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                                   Appellate Court                          Date: 2017.05.25
                                                                            11:28:47 -05'00'




           BMO Harris Bank N.A. v. Joe Contarino, Inc., 2017 IL App (2d) 160371



Appellate Court        BMO HARRIS BANK N.A., f/k/a Harris N.A., as Assignee of the
Caption                Federal Deposit Insurance Corporation, as Receiver for Amcore Bank,
                       N.A., Plaintiff-Appellant, v. JOE CONTARINO, INC., d/b/a Contry
                       Homes of Illinois, JOE CONTARINO, UNKNOWN OWNERS, and
                       NONRECORD CLAIMANTS, Defendants (Joe Contarino, Inc., d/b/a
                       Contry Homes of Illinois, and Joe Contarino, Defendants-Appellees;
                       Midwest Community Bank, Rockford Bank & Trust, and Byron Bank,
                       Intervenors-Appellees).



District & No.         Second District
                       Docket No. 2-16-0371



Filed                  March 23, 2017



Decision Under         Appeal from the Circuit Court of Winnebago County, No.
Review                 13-CH-1148; the Hon. Ronald A. Barch, Judge, presiding.



Judgment               Affirmed.



Counsel on             Martin J. Wasserman and Kurt M. Carlson, of Carlson Dash LLC, of
Appeal                 Chicago, for appellant.

                       Donald Q. Manning, of McGreevy Williams P.C., of Rockford, for
                       appellee Joe Contarino, Inc.
                              James E. Stevens, of Barrick, Switzer, Long, Balsley & Van Evera,
                              LLP, of Rockford, for appellee Joe Contarino.

                              Richard G. Larsen, of Springer Brown, LLC, of Wheaton, for appellee
                              Midwest Community Bank.

                              Kim M. Casey, of Holmstrom & Kennedy, P.C., of Rockford, for
                              other appellees.



     Panel                    JUSTICE JORGENSEN delivered the judgment of the court, with
                              opinion.
                              Justices McLaren and Burke concurred in the judgment and opinion.


                                               OPINION

¶1         Plaintiff, BMO Harris Bank N.A. (BMO), f/k/a Harris N.A., as assignee of the Federal
       Deposit Insurance Corporation, as receiver for Amcore Bank, N.A., filed a
       mortgage-foreclosure complaint against defendants, Joe Contarino, Inc., d/b/a Contry Homes
       of Illinois (JCI), Joe Contarino, unknown owners, and nonrecord claimants. BMO obtained a
       $1.5 million judgment against JCI and Contarino. As relevant here, in supplementary
       proceedings, BMO caused the issuance of a citation to discover assets to JCI (JCI citation) and,
       subsequently, a third-party citation to discover assets to Briargate Management LLC
       (Briargate citation), a property management company that collected rents for the JCI
       properties. Midwest Community Bank (Midwest), Rockford Bank & Trust (Rockford), and
       Byron Bank (Byron) (collectively Adverse Claimants) sought to intervene in the
       supplementary proceedings to assert adverse claims on rents Briargate held. They claimed that
       their interests in the rents (via assignment-of-rents provisions in their mortgages on JCI
       properties and separate forbearance agreements) were superior to any interest BMO had by
       virtue of the JCI and Briargate citations.
¶2         The trial court ruled in Adverse Claimants’ favor and against BMO, finding that BMO did
       not have priority as to the rents. Specifically, the court found, pursuant to section 31.5 of the
       Conveyances Act (765 ILCS 5/31.5 (West 2014)), that rental agreements such as the
       forbearance agreements here are beyond the reach of a third party such as BMO. BMO appeals.
       We affirm.

¶3                                          I. BACKGROUND
¶4         Contarino was sole owner and president of JCI. JCI’s assets included several income
       properties that were managed by Briargate, which was owned by Contarino’s wife. Briargate
       collected rents for the properties and transferred them to JCI.


                                                   -2-
¶5         On August 27, 2013, BMO filed a complaint against defendants, seeking to foreclose on
       four mortgages on several lots in subdivisions in Rockford, Roscoe, and Machesney Park. The
       complaint also included counts alleging breach of a promissory note (executed by JCI) and
       breach of a guaranty (by Contarino). On April 11, 2014, the trial court entered foreclosure
       judgments. On August 27, 2014, the trial court entered judgment in BMO’s favor and against
       JCI and Contarino in the amount of $1,569,610.45 each. It also confirmed sales of the lots and
       issued orders of possession.
¶6         On November 7, 2014, BMO initiated supplementary proceedings to enforce the judgment
       and filed the JCI citation. The citation was served on JCI on November 20, 2014, and was
       subsequently extended several times. See Ill. S. Ct. R. 277(f) (eff. Jan. 4, 2013) (citation
       automatically terminates six months from the date of the respondent’s personal appearance or
       upon expiration of extensions entered “as justice may require”).
¶7         On August 20, 2015, BMO filed the Briargate citation, and Briargate was served on August
       28, 2015.
¶8         In its response, Briargate asserted that it did not hold any JCI assets and that it was a mere
       management agent and conduit for Adverse Claimants, secured lenders that were entitled to
       the rents. Subsequently, Adverse Claimants moved to intervene to assert their adverse claims,
       based on rent-assignment agreements that predated BMO’s citations.
¶9         First, on September 29, 2015, Midwest moved to intervene in the supplementary
       proceedings to assert an adverse claim to certain rents held by Briargate. 735 ILCS 5/2-1402(g)
       (West 2014). Midwest argued that, on September 15, 2015, it had filed a complaint in Boone
       County to foreclose its mortgage (which was recorded on October 7, 2010, and contained an
       assignment-of-rents clause) on real property at 413 Old Orchard Lane in Poplar Grove. In that
       action, it had asserted that it was entitled to possession of the property for the purpose of
       collecting rents. The trial court granted the motion to intervene on October 1, 2015, and,
       further, gave Byron and Rockford seven days to file their claims.1 Subsequently, as noted
       below, Midwest asserted that, pursuant to a December 2014 forbearance agreement between it,
       JCI, and Briargate, Briargate began transmitting directly to Midwest the rents on the
       JCI-owned properties subject to Midwest’s mortgages.
¶ 10       Second, on October 8, 2015, Byron moved to intervene to assert an adverse claim on rents
       Briargate held. Byron asserted that it had a superior interest in the rents by reason of its
       mortgages (containing assignment-of-rents clauses) on JCI-owned properties and by reason of
       a December 2014 forbearance agreement between Byron, JCI, and Briargate, according to
       which, beginning December 1, 2014, Briargate began transmitting the rents on those
       JCI-owned properties directly to Byron.
¶ 11       Third, also on October 8, Rockford moved to intervene to assert an adverse claim on rents
       held by Briargate, similarly arguing that its interest was superior by reason of its mortgages on
       JCI-owned properties and by reason of an August 20, 2013, forbearance agreement between it,
       JCI, and Briargate, according to which Briargate began transmitting the rents on those
       properties directly to Rockford.2



          1
           Midwest filed its own responsive brief in this appeal.
          2
           Byron and Rockford jointly filed a responsive brief in this appeal.

