Household Bank v. Lewis

Docket No. 104826.

IN THE

SUPREME COURT

OF

THE STATE OF ILLINOIS

HOUSEHOLD BANK, FSB, v. JEWEL LEWIS et al. (Addie Glenn-

Tate, Appellant; Greenwich Investors XVI, LLC, Appellee).

Opinion filed May 22, 2008.

JUSTICE KARMEIER delivered the judgment of the court, with

opinion.

Chief Justice Thomas and Justices Freeman, Fitzgerald, Kilbride,

Garman, and Burke concurred in the judgment and opinion.

OPINION

The issue in this case is whether the Illinois Mortgage

Foreclosure Law (735 ILCS 5/15–1101 et seq. (West 2004)) permits

a circuit court to vacate a judicial sale at the mortgagee’s request

where the mortgagor has succeeded in finding her own buyer for the

subject property, with the mortgagee’s approval, after the statutory

redemption period has expired but before the judicial sale has been

confirmed. The circuit court of Cook County believed that it does and

ordered the judicial sale vacated. The high bidder at that sale objected

and appealed. The appellate court reversed and remanded with

instructions that the circuit court confirm the judicial sale. 373 Ill.

App. 3d 420. We granted leave to appeal. 210 Ill. 2d R. 315. For the

reasons that follow, the judgment of the appellate court is reversed

and the circuit court’s judgment is affirmed.

The pertinent facts are undisputed. In 1999, Jewel Lewis executed

a promissory note in the principal amount of $62,100.00 secured by

a mortgage on her home. The mortgage was held by Household Bank.

Lewis subsequently defaulted on the obligations which she owed

pursuant to the promissory note and mortgage.1 Household responded

by initiating foreclosure proceedings under the Illinois Mortgage

Foreclosure Law (735 ILCS 5/15–1101 et seq. (West 2004)). When

Lewis failed to answer Household’s complaint, the circuit court

entered a default judgment in Household’s favor in the amount of

$80,720.02. The judgment was entered March 17, 2005, and provided

that the statutory period of redemption would expire on June 17,

2005, after which the property would be sold.

In accordance with the circuit court’s judgment, a notice was filed

May 20, 2005, stating that the property would be sold to the highest

bidder on June 21, 2005. A sale was duly conducted on that date. The

highest bidder was Greenwich Investors XVI, LLC (Greenwich). Its

bid was $48,071, a figure substantially less than the amount due

under the default judgment entered against Lewis.

On June 29, 2005, eight days after the judicial sale, Household

sought and obtained an order from the circuit court continuing

proceedings for approval of that sale in order to allow Lewis to

attempt to negotiate a private sale of the property herself. Lewis’

efforts were successful and she was able to sell her home to Addie

Glenn-Tate on July 7, 2005, for the sum of $67,945. Lewis tendered

the proceeds of that sale to Household, and Household accepted them

as payment in full of the amounts due under the promissory note and

mortgage on July 12, 2005. One week later, a deed was recorded

showing that Glenn-Tate had purchased the property and was now its

owner.

1

The appellate court’s opinion states that an entity known as

Provincetown Improvement Association also defaulted on the mortgage.

373 Ill. App. 3d at 420. While Provincetown was named as a defendant in

the foreclosure action, along with “nonrecord claimants, unknown tenants

and unknown owners,” Provincetown was not a signator to either the

promissory note or the mortgage.

-2-

Immediately after receiving the sale proceeds from Lewis,

Household requested leave to withdraw its motion to confirm the

judicial sale. That motion was granted. The following month,

Household moved to have the judicial sale vacated. Greenwich

objected to these developments and was granted leave to intervene

and to file a response. In its response, Greenwich complained of the

absence of documentation for Household’s representation that it had

accepted $67,945 in payment from Lewis. It protested that it “pays

significant costs to have its money available to bid at sale” but,

because of Household’s actions, that money was allowed “to just sit.”

In addition, it asserted that vacating the sale was “a clear abuse of the

judicial process and the Illinois Mortgage Foreclosure Act” and “a

violation of justice.”

Household filed a reply to Greenwich’s response. The circuit

court rejected Greenwich’s arguments and granted Household’s

motion to vacate the judicial sale. The court also ordered the proceeds

of that sale to be returned to Greenwich. With these actions, the

foreclosure proceedings concluded.

