Despite Lack Of Actual Knowledge Or Record Notice, Sloppy Lender Should Have Known Of Victimized Homeowner's Unrecorded Equitable Mortgage Rights To Home Sold Out From Under Her, Says Illinois Appeals Court

A 2012 case decided by an Illinois appellate court (see U.S. Bank Nat. Ass'n v. Villasenor, 979 NE 2d 451 (Ill. App. 1st Dist., 6th Div. 2012)) involves another situation where a mortgage lender unwittingly found itself financing an equity stripping ripoff orchestrated by the typical band of bad actors, and perpetrated against an elderly homeowner who owned her home of over thirty years free and clear of any mortgage.

Not surprisingly, the scammers were nowhere to be found when this lawsuit was brought, leaving a victimized homeowner to fight it out in court (not only to undo the equity stripping scam by having it recharacterized it as an equitable mortgage, but to undo a subsequent foreclosure sale that she wasn't a party to in connection with a loan that was borrowed out from under her by using her home's equity) with an unwitting but careless lender which claimed that, not only did it lack actual notice of the ripoff, but that it also lacked constructive notice as well.

Despite the fact that the mortgage lender wasn't in on the scam, the court granted summary judgment on the victimized elderly homeowner's intervenor's complaint and quiet title lawsuit, finding that the lender had constructive notice of occupants in possession of the home securing its loan, but failed to inquire of said occupants as to the nature of their possession. The court found that, had it done so, the lender would have discovered that there was a problem with the title to the home (ie. that the victimized homeowner may hold an unrecorded equitable interest) and wouldn't have granted the mortgage loan to one of the bad actors who, through the mechanics of the equity stripping ripoff, ended up as the purported record owner of the home.

Following below is an over-simplified summary of the facts - much detail has been omitted (ie. references to land trusts, transfers between related entities, excerpts from depositions of the victimized homeowner and both of her two grandsons, among other things have been left out):

Ownership/Possession By The Victimized Elderly Homeowner:

1. Ruthie Lee Ellis ("Ellis"), the intervenor, age 73, alleges in her intervenor's complaint, affirmative defense, and complaint to quiet title that she had owned the home since 1972 and lived in the home with her son, Andre Ellis, until 1985.
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2. Ellis then moved out and Andre, or other relatives, continued to reside in the home until 2003.
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3. Later, Andre moved out and Michael Ellis, a grandson, moved in and resided in the home until 2009.
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4. From 2009 through the commencement of the instant action, Martez Knox, another of Ellis' grandsons, has lived in the home.

Events Leading Up To The Dispute:

