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FIRST DIVISION

November 4, 2002

PRESIDING JUSTICE GORDON delivered the opinion of the court:

Counterplaintiff-appellant Beneficial Systems, Inc. (BSI) appeals from the trial court'sorder denying its motion for summary judgment and granting summary judgment in favor ofcounterdefendants-appellees Banco Popular as successor trustee (BPT) and Marsha Azar(Marsha), and third party defendant-appellee Banco Popular as successor mortgagee (BPM). BSIasserts that the trial court erred in its decision in several respects, including that Marsha's failureto respond to BSI's request to admit facts resulted in judicial admissions that prevented her, aswell as BPT and BPM, from presenting evidence during the summary judgment hearing; thatthese facts were sufficient to entitle BSI to summary judgment; and that even if it was proper forthe court to consider other allegations, these raised genuine issues of material fact that precludedsummary judgment. BSI asks that we reverse the grant of summary judgment in favor of Marsha,BPT and BPM and enter summary judgment in its favor, or, alternatively, vacate the judgmentsentered and remand for trial. Because we find issues of fact as to whether there was actual andconstructive knowledge on the part of BSI of Marsha's, BPT's and BPM's interests in the propertyand because we find issues of fact as to the propriety of the levy and sale, we reverse the grant ofsummary judgment and remand.

BACKGROUND

George and Helena Kaltezas (the Kaltezases) owned property located at 1767-75 WestGreenleaf in Chicago, Illinois, which contained a building on the premises. By 1994, theproperty had fallen into disrepair. The City of Chicago instituted a building code violation caseagainst the Kaltezases, resulting in the filing of a lis pendens notice with the recorder's office in1995.

The Kaltezases hired Morris Reynolds (Reynolds) to do work on the property. Eventually, Reynolds filed a complaint against the Kaltezases alleging breach of contract andseeking to place a lien on the property. On January 17, 1996, judgment was entered for Reynoldsagainst the Kaltezases. This judgment was recorded with the Cook County recorder of deeds onMay 3, 1996.

However, several months before the judgment, on March 30, 1995, the Kaltezasesexecuted a quitclaim deed conveying all interest in the property to Marsha, through her nomineeSaul Azar (Saul). The deed, which was delivered on May 13, 1995, stated that Marsha had "theright of equitable ownership in the property and building even if it is not recorded by way of deedconveying and vesting such legal ownership." Saul and Marsha paid all taxes to redeem theproperty as well as the water bill and brokers' commissions, placed a sign in the building'swindow that their company, Westridge Realty and Construction Co., was managing the property,changed the name of the tax addressee to Westridge, repaired the building, dealt with the localpolice department and alderman's office in rehabilitating the property, and leased the property tonew tenants. Saul told Theodore Zimmerman, Reynolds' attorney, that he had purchased theproperty from the Kaltezases. Saul also appeared in open court to defend the building code caseinstituted by the City of Chicago. He filed a written appearance, stating that he was the owner ofthe property. Eventually, that case was dismissed when Saul and Marsha completed all necessaryrepairs on the property. Neither Saul nor Marsha, however, recorded the deed given to themfrom the Kaltezases.

After judgment was awarded to Reynolds against the Kaltezases, Reynolds assigned it toBSI on June 1, 1996. BSI's president, Dexter McClure (McClure), searched the records of therecorder's office, and although he found the lis pendens notice regarding the building codeviolation case on the property, he did not review the court file nor inspect the property itself.

On August 6, 1996, Marsha finally recorded her deed from the Kaltezases. Inconjunction with this, Marsha recorded a deed in trust on the property as well as a mortgage infavor of Pioneer Bank, the predecessor trustee to BPT and predecessor mortgagee to BPM.

BSI delivered the judgment it received from Reynolds to the Cook County sheriff for levyand sale. BSI initially did so on August 16, 1996; the process was conducted in mid-June 1997,against the "right, title and interest of the Defendants George Kaltezas and Helena Kaltezas." OnJune 18, 1997, the property was sold, after notice by publication, to BSI as the successful bidder. BSI thereafter notified Marsha and BPT that the sale had occurred, what amount was bid and thedate of redemption. The sale was later confirmed by the court, which ordered the sheriff todeliver the deed to BSI.