Greenwich filed a timely posttrial motion for reconsideration,

contending that the judicial sale should not have been vacated for the

reasons it had previously asserted. In the alternative, Greenwich

sought $27,000 in damages from Household under the theory of

tortious interference with prospective economic advantage.

Household filed a written response. Greenwich’s motion was

subsequently denied by the circuit court. Greenwich appealed. The

appellate court reversed and remanded to the circuit court with

instructions that the judicial sale to Greenwich be confirmed, holding

that the circuit court’s refusal to confirm the sale constituted an abuse

of discretion. 373 Ill. App. 3d at 423.

Following the appellate court’s action, Household indicated that

it would no longer attempt to defend the sale to Glenn-Tate. At the

same time, it refused to disgorge the sale proceeds to her. In order to

protect her position, Glenn-Tate therefore petitioned the appellate

court for leave to intervene. That petition was granted. In her capacity

as an intervening party, Glenn-Tate then petitioned our court for leave

to appeal (210 Ill. 2d R. 315), which we allowed.

-3-

As grounds for her appeal, Glenn-Tate contends that the circuit

court’s decision to vacate the judicial sale at Household’s request was

supported by the provisions of the Illinois Mortgage Foreclosure Law

and the policies underlying that statute. She asserts that the appellate

court therefore erred when it set aside the circuit court’s judgment

and ordered that the judicial sale be confirmed.

Greenwich, for its part, contends that the appellate court’s

analysis was sound and that the result it reached was correct. It argues

that while a circuit court has the discretion to refuse to confirm a

judicial sale under certain circumstances, that discretion is not so

broad as to authorize a court to refuse to confirm a judicial sale based

on a private sale which occurs after the statutory redemption period

has expired and the judicial sale has already taken place.

Resolution of the foregoing issues turns on questions of statutory

construction and the application of the law to undisputed facts. Our

review is therefore de novo. See City of Champaign v. Torres, 214 Ill.

2d 234, 241 (2005).

Confirmation of judicial sales is governed by section 15–1508 of

the Illinois Mortgage Foreclosure Law (735 ILCS 5/15–1508 (West

2004)). Subsection (b) of that statute provides:

“Upon motion and notice in accordance with court rules

applicable to motions generally, which motion shall not be

made prior to sale, the court shall conduct a hearing to

confirm the sale. Unless the court finds that (i) a notice

required in accordance with subsection (c) of Section

15–1507 [735 ILCS 5/15–1507] was not given, (ii) the terms

of sale were unconscionable, (iii) the sale was conducted

fraudulently or (iv) that justice was otherwise not done, the

court shall then enter an order confirming the sale.” 735 ILCS

5/15–1508(b) (West 2004).

In speaking of a court’s obligations, the foregoing statute uses the

word “shall.” The Illinois Mortgage Foreclosure Law expressly

provides that when “shall” is used, it means that something is

“mandatory and not permissive.” 735 ILCS 5/15–1105(b) (West

2004). Under the terms of statute, a court therefore has mandatory

obligations to (a) conduct a hearing on confirmation of a judicial sale

where a motion to confirm has been made and notice has been given,

-4-

and, (b) following the hearing, to confirm the sale unless it finds that

any of the four specified exceptions are present.

The provisions of section 15–1508 have been construed as

conferring on circuit courts broad discretion in approving or

disapproving judicial sales. See Citicorp Savings of Illinois v. First

Chicago Trust Co. of Illinois, 269 Ill. App. 3d 293, 300 (1995). A

court’s decision to confirm or reject a judicial sale under the statute

will not be disturbed absent an abuse of that discretion. See Fleet

Mortgage Corp. v. Deale, 287 Ill. App. 3d 385, 388 (1997); see also

Blancett v. Taylor, 6 Ill. 2d 434, 437 (1955) (addressing judicial sales

generally).

As we have indicated, the appellate court in this case concluded

that the circuit court abused is discretion when it vacated the judicial

sale and refused to confirm it under section 15–1508(b). In our view,

however, the appellate court’s focus on whether the circuit court

abused its discretion was misguided. The exercise of discretion in

applying section 15–1508(b) is necessary only when the requirements

of that law have become operative. Under the terms of the statute,

they do not become operative until they have been invoked by a

motion requesting confirmation of the sale. Although a motion to

confirm was filed by Household, the mortgagee, the motion was

withdrawn before any action on it was taken. A statutory prerequisite

to the confirmation process was thereby eliminated. Correspondingly,

the mandatory provisions of section 15–1508(b) were not triggered.

