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Burkett v. Finger Lake Development Corp.

SEPTEMBER 10, 1975.

M.D. BURKETT, PLAINTIFF-APPELLEE,

v.

FINGER LAKE DEVELOPMENT CORPORATION, DEFENDANT-APPELLANT.



APPEAL from the Circuit Court of Hamilton County; the Hon. JOHN D. DAILY, Judge, presiding.

MR. JUSTICE GEORGE J. MORAN DELIVERED THE OPINION OF THE COURT:

Mr. JUSTICE GEORGE J. MORAN delivered the opinion of the court:

Finger Lake Development Corporation, an Indiana company (hereinafter "Finger Lake") appeals from a judgment of the trial court denying its motion to set aside a judgment by confession entered against it in the circuit court of Hamilton County.

An individual named Witsman, who was the secretary and treasurer of the corporation, executed two promissory notes on November 2, 1973. One was for the principal amount of $55,868.64. The other was for the sum of $229.75. Both bore an interest rate of 8% per year and both were to become due on May 2, 1974. The notes were payable to the order of M.D. Burkett. Contained in the notes were provisions known as warrants for attorney to confess judgment, which authorized any attorney to appear in any court of record and to confess judgment against the maker of the notes if the notes were not paid when due. Witsman signed his name on each note below the name of Finger Lake, designating himself as the corporation's secretary. In return for these negotiable instruments, M.D. Burkett transferred to Finger Lake 235 shares of preferred stock in a company known as Corgro Corporation.

Finger Lake failed to pay off the notes on May 2, 1974. M.D. Burkett filed a complaint and cognovit in the circuit court of Hamilton County on May 6, 1974. At that time, most of the 235 shares of Corgro stock that had been transferred to Finger Lake were located in Hamilton County. An attorney who was not known to Finger Lake signed the cognovit and confessed judgment against the corporation. The circuit court entered a judgment for M.D. Burkett in the amount of $61,684.45, which included $56,098.39 as repayment of principal, $2243.94 for interest, and $3342.12 for reasonable attorney's fees.

On July 22, 1974, Finger Lake entered a special appearance and made what was the equivalent of a motion to vacate the judgment on the ground that the circuit court lacked personal jurisdiction over the corporation. This motion was denied.

On August 9, 1974, Finger Lake then made its motion to open the judgment and for leave to plead to the merits. It filed an affidavit in support of the motion, several parts of which are significant. Paragraph 1 of the affidavit said:

"[O]n or about November 6, 1973, M.D. Burkett and Corgro Corporation entered into a contract to settle disputes by the parties."

Paragraph 5 said:

"[T]he contract herein referred to was prepared primarily by the plaintiff and his attorney, Terry Sharp of Mt. Vernon, Illinois, and was executed at their insistence."

Paragraph 6 stated:

"[T]he contract has not been settled as of this date, and various amounts have been paid to M.D. Burkett, as well as amounts owed by M.D. Burkett have been paid by Corgro Corporation and other amounts due from M.D. Burkett to Corgro Corporation remain unpaid."

And, finally, paragraph 7 said:

"[T]he consideration for the note has failed, and M.D. Burkett is in breach of contract for failing to carry out the terms of the contract, and ...


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