                                                     -3-
¶ 12                                       A. Trial Court Orders
¶ 13       On December 16, 2015, a hearing commenced on the adverse claims. On January 13, 2016,
       the trial court issued its memorandum of decision and order with respect to the Briargate funds.
¶ 14       As to Rockford, the trial court rejected BMO’s claim that Briargate’s transmittal of rents
       directly to Rockford violated the restraining component of the JCI and Briargate citations. It
       found that the forbearance agreement between JCI, Briargate, and Rockford was an
       enforceable contract modification that predated BMO’s judgment and the JCI and Briargate
       citations. The court noted that, prior to BMO’s judgment, Rockford enjoyed the benefits of
       secured contract rights, including the right to foreclose on JCI properties in the event of a
       default. In 2013, rather than pursue foreclosure, Rockford entered into a separate
       agreement—the forbearance agreement—that contractually obligated Briargate to transmit
       rents from JCI properties directly to Rockford. Rockford, the court found, forwent its right to
       foreclose and/or pursue receivership, and JCI contracted away its right to receive rents on the
       properties implicated by the mortgages. The court noted that the forbearance agreement did not
       run afoul of the rents-and-profit doctrine because the contract dictated that all management
       expenses were to be deducted before any net rents were transmitted to Rockford. See Comerica
       Bank-Illinois v. Harris Bank Hinsdale, 284 Ill. App. 3d 1030, 1034-35 (1996) (rent assignment
       unenforceable absent actual or constructive possession by lender, the latter of which must
       include court authorization; public policy seeks to prevent mortgagee from leaving the
       mortgagor and tenants without resources for maintenance or repair). Finally, the court rejected
       BMO’s assertion that the forbearance agreement violated the restraining provisions of the JCI
       and Briargate citations, distinguishing case law BMO cited that addressed rent assignments.
       See Comerica, 284 Ill. App. 3d at 1034-35; In re Wheaton Oaks Office Partners Ltd.
       Partnership, 27 F.3d 1234, 1241, 1245 (7th Cir. 1994) (lender seeking to enforce rent
       assignment will usually have to obtain preforeclosure possession by being placed in actual
       possession or through appointment of receiver; mortgagee must take certain steps to enforce
       lien; “failure to enforce an assignment of rents does not destroy the legal existence of an
       effective, enforceable security interest in those rents which came into being upon execution
       and was perfected upon recordation”); In re J.D. Monarch Development Co., 153 B.R. 829
       (Bankr. S.D. Ill. 1993) (lender seeking to enforce rent assignment must first pursue
       debtor-in-possession status).
¶ 15       Turning to Byron, the trial court overruled Briargate’s objection to document discovery
       concerning rents it transmitted to Byron. The court determined that Byron’s adverse claim
       reflected that its forbearance agreement with JCI was executed on December 1, 2014. The JCI
       citation was filed on November 7, 2014, and JCI appeared of record no later than November
       24, 2014. Thus, the forbearance agreement was executed after the JCI citation’s restraining
       provision came into effect. The court ordered Briargate to supplement its citation production to
       include records of all rent transmittals to Byron.
¶ 16       As to Midwest, the trial court reserved ruling on Briargate’s objection to document
       discovery concerning rental payments it transmitted to Midwest. The court noted that it was
       not clear whether the forbearance agreement between JCI and Midwest was executed before or
       after BMO filed the JCI citation. It directed JCI, Briargate, and Midwest to furnish to BMO all
       documentation concerning the execution date of the forbearance agreement and directed
       Briargate to supplement its citation production to include records of all rent transmittals to
       Midwest.

                                                  -4-
¶ 17      Finally, the court overruled Briargate’s objection that the Briargate citation was untimely
       under the six-month, automatic-termination provision in Rule 277(f).

¶ 18                      B. Ruling on BMO’s Motion to Clarify and Reconsider
¶ 19       On February 12, 2016, BMO moved to clarify and reconsider, arguing that the court
       misapprehended the facts. Specifically, it argued that (1) as to Rockford, the court was
       mistaken as to the timing of the receipt of funds, as BMO was the only party with a lien on the
       funds currently held by Briargate; (2) as to Rockford, the court misstated the law in holding
       that a forbearance agreement (which, BMO claimed, gives rise only to a contractual claim, not
       a lien, on collected rents) takes priority over a lien right; and (3) as to Rockford, even if
       Rockford’s claim was superior to BMO’s claim, the forbearance obligations were never
       proved up and JCI might not owe Rockford any funds, due to a subsequent consent foreclosure
       judgment.
¶ 20       On March 16, 2016, JCI and Briargate filed a response to BMO’s motion, noting that
       section 31.5 of the Conveyances Act, which was enacted in 1996 (i.e., after BMO’s proffered
       cases were decided), controlled the issue of priority between Adverse Claimants and BMO.
       Specifically, they argued, the statute dictated that Adverse Claimants were entitled to the rents
       at every juncture of the case, including postjudgment and postcitations, because Adverse
       Claimants exercised their rights to collect the rents. JCI and Briargate argued that the issue was
       not about priorities between forbearance agreements and citation liens. In their view, any
       agreement by which a bank enforced a recorded assignment of rents trumped a citation lien.
       That is, so long as Adverse Claimants established that they had recorded assignments of rents
       and then directed the rents to be paid pursuant to the assignments, Adverse Claimants had
       priority over BMO. See West Bend Mutual Insurance Co. v. Belmont State Corp., 712 F.3d
       1030, 1034-35 (7th Cir. 2013) (reviewing Illinois law and noting that a lockbox arrangement or
       other direct payment system constitutes sufficient enforcement of an assignment of rents). JCI
       and Briargate also asserted that a claim by BMO for rents due to Adverse Claimants could have
       arisen only if BMO had sought a turnover order for the rents or sought its own receiver. Had it
       done so, they argued, BMO’s claim would have jumped ahead until Adverse Claimants
       asserted their assignments.
¶ 21       In its response, Rockford relied on the Conveyances Act, as did Midwest (in its separate
       response), which also noted that it had provided to BMO the court-ordered documentation.3
       As to lien priority, Midwest argued that, when it set up the direct-payment system, it was
       asserting its rent assignment. At that time, BMO had not sought a turnover of any of the rents,
       and therefore, Midwest’s lien was superior to BMO’s because Midwest asserted its rights to
       the rents before BMO perfected the citation lien. According to Midwest, since the recorded
       mortgage and rent assignment gave it priority over a third party such as BMO, Midwest’s
       interest in the rents was prior in both right and time to any claim by BMO based upon the
       citations. Midwest requested that the court find that BMO had no right to the rents due to
       Midwest.

          3
            Midwest asserted that, starting in December 2014, principal and interest payments were paid
       directly to Midwest. After the Briargate citation (on August 20, 2015), the September payment was
       placed on hold pending a court hearing. At a September 29, 2015, hearing, Midwest asserted, Midwest
       was placed in possession and it demanded (and was given) the September payment.

