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Community Bank of Utica v. Calkins





APPEAL from the Circuit Court of La Salle County; the Hon. JOHN S. MASSIEON, Judge, presiding. MR. JUSTICE STOUDER DELIVERED THE OPINION OF THE COURT:

This action was instituted by the plaintiff, Community Bank of Utica, against the defendant, Charles Calkins, to recover $4,000 alleged due under a written guarantee agreement. After the jury returned a verdict in favor of plaintiff for the sum of $1,765.25, the circuit court of LaSalle County entered judgment on the verdict and defendant appealed.

In February of 1970 Virgil Crane executed and delivered to the plaintiff a note and security agreement in the sum of $7,653.60. The note was secured by a used White truck-tractor. A written guarantee was executed at approximately the same time by Howard Jackson, guaranteeing to the bank prompt payment on Crane's indebtedness to the bank, but only to the extent of $2,500.

In June of 1970 Crane executed a second note and security agreement in the amount of $3,259.06 for repair of the truck-tractor's engine. At the request of the plaintiff and to provide Crane with the necessary credit to obtain the loan for $3,259.06, defendant executed a written guarantee by which defendant guaranteed to the bank the prompt payment of Crane's indebtedness to the bank, but only to the extent of $4,000. The guarantee was executed on a standard form which by its printed terms provided for a continuing general guarantee limited only to $4,000.

Defendant, Crane, and John Goskusky, the officer of the bank involved with the transaction but who later left plaintiff's employment, all testified that the guarantee was limited to the amount needed to complete the repair of the truck-tractor's engine and was not to apply to future loans. In short, it seems the guarantee was intended by the parties to be restricted and not general. While plaintiff objected to introduction of evidence contradicting the express terms of the written agreement, the court allowed the testimony as relevant to defendant's allegations of fraud. No contention is made on appeal by either party as to the correctness of this ruling.

Defendant, Crane, and Goskusky were all present during the conversations in which Crane and the parties discussed the transaction. The defendant testified Goskusky told him that any proceeds collected by the bank, whether from payment by the debtor or from the sale of the collateral, would be used first to reduce defendant's guarantee obligation. Crane testified that any payments made subsequent to the repair of the engine would reduce the amount Calkins owed on the guarantee. Goskusky testified he told defendant that anything in excess of regularly scheduled payments would be used to reduce defendant's guarantee. Neither Goskusky nor Crane had any recollection that defendant was to receive any priority in the application of the proceeds from the sale of the truck.

After being unable to make payments, Crane voluntarily turned the truck-tractor over to the bank at its request. The bank received a cash bid of $5,000 for the truck, which was rejected by Goskusky as being unreasonable. By refinancing the truck, the bank was able to obtain a purchase price of $6,500 at a private sale. Efforts were made to contact local truckers who might be interested in purchasing the truck-tractor and some form of advertising was done. No attempt was made to offer the truck for sale through either of two local truck dealers in the area.

The general manager and president of Ottawa White Sales was qualified by the defendant as an expert and estimated the value of the truck to be approximately $10,000 to $11,000 immediately after his firm had rebuilt the truck's engine. His opinion was based in part on a book which advises dealers on the value of trucks of a given vintage. He believed that even after several thousand miles were put on the truck with its new rebuilt engine, it would still be worth approximately the same amount. While the witness stated he probably could guarantee a price of $10,000 for the truck if sold through his firm, he also stated that this figure would depend on the availability of buyers and that it could take months to sell the truck.

Correspondence sent by Goskusky to the defendant after the sale of the truck indicated that Goskusky believed the defendant was responsible upon his guarantee for only $1,890.25. This figure was arrived at by reducing Crane's total indebtedness ($10,593.76) by the proceeds of the sale ($6,500) less the proper expenses of sale ($296.49), further reduced by the guarantee of Howard Jackson ($2,500). Evidence was also introduced of a payment of $125 to Crane's account by someone unknown. The amount of the jury's verdict is exactly $125 less than $1,890.25.

Throughout the trial, plaintiff contended that defendant was responsible for the full amount of the guarantee. However, on appeal, plaintiff concedes that the parties intended a restricted guarantee limited to the actual cost of repairing the truck ($3,259). Plaintiff also concedes that in spite of the language in the agreement to the contrary, the guarantee was not intended to apply to future loans. However, he correctly points out that no future loans were made. Though not conceding that defendant's guarantee was subordinate to Jackson's guarantee, plaintiff has not taken a cross-appeal and requests this court to affirm the judgment as entered. While not denying that he signed the guarantee or that he intended to guarantee a loan by the bank to Crane, defendant asks this court to reverse the circuit court's judgment. We decline to do so.

Before embarking further, we would like to state that no issue is raised on appeal concerning the parol evidence rule and we express no opinion as to its applicability.

Defendant first contends the evidence shows the guarantee was intended to be restricted and not general. Plaintiff has conceded this point on appeal and we will not consider the matter further.

The next argument advanced is that the guarantee was procured by fraud and therefore voidable. Specifically, defendant contends he relied upon false misrepresentations which were made to him by the plaintiff for the purpose of inducing him to execute the written guarantee. Defendant claims he signed the agreement in blank and that the blanks were later filled in not in accord with their agreement.

• 1 The elements which a party must prove to establish fraud are adequately set forth in Broberg v. Mann, 66 Ill. App.2d 134, 213 N.E.2d 89, and need not be reiterated here. As to the defendant's claim that the guarantee he signed did not contain a $4,000 limitation, conflicting evidence was presented and the jury was free to disregard the defendant's version of the facts. As to the fact that the guarantee was to be limited to the cost of repairs, $3,259, and the $4,000 was in excess of that cost, at the time the agreement was signed no one knew the precise amount of the yet to be completed repairs and the $4,000 figure was based on the upper limit of the estimated cost of repairs. We fail to comprehend how this amounts to an untrue statement which is necessary to support a claim of fraud.

As the the failure of the written provisions of the agreement to reflect the restricted character of the guarantee, the defendant was a business man who should have been capable of reading and understanding the printed provisions such as those contained in the form guarantee. No representations were made by plaintiff that the contract defendant signed was not in accord with their oral agreement. Under the circumstances, defendant had no right to rely upon the fact that the written guarantee agreement was different from the parties oral agreement. The jury heard all the evidence which defendant claims supports his allegation of fraud, but in a special interrogatory submitted by the defendant, the jury ...

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