Trust Co of Illinois v Kenny (IL)

2019 IL App (1st) 172913

Summary: Section 7 of the Illinois Conveyances Act states that if any person attempts to sell and convey land that they do not have legal title to, but after the sale actually does acquire legal title, it shall be taken and held in trust and the conveyance shall be construed as valid at the time of the sale. 765 ILCS 5/7 (West 2016). This applies to the after-acquired-title doctrine because although one does not have title at the time of the sale, it is possible that all subsequent conveyances of the property can be valid as long as the grantor acquired title shortly after the sale.

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Facts: Prior to 1976, Rose Mary Stachnik and her husband Edward Stachnik owned title to the property in question. On August 28, 1976, the Stachniks executed and recorded a deed in trust (1976 Deed) and conveyed all legal and equitable title to First National Bank of Cicero (Cicero Bank), trust No. 5076 (Stachnik Land Trust). In 1977, the Stachniks sold the property to James Ruzicka and his wife Alice Ruzicka as joint tenants.

The Ruzickas lived on the property for 30 years. During that time, they made several conveyances. On September 18, 1981, the Ruzickas executed and recorded a deed in trust (1981 Deed) to Garfield Ridge Trust & Savings Bank (Garfield Bank) as trustee of a land trust (Ruzickas Land Trust). On June 30, 2010, the Ruzickas established two individual trusts: James Ruzicka 2010 Trust (James Trust) and Alice J. Ruzicka Trust (Alice Trust). On August 16, 2010, the Ruzickas executed and recorded a deed in trust (2010 Deed), which conveyed their individual interests in the property as trustees of their respective trusts.

On September 3, 2010, James Ruzicka passed away and Alice became successor trustee of the James Trust. The terms of the James Trust provided that the trustee distribute one-half of the residue to James' heirs (Ruzicka) and one-half to Alice's heirs (Wilkowski). On December 2, 2011, Alice executed and recorded a trustee's deed (2011 Deed), which transferred an undivided one-half interest from the James Trust to the Alice Trust. After Alice's death on July 13, 2014, Dennis G. Kenny became the successor trustee of the James Trust and Trust Company of Illinois became the successor trustee of the Alice Trust.

Plaintiff Trust Co. of Illinois and Marquette Bank filed suit to quiet title alleging that Marquette Bank, as trustee of Ruzicka Land Trust currently holds all legal and equitable title to the property. Also they claimed that the 1976 Deed is null and void because there was no evidence to show that the Stachnik Land Trust was created. Plaintiffs also alleged that the Ruzickas acquired title through adverse possession and therefore the Ruzicka's 1981 Deed was valid. Kenny and the Wilkowskis both moved for partial summary judgment.

The circuit court denied Kenny's motion for summary judgment and granted summary judgment in favor of the Wilkowskis. Kenny now appeals the circuit court's order granting summary judgment in favor of the Wilkowskis.

Holding: Affirmed. The court reviewed the trial court's entry of summary judgment de novo. As it was unclear whether the after-acquired doctrine required both a sale and a conveyance under section 7 of the Illinois Conveyances Act, the court turned to extrinsic aids to determine its meaning. The court found that the doctrine did not solely apply to transactions that included both a sale and a conveyance. The court relied on Tompkins State Bank v. Niles, 127 Ill. 2d 209 (1989), for the proposition that the after-acquired-title doctrine is "based on the principle that where one having no title or imperfect title purports to convey good title to another, and afterwards acquires good title to the land, the subsequently acquired title should and does inure to the benefit of the original grantee."

The 1981 Deed was a valid conveyance and fell within the scope of section 7 of the Conveyances Act, and the after-acquired-title doctrine was applicable in this case. The Ruzickas executed a Deed in Trust conveying the property to the Ruzicka Land Trust. Garfield Bank was named as the trustee holding legal and equitable title whereas the Ruzickas owned the beneficial interest in the property. Therefore, the Ruzickas had no right to convey the property as beneficiaries. The circuit court did not err in finding Marquette Bank, successor to Garfield Bank, is the current title holder with beneficial ownership belonging to the Alice Trust.

The circuit court correctly applied the after-acquired-title doctrine to the 1981 Deed and found the 2010 and 2011 Deed to be improper attempts to convey property.

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By: ATG Underwriting Department | Posted on: Tue, 06/16/2020 - 3:23pm