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Steiner v. Rig-a-jig Toy Co.

MAY 29, 1956.




Appeal from the Superior Court of Cook county; the Hon. DONALD S. McKINLAY, Judge, presiding. Judgment affirmed.


Rehearing denied June 19, 1956.

Defendant, Rig-A-Jig Toy Company, appeals from a judgment confirming a judgment by confession previously entered in favor of the plaintiff. The confessed judgment on two promissory demand notes executed by the defendant corporation was in the sum of $40,000 principal, $19,200 interest, and $3,000 attorney's fees.

The records reveals that the plaintiff, Oscar Steiner, M.S. Landfield, and the intervening petitioner, Joseph Wertheimer, had, since 1935, been engaged in a series of business relationships. In 1945 these three men agreed to participate in a new venture involving a child's toy, called a Rig-A-Jig. Plaintiff and Wertheimer each advanced $10,000 to the enterprise in 1945 and early 1946. This $20,000 was designated as "Loans Payable — Wertheimer-Steiner" on the corporate books.

In 1946 plaintiff and Wertheimer advanced an additional $40,000 to defendant by check drawn on the Craftsmen Finance Company, of which they were sole and equal owners. This $40,000 was designated "Loans Payable — Craftsmen Finance Company" on the corporate books. Later that year Wertheimer and the plaintiff each received $10,000 from Rig-A-Jig. The corporate books showed this payment as canceling out the 1945 "Loans Payable" of $20,000 to Steiner and Wertheimer. The $40,000 "Loans Payable — Craftsmen Finance Company" remained open.

In July of 1948 two promissory notes for $20,000 each, payable on demand, were executed by defendant; one made payable to Craftsmen, and one jointly to plaintiff and Wertheimer. The notes were indorsed by the respective payees and delivered to the plaintiff. These are the notes on which the plaintiff confessed judgment. Upon the filing of defendant's amended petition the judgment was opened up. The amended petition alleged, in substance, that the notes were not issued for the purpose of evidencing a debt and, if they be recognized as evidencing a debt, payments were made which should be credited against such obligation. Wertheimer thereupon filed his intervening petition alleging that he owned a one-half interest in each note, and making factual allegations in substantial agreement with the allegations of defendant's amended complaint. The trial court reserved the hearing on the intervening petition and decided that the plaintiff was entitled to the judgment as confessed.

The general theory of defendant's case, as stated in its brief, is that "it is not always true that a promissory note is given to evidence a debt. . . . It devolves upon the court in any such ambiguous situation to ascertain the intent of the parties inter se. . . ." This unique statement precedes a detailed analysis of testimony and exhibits, but nowhere is there a clear statement of the actual defense upon which the corporation relies. There is no charge of fraud, and payment was not pleaded as a complete defense. Defendant's argument, in a vague way, seems to hint at want of consideration for the notes, but nowhere does it specifically rely on this as its defense to the action.

At the outset of a business venture an atmosphere of optimism and friendliness nearly always prevails and breeds impatience with the details of legal contracts. In their eagerness to organize what appears to be a profitable venture men enter into business deals with only vague notions of their relationship to one another and to the enterprise. Characteristic of such a situation is the failure to anticipate the problems that might ensue if the enterprise was unsuccessful or the participants became hostile. The record in this case, filled as it is with uncertainties and inconsistencies, is an example of what may result from such a situation. Ambiguous and uncertain evidence cannot dispel the absolute and unconditional obligations that are represented by a promissory note.

On this appeal defendant contends that the trial court erred in the following respects: (1) in deciding the issues against the manifest weight of the evidence; (2) in excluding certain testimony and documentary evidence, and (3) in reserving the trial on the intervening petition until after the trial of the issue between plaintiff and defendant.

A substantial part of defendant's case is made up of parol evidence to the effect that the books of the corporation and the notes in question do not reflect the true intention of the parties, and that the notes were not really intended to evidence a debt. In Weinstein v. Sprintz, 234 Ill. App. 492, plaintiff indorser, not a holder in due course, sued the maker of a $500 check. The defense was that the maker and payee intended said check to be a receipt for money which the maker gave to the payee at the beginning of their partnership venture. The court said that the check on its face was an absolute order given by defendant to the payee, and parol evidence which tended to show that the check was merely intended to be a receipt and not for the payment of money was not admissible. Werner v. Steele, 8 Ill. App.2d 460; Chandler v. Chandler, 326 Ill. App. 670.

It would seem that the rule of these cases is applicable to much of the testimony of defendant's witnesses. We need not decide this case on that theory, however, because even if parol evidence was properly made a part of the record, we feel that the trial court's decision was nevertheless not against the manifest weight of the evidence.

In determining whether or not the trial court's decision was against the manifest weight of the evidence, we must look to the record to see if there was substantial evidence supporting the plaintiff's position.

There is testimony to the effect that at the time the original $20,000 was advanced, in 1945 and early 1946, the issuance of stock was discussed. But there was no direct testimony that it was agreed that the money paid in at that time was to be purchase money for corporate stock and not a loan. Wertheimer testified, in fact, that "the interest was not clearly stated at that time because we were a little nebulous in our thoughts." It is undisputed that neither Wertheimer or Steiner ever received any stock of the company. The vagueness of Wertheimer's testimony at that point is representative of the vague state of the record with respect to the incorporation of this enterprise and the steps leading thereto. Nowhere does the record indicate when the defendant was incorporated, whether there were any subscription agreements, or other similar documents which could have shed considerable light on the issues involved in this lawsuit.

Later in 1946 plaintiff and Wertheimer each advanced an additional $20,000 to the company, in accordance with an oral agreement. It is not clear whether Landfield was to put in $20,000 or $20,000 worth of printing. The corporate books nowhere reflect the receipt of cash or services from Landfield with respect to this agreement. There is ...

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