Under these circumstances, the dispositive question is not whether the

circuit court’s actions constituted an abuse of discretion under section

15–1508(b). It is, instead, whether the circuit court was obligated to

proceed with the confirmation process even after Household, which

initiated the foreclosure proceedings, elected not to pursue them.

Resolution of this issue implicates basic principles regarding a

party’s right to control its own litigation. In addressing that issue, we

begin by noting that the reason for Household’s decision to forgo its

remedies under the Illinois Mortgage Foreclosure Law was clear.

Lewis’ success in selling the property to Glenn-Tate enabled the

company to recover a significantly larger amount of the debt than it

would have through the foreclosure process. From Household’s

perspective, further pursuit of foreclosure proceedings would have

been counterproductive.

-5-

Several decades ago, in a case recognizing the right of a plaintiff

in a tax foreclosure case to voluntarily dismiss the case after receiving

payment for the amount of the delinquent taxes, we observed that

“[t]hose who invoke the jurisdiction of the courts do not

thereby irrevocably commit themselves to that course of

action. Litigation, as a means of resolving disputes, should be

employed sparingly. Other methods of solution have long

been favorably regarded by the courts, and when, as here, the

underlying reason for particular litigation has vanished, the

foundation upon which the action stood is ordinarily

destroyed.” People v. American National Bank & Trust Co.,

32 Ill. 2d 115, 120-21 (1965).

Consistent with this view, our system of civil justice has

recognized that a plaintiff is ordinarily the master of his or her cause

of action. People v. American National Bank & Trust Co., 32 Ill. 2d

at 120. Under the common law, plaintiffs were permitted to

voluntarily dismiss their claims without prejudice any time prior to

entry of judgment. Through section 2–1009 of the Code of Civil

Procedure (735 ILCS 5/2–1009 (West 2004)), our legislature has now

qualified this right in order to discourage vexatious suits, “but only by

preventing an automatic voluntary dismissal without prejudice after

trial or hearing commenced.” (Emphasis added.) Kahle v. John Deere

Co., 104 Ill. 2d 302, 307-08 (1984). Even if we assume, for the sake

of argument, that the operative “hearing” in this case was the hearing

on the foreclosure complaint rather than the hearing on confirmation

of the sale and that Household’s motion to vacate came after the

hearing commenced, the foregoing statutory qualification is not

controlling here. That is so because when Household moved to

withdraw the motion to confirm and to vacate the judicial sale in this

case, it clearly intended to forgo any future claim it might assert to

have the property sold by the court based on Lewis’ default.

Household was, in effect, dismissing that claim with prejudice. The

statutory restrictions governing voluntary dismissals without

prejudice are therefore inapplicable.

Greenwich argues that allowing mortgagees to accept private

sales after a judicial sale has been conducted but before the judicial

sale has been confirmed will undermine the settled expectations of

those who bid at judicial sales, deter such bidders from participating

-6-

in the judicial sale process, and thereby undermine the purposes of the

Illinois Mortgage Foreclosure Law.

We find this argument unpersuasive. First, it assumes that being

the highest bidder at a judicial sale confers on the bidder some legally

cognizable interest in the property. It does not. See Jennings v.

Dunphy, 174 Ill. 86, 90-91 (1898). The highest bid received by a

sheriff at a judicial foreclosure sale is merely an irrevocable offer to

purchase the property. The offer is not deemed to have been accepted

and the sale is not complete until it has been confirmed by the circuit

court. See Plaza Bank v. Kappel, 334 Ill. App. 3d 847, 852 (2002).

Numerous factors may affect a circuit court’s decision to confirm the

sale, including issues of notice, unconscionability and fraud. 735

ILCS 5/15–1508(b) (West 2004). In addition, even after the sale is

confirmed, the bidder may discover that the property is subject to

prior tax liens or other encumbrances that affect the property’s value.

Any expectations a bidder may have regarding property offered at a

judicial foreclosure sale are therefore speculative.