                                                    -5-
¶ 22       On April 21, 2016, the trial court issued a written order, denying the motion to clarify and
       reconsider and finding that Adverse Claimants held liens superior to BMO’s. The court noted
       that it previously addressed the cases upon which BMO relied. It also noted that there was no
       authority addressing the effect of a citation lien on a previously executed forbearance
       agreement. The court reiterated its previous finding that the forbearance agreements “were
       legally enforceable contractual agreements manifestly distinct from the assignments of rent
       agreements at issue in the cases relied upon by BMO.” As to the prove-up issue, the court
       rejected it, noting that the existence of the forbearance agreements was not disputed and that
       BMO had cited no authority in support of its argument, which it asserted for the first time in its
       motion to clarify and reconsider. Further, case law instructed that “an express pledge of rents is
       not extinguished by a foreclosure sale which merges the title and the debt in the same party.”
       In re Randall Plaza Center Associates, L.P., 326 B.R. 133, 141 (Bankr. N.D. Ill. 2005).
       Accordingly, the court denied BMO’s motion to clarify and reconsider.
¶ 23       The court granted JCI and Briargate’s request for clarification, finding that section 31.5
       was added to the Conveyances Act in 1996 to address the holdings in Wheaton Oaks, J.D.
       Monarch, and Comerica. According to the court, those cases held that a lender may not collect
       rents directly under a rent-assignment agreement until the lender has first attained
       mortgagee-in-possession status or secured the appointment of a receiver. Section 31.5, the
       court determined, declares that rent-collection agreements, such as lockbox arrangements or
       the forbearance agreements in this case, “are beyond the reach of any third-party claims that
       are perfected or arise thereafter.” Furthermore, the court found that, even if the statute is
       ambiguous on this point, the legislative history dictated that the legislature intended to override
       the case law finding that the recording of an assignment of rents alone is insufficient to defeat
       priority claims by subsequent lenders and lien claimants. See 89th Ill. Gen. Assem., House
       Proceedings, May 8, 1995, at 180-81 (statements of Representative Biggert) (noting that “court
       decisions have been highly inconsistent” and that most, but not all, courts have held that
       recording is sufficient).
¶ 24       The court summarized that, pursuant to section 31.5, Adverse Claimants’ claims
       “trumped” BMO’s claim to the rents generated by the JCI-owned properties (prior to BMO’s
       judgment, between the judgment and the JCI and Briargate citations, and between the JCI and
       Briargate citations and Adverse Claimants’ securing mortgagee-in-possession status).
¶ 25       Next, the trial court addressed, in the alternative, the effect of a ruling that the forbearance
       agreements here are indistinguishable from the rent-assignment agreements in Wheaton Oaks,
       J.D. Monarch, and Comerica. The trial court found that those cases stand for the proposition
       that a judgment creditor can establish an entitlement to collect rents by obtaining possession of
       a mortgagor’s property before the mortgagee holding a previously recorded rent assignment
       takes steps to enforce its rights through foreclosure or the appointment of a receiver. It further
       noted that, to unseat a priority lienholder’s right to receive rents, the judgment creditor or
       subordinate lienholder must gain possessor status or secure the appointment of a receiver. In
       this case, the trial court found, BMO secured a judgment and thereafter issued citations to
       discover assets. Its efforts to collect rents, however, did not progress any further, such as by
       seeking the appointment of a receiver or seeking possession of the JCI rental properties. Thus,
       the trial court determined in the alternative (i.e., if section 31.5 does not control) that BMO
       does not have a superior interest in the rents because it “did not do all that was necessary, as a
       junior lienholder, to supplant the right of any of the lender banks, the undisputed senior


                                                    -6-
       lienholders, to the rental streams associated with the JCI properties, even on a temporary
       basis.” Finally, the trial court found that there was no just reason to delay enforcement or
       appeal of its order. Ill. S. Ct. R. 304(a) (eff. Mar. 8, 2016). BMO appeals.

¶ 26                                           II. ANALYSIS
¶ 27       BMO argues that the trial court erred in finding that Adverse Claimants hold a superior lien
       on the rents Briargate collects. It contends that Adverse Claimants have no lien on the collected
       funds, while BMO has the only perfected judgment lien. Adverse Claimants’ mortgages and
       rent-assignment agreements are not relevant to this case, BMO argues, until Adverse
       Claimants have been granted constructive or actual possession, through the appointment of a
       receiver or as mortgagees in possession. For the following reasons, we find BMO’s claims
       unavailing.

¶ 28                                            A. Background
¶ 29                     1. Citations to Discover Assets/Supplementary Proceedings
¶ 30         “A citation to discover assets, also known as a supplementary proceeding, is the
       predominant procedure for enforcing judgments. Robert G. Markoff, Jeffrey A. Albert, Steven
       A. Markoff & Christopher J. McGeehan, Citations to Discover Assets, in Creditors’ Rights in
       Illinois § 2.42 (Ill. Inst. for Cont. Legal Educ. 2014) (citing 735 ILCS 5/2-1402(c)). That
       procedure, found in section 2-1402 of the Code, provides judgment creditors with a
       mechanism to initiate supplementary proceedings against a judgment debtor or third party in
       order to discover the judgment debtor’s assets and apply them to satisfy the underlying
       judgment. Eclipse Manufacturing Co. v. United States Compliance Co., 381 Ill. App. 3d 127,
       133 (2007). To that end, this statute provides a circuit court with broad powers to compel
       parties to satisfy a judgment with discovered assets. Stonecrafters, Inc. v. Wholesale Life
       Insurance Brokerage, Inc., 393 Ill. App. 3d 951, 958 (2009). Actions that a creditor may
       accomplish by another type of enforcement may be accomplished in supplemental
       proceedings, as a citation to discover assets has features of a creditor’s bill, execution,
       garnishment, levy and sale. Robert G. Markoff, Jeffrey A. Albert, Steven A. Markoff &
       Christopher J. McGeehan, Citation to Discover Assets, in Creditors’ Rights in Illinois § 2.42
       (Ill. Inst. for Cont. Legal Educ. 2014). Additionally, supplemental proceedings are intended to
       be expeditious and efficient. In re FBN Food Services, Inc., 158 B.R. 756, 761 (Bankr. N.D.
       Ill. 1993). The debtor bears the burden of demonstrating that property is exempt from being
       applied to satisfy a judgment. See In re Marriage of Takata, 383 Ill. App. 3d 782, 788 (2008).”
       Wells Fargo Bank Minnesota, NA v. Envirobusiness, Inc., 2014 IL App (1st) 133575, ¶ 13.
¶ 31         During the course of supplementary proceedings, a judgment creditor may serve a citation
       to discover assets on a third party, requiring it to freeze assets. 735 ILCS 5/2-1402(f) (West
       2014). After the citation is served, the judgment becomes a lien on the judgment debtor’s
       assets. 735 ILCS 5/2-1402(m) (West 2014). At the same time, the prohibition in a third-party
       citation is not an injunction but, rather, serves to warn the third party of sanctions it could incur
       if it transfers the judgment debtor’s assets. Bank of Aspen v. Fox Cartage, Inc., 126 Ill. 2d 307,
       314-15 (1989).
¶ 32         The only relevant inquiries in supplementary proceedings are (1) whether the judgment
       debtor possesses assets that should be applied to satisfy the judgment and (2) whether a third
       party is holding assets of the judgment debtor that should be applied to satisfy the judgment.