Marsha and BPT filed suit against BSI to set aside the sheriff's deed. BSI filed acountersuit to quiet title and establish its priority over BPM's mortgage. BPM, in turn, broughtsuit against BSI.

During this litigation, BSI submitted a "Request to Admit Facts and Genuiness ofDocuments" (request to admit) to Marsha, BPT and BPM. Specifically, requests number 11 andnumber 13 dealt with the issue of BSI's notice of Marsha's interest in the property:

"11. That at no time prior to June 1, 1996, was there any public record or notice of the interest of Marsha Azar or [BPT] in the subject property.

***

13. That at no time prior to June 1, 1996, neither [BSI], it shareholders, officers, agents nor its attorneys had any actual or constructive knowledge of the interest of Marsha Azar and/or [BPT] in the property ***."

Both BPT and BPM timely filed their objections and responses to this request. Marsha, however,never replied to this request.

BSI moved for summary judgment, asserting that because judgment on the lien wasentered before Marsha recorded her deed, its interest in the property superseded hers, BPT's andBPM's. BSI also claimed that Marsha's failure to respond to its request to admit resulted injudicial admissions that BSI did not have actual or constructive knowledge of her interest in theproperty when it received the lien. Marsha, BPT and BPM also moved for summary judgment,arguing that because the Kaltezases no longer had an interest in the property once the deed wasdelivered to Marsha on May 13, 1995, Reynolds' lien against the Kaltezases entered in 1996 andlater assigned to BSI was a nullity that in no way affects Marsha's title in the property.

The trial court denied BSI's motion and granted Marsha's, BPT's and BPM's motion forsummary judgment in their favor. The court concluded that the main issue was whether theReynolds' judgment attached to the Kaltezases' interest. The court found that it did not. Moreover, it concluded that even if Marsha's failure to reply to the request to admit did play arole, the request contained legal conclusions, not factual issues. Therefore, the court held thatBPT's title and BPM's mortgage on the property were unaffected by BSI's claims and that BSIhad no interest in the property. Accordingly, the court declared the levy proceedings and sheriff'sdeed null and void. BSI filed a motion for reconsideration. This was denied.

BSI now appeals, presenting several arguments for our review. BSI contends that the trialcourt erred in finding that the judgment lien, obtained before Marsha recorded her deed, did notattach to the property. Moreover, BSI argues that the court erred in not binding Marsha, BPT andBPM to Marsha's "admission," resulting from her failure to respond to BSI's request to admit,that BSI lacked actual and constructive notice of her interest in the property. BSI insists thatbecause of this admission, the court was required to disregard any contrary testimony regardingnotice, thereby resulting in summary judgment in favor of BSI. Alternatively, BSI argues that ifit was proper for the court to consider the issue of notice, then this constituted a genuine issue ofmaterial fact precluding summary judgment and this cause must be remanded. On their part,Marsha, BPT and BPM⁽¹⁾ contend on review that the trial court's grant of summary judgment intheir favor was proper because, since the Kaltezases sold the property prior to the entry ofjudgment lien, the judgment lien did not attach to the property and the levy and sale to BSI werevoid. In the alternative, they argue that BSI had actual and constructive knowledge of Marsha's,BPT's and BPM's interests in the property; that because BSI did not notify them of the levy andsale, those could not be legally effective; and that Marsha's failure to respond to BSI's request toadmit is immaterial.

In disposing of this cause, we first address whether, based on the circumstancespresented, the judgment lien attached to the property. Second, we examine the consequences ofMarsha's failure to respond to BSI's request to admit and this failure's effect on BPT and BPM. Finally, we analyze the propriety and validity of the ultimate levy and sale of the property.

