Forrester v. State Bank of East Moline

363 N.E.2d 904, 52 Ill. App. 3d 34, 6 Ill. Dec. 957, 1977 Ill. App. LEXIS 3243
CourtAppellate Court of Illinois
DecidedMay 25, 1977
Docket76-472
StatusPublished
Cited by12 cases

This text of 363 N.E.2d 904 (Forrester v. State Bank of East Moline) 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
Forrester v. State Bank of East Moline, 363 N.E.2d 904, 52 Ill. App. 3d 34, 6 Ill. Dec. 957, 1977 Ill. App. LEXIS 3243 (Ill. Ct. App. 1977).

Opinion

Mr. PRESIDING JUSTICE ALLOY

delivered the opinion of the court:

The State Bank of East Moline, hereinafter called “State Bank,” appeals from a judgment of the Circuit Court of Rock Island County in favor of Robert D. Forrester as trustee of the bankruptcy estate of James Louis Heller. The action was brought in the circuit court to recover damages incurred by reason of fraudulent representations or, alternatively, negligent misrepresentations, of the defendant State Bank. The jury trial resulted in a verdict for the plaintiff Forrester, as Trustee, on the ground of fraudulent misrepresentations.

Defendant State Bank argues (1) that plaintiff failed to properly plead and prove the necessary elements for recovery on the basis of fraud or misrepresentation; (2) that the trial court failed to apply correctly the Uniform Commercial Code (Ill. Rev. Stat. 1975, ch. 26, par. 1—101, et seq.) in denying defendant’s motion for directed verdict and post-trial motion on the basis of the facts in the case; (3) that the trial court erred in allowing plaintiff’s post-trial motion for additur of statutory interest; and (4) that the trial court erred in allowing the jury to consider as an element of damages, interest paid by plaintiff on a loan made by him for the purchase of cattle.

There is also a cross-appeal by plaintiff Forrester from the action of the trial court in reducing the amount of statutory interest, which was awarded to plaintiff, by the amount of out-of-pocket interest which was paid by plaintiff and which amount is included in the judgment for plaintiff returned by the jury.

As we have noted, Forrester is the trustee of the bankruptcy estate of James Louis Heller. The action was originally brought by Heller, but after his bankruptcy, during the pendancy of this litigation, plaintiff Forrester succeeded to the position of Heller in the action. The defendant State Bank was involved in financing certain cattle feeding operations of Western Testing, Inc. Western Testing also was bankrupt in 1967, and is not a party to the action. The instant action was brought to recover certain losses sustained by Heller as a result of the purchase of 1,063 head of feeder cattle from Western Testing. Heller paid *150,504 for the cattle, and borrowed the total stun for such purchase from First National Bank of Peoria.

Following the purchase, Heller left the cattle at the Western Testing feed lots in Orion, Illinois, to be fattened. About 45 days after Heller bought the cattle, Western Testing went bankrupt, with a total of 7,592 head of cattle on the Western Testing feed lots at Orion, Illinois, and St. Joseph, Missouri. Claims of ownership to cattle amounted to a total of 15,189 head of cattle. Reclamation petitions were filed by Heller and other claimants, including defendant State Bank. Heller ultimately received *68,Ill.13 pursuant to a plan of settlement and distribution of the bankrupt’s (Western Testing’s) assets, which plan was initially proposed by the defendant State Bank. Heller repaid his loan of *150,504 principal plus *21,221.13 in interest to the First National Bank of Peoria and, also, incurred attorney’s fees of *7,761.63 in prosecuting his claim in bankruptcy, thus sustaining a loss from these items of *111,375.63 on the transaction with Western Testing.

Plaintiff’s amended complaint stated two counts for recovery against the defendant State Bank. Count I alleged that the defendant, through its employee William McKelvey, knowingly and falsely represented to Heller that Western Testing was the owner of the cattle to be purchased by Heller; that it was safe to buy the cattle; and that Heller would receive clear title to the cattle. Count II of the complaint, based on negligent misrepresentation, alleged that defendant bank was involved in financing certain cattle clubs with Western Testing; that defendant had or should have had knowledge concerning the operation of Western Testing; and that defendant negligently failed to ascertain the ability of Western Testing to transfer title and ascertain the number of cattle on Western Testing’s premises; and to compare the number of cattle club investors and the number of cattle allegedly owned by each with the number of cattle physically situated on Western Testing’s premises. Defendant State Bank challenged this complaint by filing a motion to dismiss for failure to state a cause of action. The trial court denied the motion.