                                                     -7-
       Schak v. Blom, 334 Ill. App. 3d 129, 133 (2002).

¶ 33               2. Assignment of Rents and the Common-Law Rents-and-Profits Doctrine
¶ 34        Generally in Illinois, “a mortgagor[/debtor], as the party in possession and owner of [a]
       statutory right of redemption, is entitled to any rents generated from the property as long as
       [the mortgagor] retains possession, without having to account for them to the
       mortgagee[/lender].” Wheaton Oaks, 27 F.3d at 1241. This can be problematic for a lender if a
       debtor defaults and the lender would like to access the rents from the property to apply them to
       the deficiencies under the note. Id. Thus, “Illinois allows mortgagees to include in their
       mortgages assignment[-]of[-]rents clauses, giving them[, preforeclosure,] a sufficient interest
       in the rents to authorize the appointment of a receiver through whom the mortgagee can begin
       collecting rents.” Id. at 1242. But the mortgagee must obtain preforeclosure possession
       through the courts, by being placed in either actual or constructive possession and, again, only
       if so authorized by the mortgage instrument. Id. at 1241-42; see also Fidelity Mutual Life
       Insurance Co. v. Harris Trust & Savings Bank, 71 F.3d 1306, 1308 (7th Cir. 1995) (under
       Illinois common law, the rents-and-profits doctrine “forbids a mortgagee to enforce a
       provision of the mortgage assigning the rents or other income of the mortgaged property to [it]
       until the mortgagee takes possession of the property (presumably having bought in at the
       foreclosure sale) or a receiver is appointed to operate the property”).
¶ 35        Reviewing the historical development of this concept, the Fidelity court noted that, as real
       estate financing law developed, courts decreed that, when lenders took land to ensure the
       repayment of loans, they did not take title to the land but “only a security interest equal to what
       the borrower owe[d], an interest that [shrunk], therefore, as the borrower repa[id].” Fidelity, 71
       F.3d at 1309. A security interest does not constitute title and is not a possessory interest, and
       therefore, “it does not entitle the lender to receive the rent or other income that the property
       throws off.” Id. An assignment of rents to the lender is “inconsistent with the character of the
       lender’s interest in the property generating the rents, as it would give the lender a right
       associated with ownership.” Id. This is the view in “lien-theory” states such as Illinois.4 Id.;
       see also Monarch, 153 B.R. at 833 (assignment of rents is different from other security
       interests; typically, “a perfected lien gives the creditor an interest in a specific piece of
       property, whereas an assignment of rents allows the mortgagee to collect rents that come due
       after the mortgagee takes control of the property”).
¶ 36        The public policies underlying this framework ensure that mortgagees’ interests are
       protected, while also ensuring proper maintenance of the properties at issue. Wheaton Oaks, 27
       F.3d at 1242 (assignment-of-rents provisions allow creditors to reach the rents prior to
       completion of foreclosure proceedings and prevent a mortgagor from collecting rents after
       default and not making payments under the mortgage agreement); Comerica, 284 Ill. App. 3d
       at 1034 (but the possession requirement—actual, or constructive with court
       authorization—reflects a policy that seeks to prevent mortgagees from stripping the rents from
       the property and leaving the mortgagor and tenants without resources for maintenance or


           4
            In “title-theory” states, which retain some of the early English legal concept of a mortgage as a
       conveyance, “the rents of a mortgaged property are considered an important part of the mortgagee’s
       security.” Id.

                                                     -8-
       repair).

¶ 37                                            3. Comerica
¶ 38       The Comerica court was the first to hold that constructive possession to enforce an
       assignment-of-rents provision must include court authorization. Comerica, 284 Ill. App. 3d at
       1034-35; see also Robert C. Feldmeier, Enforcing Assignment-of-Rents Provisions in Illinois,
       86 Ill. B.J. 436, 438 (1998). The case does not address section 31.5 of the Conveyances Act.
¶ 39       In Comerica, upon which BMO primarily relies, two lenders, Comerica and a trustee,
       sought an award of rents after the borrower defaulted on its mortgages by failing to pay real
       estate taxes. After the borrower defaulted, Comerica exercised its rights under its assignment
       of rents and began collecting rents for the property without foreclosing on the first mortgage,
       seeking the appointment of a receiver, or obtaining court authorization. (This option
       apparently permitted it to reduce the debt without assuming responsibility for the property or
       the tax burden.) Comerica then filed a complaint, seeking an accounting and other relief
       against the borrower and the mortgage guarantors. Separately, the trustee filed an action to
       foreclose on the second mortgage, seeking an accounting, the appointment of a receiver, and a
       return of the rents from Comerica. The trial court found that the rents belonged to the possessor
       of the property and awarded them to the borrower. It also granted the trustee’s request for an
       accounting. (Subsequently, the borrower settled with Comerica, assigning its interest in the
       rents to Comerica in the event that the appellate court ruled in the borrower’s favor. The
       appellate court, thus, found Comerica’s appeal moot and addressed only the trustee’s appeal.
       Comerica, 284 Ill. App. 3d at 1033.)
¶ 40       On appeal, the Comerica court reviewed the history of and policy behind assignments of
       rents, noting that, at common law, a mortgagee/lender had to take actual possession before it
       was entitled to rents. Id. This rule reflected a public policy seeking “to prevent mortgagees
       from stripping the rents from the property and leaving the mortgagor[/debtor] and the tenants
       without resources for maintenance or repair.” Id. The Comerica court quoted a bankruptcy
       case:
                “ ‘To obtain the benefits of possession in the form of rents, the mortgagee must also
                accept the burdens associated with possession—the responsibilities and potential
                liability that follow whenever a mortgage goes into default. The mortgagee’s right to
                rents, then, is not automatic but arises only when the mortgagee has affirmatively
                sought possession with its attendant benefits and burdens.’ ” Id. at 1033-34 (quoting
                Monarch, 153 B.R. at 833).
¶ 41       The Comerica court also acknowledged a “modern trend” that permitted a mortgagee to
       collect rents once it had taken constructive, as opposed to actual, possession, such as by a
       judicial award of injunctive relief or appointment of a receiver. Id. at 1034 (citing cases). Thus,
       a mortgagee must take some affirmative action to gain possession of the property. Id. The
       Comerica court held that neither Comerica nor the trustee was entitled to the rents because
       neither had taken actual or constructive possession of the property. Id. As to Comerica, the
       court noted that “a mortgagee still needs to obtain a court’s authorization before [it] may
       collect rents without taking possession.” (Emphasis added.) Id. This ensures that all parties’
       interests are before the court. Id. The Comerica court refused to recognize the
       assignment-of-rents provision in Comerica’s agreement. Id. As to the trustee, the Comerica
       court held that the trustee’s filing of certain pleadings, such as the foreclosure action or the

