Adverse Possession; Bankruptcy

General Iron Ind. v. A. Finkl and Sons, 686 N.E. 2d 1 (Ill. App. 1st Dist. 1997).

Facts: In 1977 a railroad filed a petition for reorganization under the Bankruptcy Act, and the bankruptcy court entered the final decree in 1985. Under the newly organized railroad, a deed was quitclaimed to A. Finkle and Sons (Finkle). Two years later, Finkle informed the company that had been utilizing the property, General Iron Industries (General Iron), of its ownership interest in the property. In response, General Iron filed a declaratory judgment by adverse possession, to which Finkle replied with a complaint for ejectment. Both cases were consolidated into one. Each side filed a motion for summary judgment with the court granting for Finkle. General Iron appealed.

Holding: Affirmed. The opinion began with a basic discussion of adverse possession and its requirements. Of the five elements for adverse possession (continuous, actual, exclusive, open, and hostile), the issue of this case dealt only with the first element. In Illinois, adverse possession must be continuous for a period of twenty years. The earliest date General Iron could have begun its adverse possession was 1966, the year it acquired the adjoining land and assumed possession. When the railroad filed for bankruptcy in 1977, only eleven years of continuous possession by General Iron had occurred; thus, they had no claim. In 1977, the bankruptcy court began its power to adjudicate summarily rights and claims to property that were in the actual or constructive possession of the court. Since General Iron had no claim in 1977 when the railroad filed its petition for reorganization, the court obtained possession of the subject property. Since the bankruptcy court had possession of the property from 1977 until 1985, General Iron was not in continuous possession for the required twenty-year period and therefore could not have adverse possession.

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