In the jury trial, plaintiff Forrester called six witnesses, three of them being officers of defendant State Bank, who were called as adverse witnesses. The defendant State Bank called two witnesses. The evidence at the trial showed that Western Testing Company, a cattle feeding operation, employed a technique whereby outside investors could invest in cattle feeding operations through “cattle clubs.” It was shown that Western Testing would finance an individual purchase of feeder cattle through defendant State Bank, with Western Testing signing a note and a security agreement giving State Bank a security interest in the cattle purchase. Western Testing would then sell the cattle to investors, often grouped into clubs, and frequently Western Testing would enter into Cattle Feeding Agreements with the investors to provide for feeding of the cattle for approximately 200 days it took to fatten them for market. Prospective investors would sometimes be able to borrow the total cost of acquiring the cattle plus the cost of feeding the cattle until fattened. Apparently defendant State Bank at times financed sales of the cattle to the investors, taking a security interest in the cattle which the investors acquired. From 1965 to 1967 the Western Testing account at defendant State Bank was handled by William McKelvey.

During 1967, Heller, who had been in the cattle business for over 40 years, was employed by Buster and Company, a brokerage firm which purchased cattle for resale to packers for slaughter. Prior to May 21,1967, Heller had become acquainted with Edgar McWhinney, the owner and operator of Western Testing, through Heller’s activity in making of cattle purchases from McWhinney on the Buster and Company account. It also appears that prior to May 21, Heller had purchased feeder cattle from time to time for his own account, both from McWhinney and from others. On about May 21,1967, McWhinney offered to sell some Hereford heifers to Heller personally, and if Heller so desired, to fatten the cattle at the Orion, Illinois, feed lot for later resale for slaughter.

Before agreeing to purchase the cattle, Heller contacted defendant State Bank, since Heller knew the bank to be Western Testing’s banker and, also knew that the bank held a security interest on the offered cattle. He talked to McKelvey, as a representative of the bank. At the trial, Heller testified that he told McKelvey that he would be required to borrow the money to make the purchase and that he wanted to know from McKelvey whether Western Testing owned the cattle, whether it was safe to buy them, whether he would get clear title to the cattle, and whether defendant State Bank would release its security interest in the cattle. According to Heller’s testimony, McKelvey replied affirmatively to all these inquiries. Heller also testified that he told McKelvey that the cattle would be left at the Orion, Illinois, feed lot for feeding. Heller admitted on cross-examination that he, Heller, had said that he could have moved the feeder cattle from the Orion lot if he wanted to.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Garza v. Nestle USA, Inc.
N.D. Illinois, 2023
Rambus, Inc. v. Infineon Technologies AG
164 F. Supp. 2d 743 (E.D. Virginia, 2001)
Wilson v. Cherry
612 N.E.2d 953 (Appellate Court of Illinois, 1993)
Kardynalski v. Fisher
482 N.E.2d 117 (Appellate Court of Illinois, 1985)
Obermaier v. Obermaier
470 N.E.2d 1047 (Appellate Court of Illinois, 1984)
Colonial Bank & Trust Co. v. Kozlowski
435 N.E.2d 1251 (Appellate Court of Illinois, 1982)
Martin v. Allstate Insurance Co.
416 N.E.2d 347 (Appellate Court of Illinois, 1981)
Murphy v. Walters
410 N.E.2d 107 (Appellate Court of Illinois, 1980)
National Republic Bank v. National Homes Construction Corp.
381 N.E.2d 15 (Appellate Court of Illinois, 1978)
Nat'l Republic Bk. v. Nat'l Homes Constr.
381 N.E.2d 15 (Appellate Court of Illinois, 1978)

Cite This Page — Counsel Stack

Bluebook (online)
363 N.E.2d 904, 52 Ill. App. 3d 34, 6 Ill. Dec. 957, 1977 Ill. App. LEXIS 3243, Counsel Stack Legal Research, https://law.counselstack.com/opinion/forrester-v-state-bank-of-east-moline-illappct-1977.