                                                    -9-
       request for the appointment of a receiver, was not sufficient to trigger the mortgagee’s right to
       collect rents, where the trustee did not obtain prejudgment possession of the property and
       where the rents were collected while the mortgagor was in possession and before the receiver
       was appointed. Id. Rather, the court concluded, it is a “trial court’s affirmative ruling on such
       filings that entitles the mortgagee to the rents.” Id. at 1035. In a foreclosure action, a mortgagee
       is not entitled to rents until a judgment has been entered, unless the mortgage agreement
       permits the mortgagee to obtain prejudgment possession. Id. at 1034-35. Similarly, a request
       for the appointment of a receiver is not sufficient; rather, a receiver must be appointed on the
       mortgagee’s behalf and take actual possession of the property. Id. at 1035. Accordingly, the
       Comerica court affirmed the trial court’s ruling that the rents collected belonged to the
       mortgagor. Id.
¶ 42        In sum, Comerica held that (1) assignment-of-rents provisions are enforceable only when
       lenders take actual or constructive possession of the mortgaged property and (2) constructive
       possession requires affirmative action that must include court authorization (such as the
       appointment of a receiver) to collect the rents. Id. at 1034-35; see also In re Callas, No. 13 B
       43900, 2015 WL 1850260, at *7 (Bankr. N.D. Ill. Apr. 23, 2015) (reviewing case law and
       noting that, “under Illinois law, a security interest in rents arising under an assignment of rents,
       while perfected against third parties upon recordation, does not grant an interest in particular
       amounts, paid after default and constituting rents from the property, until affirmative steps are
       taken by the mortgagee to acquire possession of the property through either foreclosure or the
       appointment of a receiver pending foreclosure”); cf. Fidelity, 71 F.3d at 1309-10
       (rents-and-profits doctrine does not apply to agreements involving the recovery of postdefault
       rent that are not assignment-of-rents agreements; specifically, an indemnity agreement, under
       which a borrower agreed to turn over postdefault rents to the lender upon receipt, was not an
       assignment-of-rents agreement because it did not involve an outright assignment of the rents to
       the lender and only required the borrower to pay over rents it collected upon receipt; it was in
       the nature of a guarantee).

¶ 43                                   4. Perfection and Enforcement
¶ 44        The common law distinguishes between perfection and enforcement of
       assignment-of-rents interests. An assignment of rents creates a security interest/lien in the
       rental income. Monarch, 153 B.R. at 833. That security interest is perfected upon recordation.
       Id.; see also West Bend, 712 F.3d at 1034-35; Callas, 2015 WL 1850260, at *7.
¶ 45        Taking possession constitutes enforcement of the lien (i.e., when a party takes affirmative
       steps to start collecting the rents, it is enforcing its lien). The lien is not one on specific rents
       held by the mortgagor; rather, “an assignment[-]of[-]rents provision allows the mortgagee to
       take certain steps [i.e., enforce], after default *** to obtain possession of the property and start
       collecting the rents; but until [it] takes such steps the mortgagor is entitled to keep the rents.”
       (Emphasis added.) Wheaton Oaks, 27 F.3d at 1242; see Monarch, 153 B.R. at 833 (“[t]he
       requirement that a mortgagee enforce its lien on rents by possession of the real estate renders
       an assignment of rents different from security interests in other property” (emphasis added));
       see also Callas, 2015 WL 1850260, at *7 (“a security interest in rents arising under an
       assignment of rents, while perfected against third parties upon recordation, does not grant an
       interest in particular amounts, paid after default and constituting rents from the property, until
       affirmative steps are taken by the mortgagee to acquire possession of the property [(i.e.,

                                                    - 10 -
       enforce the lien)] through either foreclosure or the appointment of a receiver pending
       foreclosure”); id. (an assignment of rents creates a lien upon the rents of the property “that may
       be enforced upon default by taking affirmative steps to acquire possession of the land by the
       mortgagee or a receiver appointed on the mortgagee’s behalf” (emphasis added)); 27A Ill. L.
       and Prac. Mortgages § 80 (2016).
¶ 46       There is some authority for the proposition that a lockbox arrangement or other
       direct-payment system constitutes sufficient enforcement of an assignment of rents; thus,
       under this view, court authorization is not the only enforcement mechanism. West Bend, 712
       F.3d at 1035 (reviewing Illinois case law). In West Bend, a creditor sought to enforce a
       judgment against a bank where the judgment debtor had an account and had borrowed on the
       security of some commercial real estate. However, the bank “did not enforce a direct-payment
       system or appoint a receiver to collect the rents on its behalf,” and some funds flowed to the
       judgment debtor. Id. at 1034. The court first noted that the bank’s interest was senior to the
       creditor’s interest because an assignment is perfected when it is recorded. Id. at 1034-35.
       However, it continued, when rents are paid directly to the debtor, the security interest
       evaporates. Id. at 1035. To enforce the assignment, “a creditor must arrange for the tenants to
       pay it directly through a lockbox, or for a third party such as a receiver to take possession for
       the lender’s benefit.” Id. (citing Comerica, 284 Ill. App. 3d at 1035). In that case, the funds
       flowed to the debtor’s account (i.e., not to the bank, through a direct-payment system),
       whereupon the bank’s security interest evaporated. Id.
¶ 47       We further note that, in 1995, the Fidelity court contemplated this possibility and noted that
       it was unclear if the rents-and-profits doctrine forbids “enforcing the mortgagor’s agreeing to
       place a portion of the rents in escrow (the type of ‘lockbox’ arrangement that is common in
       commercial lending secured by personal rather than real property) to be available to the
       mortgagee in the event of a default, an issue on which we cannot find any cases.” Fidelity, 71
       F.3d at 1309-10. Of course, in 2013, the West Bend court read Illinois law to permit this option.

¶ 48                               5. Section 31.5 of the Conveyances Act
¶ 49       Section 31.5 of the Conveyances Act became effective on January 1, 1996. Pub. Act 89-39,
       § 5 (eff. Jan. 1, 1996) (adding 765 ILCS 5/31.5). The provision states, in relevant part:
                   “(b) If an instrument assigning the interest of the assignor in rents arising from the
               real property described in the instrument is recorded, pursuant to this Act, in the county
               in which the real property is situated, then the interest of the assignee in those rents is
               perfected upon that recordation without the assignee taking any other affirmative
               action.
                   The recordation is constructive notice to subsequent purchasers, creditors, and third
               parties of the content and effect of the assignment with the same force and effect as any
               other duly recorded instrument or conveyance of an interest in real property under
               Sections 30 and 31 of this Act. From the time of the recordation, the assignee has a
               superior claim to the rents that are subjected to the assignment, as against all parties
               whose claims or interests arise or are perfected thereafter.
                   (c) This Section applies whether the assignment is absolute, conditional, or
               intended as security.