1. In 2004, Ellis became aware that her 2000 Cook County real estate taxes had been sold in a tax sale. To avoid losing the property, Ellis sought a loan to pay off the overdue taxes. She began searching for loan providers and was contacted by Property Tax Counselors, Inc. (PTC).
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2. On September 23, 2004, Ellis signed a written agreement drafted by PTC (the PTC agreement) and, pursuant to the agreement, executed a warranty deed in trust on the same day, conveying title to the home to First Suburban as trustee of a land trust.
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3. The PTC agreement outlined the terms of a $10,210.63 loan in which Ellis alleges, in her affirmative defense and complaints, that her property served as security for the loan. It required periodic payments, and a right to repurchase the home.
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4. On June 7, 2005, record title to the home was sold to one, Villasenor, who was ostensibly connected to the outfit orchestrating the scheme. Villasenor obtains a mortgage loan secured by the theretofore free and clear home in the amount of $99,000 shortly thereafter.
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5. On April 1, 2007 (almost two years after title to the home was ostensibly sold out from under her and encumbered with a $99,000 mortgage), Ellis secured a second loan from PTC for $3,764.19, alleging in her deposition that she needed the money to pay off water bills and property taxes. An identical agreement was executed for that loan. Ellis alleges in her complaints, affirmative defense, and motions that she made all payments due under both PTC loans until October of 2007 when her mailed payments were returned by the United States post office showing that PTC was not located at the address and had left no forwarding address. All efforts to locate PTC were unsuccessful.
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6. On May 1, 2007 (one month after securing the second loan from PTC), Villasenor (the then-ostensible owner of record) defaulted on his mortgage and the mortgage lender filed a complaint to foreclose on August 21, 2007.
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7. In October, 2007 (two months after the mortgage lender filed its foreclosure action), Ellis' mailed payments to PTC on account of her two loans were returned to her by the post office showing that PTC was not at that address and had left no forwarding address (as referenced in #5, above),
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8. On November 7, 2007, the mortgage lender filed a motion for an order of default and for judgment for foreclosure and sale for Villasenor's failure to file an appearance and answer or otherwise plead.
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9. On December 10, 2007, an order of default and judgment for foreclosure and sale was entered.
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10. The notice of sale was mailed to two separate addresses, one of which was the subject property. At the time the notice was mailed to the subject property, Michael Ellis, one of Ellis' grandsons, was the occupant of the home.
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11. On April 24, 2008, after the judicial sale had taken place, the foreclosing mortgage lender filed a motion to approve the report of sale and for the entry of an order of possession, which was granted the same day.
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12. On April 28, 2008 (four days later), Ellis learned of a cloud on her title after receiving notice that her property had been foreclosed and that an eviction action had commenced (as alleged in her motion for leave to intervene).
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13. On May 21, 2008, Ellis responded by filing a motion for leave to intervene in the Villasenor foreclosure and a motion to vacate the judgment for foreclosure and the order confirming the sale.
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14. On August 7, 2008, the court permitted Ellis to intervene and granted her request to vacate the April 24 order approving the report of sale and possession order, and the December 10 judgment of foreclosure and order confirming the sale. The court granted Ellis leave to file an answer, affirmative defense, and complaint to quiet title.
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15. Among Ellis' allegations was that the warranty deed was represented to her and in the PTC agreement as only security for her loan. Ellis claimed that the agreement and warranty deed she executed created an equitable mortgage. Ellis also alleges that PTC would be required to foreclose on her mortgage in accordance with Illinois Mortgage Foreclosure Law (735 ILCS 5/15-1101 et seq. (West 2004)) before title could pass to a third party.
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16. The mortgage lender claimed that, as a matter of law, Ellis's equitable mortgage claim could not defeat the bank's mortgage because the bank was first to record its interest in the property and had no notice of Ellis's equitable claim.
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17. Further, it claimed that because the tenancy relationship between Ellis and her grandson was not inconsistent with the public record, this relationship did not place the bank on notice of Ellis's interest as a matter of law. The bank denied Ellis's claim that it had a duty to inquire further to satisfy inquiry notice. U.S. Bank also alleges that, had it inquired further, there was nonetheless no certainty that it would be led to Ellis's purported interest.

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Following below is the Illinois appeals court's recitation of the relevant Illinois law, its application to the facts of the case, and the court's conclusion, in its entirety:

• ¶ 58 The primary issue we are to consider is whether U.S. Bank had notice of Ellis's interest prior to granting the Villasenor mortgage. The law measures bona fide purchasers and mortgagees under the same standards. US Bank must qualify as a bona fide mortgagee to retain an interest in the property. In order to successfully foreclose on the property, U.S. Bank must establish that it acquired an "interest in [the] property for valuable consideration without actual or constructive notice of another's adverse interest in the property." In re Ehrlich, 59 B.R. 646, 650 (Bankr.N.D.Ill.1986) (citing Life Savings & Loan Ass'n of America v. Bryant, 125 Ill.App.3d 1012, 1019, 81 Ill.Dec. 577, 467 N.E.2d 277 (1984)). If U.S. Bank meets these requirements it would obtain the role of a bona fide mortgagee. In the case at bar, U.S. Bank denies that it had actual or constructive notice of Ellis's interest.
  
  ¶ 59 Actual notice is that knowledge the purchaser had at the time of the conveyance. Bryant, 125 Ill.App.3d at 1019, 81 Ill.Dec. 577, 467 N.E.2d 277. The parties agree that U.S. Bank did not have actual notice.
  
