City Nat. Bank of Murphysboro v. Reiman

601 N.E.2d 316, 236 Ill. App. 3d 1080, 175 Ill. Dec. 919, 20 U.C.C. Rep. Serv. 2d (West) 1280, 1992 Ill. App. LEXIS 1719
CourtAppellate Court of Illinois
DecidedOctober 19, 1992
Docket5-90-0812
StatusPublished
Cited by14 cases

This text of 601 N.E.2d 316 (City Nat. Bank of Murphysboro v. Reiman) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
City Nat. Bank of Murphysboro v. Reiman, 601 N.E.2d 316, 236 Ill. App. 3d 1080, 175 Ill. Dec. 919, 20 U.C.C. Rep. Serv. 2d (West) 1280, 1992 Ill. App. LEXIS 1719 (Ill. Ct. App. 1992).

Opinion

PRESIDING JUSTICE GOLDENHERSH

delivered the opinion of the court:

Defendant, Willard Dean Reiman, appeals from a judgment of the circuit court of Jackson County in the amount of $55,862.36 for plaintiff, City National Bank of Murphysboro, entered after a jury verdict for plaintiff in that amount. In this cause defendant raises the following contentions: (1) that the trial court improperly granted summary judgment on defendant’s first affirmative defense, impairment of collateral; (2) that the trial court improperly granted summary judgment on defendant’s third affirmative defense, demand for suit by surety pursuant to section 1 of “An Act to revise the law in relation to sureties” (the Act) (Ill. Rev. Stat. 1989, ch. 132, par. 1); (3) that the trial court improperly sustained objections to tendered testimony, exhibits, and offers of proof; (4) that the jury instructions contained errors and read as a whole failed to sufficiently instruct the jury and/or misled the jury; (5) that the submission of special interrogatories to the jury was error; (6) that the instruction of the jury prior to final argument was error; (7) that the trial court improperly responded to questions from the jury during deliberations; and (8) that the trial court’s acceptance of special interrogatories which were not signed by all jurors was error. We affirm and remand.

This case arises from a loan guaranty agreement dated December 31, 1985, made between defendant, a voluntary guarantor, and plaintiff. The guaranty was to cover a loan made to Frank and Patricia Stokes and their company, Hoke Investment Company, for $133,000. A debtor-creditor relationship had existed for several years prior to 1985 between plaintiff and the Stokeses. In December 1985, the Stokeses had an outstanding indebtedness to plaintiff for $55,000.

The Stokeses operated three businesses, namely Hunker’s Lounge, Frank’s Cleaning Service, and a concession business. In December 1985, the property in which Hunker’s Lounge was housed was owned by Hoke Investment Company. This property consisted of a two-story building with Hunker’s Lounge and three other business fronts on the ground floor and at least three furnished apartments on the second floor. The Stokeses had possession of the entire premises in December 1985 under a purchase agreement entered into in 1981 in which the Stokeses agreed to purchase the stock of Hoke Investment Company for $127,000. In 1985, the Stokeses made arrangements with plaintiff to borrow an additional $78,000 to complete the purchase of Hoke and to consolidate their debts. The loan was evidenced by a $133,000 promissory note from the Stokeses to the bank. As security for the note, plaintiff took a security interest in, among other things, all equipment, fixtures, and furniture owned by Frank and Patricia Stokes and used in the operation of Hunker’s Lounge, the cleaning business, the concession business, and the apartment rentals. A detailed list of the items was compiled and attached to the agreement. Plaintiff also took mortgages on the building housing Hunker’s Lounge (hereinafter business property) and a residence and farm owned by the Stokeses in a rural area near Murphysboro (hereinafter rural property). Plaintiff requested that the Stokeses obtain a guarantor for the debt, which is how defendant became involved.

Defendant was a friend of. the Stokeses and at their request went to plaintiff on or about November 25, 1985. Defendant gave personal financial information to the president of the bank, Robert Streuter. On December 31, 1985, defendant received a call from Frank Stokes requesting that he go to the bank and sign papers. According to defendant, he signed the.guaranty with the understanding that all property owned by the Stokeses was to stand as security for the debt. The security interest was granted by a written agreement, which included an extensive list of furniture, fixtures, equipment, and inventory owned by the Stokeses. As part of the loan transaction, Streuter appraised the business property at $165,000 and the rural property at $25,000. Streuter believed that the value of the equipment in Hunker’s Lounge was around $17,000.

In December 1987, Streuter contacted defendant concerning problems the Stokeses were having meeting their loan obligations. At Streuter’s request, defendant went to the bank where he was informed by Streuter that the Stokeses were in default under their loan obligation. Streuter requested that defendant cure the default. Defendant then told Streuter that if there were problems with the Stokeses’ payments, the bank should proceed against the Stokeses on their security.

After this meeting, defendant sent plaintiff a revocation of guaranty giving notice that his guaranty, signed on December 31, 1985, was revoked effective upon receipt of notice. The revocation was dated and delivered on December 22, 1987. Accompanying the revocation was a request by defendant for “specific information regarding any acceptance of the loan guaranty agreement by City National Bank and any indebtedness or obligation of Hoke Investment Company *** and Frank Stokes and Patricia Stokes *** which City National Bank considers guaranted [sic] by the above referenced loan guaranty agreement.” Defendant specifically asked for the following information: (1) the date of making of any obligations and indebtedness; (2) photocopies of all documentation relating to any indebtedness and obligations; (3) a statement with respect to the balance due as of December 22, 1987, under any indebtedness and obligation; and (4) a statement with respect to any default as to any indebtedness and obligations, and if there was a default, the nature and extent of such default. On December 24, 1987, three payments were applied on the loan account, presumably by the Stokeses. Plaintiff made no reply to defendant’s notice of revocation or defendant’s request for information.

The next correspondence between the parties occurred on July 21, 1988, when plaintiff sent a letter to defendant by certified mail requesting and demanding that he pay past-due amounts due under the note for the months of May, June and July 1988. On July 26, 1988, defendant sent a response to plaintiff reminding plaintiff of his December 1987 revocation and request for- specific information regarding any acceptance of the loan guaranty agreement by plaintiff and any obligations of Hoke Investment Company or the Stokeses. Defendant further stated in his letter that he took plaintiff’s failure to respond as an acknowledgement that no extension of credit had been made under the loan guaranty agreement which he had revoked on December 22, 1987. Defendant also demanded that plaintiff sue the Stokeses immediately, claiming rights under section 1 of the Act (Ill. Rev. Stat. 1987, ch. 132, par. 1).

Plaintiff received a request from the Stokeses to purchase the release of the rural property from the mortgage. Plaintiff apparently had received an offer on the rural property. There was also a prospective purchaser for the business property. Neither sale was made. With no sale on either the mortgaged business property or the rural property, plaintiff filed a complaint for foreclosure on both pieces of property on November 10, 1988. On December 31, 1988, plaintiff received $20,000 from Pauline Leedy, who purchased the rural property. The rural property was subsequently released from the lien created by plaintiff’s mortgage on the property.

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Bluebook (online)
601 N.E.2d 316, 236 Ill. App. 3d 1080, 175 Ill. Dec. 919, 20 U.C.C. Rep. Serv. 2d (West) 1280, 1992 Ill. App. LEXIS 1719, Counsel Stack Legal Research, https://law.counselstack.com/opinion/city-nat-bank-of-murphysboro-v-reiman-illappct-1992.