                                                   - 11 -
                   (d) Unless otherwise agreed to by the parties, the mere recordation of an
               assignment does not affect who is entitled, as between the assignor and the assignee, to
               collect or receive rents until the assignee enforces the assignment under applicable law.
                   (e) The fact that the assignee may permit the assignor to collect rents under the
               terms of an assignment does not affect the validity, enforceability, or priority of an
               assignment perfected in the manner set forth in subsection (b).” (Emphases added.) 765
               ILCS 5/31.5(b), (c), (d), (e) (West 2014).
¶ 50      Although section 31.5 became effective just prior to the Comerica decision, the Comerica
       court did not address the statute. Thus, the statute’s impact on Comerica is an open question.
       Robert C. Feldmeier, Enforcing Assignment-of-Rents Provisions in Illinois, 86 Ill. B.J. 436,
       439 (1998).

¶ 51                                              B. Issues
¶ 52                               1. Effect of Section 31.5 on Comerica
¶ 53       Turning to BMO’s first argument, BMO argues that Comerica is binding and was not
       superseded by section 31.5. Adverse Claimants and the trial court, according to BMO, mistake
       perfection for enforcement, and the trial court’s interpretation (1) is inconsistent with, and
       renders meaningless, legislative enactments concerning a creditor’s ability to collect rents and
       (2) is in derogation of common law and violates public policy. BMO maintains that this case is
       not a priority dispute between secured parties but, rather, a dispute between a party with a
       perfected citation lien (BMO) and other parties (Adverse Claimants) who are unsecured due to
       their failure to obtain court authorization to collect the rents for the JCI properties. It argues
       that because Adverse Claimants did not have possession of the properties and did not obtain
       court authorization to collect the rents, their arrangements are void as against public policy
       under the rents-and-profits doctrine. BMO maintains that it is arguing not that it is entitled to
       collect the rents but that, once they were collected, (1) they simply became funds held by
       Briargate, (2) Adverse Claimants had no lien on the funds because, once the rents were
       collected, Adverse Claimants’ liens evaporated, and (3) BMO maintained its perfected citation
       lien on the funds. For the following reasons, we reject BMO’s argument and hold that the
       Briargate citation cannot reach the assigned rents. Through the forbearance agreements, which
       predated the Briargate citation, Adverse Claimants enforced the recorded/perfected
       assignment-of-rents provisions in their mortgages and, thus, the rents were no longer in JCI’s,
       the debtor’s, possession or control.
¶ 54       We review de novo issues of statutory construction. Wells Fargo Bank, N.A. v. McCluskey,
       2013 IL 115469, ¶ 10. The primary rule of statutory construction requires that we give effect to
       the legislature’s intent. Advincula v. United Blood Services, 176 Ill. 2d 1, 16 (1996). In
       ascertaining the legislature’s intent, we begin by examining the plain language of the statute,
       reading the statute as a whole, and construing it so that no word or phrase is rendered
       meaningless or superfluous. Kraft, Inc. v. Edgar, 138 Ill. 2d 178, 189 (1990). “Where the
       language is clear and unambiguous, the statute must be given effect as written without resort to
       further aids of statutory construction.” Alvarez v. Pappas, 229 Ill. 2d 217, 228 (2008).
¶ 55       The trial court found that, under section 31.5, Adverse Claimants hold a superior lien on
       the Briargate funds. The forbearance agreements, the court further found, are enforceable, are
       like the lockbox or other direct-payment arrangements specified in the case law, and are
       beyond the reach of any third-party claims that are perfected or arise thereafter.

                                                   - 12 -
¶ 56       We conclude that section 31.5 unambiguously provides that an assignment of rents is
       perfected upon recording and provides that the assignee has a superior claim to the rents “as
       against all parties whose claims or interests arise or are perfected thereafter.” 765 ILCS
       5/31.5(b) (West 2014). The statute further provides, unambiguously, that, as between assignor
       (such as JCI/Briargate) and assignee (Adverse Claimants), the mere recording does not affect
       who is entitled to the rents until the assignee (Adverse Claimants) enforces the assignment
       “under applicable law,” unless, as is critical here, the parties agree otherwise. 765 ILCS
       5/31.5(d) (West 2014).
¶ 57       BMO contends that this reading of section 31.5 puts the statute in direct contrast with other
       statutes and renders them meaningless. BMO argues that section 31.5 is not ambiguous and
       that subsection (d) clearly incorporates enforcement through applicable law, which, in BMO’s
       view, reflects the legislature’s intent that the statute controls perfection, not enforcement. Next,
       BMO contends that, even if the legislature “disposed” of the rents-and-profits doctrine in
       section 31.5, the statute still requires that an agreement to collect rents be reflected in the
       recorded document that gives rise to the lien. Here, it notes, the trial court never found that any
       recorded document provided Adverse Claimants the right to collect rents. Instead, the court
       relied upon unsigned agreements that were not recorded, in violation of the statute. BMO
       further argues that the trial court’s reading departs from Comerica and other case law. BMO’s
       second point is that, if Adverse Claimants are allowed to collect rents without court authority,
       this would violate common law, which applies because the statute does not state that rents can
       be collected without such authority.
¶ 58       We disagree with BMO that section 31.5 controls only perfection of an assignment of
       rents. The statute explicitly provides in subsection (d) that rent entitlement is determined once
       an assignment is enforced, unless otherwise agreed to by the parties. Id. We also disagree with
       BMO’s assertion that, even if parties may agree otherwise, there were no signed and recorded
       documents here that enforced Adverse Claimants’ assignments. It is undisputed that the
       assignment-of-rents provisions upon which Adverse Claimants rely are contained in recorded
       mortgage instruments (indeed, they were recorded prior to either the Briargate or the JCI
       citation and even prior to BMO’s judgment). Adverse Claimants perfected these liens when
       they recorded the instruments. 765 ILCS 5/31.5(b) (West 2014). The assignments were
       properly enforced when, by electing to agree “otherwise” and enforce them other than under
       applicable law, the parties, prior to the Briargate citation, entered into the forbearance
       agreements to transmit the rents Briargate collected directly to Adverse Claimants (after
       payment of the properties’ expenses). 765 ILCS 5/31.5(d) (West 2014). There is no dispute
       that Adverse Claimants entered into these agreements, and there is no statutory requirement
       that the forbearance agreements be recorded. Thus, Adverse Claimants properly enforced their
       assignments.
¶ 59       As to Comerica, the court in that case did not address section 31.5 and its language in
       subsection (d), allowing parties to contract to enforce an assignment other than pursuant to
       applicable law. Comerica might remain viable in cases where the parties have not agreed to
       “otherwise” enforce assignments of rents. But that is not the case here. West Bend recognized a
       mechanism—a lockbox arrangement or other direct-payment system—by which parties can
       enforce assignments of rents other than through court authorization. West Bend, 712 F.3d at
       1035. Here, JCI contracted away in the forbearance agreements its right to receive the rents,
       which, after deduction of property expenses, Briargate directly forwarded to Adverse


