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Marengo State Bank v. Meyers

DECEMBER 7, 1967.

MARENGO STATE BANK, AN ILLINOIS BANKING CORPORATION, PLAINTIFF-APPELLEE,

v.

TILDEN P. MEYERS, ET AL., DEFENDANTS-APPELLANTS.



Appeal from the Circuit Court of Boone County, Seventeenth Judicial Circuit; the Hon. HAROLD SEWELL, Judge, presiding. Judgment affirmed in part and reversed in part.

MR. PRESIDING JUSTICE DAVIS DELIVERED THE OPINION OF THE COURT.

This is an appeal by Marion Meyers Johnson, herein called the appellant, from a judgment entered against her after a bench trial in the Circuit Court of the 17th Judicial Circuit. The defendant-appellant is the mother of Tilden P. Meyers, herein called Tilden, and Frank P. Meyers, herein called Frank, who were additional defendants in this litigation.

On August 3, 1966, the Marengo State Bank, herein called the Bank, caused a judgment to be confessed against the three defendants in the total sum of $27,601.80, and costs of the suit. This judgment, herein referred to as the original judgment, was based on a promissory note in the principal sum of $25,000, with interest due thereon in the sum of $86.80 and attorney's fees in the sum of $2,515, pursuant to the provisions of the confession clause of the note.

The essential facts in connection with this litigation are undisputed. The appellant and her two sons held title, in joint tenancy, to a parcel of farmland near Belvidere on which Tilden and his family resided. Prior to January 20, 1966, Tilden negotiated a $20,000 loan with the Bank, based on his financial statement, showing a net worth of $419,200, and the joint signatures of the appellant and Frank.

Tilden desired to remodel his home and advised the Bank that the proceeds of the loan would be used for this purpose, and subsequently $19,500 thereof was so used. On January 20, 1966, Tilden delivered to the Bank an executed judgment note in the sum of $20,000, due July 1, 1966, purporting to bear the signatures of the appellant and Frank, as well as his own. The appellant's and Tilden's signatures were genuine, but that of Frank was a forgery.

Prior to July, 1966, Tilden again called at the Bank and requested a renewal of the existing loan, and an additional $5,000, which was needed to complete the home remodeling work. The Bank agreed to comply with Tilden's request and gave him a new note in the sum of $25,000 with directions that he obtain the signatures of the appellant and Frank on said note and return it to the Bank. This note was executed by Tilden at that time and was payable on September 14, 1966.

On July 14, 1966, Tilden delivered the $25,000 note to the Bank with the purported signatures of the appellant and Frank thereon, received an additional $5,000 from the Bank, and a bank teller surrendered the $20,000 note to him. This note remained in Tilden's possession until produced at the trial by him, pursuant to subpoena. On the face of the note the teller wrote the word "Renewed."

The purported signatures of the appellant and Frank on the $25,000 note were both forgeries and they filed motions to vacate the judgment and for leave to plead. The judgment was opened up as to them on September 2, 1966, they were given leave to plead, and each filed an answer which stated in substance that his and her purported signatures were not genuine, but rather, were forgeries. Pending hearing on the pleadings, the judgment stood as security.

On September 23, 1966, pursuant to leave of court, the Bank filed an amendment to its complaint — designated as Count II — alleging a second cause of action against the appellant and Frank, based upon the $20,000 note dated January 20, 1966.

This count alleged: the making and delivery of the $20,000 note and its provision for interest and attorney's fees; that while the Bank was the owner and holder thereof, Tilden delivered to it the $25,000 note dated July 14, 1966, purportedly executed by the three defendants against whom judgment was confessed, and Tilden then paid the interest due on the $20,000 note; that Tilden on July 14, 1966, received an additional $5,000 loan from the Bank, and when he presented the $25,000 note to it, he represented to the Bank that it had been signed by himself, the appellant and Frank, knowing that the signatures of appellant and Frank were forgeries; that the Bank relied on Tilden's representations and returned the note dated January 20, 1966 to him; that had the Bank known that the signatures of the appellant and Frank were forgeries, it would neither have made the additional loan of $5,000 to Tilden nor returned the $20,000 note to him; that the Bank is the owner and holder of the $20,000 note; and that there is due and owing to it on said note, from the defendants, Frank, and the appellant, the principal sum of $20,000, plus interest in the sum of $116.66, and attorney's fees in the sum of $2,015, making a total amount due of $22,131.66, and costs of the suit.

The appellant filed a motion to strike Count II, which was denied, and the appellant and Frank each thereafter answered the count in the nature of a general denial, and they asserted, as an affirmative defense, that the Bank was not the owner and holder of the note; and that it had been surrendered to Tilden, as one of the makers, and was thereby discharged. Frank further asserted that the note dated January 20, 1966, did not bear his signature.

On September 23, 1966, the judgment of August 3, 1966 was confirmed against Tilden and the case was tried on October 7, 1966. The court then found that the appellant's signature on the note of January 20, 1966 was genuine; that the purported signature of Frank thereon was not his signature; and that the purported signatures of appellant and Frank on the note dated July 14, 1966, in the sum of $25,000 were not their respective signatures. On said date, the court vacated the judgment entered against Frank on August 3, 1966, in the sum of $27,601.80, and on November 2, 1966, vacated said judgment as to appellant.

Thereafter, on January 23, 1967, the court entered judgment for the Bank and against the appellant on Count II in the sum of $20,643.33. The court found in its judgment order, herein referred to as the second judgment, that the signatures of Tilden and the appellant on said note were genuine; that Frank's was a forgery, and found the facts heretofore stated relative to Tilden's negotiation of the $25,000 loan. It recited the vacation of the August 3, 1966 judgment as to appellant and Frank; found that Tilden obtained possession of the $20,000 note from the Bank by fraudulent and deceitful means; and that its delivery to Tilden did not release the appellant from her liability on said note.

The court included in its judgment on Count II, in favor of the Bank and against the appellant, the principal sum of said note — $20,000 — plus interest thereon from July 14, 1966 to January 23, 1967, in the sum of $643.33, and costs. It further ordered that all payments made by appellant as to principal, interest and costs on this second judgment, be also credited on the original judgment against Tilden; and that all payments made by Tilden as to principal, interest and costs on the original judgment entered against him, be credited to and applied on the principal, interest and costs of the second judgment. Subsequently, by nunc pro tunc order, the court clarified the second judgment and ordered that the plaintiff not recover attorney's fees from appellant.

The appellant has appealed from this judgment in the sum of $20,643.30, and the Bank has cross-appealed from that part of the second judgment order disallowing it attorney's fees, and from the judgment order entered November 2, 1966 which vacated the original judgment as to appellant.

The appellant contends that the judgment against her was erroneous for the reason that the Bank was neither the holder nor the owner of the note upon which the judgment was based; and that the Bank had voluntarily surrendered the note to one of the original makers and had thereby discharged the obligation created by the note. In support thereof she cites sections 3-605(1)(a), (b) and (2); and 3-601(3)(a) and (b) of the Commercial Code (Ill Rev Stats c 26, pars 3-605(1)(a), (b) and (2); and 3-601(3)(a) and (b)), which provide:

"3-605 CANCELLATION AND RENUNCIATION.

"(1) The holder of an instrument may even without consideration discharge any party

"(a) in any manner apparent on the face of the instrument or the endorsement, as by intentionally canceling the instrument or the party's signature by destruction or mutilation, or by striking out the party's signature; or

"(b) by renouncing his rights by a writing signed and delivered or by surrender of the instrument to ...


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