Deutsche Bank National Trust Co. v. Hart
2016 IL App (3d) 150714
| Ill. App. Ct. | 2017Background
- Deutsche Bank filed for foreclosure in 2007 on a mortgage executed by Daniel and Ellen Hart in 2005, alleging default on a $716,000 loan and attaching the mortgage as an exhibit.
- The attached mortgage had repagination and a later-added full legal description; the mortgage page signed by defendants contemplated that a legal description would be “attached hereto.”
- Defendants initially admitted the legal-description paragraph, later amended their answer (2008) to deny it, and pursued discovery; a settlement was reached at the day-of-trial on October 3, 2011: an agreed judgment of foreclosure (with the full legal description), a $10,000 payment to defendants, a four-month redemption period, and 60 days’ post-sale possession.
- Defendants repeatedly sought to vacate the settlement, claiming coercion and that the recorded mortgage was void because the legal description was post hoc; trial courts denied relief after evidentiary hearings and found the mortgage was enforceable or, at worst, voidable and ratified.
- A sheriff’s sale was held; defendants objected and appealed the confirmation of sale arguing the mortgage was void and therefore could not be ratified; the appellate court affirmed the confirmation and initiated Rule 375(b) sanctions proceedings against defendants and appellate counsel.
- In a supplemental opinion the court imposed monetary sanctions totaling $30,093.75 (allocated between the Harts and their law firm), primarily representing plaintiff’s fees/costs, taxes paid, and disgorgement of the $10,000 settlement payment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the mortgage was void ab initio due to a post‑execution addition of an overinclusive legal description | Bank: mortgage document expressly contemplated a later-attached legal description; mortgage valid and defendants ratified settlement | Harts: the recorded mortgage was materially altered after signing and thus void, so it could not be enforced or ratified | Court: mortgage was not altered improperly; addition was contemplated; at most voidable (not void ab initio); defendants ratified it and/or settled validly, so enforcement stands |
| Whether a settlement/agreed judgment is unenforceable because it follows a void contract | Bank: settlement is independent and not a renewal or continuation of the mortgage; law favors enforcing settlements | Harts: a void mortgage cannot be waived or revived by settlement | Held: settlement is enforceable because it does not continue the alleged illegal contract and defendants accepted benefits; settlements are favored absent fraud or duress |
| Distinction between void and voidable contracts and effect on rescission/waiver | Bank: any defect was voidable (mutual mistake/fraud), and defendants failed to promptly rescind and instead accepted benefits | Harts: argued for voidness to prevent waiver/ratification | Held: void vs. voidable distinction controls; parties may ratify a voidable contract; defendants waited, accepted $10,000 and other benefits, and thus waived/rescinded rights to attack the mortgage |
| Whether appellate conduct and repeated meritless filings justify Rule 375(b) sanctions | Bank: defendants repeatedly filed frivolous motions and appeals to delay possession and avoid payments; sanctions appropriate | Harts: defended the appeal as a lawful challenge to mortgage voidness; sought alternative bonds (insurance) | Held: appellate court initiated sanctions proceedings; appeal was frivolous and taken to delay; sanctions later imposed ($30,093.75) allocated between Harts and counsel |
Key Cases Cited
- Illinois State Bar Ass’n Mut. Ins. Co. v. Coregis Ins. Co., 355 Ill. App. 3d 156 (Ill. App. Ct.) (distinguishing void and voidable contracts; voidable contracts may be ratified)
- Zirp‑Burnham, LLC v. E. Terrell Assocs., Inc., 356 Ill. App. 3d 590 (Ill. App. Ct.) (party seeking rescission must act promptly when alleging defects)
- 23‑25 Building Partnership v. Testa Produce, Inc., 381 Ill. App. 3d 751 (Ill. App. Ct.) (contract induced by fraud is voidable, not void)
- Johnson v. Hermanson, 221 Ill. App. 3d 582 (Ill. App. Ct.) (once court approves a settlement, it merges included claims and bars further proceedings absent fraud/duress)
- Foutch v. O’Bryant, 99 Ill. 2d 389 (Ill. 1984) (appellant bears burden to provide a record adequate to support claims on appeal)