ANALYSIS

"The purpose of summary judgment is to determine whether a question of fact exists." West v. Northeastern Illinois Railroad Corp., 180 Ill. App. 3d 307, 311 (1989); see also Addisonv. Whittenberg, 124 Ill. 2d 287, 294 (1988). In the instant case, summary judgment would havebeen proper only if the pleadings, depositions and admissions on record, together with anyaffidavits, had shown that there was no genuine issue as to any material fact and that Marsha,BPT and BPM, as the moving parties, were entitled to judgment as a matter of law. See 735ILCS 5/2-1005(c) (West 1996); Purtill v. Hess, 111 Ill. 2d 229, 240-44 (1986); see also McBridev. Commercial Bank of Champaign, 101 Ill. App. 3d 760, 764 (1981) (right to this relief musthave been "clear and free from doubt"). Our review of the court's order granting summaryjudgment is de novo. See Anderson v. Alberto-Culver USA, Inc., 317 Ill. App. 3d 1104, 1110(2000). If we find that a genuine issue of material fact exists in this cause, summary judgmentcannot stand. See West, 180 Ill. App. 3d at 312.

A. The Judgment Lien

The first issue we address on appeal involves the priority of a judgment lien creditor overa prior purchaser who failed to record his deed. Primarily, we are asked to resolve the questionof whether the judgment lien, which was obtained and registered after the Kaltezases conveyedthe property to Marsha but before Marsha recorded her deed, attached to the property therebygiving Reynolds (and BSI) an interest superior to that of Marsha (and BPT and BPM). BSIargues that pursuant section 30 of the Conveyances Act (Act) (765 ILCS 5/30 (West 1998)),Reynolds was a creditor without notice of Marsha's interest in the property and Marsha's deedbecame effective as to Reynolds only after she recorded it; therefore, Marsha, BPT and BPMtook their interest subject to the judgment lien. BSI asserts that the issue of what interest the lienattached to must ultimately be governed by the issue of notice, an issue which presents genuinequestions of material fact. Marsha, BPT and BPM, however, argue that the judgment lien neverattached to the property because the Kaltezases did not own the property at the time Reynoldsreceived the judgment lien on it; since the Kaltezases had already sold the property to Marsha,there was nothing upon which to impose a lien. Marsha, BPT and BPM further contend that, as amatter of law, section 30 of the Act does not apply here because Reynolds was not a creditor atthe time the Kaltezases and Marsha executed the deed, and the fact that Reynolds recorded hislien before Marsha recorded her deed is "immaterial" because Reynolds, even if he were acreditor, could not have greater rights in the property at that time than the Kaltezases, as debtors. We agree with BSI and conclude that summary judgment was improper.

The general rule, as outlined by our supreme court in East St. Louis Lumber Co. v.Schnipper, is that a judgment lien extends only to the actual interest a judgment debtor has in theproperty at the time the judgment lien is issued. See East St. Louis, 310 Ill. 150, 156 (1923). Thus, if the judgment debtor has no interest in the property at that time, the lien cannot attach. See East St. Louis, 310 Ill. at 156 (creditor's lien cannot attach "to a mere naked legal estate whenthe entire equitable estate in vested in some third person"). However, our supreme court alsonoted in East St. Louis that exceptions to this general rule exist which grant priority to ajudgment creditor over the actual owner of property. See East St. Louis, 310 Ill. at 157. Onesuch exception, as cited by our supreme court, is embodied in section 30 of the Act. See East St.Louis, 310 Ill. at 157. Section 30 states:

"All deeds, mortgages and other instruments of writing which are authorized to be recorded, shall take effect and be in force from and after the time of filing thesame for record, and not before, as to all creditors and subsequent purchasers, without notice; and all such deeds and title papers shall be adjudged void as to all such creditors and subsequent purchasers, without notice, until the same shall be filed for record." 765 ILCS 5/30 (West 1998).

Under this section, then, a judgment creditor is given priority over the holder of an unrecordedconveyance if the creditor is without notice of the holder's interest. See East St. Louis, 310 Ill. at157.

