Appeal from the Circuit Court of Cook County; the Hon. WILLIAM
J. TUOHY, Judge, presiding. Reversed and remanded with
MR. JUSTICE MCCORMICK DELIVERED THE OPINION OF THE COURT. This appeal is taken by Stanley Berzani from an order entered on June 26, 1962 confirming a judgment by confession previously entered against him in favor of Morton Neboshek, and from a denial of a motion to vacate said order entered by the court on July 12, 1962.
On May 25, 1961 judgment was confessed in favor of the plaintiff against defendant in the sum of $1,633.54 and costs, on a note made by the defendant to a certain Tevel Feldman as payee, who afterwards allegedly endorsed and delivered the said note to the plaintiff. The defendant filed a motion to vacate the judgment by confession. The plaintiff filed an answer thereto, and on August 14, 1961, after hearing, the judgment was opened and the defendant given leave to appear and defend, with the provision that the judgment stand as security until final disposition of the cause. An order was also entered upon the defendant to file a verified answer to the complaint.
In paragraph one of the complaint it is alleged that the defendant "made his certain promissory note in writing, bearing date of the day of execution, respectively: the 15th day of July, 1958 . . . and delivered same to Tevel Feldman and the said Tevel Feldman afterwards endorsed the note in writing and delivered same so endorsed to the plaintiff." (A copy of the note and endorsement was attached to the complaint.) There was a further allegation that the defendant has defaulted in the payment of the note and that there is due to the plaintiff for principal and interest the sum of $1,477.19. In his answer the defendant denies all of the allegations contained in paragraph one of the complaint except as to the alleged endorsement, and as to that he states he has no knowledge and neither admits nor denies the same but demands strict proof thereof. In the answer the defendant further alleges that "he does not know, nor has he ever met or been acquainted with the said Tevel Feldman, the purported payee named in said note, nor has he ever borrowed money from or had any business or other dealings with the said Tevel Feldman, and affirmatively states that he has never knowingly or intentionally made, executed and delivered said note or any note to the said Tevel Feldman; nor did he ever authorize or direct any person to place his name on said note or any note payable to the said Tevel Feldman; and that the signature appearing thereon purporting to be his signature was procured and obtained by the said Tevel Feldman by some fraudulent or surreptitious trick, device or scheme by which to defraud the defendant, and that because of such fraud the purported endorsement to the plaintiff is or ought to be null and void and held for nought."
A motion to strike the defendant's answer was overruled. The plaintiff was given leave to file a reply to the answer. The plaintiff filed a reply which the defendant moved to strike, which motion was sustained by the court on January 3, 1962. The defendant was then ordered to file a bill of particulars, which he did on May 7, 1962. In the bill of particulars he adopts his answer, and further states that at no time had Tevel Feldman or Morton Neboshek made demand on him for payment of the note, that he does not know how or by what means Tevel Feldman or Morton Neboshek came into possession of the note, and that he demands strict proof of the same and of "the consideration for said note, and what consideration, if any, he [Morton Neboshek] has paid or given therefor."
The plaintiff on June 15, 1962 filed a motion and affidavit to confirm the judgment by confession. A hearing on this motion was continued to June 26, 1962, and the court ordered that the plaintiff serve defendant with a copy of the affidavit which he had filed in support thereof. The affidavit was made by the attorney for the plaintiff, and in that affidavit he states that he knows of his own knowledge that the note was executed and delivered for a good and valuable consideration. He further states that he represented the owner and holder of the note, has repeatedly made demands on the defendant for payment, and that the defendant "on numerous occasions promised to pay the indebtedness evidenced by the said note, but failed to do so." He further states that the plaintiff acquired the note for a good and valuable consideration and was a holder in due course.