Second, Greenwich’s argument presupposes that protecting the

position of third-party bidders should be the preeminent principle

guiding our construction of the laws governing judicial sales. We find

no support for that view. It is true that our court has long recognized

the need to promote stability in the conduct of judicial sales so as not

to “ ‘impair that confidence so essentially necessary to induce persons

to become purchasers when real estate is offered for sale under a

judgment or decree of a court.’ ” See Abbott v. Beebe, 226 Ill. 417,

420 (1907), quoting Conover v. Musgrave, 68 Ill. 58, 62 (1873). At

the same time, however, the courts have also consistently held that

the law favors redemptions (Skach v. Sykora, 6 Ill. 2d 215, 224

(1955); Rodman v. Quick, 217 Ill. 162, 164 (1905)) and protection of

a mortgagor’s equity in the property (see Fleet Mortgage Corp. v.

Deale, 287 Ill. App. 3d at 389).

Balancing these competing policy considerations is ultimately a

matter for the legislature. See Country Mutual Insurance Co. v.

Livorsi Marine, Inc., 222 Ill. 2d 303, 319 (2006). Nothing in the

current statutory scheme enacted by our General Assembly prohibits

mortgagees from declining to seek confirmation of a judicial sale and

abandoning foreclosure proceedings where, as here, the mortgagor is

able to arrange a private sale for a price acceptable to the mortgagee.

-7-

If the legislature had intended to impose such a prohibition, it could

have specifically done so. It did not and we cannot. As we have often

held, a court may not add provisions that are not found in a statute,

nor may it depart from a statute’s plain language by reading into the

law exceptions, limitations, or conditions that the legislature did not

express. Madison Two Associates v. Pappas, 227 Ill. 2d 474, 495

(2008), citing People v. Lewis, 223 Ill. 2d 393, 402 (2006).

In ruling for Greenwich, the appellate court relied on the

provisions of section 15–1605 of the Illinois Mortgage Foreclosure

Law (735 ILCS 5/15–1605 (West 2004)), which provides, in part, that

“[n]o equitable right of redemption shall exist or be enforceable under

or with respect to a mortgage after a judicial sale of the mortgaged

real estate.” Following an earlier appellate court decision in

Washington Mutual Bank, FA v. Boyd, 369 Ill. App. 3d 526, 530

(2006), the appellate court in this case construed section 15–1605 as

precluding any private sale or redemption of the property after the

statutory redemption period has expired and a judicial sale under

section 15–1507 of the Illinois Mortgage Foreclosure Act (735 ILCS

5/15–1507 (West 2006)) has been conducted.

Such a construction is not supported by the language of the statute

itself. By its terms, section 15–1605 does not purport to bar all

redemptions. It merely extinguishes the “equitable right of

redemption.” The equitable right of redemption is a right that belongs

to the mortgagor and is implicated only when a mortgagor wishes to

forestall efforts by a mortgagee to terminate the mortgagor’s

ownership interest in the property. See First Illinois National Bank v.

Hans, 143 Ill. App. 3d 1033, 1037 (1986). That situation is not

present here. Lewis, the mortgagor, did not attempt to invoke any

right adverse to the interests of Household, the mortgagee, in order to

preserve her ownership of the residence in question. When Household

initiated foreclosure proceedings, Lewis simply defaulted.

Redemption was permitted by Household purely as a matter of grace

after a private third-party buyer was found. That is a situation to

which 15–1605 does not speak.

Finally, we note that while the statutory right of redemption

enures to the benefit of mortgagors, the temporal limitations on the

exercise of that right, including the bar against revival of expired

redemption rights (see 735 ILCS 5/15–1603(c) (West 2004)), are

-8-

designed to benefit mortgagees such as Household. Illinois law

recognizes that a party may waive a statutory provision designed for

its benefit. See In re Application of the County Collector for

Judgment & Order of Sale Against Land & Lots Returned Delinquent

for Nonpayment of General Taxes for the Year 1996 & Prior Years,

318 Ill. App. 3d 641, 645 (2000). Exceptions to the waiver rule may

be established by the General Assembly (see, e.g., 735 ILCS

5/15–1601(a) (West 2004) (restricting mortgagor’s right to waive its

rights of reinstatement and redemption)), but no restriction has been

imposed on a mortgagee’s freedom to permit redemption, as a matter

of grace, after the statutory redemption period has passed and before

the judicial sale has been confirmed. Household was therefore entitled

to allow belated redemption of the subject property in this case rather

than seek confirmation of the judicial sale.

For the foregoing reasons, the circuit court did not err when it

granted Household’s motion to vacate the judicial sale. The judgment

of the circuit court is therefore affirmed and the judgment of the

appellate court is reversed.

Appellate court judgment reversed;

circuit court judgment affirmed.

-9-