  Thus, the next inquiry is whether the bank had constructive notice. Constructive notice is knowledge that the law imputes to a purchaser, whether or not he had actual knowledge at the time of the conveyance. See generally In re Application of Cook County Collector for Judgment & Sale Against Lands & Lots Returned Delinquent for Nonpayment of General Taxes for the Year 1985, 228 Ill. App.3d 719, 734-35, 170 Ill.Dec. 649, 593 N.E.2d 538 (1991); City of Chicago v. Cosmopolitan National Bank, 120 Ill.App.3d 364, 368, 75 Ill.Dec. 843, 458 N.E.2d 11 (1983); In re Application of County Treasurer, 30 Ill.App.3d 235, 240, 332 N.E.2d 557 (1975); Landis v. Miles Homes Inc., 1 Ill.App.3d 331, 273 N.E.2d 153 (1971).
  
  There are two kinds of constructive notice: record notice and inquiry notice. LaSalle Bank v. Ferone, 384 Ill.App.3d 239, 245, 322 Ill.Dec. 948, 892 N.E.2d 585 (2008) (citing In re Ehrlich, 59 B.R. 646, 650 (Bankr.N.D.Ill.1986)). Both parties agree that U.S. Bank did not have record notice because Ellis's interest in the property was not recorded because the PTC agreement prevented recordation. Thus the chain of title does not impute record notice on U.S. Bank. The bank relies on section 30 of the Conveyances Act (765 ILCS 5/30 (West 2004)) to explain in relevant part that all mortgages:
  
  
  "which are authorized to be recorded, shall take effect and be in force from and after the time of filing the same 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 2004).
  
  US Bank argues that, "the first mortgage recorded has priority. Firstmark [Standard Life Insurance Co. v. Superior Bank FSB], 271 Ill.App.3d [435,] 439 [208 Ill. Dec. 409, 649 N.E.2d 465] [(1995)]. An unrecorded interest in land is not effective to a bona fide purchaser without notice. Schaumburg State Bank v. Bank of Wheaton, 197 Ill.App.3d 713, 720 [144 Ill.Dec. 151, 555 N.E.2d 48] (1990)." Federal National Mortgage Ass'n v. Kuipers, 314 Ill. App.3d 631, 635, 247 Ill.Dec. 668, 732 N.E.2d 723 (2000).
  
  U.S. Bank points to the chain of title to prove that it recorded an interest before Ellis. However, Ellis argues that U.S. Bank is on inquiry notice, yet failed to uphold its duty to inquire. In effect, she argues that, "where a party has constructive notice of a prior interest in real estate, the failure to record is not necessarily fatal to the rights of the prior interest holder. See Dana Point Condominium Ass'n, Inc. v. Keystone Service Co., 141 Ill.App.3d 916, 922 [96 Ill.Dec. 249, 491 N.E.2d 63] (1986)." Kuipers, 314 Ill. App.3d at 635, 247 Ill.Dec. 668, 732 N.E.2d 723.
  
  
  "The title of a purchaser whose deed has been recorded will not be postponed to a prior unrecorded conveyance except upon clear proof of actual notice of the earlier deed or of circumstances which should have induced an honest and prudent purchaser to make inquiry which would have disclosed the truth. Mere suspicion will not establish an inference of fraudulent intent. The proof must be so clear that the inference of bad faith is a necessary conclusion." Cessna v. Hulce, 322 Ill. 589, 597, 153 N.E. 679 (1926) cited in Reed v. Eastin, 379 Ill. 586, 592, 41 N.E.2d 765 (1942)).
  
  See also Blake v. Blake, 260 Ill. 70, 102 N.E. 1007 (1913); In re Cutty's-Gurnee, Inc., 133 B.R. 934, 949 (Bankr.N.D.Ill. 1991). Ellis argues that U.S. Bank acted in bad faith by ignoring clear proof of her equitable interests.
  
  She relies most heavily on Michael Ellis's presence as an occupant of the home, and the inadequate consideration recorded in her initial conveyance evidenced in the chain of title, as proof of her interests. She argues that had U.S. Bank inquired of Michael Ellis, inquiry would have led to Ellis's interests since Michael was her grandson. Regardless of the bank's actions, Ellis argues that the law imputes U.S. Bank with this duty to inquire. She relies on Cessna, once again stating that, "[i]t is true that one having notice of such facts as would put a prudent man on inquiry is chargeable with the knowledge of other facts which he might have discovered by diligent inquiry. Whatever is notice enough to excite attention, put the party on his guard and call for inquiry is notice of everything to which such inquiry might have led." Cessna, 322 Ill. at 595, 153 N.E. 679. See also Reed v. Eastin, 379 Ill. at 592, 41 N.E.2d 765.
  