                                                    - 13 -
       Claimants.5 As JCI and Briargate note, at no point did BMO take the required steps—seeking
       a turnover of the rents or the appointment of a receiver—to supplant Adverse Claimants’
       priority positions. BMO, in their view, has an unenforced citation lien that cannot trump an
       assignment of rents. We agree.
¶ 60       Furthermore, as Rockford and Byron note, the supplementary-proceedings statute provides
       that citations can reach only those assets in the possession or control of the judgment debtor (or
       belonging to the judgment debtor but in the possession or control of the third-party citation
       respondent). 6 735 ILCS 5/2-1402(a) (West 2014); see also 735 ILCS 5/2-1402(m) (West
       2014) (lien established by service of citation does not affect the citation respondents’ rights in
       property prior to the service of the citation upon them, and the lien created does not affect the
       rights of bona fide purchasers or lenders without notice of the citation). Thus, given Adverse
       Claimants’ control over the rents pursuant to the forbearance agreements between themselves,
       JCI, and Briargate, no citation lien can attach to the rents collected by Briargate.
¶ 61       BMO next points to several sections of the Illinois Mortgage Foreclosure Law
       (Foreclosure Law). 735 ILCS 5/15-1701, 15-1703, 15-1704, 15-1706 (West 2014) (addressing
       the right to possession during foreclosure). 7 It reads these provisions as establishing
       requirements before a lender can collect rents to the exclusion of other parties who may claim
       an interest. BMO argues that the trial court’s ruling usurps the legislature’s statutory
       protections and disregards its statutory predicates. It suggests that if the law is as the trial court
       interpreted it, then no creditor would ever go to court to enforce its right to collect rents. The
       legislature’s detailed mortgagee-in-possession and receivership rules, BMO urges, should not
       be interpreted in a manner that renders them superfluous.
¶ 62       We reject BMO’s argument. Section 31.5(d) of the Conveyances Act, the more specific
       statute, applies here. Adverse Claimants did not file foreclosure actions. Rather, they entered
       into agreements to enforce assignments of rents. Section 31.5(d), not the foreclosure statute,
       specifically addresses that scenario.
¶ 63       BMO next argues in the alternative that, if the statute is ambiguous, the legislative history
       nevertheless reflects that the General Assembly was merely clarifying the law concerning how
       an assignment of rents is perfected, such as where a junior lender is allowed to continue to
       collect rents after a senior lienholder attempted to enforce it.

           5
             Rockford notes that, under its forbearance agreement, rent payments received by check and money
       order were signed over to Rockford to be deposited into a bank-controlled account. Only credit card
       payments were deposited by Briargate and then remitted to Rockford. After deduction of escrow
       payments and loan payments, any remaining funds were released back to Briargate for payment of
       expenses for the property. No funds collected by Briargate were to be paid to JCI. The Byron agreement
       similarly provided that rents collected by Briargate, minus expenses and management fees, would be
       turned over to Byron with a rent roll report.
           6
             At oral argument, BMO conceded that, if the funds Briargate collected were not JCI’s property, its
       argument failed.
           7
             The procedures for obtaining possession are contained in the article of the Foreclosure Law
       addressing possession during foreclosure. 735 ILCS 5/15-1701 et seq. (West 2014); Monarch, 153 B.R.
       at 832-33 & n.3; see 735 ILCS 5/15-1706(a) (West 2014) (request that a mortgagee be placed in
       possession or that a receiver be appointed must be made by motion); 735 ILCS 5/15-1703(a)(1) (West
       2014) (a mortgagee in possession has the right to receive rents); 735 ILCS 5/1704(b)(2) (West 2014) (a
       receiver appointed for the mortgaged property has the power and authority to collect rents).

                                                     - 14 -
¶ 64       Again, section 31.5 is not ambiguous. But even assuming, arguendo, that it is, our holding
       remains the same. We disagree with BMO that the legislative history reflects that section 31.5
       merely clarifies the law on perfection. We find the legislative history unhelpful because it
       focuses on perfection of assignments-of-rent interests, not enforcement, and the statute
       distinguishes between the two concepts. The legislative history of section 31.5 reflects that the
       General Assembly intended the statute to “provide procedures for perfecting an assignment of
       rents by recordation” and that such an assignment “will be perfected from the time it is
       recorded and without requiring the assignee to take any other action.” 89th Ill. Gen. Assem.,
       House Proceedings, May 8, 1995, at 180 (statements of Representative Biggert). The House
       sponsor noted that there was no statute that set forth how to perfect a security interest in rents,
       that “court decisions have been highly inconsistent,” and that most, but not all, courts have held
       that recording is sufficient. Id. at 180-81 (further noting that some cases had held that the
       second mortgagee had top priority). “So, this really is a clarification of the law.” Id. at 181. In
       the Senate, the sponsor also noted that there was no statute on the matter and that the enactment
       would “simply codify common[-]law rules.” 89th Ill. Gen. Assem., Senate Proceedings, Mar.
       24, 1995, at 31 (statements of Senator Fitzgerald).
¶ 65       Assuming, arguendo, that section 31.5 is ambiguous, we find that public policy
       considerations weigh in favor of our reading. As noted, the public policies underlying the
       rents-and-profits doctrine ensure that mortgagees’ interests are protected, while also ensuring
       proper maintenance of the properties at issue. Wheaton Oaks, 27 F.3d at 1242
       (assignment-of-rents provisions allow creditors to reach the rents prior to completion of
       foreclosure proceedings and prevent a mortgagor from collecting rents after default and not
       making payments under the mortgage agreement); Comerica, 284 Ill. App. 3d at 1034 (but the
       possession requirement—actual, or constructive with court authorization—reflects a policy
       that seeks to prevent mortgagees from stripping the rents from the property and leaving the
       mortgagor and tenants without resources for maintenance or repair). The forbearance
       agreements here allow for the expenses of maintenance, management, and repair of the
       properties to be paid from the rents. Thus, the public policy to be advanced by requiring a
       mortgagee to take actual or constructive possession of the property through court action, as
       addressed in Comerica, is not implicated because the agreements require Adverse Claimants to
       accept both the benefits and the maintenance and repair burdens of the properties. In this way,
       the tenants’ needs were met by Briargate’s active management of the properties, and Adverse
       Claimants received the net rents. Indeed, if the forbearance agreements had not accounted for
       management expenses, as further specified in the leases, it is arguable that they would have
       been void as against public policy.