These principles were again affirmed by our supreme court in Echols v. Olsen, 63 Ill. 2d270, 276 (1976). There, the court stated that a judgment creditor who records his judgment lien "acquires rights superior to those" of one who failed to record an interest obtained before thecreditor received the judgment lien. Echols, 63 Ill. 2d at 276. As a result, then, this preference,which comes by virtue of section 30 only, allows the creditor to "prevail over the holder of aprior but unrecorded interest." Echols, 63 Ill. 2d at 276, referring to East St. Louis, 310 Ill. at156. See also Massey v. Westcott, 40 Ill. 160, 163 (1866) ("it is the settled law" of Illinois that"lien attaches to whatever interest in real estate the records disclose in the judgment debtor, in theabsence of" notice); Bauman v. Schoaff, 331 Ill. App. 38, 43-44 (1947) (pursuant to section 30 ofAct, "a judgment becomes a lien on all real estate of the judgment debtor appearing of record freefrom the claims of all other persons of which the judgment creditor had no notice, either actual orconstructive"); Commercial Trust & Savings Bank of Springfield, Illinois v. Murray, 246 Ill.App. 355, 359 (1927) (creditor's "lien will not be affected by the subsequent recording" of deedof prior holder in interest if creditor had no notice of the unrecorded deed).

In the instant case, it is undisputed that the Kaltezases executed a deed to the property toMarsha in March 1995 and delivered it in May 1995. The record also indicates that judgment onthe lien petition was entered for Reynolds in January 1996 and was recorded in May 1996. It wasnot until August 1996 that Marsha finally recorded her deed. Thus, while Marsha was the holderof an interest prior to that of Reynolds, that interest was not recorded at the time Reynolds'judgment was entered and recorded-all parties agree that the Kaltezases appeared of record as theowners of the property in 1996 when the lien was entered and recorded. Under the general ruleof liens and conveyances as noted above, Reynolds' lien would have been limited to theKaltezases' interest in the property at the time of the lien in 1996-which, due to the 1995 deed toMarsha, was none. However, the circumstances present here fit those outlined in section 30 ofthe Act and may well qualify Reynolds for the exception to the general rule. Marsha is the holderof a prior unrecorded interest, and Reynolds is a judgment creditor who, though he obtained hislien after Marsha received her interest, recorded his interest before she recorded hers. Theultimate question left to be answered, then, is whether Reynolds had other notice of Marsha'sinterest notwithstanding her failure to record her deed before Reynolds recorded his lien. SeeMiller v. Bullington, 381 Ill. 238, 243 (1942), and Beals v. Cryer, 99 Ill. App. 3d 842, 844 (1981)(possession of property, acts of dominion and/or improvements may be sufficient notice ofinterest in property to others notwithstanding failure to record deed). If he did not, he is acreditor "without notice" under section 30 and, under that statute, acquired rights superior tothose of Marsha at the time he recorded his lien. See Echols, 63 Ill. 2d at 276.

The transcript of the hearing on the cross-motions for summary judgment in the instantcase reveals that the parties argued at length whether Reynolds and BSI had notice, actual orconstructive, of Marsha's interest in the property before Reynolds' lien was recorded and assignedto BSI. The court, however, did not believe that this cause pivoted on the question concerningthe adequacy of Reynolds' notice, and instead stated that it depended solely on whether theKaltezases still retained an interest in the property as of the time Reynolds' judgment lienattached. Thus, the court made no determination as to Reynolds' status under section 30, whichclearly applied to the circumstances presented. Without the court's resolution of this issue, whatis left is the question as to whether Reynolds is a creditor without notice under section 30,thereby giving him priority over Marsha as the holder of a prior unrecorded conveyance. As shallbe discussed in a later section of this opinion, this would largely be a question of fact, precludingthe grant of summary judgment. See Helm v. Kaddatz, 107 Ill. App. 413, 418 (1903) (whetherpossession by grantee of unrecorded deed amounts to notice is question of fact); 77 Am. Jur. 2dVendor and Purchaser