  It is important to note that the law does not concern itself with whether an inquiry is actually carried out; rather, "notice is imputed to the subsequent purchaser, on account of his negligence in not prosecuting his inquiries in the direction indicated." Anthony v. Wheeler, 130 Ill. 128, 135, 22 N.E. 494 (1889). See also Smolek v. K.W. Landscaping, 266 Ill.App.3d 226, 229, 203 Ill. Dec. 415, 639 N.E.2d 974 (1994); Bryant v. Lakeside Galleries, Inc., 402 Ill. 466, 477, 84 N.E.2d 412 (1949); Reed v. Eastin, 379 Ill. 586, 592, 41 N.E.2d 765 (1942) (citing Cessna v. Hulce, 322 Ill. 589, 597, 153 N.E. 679 (1926)); Doll v. Walter, 305 Ill.App. 188, 192, 27 N.E.2d 231 (1940). See generally Aurora National Loan Ass'n v. Spencer, 81 Ill.App. 622, 622-25 (1898); Robertson v. Wheeler, 162 Ill. 566, 580, 44 N.E. 870 (1896); Grundies v. Reid, 107 Ill. 304 (1883); Slattery v. Rafferty, 93 Ill. 277 (1879).
  
  ¶ 60 Both parties rely on Ehrlich to explain the tenets of inquiry notice. In re Ehrlich, 59 B.R. 646, 649-50 (Bankr. N.D.Ill.1986). Ehrlich, in turn relies on Illinois Supreme Court and Appellate Court cases Miller v. Bullington, 381 Ill. 238, 44 N.E.2d 850 (1942), and Burnex Oil Co. v. Floyd, 106 Ill.App.2d 16, 245 N.E.2d 539 (1969), respectively.
  
  We will first consider the precedent set forth in Miller by reviewing the relevant case history that spans over 50 years.
  
  ¶ 61 We begin our review with Miller v. Bullington, but first must lay Miller's foundational precedent in Whitaker v. Miller, 83 Ill. 381 (1876), and Mallett v. Kaehler, 141 Ill. 70, 73-74, 30 N.E. 549 (1892). In Whitaker, our supreme court found that a complainant's right of possession was evidenced by her tenants. "Her possession was notice to all the world of her rights in the premises, and inquiry of her would have disclosed a knowledge of the truth. Without inquiry, no one can claim to be an innocent purchaser of lands in actual possession of another, as against such party." Whitaker v. Miller, 83 Ill. 381, 386 (1876). This tenet was reinforced when the Illinois Supreme Court found, yet again, that:
  
  
  "[W]hen one purchases land in the possession of a third party, he is bound to take notice of whatever facts an inquiry as to the right of such possession would lead to. We said in Whitaker v. Miller, 83 Ill. 381 [(1876)], (and in substance in many other cases,) that `the possession of land by a party, through his tenants, is notice to all the world of his rights in the premises, and without inquiry of him, no one can claim to be an innocent purchaser, as against him.'" Mallett v. Kaehler, 141 Ill. 70, 74 [30 N.E. 549] (1892).
  
  These two 19th-century cases lay the foundation upon which the 20th-century Miller v. Bullington decision stands. The court in Miller found:
  
  
  "Again, possession of premises by a landlord through his tenant is notice of the landlord's rights. (Mallett v. Kaehler, 141 Ill. 70 [30 N.E. 549 (1892)]). One having notice of facts which would put a prudent man on inquiry is chargeable with knowledge of other facts which he might have discovered by diligent inquiry. Whatever is notice enough to excite attention and put the party on his guard is notice of everything to which such inquiry might have led and every unusual circumstance is a ground of suspicion and demands investigation. Reed v. Eastin, [379 Ill. 586, 41 N.E.2d 765 (1942)]; Struve v. Tatge, 285 Ill. 103 [120 N.E. 549 (1918)]; Blake v. Blake, 260 [Ill.] 70 [102 N.E. 1007 (1913)]." Miller v. Bullington, 381 Ill. 238, 243, 44 N.E.2d 850 (1942).
  