¶ 66                                        2. Commingling
¶ 67      Next, BMO argues that, assuming, arguendo, that a secured lender may collect rents
       without court authorization, Adverse Claimants still do not have a lien on the Briargate funds
       because any such lien evaporated when Briargate (as mortgagor JCI’s agent) collected the
       funds and deposited them into its bank account, thereby commingling them with its assets.
       West Bend, 712 F.3d at 1035 (“when rentals are paid directly to the debtor, the security interest
       evaporates”). BMO argues that there was no evidence that Briargate acted as Adverse
       Claimants’ agent, as opposed to JCI’s agent. BMO points to the January 1, 2014, JCI-Briargate



                                                   - 15 -
       management agreement, noting that it states, in section 5(b), that all funds collected by
       Briargate will remain JCI’s property.8
¶ 68       JCI and Briargate respond that the rents were not JCI’s cash assets commingled with
       Briargate’s operating account because, pursuant to the assignment of rents, Briargate managed
       the properties for Adverse Claimants, not JCI. They point to a different portion of the
       JCI-Briargate management agreement, section 9(j), which allows for the assignment of the
       agreement to the lender and which they argue was exercised via the actual assignment of the
       rents.9 Thus, they reason, Briargate became Adverse Claimants’ agent.
¶ 69       We find BMO’s argument unavailing and disagree that no agreement such as that
       contemplated in section 9(j) of the management agreement is in the record or was alleged by
       Adverse Claimants. The forbearance agreements, which are in the record, effectuated the
       enforcement of Adverse Claimants’ liens. We also disagree with BMO’s additional assertion
       that there were factual issues that the trial court should have resolved. BMO points to
       Contarino’s deposition testimony that Briargate started paying Adverse Claimants directly in
       order to avoid the JCI citation. Whether or not the forbearance agreements were entered into to
       protect JCI’s interests, the contracts speak for themselves and unambiguously reflect that JCI
       contracted away its right to receive the rents. The parties’ intent beyond that is not relevant to
       interpreting the unambiguous agreements.
¶ 70       Further, as Rockford and Byron note, West Bend is distinguishable because there the funds
       used by the judgment debtor to pay the bank were rent payments collected by the debtor and
       deposited into his bank account after service of the citation upon him. Here, Briargate, a third
       party, collects the rents and they are not paid over to or into JCI’s account. The West Bend
       court acknowledged such an option as an enforceable means of continuing the interest in the
       rents. Id. at 1034-35 (“a creditor must arrange for the tenants to pay it directly through a
       lockbox, or for a third party such as a receiver to take possession for the lender’s benefit”).
¶ 71       We agree with Midwest that BMO’s reasoning would lead to the ridiculous result that a
       lender would have a lien on unpaid rents but would lose the lien once it turns into cash. Further,
       section 31.5(e) of the Conveyances Act specifically provides that the priority of a perfected
       assignment is unaffected by whether an assignee permits an assignor to collect rents under the
       terms of an assignment. 765 ILCS 5/31.5(e) (West 2014).

¶ 72                                           3. Prove-up
¶ 73       Next, BMO argues that, even if the trial court did not err in finding that Adverse Claimants’
       lien was superior to BMO’s, the trial court erred in failing to require that Adverse Claimants

           8
              Section 5(b) of that agreement addresses the operating account into which Briargate is to deposit
       all funds it collects, noting that the account shall be segregated and be in the “Manager’s name as
       custodian for Owner” and that “[a]ll funds deposited into the Operating Account shall be and remain
       Owner’s property.”
            9
              Section 9(j) of the agreement addresses lender agreements and provides, in relevant part:
                 “Manager shall sign and deliver such agreements related to the subject matter hereof as any of
            Owner’s lenders may reasonably require, including, without limit thereto, *** [1] lender’s right to
            terminate this Agreement in the event Owner is in material default of an obligation owed lender,
            *** and [2] assignment of this Agreement to the lender and agreement to perform services for the
            lender (any such agreement being a ‘Lender Agreement’) ***.” (Emphasis in original.)

                                                     - 16 -
       prove up the existence or amount of the indebtedness and corresponding liens. BMO focuses
       on the fact that, prior to the trial court’s ruling, Rockford, which apparently claims more than
       75% of the funds here, entered into a consent foreclosure in which it accepted title to the
       properties in exchange for satisfaction of the indebtedness owed to it by, as relevant here, JCI.
       BMO argues that Rockford was awarded double satisfaction of its claims because Rockford no
       longer was owed any debts at the time of the trial court’s ruling.
¶ 74       The trial court rejected the prove-up issue, noting that the existence of the forbearance
       agreements was not disputed and that BMO had cited no authority in support of its argument,
       which it asserted for the first time in its motion to clarify and reconsider. As to Rockford’s
       consent foreclosure, the court also noted that case law instructed that “[a]n express pledge of
       rents is not extinguished by a foreclosure sale which merges the title and the debt in the same
       party.” (Emphasis added.) Randall Plaza, 326 B.R. at 141.
¶ 75       We find BMO’s argument unavailing. BMO argues that Randall Plaza is distinguishable
       because it merely permitted a creditor that had taken title to the property to collect outstanding
       rents from the tenants and stated that the foreclosure did not affect that creditor’s ability to
       collect future and outstanding rents as the property owner. We disagree with BMO’s reading,
       as the court’s holding encompassed rents from the time of default to any time thereafter. Id.
       The Randall Plaza court held that the creditor had a valid assignment of rents and had taken
       appropriate steps to enforce it prior to foreclosure. Id. at 140. The creditor both initiated
       foreclosure proceedings and obtained the appointment of a receiver, thus commencing
       proceedings under which it could gain possession of the property for purposes of collecting
       rent. Id. at 141. The court noted that the assigned rents included “all rents that were unpaid at
       the time [the creditor] gave notice of the default” or any time thereafter. Id. Critically, the court
       also held that the creditor’s purchase of the property after foreclosure did not extinguish both
       the mortgage and the lien on the rents but extinguished only the mortgage. Id. The rents were
       unaffected because “[a]n express pledge of rents is not extinguished by a foreclosure sale
       which merges the title and the debt in the same property.” Id. (citing cases). Pursuant to
       Randall Plaza, the consent foreclosure judgment did not act to waive Rockford’s lien on the
       rents.
¶ 76       Furthermore, the prove-up issue is unavailing because, as Adverse Claimants note, the
       facts asserted in their adverse claims are undisputed and, at all stages of these proceedings,
       they asserted their contractual and lien rights to the funds and consistently maintained that the
       funds, which Briargate collected as JCI’s management agent, were no longer JCI’s property;
       rather, by agreement (the forbearance agreements), which the trial court correctly found to be
       enforceable, they had become Adverse Claimants’ property.
¶ 77       We note that BMO never asked for a hearing below to address any factual issues, nor did it
       request additional discovery. Further, it framed the prove-up issue as a question of law,
       namely, whether the consent foreclosure judgment waived Rockford’s lien on the rents.
       Specifically, in its motion to clarify and reconsider, BMO argued that Adverse Claimants
       “must first prove up their claims against JCI, as a matter of law.” Given our holding that the
       consent foreclosure judgment did not waive Rockford’s lien, there is no factual question to be
       resolved.




                                                    - 17 -
¶ 78                                   III. CONCLUSION
¶ 79   For the reasons stated, the judgment of the circuit court of Winnebago County is affirmed.

¶ 80   Affirmed.




                                             - 18 -
