The Bank of New York v. Langman
986 N.E.2d 749
Ill. App. Ct.2013Background
- BONY forecloses a mortgage on a Kane County property; JPM later forecloses on WaMu’s mortgage in a separate action.
- A forged release of GN Mortgage (GN’s mortgage) was recorded in 2000; Langman continued paying GN until 2003.
- BONY discovers forged GN release in 2006 and files foreclosure with lis pendens on July 13, 2006.
- JPM intervenes in 2009 seeking priority over BONY, asserting its WaMu mortgage should be superior.
- Trial court eventually held BONY’s mortgage superior; JPM appeals contending reliance on the forged release and related theories.
- WaMu’s mortgage was entered after BONY’s lis pendens, giving WaMu constructive notice of BONY’s adverse interest; JPM’s priority claim relies on that notice, not on the forged release alone.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does BONY have priority over JPM despite the forged release? | JPM: forged release should allow JPM priority. | BONY: forged release should not defeat priority; record notice governs. | BONY’s lien remains superior; lis pendens gave notice to JPM. |
| Is the bona fide purchaser doctrine applicable to forged releases to defeat BONY? | JPM: genuine reliance on forged release should protect WaMu/JPM. | BONY: doctrine should not apply to forged releases or to notice issues. | Doctrine applies, but notice via lis pendens defeats JPM’s priority. |
| Was BONY equitably estopped from asserting its lien due to delay in correcting the forged release? | JPM: BONY’s silence misled WaMu, warrants estoppel. | BONY: WaMu had lis pendens notice; no estoppel. | Equitable estoppel not available; lis pendens notice forecloses relied-upon misperception. |
| What is the effect of lis pendens on constructive notice and mortgage priority? | WaMu/JPM not bound by BONY’s interests after lis pendens. | Lis pendens provides constructive notice to subsequent purchasers. | WaMu and JPM had constructive notice; BONY’s priority remains superior. |
Key Cases Cited
- Polish National Alliance of the United States of North America v. Lipinski, 288 Ill. App. 234 (Ill. App. 1937) (constructive notice and inquiry obligations when adverse title appears in chain of title)
- Lennartz v. Quilty, 191 Ill. 174 (Ill. 1901) (bona fide purchaser doctrine applies to forged releases; priority rules for subsequent purchasers)
- Ogle v. Turpin, 102 Ill. 148 (Ill. 1881) (unauthorized releases and effect on subsequent purchasers' priority)
- Vogel v. Troy, 232 Ill. 481 (Ill. 1910) (unauthorized release does not discharge debt between original parties; may affect later purchasers)
- React Financial v. Long, 366 Ill. App. 3d 231 (Ill. App. 2006) (junior lienholder not bound by senior mortgagee foreclosure if not named)
- Oxequip Health Industries, Inc. v. Canalmar, Inc., 94 Ill. App. 3d 955 (Ill. App. 1981) (lis pendens constructive notice to subsequent interest holders)