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Southgate Bank v. Wooden

APRIL 3, 1974.




APPEAL from the Circuit Court of Winnebago County; the Hon. JOHN C. LAYNG, Judge, presiding.


From the granting of a preliminary injunction and order of possession, defendants appeal claiming that the trial court erred in striking a portion of the praecipe pertaining to the record in another case, in granting the petition for a temporary restraining order, and in granting the preliminary injunction and order of possession.

The plaintiff loaned the corporate defendant $168,513.13, evidenced by a demand note and security agreement which pledged the corporate assets as collateral. In addition, the individual defendants executed notes: one in the amount of $70,850 and one for $4,825.66 (both due January 3, 1973), and a $10,000 note payable by monthly installments of $200.38, its remaining balance to be paid by October 31, 1977. Pledged as collateral in these notes and the security agreements were the individual defendants' business assets, real property, personal property and lease agreements.

On December 28, 1972, in case No. 72-3758, plaintiff secured an order temporarily restraining the corporate defendant from transferring or disposing of certain of the pledged assets. On January 2, 1973, the same judge who issued the order dissolved it.

On December 29, 1972, prior to the above order being dissolved, plaintiff, deeming itself insecure because of an accumulation of events, *fn1 went before another judge and filed a complaint, No. 72-3773, requesting a preliminary and permanent injunction, possession of the collateral and damages for the wrongful detention of the collateral. At the same time, plaintiff filed a second petition for an order temporarily restraining defendants from removing, transferring or disposing of the pledged assets; the order was granted without notice or bond. On January 5, 1973, hearing commenced on plaintiff's complaint as amended and on defendants' motion to vacate the second temporary restraining order.

At trial, a bank official testified that the notes were then in default but that no written notice has been given the defendants in accordance with the security agreements. On January 10, after 4 days of hearing, the court granted plaintiff possession of certain property pledged as collateral, enjoined defendants (by way of preliminary injunction) from interfering with plaintiff's possession, and dissolved the temporary restraining order of December 29, 1972.

Defendants appeal the orders entered in case No. 72-3773. Their praecipe sought to include the record in case No. 72-3758 although that record was not made part of the evidence in the appealed case. On plaintiff's motion, the court struck from the praecipe the request for pleadings filed in case No. 72-3758. Defendants argue that the court acted without authority and that to permit such action would in effect eliminate evidence on issues which they sought to have reviewed. In support of their argument, defendants infer that the trial court took judicial notice of the entire record in the former case and reason that this entitled them to include that record in the instant appeal. The inference is unfounded. All that the trial court noted from case No. 72-3758 was that both counsel appeared before another judge and the original restraining order did not include the vehicles and equipment pledged as securities. These facts do not create a material omission of introduced evidence in the case at bar nor are they material to the issues raised here. (Supreme Court Rule 329 (Ill. Rev. Stat. 1973, ch. 110A, § 329); Joseph D. Foreman & Co. v. Neri, 6 Ill. App.3d 313, 316 (1972).) We find no error on this issue.

It is next argued that the trial court erred by allowing the second temporary restraining order. This was an appealable order (Bohn Aluminum & Brass Co. v. Barker, 55 Ill.2d 177 (1973)) from which the defendants did not appeal. Further, the order was dissolved by the trial court, as requested by the defendants, and became moot.

It is also contended that the court erred in granting the preliminary injunction and order of possession since the plaintiff failed to comply with the notice provision of the security agreements. The relevant parts of the notes provide:

"In addition to all other rights possessed by it, the Bank, * * * may * * * (b) notify the parties obligated on any of the Collateral to make payment to the Bank of any amounts due or to become due thereunder; * * * (e) exercise such additional rights and powers, if any, with respect to any security for * * * any of the Liabilities, as may be provided in any written instrument (in addition to this Note).

In the event of non-payment, when due, of any amount payable on any of the Liabilities, or if the Bank shall feel insecure for any reason whatsoever, * * * (1) this Note and all other Liabilities may, at the option of the Bank, and without demand or notice of any kind, be declared, and thereupon immediately shall become due and payable * * *."

The relevant parts of the security agreements provided:

"7. * * * (c) if default is made in the due and punctual payment in full of any indebtedness secured hereby when and as any part of such indebtedness shall become due and payable; * * * or (e) if any warranty, representation or statement made or furnished to Southgate by or on behalf of the Debtor in connection with this agreement proves to have been false in any material respect when made or furnished; * * *

8. Debtor agrees that upon the occurrence of any of the events of default set forth in paragraph 7 hereof, the full amount remaining unpaid on the indebtedness secured hereby shall at the option of Southgate, by notice in writing sent ...

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