  See also LaSalle Bank v. Ferone, 384 Ill. App.3d 239, 246, 322 Ill.Dec. 948, 892 N.E.2d 585 (2008).
  
  ¶ 62 U.S. Bank ignores the importance of these three holdings in protecting the rights of landlords through their tenants. Ellis repeatedly asserts that Michael, as occupant and tenant, represents her equitable interests in the property. "Such occupancy has been repeatedly held to charge a purchaser or incumbrancer with notice, and all that it would lead to, if pursued." Crawford v. The Chicago, Burlington & Quincy R.R. Co., 112 Ill. 314, 321 (1884). See Doll v. Walter, 305 Ill. App. 188, 192, 27 N.E.2d 231 (1940).
  
  ¶ 63 U.S. Bank supports its position by noting that Michael's tenancy is not inconsistent with the record owner. The bank persistently argues that when Villasenor applied for a loan and mortgage, First National remained the record owner in a land trust. US Bank argues that Michael's tenancy is not inconsistent with this relationship and thus it is not on notice of Ellis's interests. However, U.S. Bank reaches this conclusion only after misinterpreting Burnex Oil Co. v. Floyd and thus we do not find its argument persuasive. Burnex was decided after the trio of supreme court cases discussed above and clearly supports their conclusions:
  
  
  "Where real estate is in the possession of someone other than the record owner, such possession is generally regarded as notice to the world of the interest represented thereby and is legally equivalent to the recording of such interest. Carnes v. Whitfield, 352 Ill. 384 [185 N.E. 819 (1933), cited in Beals v. Cryer, 99 Ill.App.3d 842, 845, 55 Ill.Dec. 278, 426 N.E.2d 253 (1981); Bryant v. Lakeside Galleries, Inc., 402 Ill. 466, 477, 84 N.E.2d 412 (1949); Chicago Title & Trust Co. v. Darley, 363 Ill. 197, 204, 1 N.E.2d 846 (1936)]], and Slinger v. Sterrett, 283 Ill. 82 [118 N.E. 1008 (1918)].

  
  A purchaser is bound to inquire of the person in possession by what tenure he holds and what interest he claims in the premises." Burnex Oil Co. v. Floyd, 106 Ill.App.2d 16, 21-22 [245 N.E.2d 539] (1969). Even if First Suburban was the record owner at the time Villasenor's mortgage was recorded, the home was still in Ellis's possession via Michael. Thus, this situation matches the criteria described in Burnex. Following the logic of Burnex, Ellis's equitable mortgage has all the effects of recordation because the land was in possession by someone other than the record owner. Not only does the equitable mortgage have the effects of recordation, but this also requires that U.S. Bank foreclose on Michael's interests as occupant and tenant of the house. We note that while Burnex is instructive, it continues the long precedent our supreme court set forth in Miller v. Bullington, Carnes, Slinger, Mallett, and Whitaker.
  
  ¶ 64 Therefore, U.S. Bank was imputed with inquiry notice of Ellis's interest based on Michael Ellis's possession of the home. Had the bank, or their appraisers, dutifully inquired of Michael, he surely would have responded that he rented the property from his grandmother, Ruthie Lee Ellis, who was the owner of the home.
  
  Then U.S. Bank would have searched the chain of title further to find the recorded conveyance with inadequate consideration. These facts in tandem would have led U.S. Bank to learn of Ellis's interest and PTC's misrepresentation and fraud. These facts are imputed to U.S. Bank regardless of their decision to actually question Michael Ellis. The ruling in Burnex is certainly not an anomaly based on ancient case law; rather, the same precedent from Miller v. Bullington is evidenced in the 21st century as well:
  
  
  "[S]ee also Atwood v. Chicago, Milwaukee & St. Paul Ry. Co., 313 Ill. 59, 62 [144 N.E. 351] (1924) (as long as possession is not occasional or temporary, it amounts to constructive notice, viable against the world, of any rights person in that possession may have). This may include improvements on the property, signs posted thereon, or possession by a tenant of the person claiming possession. See Carnes, 352 Ill. at 390 [185 N.E. 819] (possession of tenant is constructive notice of rights of landlord in property, even if legal title to property indicates another) * * *"
  
  Banco Popular v. Beneficial Systems, Inc., 335 Ill.App.3d 196, 211, 269 Ill.Dec. 389, 780 N.E.2d 1113 (2002).
  
