U.S. Bank N.A. v. Rahman, 2016 IL
App (2) 150040
On September 29, 2009, U.S. Bank filed its complaint to foreclose a mortgage against Defendant, Syeda Nazia Rahman (Rahman) and others with an interest in the property, on a residential property for a trial. Because of the small amount of mortgage foreclosure trials, most judges and attorneys are unsure as to what is needed in order to make a prima facie case for the plaintiff/mortgagee. Is it required that proof of service of the so-called “grace period notice” dictated by 735 ILCS 5/15-1502.5(c) be offered into evidence? Does the mortgagee have to prove the existence of all of the junior liens on the subject property since they were all named defendants? Does evidence of all payments made on the mortgage need to be offered? There are several statutorily required steps that a mortgagee must take in order to properly foreclose a mortgage under the Illinois Mortgage Foreclosure Law (“IMFL”), but how many, if any, of those steps must be proven in a foreclosure trial? Perhaps surprisingly, proving a mortgagee’s case in a mortgage foreclosure requires only the introduction into evidence of the note and mortgage. Once these two documents are admitted into evidence, the burden shifts to the mortgagor to prove payment or any other affirmative defenses that she may have.
The most cited case regarding this subject is Rago v. Cosmopolitan Nat. Bk., 89 Ill. App. 2d 12 (1st Dist. 1967). In Rago, the plaintiff sought to foreclose on a junior mortgage, and the defendant claimed the affirmative defense of “lack of consideration.” Rago states that the plaintiff:
… affirmatively established her prima facie right to foreclosure of the mortgage. The long established rule … is that the mere possession and production into evidence by the holder of a note and trust deed, the execution and default in the performance of which is established, entitles that holder to a prima facie basis for recovery thereon, unless and until, the defendant interposes and establishes a defense. Rago, at 19.
Rago, however, is not entirely on-point because it was decided in 1967—prior to the IMFL - and applied the Uniform Commercial Code to its holding.
Regardless, it is still cited to in foreclosure cases and considered “good law.” The case of Farm Credit Bk. of St. Louis v. Biethman, 262 Ill. App. 3d 614 (5th Dist. 1994) is instructive on the topic, and is additionally helpful because it was decided after the IMFL was codified in 1987.
Biethman is something of a convoluted case involving multiple parties, claims, and insurance companies. Of interest to this particular topic, however, is where the court discussed burdens of proof in foreclosures.
The court stated:
… Biethman pleaded the affirmative defense of lack of consideration and payment of the mortgage. In order for [the mortgagee] United Fire to establish a prima facie case of foreclosure, it was required only to introduce the deed of trust and promissory note, at which time the burden of proof shifted to Biethman to prove his affirmative defense. Biethman, at 622, citing Foreman Tr. and Sav. Bk. v. Cohn, 342 Ill. 280 (1930).
Another case, which cites favorably to Biethman, is PNC v. Zubel, --- Ill. App. 3d ---, 24 N.E.2d 869 (1st Dist. 2014). Zubel was a foreclosure case that was decided on summary judgment, rather than trial, but it still quoted Biethman for the authority that a mortgagee establishes a prima facie case for foreclosure with the introduction of the mortgage and note. Zubel, at 874-75. With these cases, there is authority pre-IMFL and post -IMFL that states that a plaintiff in a mortgage foreclosure case need only to present the note and mortgage in court in order to prove its prima facie case.
Rago, Biethman and Zubel are all in complete agreement that a plaintiff in a mortgage foreclosure case needs only to admit into evidence the note and the mortgage. Because of the sparse amount of foreclosure trials, there are even fewer appellate decisions regarding the subject, making three appellate court decisions on the topic fairly conclusive; despite this, arguments are sometimes raised in opposition.
Some may argue that the IMFL requires more than just the note and mortgage in order to prove a prima facie case. The argument cites to 735 ILCS 5/15-1506(a) of the IMFL which states, “Evidence. In the trial of a foreclosure, the evidence to support the allegations of the complaint shall be taken in open court,” and then lists two exceptions to this requirement.
The argument is that this section of the IMFL requires proof of the allegations in the complaint, so if it is alleged in the complaint and then denied by the mortgagor, the mortgagee must prove that allegation as part of the mortgagee’s prima facie case. While this argument may seem to make sense at first blush, it is fatally flawed because it fails to take into account the fact that the IMFL is a statute in derogation of the common law.
In construing statutes in derogation of the common law, courts may not presume that an innovation thereon was intended further than the innovation which the statute specifies or clearly implies.
Gallagher v. Union Square Condominium Homeowner’s Assoc., 397 Ill. App. 3d 1037, 1043 (2d Dist. 2010). Illinois courts have limited all manner of statutes in derogation of the common law to their express language, in order to effect the least—rather than the most—change in the common law. Adams v. Northern Illinois Gas Co., 211 Ill.2d 32, 69 (2004). Therefore, any legislative intent to abrogate the common law must be clearly and plainly expressed, and courts will not presume such an intent from ambiguous language. Tomczak v. Planetsphere, Inc., 315 Ill. App. 3d 1033, 1038 (1st Dist. 2000). Finally, a statute that appears to be in derogation of the common law will be strictly construed in favor of the person sought to be subjected to the statute’s operation. Id.
The express language of 15-1506(a) of the IMFL merely states that the evidence to support the allegations of the complaint must be taken in open court. It does not state what that particular evidence is, nor what is required to make a prima facie case, nor does it state that a prima facie case is anything other than what the common law dictates. Further, the IMFL does not state that proof of the allegations of the complaint must be taken in open court, only that evidence to support the allegations of the complaint must be so demonstrated. Further, the IMFL statement in 15-1506(a) subjects only the mortgagee to its dictates, and must therefore be strictly construed in favor of the mortgagee. See Tomczak, at 1038. At best, the language in 15-1506(a) is ambiguous, and because it must be construed in favor of the mortgagee, the only logical reading of it is that the proof that is required to make a prima facie case must be taken in open court. If a trial occurs, that proof has not changed from the common law, and is still the admission of the note and mortgage into evidence—nothing more. 15-1506(a) simply requires that the mortgage and note be offered into evidence in open court.
If the IMFL were intended to change the elements of proof of a mortgage foreclosure, it would have so stated. It would have been simple enough for the legislature to insert into the IMFL exactly what was required for the plaintiff to prove its case if the legislature had intended to change the common law. The legislature could have specifically stated that all of the elements in the form foreclosure complaint shown in 735 ILCS 5/15-1504 must be proven in order for a plaintiff to make its prima facie case, but they did no such thing. Because the legislature did not change the elements of a prima facie case in the IMFL, the common law requirement of producing the note and mortgage for a mortgagee to make its case remains the law.
Despite the scant amount of published decisions on the topic, the only Illinois decisions pertaining to the proof required in mortgage foreclosure cases state that the mortgagee merely needs to offer the note and mortgage into evidence in order to prove its prima facie case. The Illinois Mortgage Foreclosure Law did not change this common law principle, and simply requires that evidence needed to support a foreclosure complaint be presented in open court. Mortgage foreclosure trials, therefore, will be primarily conducted by the mortgagor who needs to prove payments, affirmative defenses, or possibly her counterclaims.
This publication is from "Commercial Banking, Collections, and Bankruptcy August 2016"