On June 26, 1962 the trial court entered an order confirming the judgment by confession. The defendant moved to vacate the order of June 26th. Defendant's motion sets out that the defendant has a meritorious defense to the plaintiff's demand, and the motion is supported by the affidavit of the attorney for defendant, in which, among other things, he states that when the order setting the case on June 26th was entered it was conditioned upon the plaintiff's filing and serving upon the defendant the affidavit of the attorney for the plaintiff which we have heretofore referred to, and that that affidavit was not filed until June 19th, and that a copy of the same was served upon the attorney for the defendant on June 21st. The affidavit further sets out that on June 25th the affiant telephoned the attorney for the plaintiff and told him that he, the affiant, was required to go to Waukegan, Illinois, and attend a progress call by Judge Thomas J. Moran at 9:30 a.m. with reference to a case which he then had pending in the Circuit Court of Lake County, and that it was agreed between affiant and the attorney for the plaintiff that the attorney for the plaintiff would continue plaintiff's motion to June 29th; and that on June 26th upon his return to Chicago from Waukegan, the affiant mailed to the attorney for the plaintiff a counteraffidavit of the defendant in opposition to the motion to confirm the said judgment. The affidavit further alleges that the affiant believes that had the court had knowledge of these facts on June 26th, the date of the entry of the order confirming the judgment by confession, it would not have entered said order. The counteraffidavit of the defendant again reiterates the statements made in the defense and the previous affidavit, and again states that the defendant "does not know and has never known the said Tevel Feldman, nor has he ever done business with, borrowed money or received any consideration from the said Tevel Feldman," and he denies that he ever promised the attorney for the plaintiff to pay the indebtedness.
The trial court, after hearing, denied the motion on July 12, 1962. This appeal is taken from that order and from the order of the trial court entered on June 26, 1962 confirming the judgment by confession.
The defendant's theory of the case is that under the circumstances it was an abuse of the discretion of the court to deny a three-day continuance in the hearing of the motion to confirm the judgment.
In this court the plaintiff contends that the defendant at no time denied the execution of the note, and that the defendant's allegations that the signature appearing on the note was obtained by a fraudulent or surreptitious trick, device or scheme by which to defraud the defendant are not sufficient as a defense.
From a reading of the pleadings in the case it is apparent that the defendant in his answer did deny the delivery of the note which was alleged by the plaintiff in his complaint. The defendant further alleges that there was a lack of consideration and that he has no knowledge as to how his signature got on the note or how the note came into existence.
There is no question that it has been held repeatedly by the courts of this State that a mere allegation of fraud in a pleading is not sufficient but that the party relying on fraud must plead sufficient acts or facts to establish it. Tate v. Jackson, 22 Ill. App.2d 471, 161 N.E.2d 156. However, if the statements made by the defendant with reference to the alleged fraud are true, to-wit, that he has no knowledge as to how his signature got on the note or as to how the note got into the hands of the plaintiff, it would seem difficult to see how the court could require him to plead facts about which he alleges he has no knowledge. Under section 3-401 of the Commercial Code (Ill Rev Stats 1961, c 26, § 3-401), no person is liable on an instrument unless his signature appears thereon, and under section 3-306(c), except as to a holder in due course, unless there has been a delivery of the instrument. In section 3-408, it is stated that the want or failure of consideration is a defense as against any person not having the rights of a holder in due course. By the defense it was denied both that there was any consideration for the note originally and that the plaintiff was a holder in due course.
Under the former Act (Negotiable Instruments Law (Ill Rev Stats, c 98)), practically the same rule with reference to execution and delivery was in effect. Section 1 of that Act (c 98, § 21) provided that an instrument payable in money to be negotiated must be in writing and signed by the maker or drawer, and section 16 (par 36) provided that it is incomplete and revocable until delivery of the instrument for the purpose of giving effect thereto. See 28 ILP Negotiable Instruments, §§ 41, 43. The defense pleaded by the defendant in the instant case, a denial of delivery and a denial that the plaintiff was a holder in due course, would be sufficient to place the burden of proof on the plaintiff. There was compliance with the provisions of section 35(2) of the Civil Practice Act inasmuch as the defendant's pleading was verified. In In re Estate of Herr, 16 Ill. App.2d 534, 148 N.E.2d 815, it was held that a denial under oath that the defendant made or delivered an alleged note was sufficient to destroy the presumptions of execution and delivery of the note. The court in its opinion quotes from Bippus v. Vail, 230 Ill. App. 633, 635, saying:
". . . It has been held repeatedly that a verified plea, filed under the provisions of section 52 [Practice Act of 1907], denying execution of an instrument sued on, will have that effect and will put the plaintiff to the burden of making proof of execution, or of delivery, if that is ...