  ¶ 65 In Banco Popular, George and Helena Kaltezas owned property which contained a building that had fallen into disrepair. Banco Popular, 335 Ill.App.3d at 199, 269 Ill.Dec. 389, 780 N.E.2d 1113. The City of Chicago instituted a building code violation case against the Kaltezases, which resulted in the filing of a lis pendens notice with the recorder's office in 1995. Banco Popular, 335 Ill.App.3d at 199, 269 Ill.Dec. 389, 780 N.E.2d 1113. The Kaltezases hired Morris Reynolds to do work on the property, but he eventually filed a claim for breach of contract against the Kaltezases and sought a lien on the property. Banco Popular, 335 Ill.App.3d at 199, 269 Ill.Dec. 389, 780 N.E.2d 1113. Reynolds was awarded judgment against the Kaltezases, and the judgment was recorded in the Cook County recorder of deeds office on May 3, 1996. Banco Popular, 335 Ill.App.3d at 199, 269 Ill.Dec. 389, 780 N.E.2d 1113.
  
  ¶ 66 Before the judgment was entered, the Kaltezases executed a quitclaim deed conveying all interest in the property to Marsha Azar, through her nominee Saul Azar. Banco Popular, 335 Ill.App.3d at 199, 269 Ill.Dec. 389, 780 N.E.2d 1113. The deed was delivered on March 13, 1995, and stated that Marsha Azar had the right of equitable ownership in the property and the building, "`even if it [was] not recorded by way of deed conveying and vesting such legal ownership.'" Banco Popular, 335 Ill.App.3d at 199, 269 Ill.Dec. 389, 780 N.E.2d 1113. The Azars paid taxes on the property, paid the water bill and brokers' commissions, placed a sign in the building's window stating that their company was managing the property, changed the name of the tax addressee to their company, dealt with the local police department and alderman's office in rehabilitating the property, and leased the property to new tenants. Banco Popular, 335 Ill.App.3d at 199, 269 Ill.Dec. 389, 780 N.E.2d 1113. Saul Azar told Reynolds' attorney that he and Marsha had purchased the property. Banco Popular, 335 Ill.App.3d at 199, 269 Ill.Dec. 389, 780 N.E.2d 1113. Saul Azar also appeared in open court to defend the building code case instituted by the City of Chicago, and the case was eventually dismissed when the Azars completed all necessary repairs on the property. Banco Popular, 335 Ill.App.3d at 200, 269 Ill.Dec. 389, 780 N.E.2d 1113. However, the Azars did not record the quitclaim deed. Banco Popular, 335 Ill.App.3d at 200, 269 Ill.Dec. 389, 780 N.E.2d 1113.
  
  ¶ 67 After the judgment in favor of Reynolds was rendered, he assigned the judgment to Benefit Systems, Inc. Banco Popular, 335 Ill.App.3d at 200, 269 Ill.Dec. 389, 780 N.E.2d 1113. Benefit Systems' president searched the records and found the lis pendens notice, but did not review the court file or inspect the property. Banco Popular, 335 Ill.App.3d at 200, 269 Ill.Dec. 389, 780 N.E.2d 1113. On August 6, 1996, Marsha Azar recorded the deed she received from the Kaltezases and recorded a deed in trust on the property and a mortgage. Banco Popular, 335 Ill. App.3d at 200, 269 Ill.Dec. 389, 780 N.E.2d 1113.
  
  ¶ 68 Benefit Systems delivered the judgment to the Cook County sheriff for levy and sale on August 16, 1996. Banco Popular, 335 Ill.App.3d at 200, 269 Ill.Dec. 389, 780 N.E.2d 1113. Benefit Systems successfully purchased the property at the sheriff's sale, and Benefit Systems notified Marsha Azar of the sale. Banco Popular, 335 Ill.App.3d at 200, 269 Ill.Dec. 389, 780 N.E.2d 1113. Marsha Azar, and Banco Popular as trustee, brought suit against Benefit Systems to set aside the sheriff's deed. Banco Popular, 335 Ill.App.3d at 200, 269 Ill.Dec. 389, 780 N.E.2d 1113. Benefit Systems filed a counterclaim to quiet title and establish its priority in the mortgage. Banco Popular, 335 Ill.App.3d at 200, 269 Ill.Dec. 389, 780 N.E.2d 1113. The trial court granted summary judgment to Marsha Azar and Banco Popular. Banco Popular, 335 Ill.App.3d at 201, 269 Ill.Dec. 389, 780 N.E.2d 1113.
  
  ¶ 69 On appeal, we found that Beals and Miller found that possession of a property can "be equivalent to the recording of a deed as to a judgment creditor who claims an interest in the property of which another has possession when the creditor secured the judgment." Banco Popular, 335 Ill.App.3d at 210, 269 Ill.Dec. 389, 780 N.E.2d 1113 (citing Beals v. Cryer, 99 Ill.App.3d 842, 844, 55 Ill.Dec. 278, 426 N.E.2d 253 (1981); and Miller, 381 Ill. at 243, 44 N.E.2d 850). Possession must provide some measure of notice to the outside world of the possessor's interest. Banco Popular, 335 Ill.App.3d at 211, 269 Ill.Dec. 389, 780 N.E.2d 1113 (citing Beals, 99 Ill. App.3d at 844, 55 Ill.Dec. 278, 426 N.E.2d 253). Evidence of possession includes making improvements on the property, posting signs on the property, and possession of the property by a tenant of the person claiming possession. Banco Popular, 335 Ill.App.3d at 211, 269 Ill.Dec. 389, 780 N.E.2d 1113.
  
  ¶ 70 What constitutes possession in this respect will depend on the facts of the case and is thus a question of fact. Banco Popular, 335 Ill.App.3d at 211, 269 Ill.Dec. 389, 780 N.E.2d 1113. Therefore, the Azars' actions created questions of fact about whether or not they "possessed" the property and whether or not their actions put Reynolds and Benefit Systems on constructive notice of Marsha Azar's interest in the property. Banco Popular, 335 Ill. App.3d at 211-12, 269 Ill.Dec. 389, 780 N.E.2d 1113. Therefore, we reversed the grant of summary judgment and remanded for further proceedings. Banco Popular, 335 Ill.App.3d at 214, 269 Ill.Dec. 389, 780 N.E.2d 1113.
  
  ¶ 71 In summation, U.S. Bank had before it a series of facts that should have led it to inquire further before issuing its loan and mortgage. This is a duty imputed by the law. US Bank relies on Connor v. Wahl in alleging that Illinois precedent requires that "[w]here one of two innocent persons must suffer by reason of fraud or wrong conduct of another the burden must fall upon him who put it in the power of the wrongdoer to commit the fraud or do the wrong." Connor v. Wahl, 330 Ill. 136, 146, 161 N.E. 306 (1928). US Bank urges us to find that Ellis should be held responsible for placing the power in PTC to commit fraud. However, we find that that U.S. Bank is not without fault for the reasons noted. Thus U.S. Bank is not a bona fide mortgagee without notice. We come to this conclusion without considering Villasenor's role in any fraud that may have been committed upon Ellis.
  
  ¶ 72 III. Conclusion
  
  ¶ 73 For the reasons noted above, U.S. Bank is not a bona fide mortgagee without notice. Therefore we affirm the trial court in denying the U.S. Bank's motion to reconsider and affirm the grant of summary judgment in favor of Ruthie Lee Ellis.
  
  ¶ 74 Affirmed.

For the ruling, see U.S. Bank Nat. Ass'n v. Villasenor, 979 NE 2d 451 (Ill. App. 1st Dist., 6th Div. 2012).

Go here for a collection of decisions from the Illinois Supreme Court, and here for a collection of decisions from the Illinois appellate courts. on the issue of possession, duty to inquiry, and notice.

Go here for a collection of decisions from courts of other states on the issue of possession, duty to inquiry, and notice.