APPEAL from the Circuit Court of Mercer County; the Hon. PAUL
E. RINK, Judge, presiding.
MR. PRESIDING JUSTICE SCOTT DELIVERED THE OPINION OF THE COURT:
This case arises out of an appeal from a bench trial in the Circuit Court of Mercer County. The plaintiff, Bank of Viola, filed suit to recover the balance due on a certain promissory note executed by the defendant, Donald Nestrick. The note in question was executed on May 7, 1975, with a principal sum of $15,884.54 and a stated rate of interest of eight percent per annum. The note recites that the funds were advanced for the purpose of renewal, and in fact the evidence adduced at trial reveals that this note is but one in a series of notes executed by the defendant to secure an uninterrupted line of credit which began in August of 1971. The defendant in sworn testimony concedes subscribing to the note in the following manner:
"Liberty Advertizer [sic] Donald E. Nestrick"
The trial court did not determine nor are we asked on appeal to determine the effect of this signature in what purports to be a representative capacity.
The Liberty Advertiser was a weekly advertising paper that was published in Aledo, Illinois. Defendant's precise relationship with the Liberty Advertiser is a matter of some dispute, but it is clear that defendant executed the note in question in the manner previously set forth, as well as those notes which preceded it. In pertinent part, the note reads:
"For value received, the undersigned promises to pay to the Order of Bank of Viola, Viola, Illinois, the principal sum of $15,884.54 payable in installments or as follows: Or payable $80.00 per week from Jack & Jill contract with interest at the rate of 8.00 per cent per annum from date until paid." (Underlined segments handwritten in original.)
The Jack & Jill contract referenced in the instrument was identified at trial as a contract entered into by the Aledo Jack & Jill store for advertising space in the Liberty Advertiser. In his answer the defendant affirmatively asserts that the proceeds of the advertising contract with the Aledo Jack & Jill store are the sole source of funds to which the plaintiff can look for satisfaction of the note in question.
After a full hearing on the merits and at the conclusion of all testimony, the circuit court made the following findings:
"1. The note was a conditional note to be paid from a particular fund.
2. Even though the note was conditional, it was fully paid if the payments made by Jack & Jill store were properly credited to the note. It is therefore ordered that judgment is hereby awarded to the Defendant and against the plaintiff."
Plaintiff appeals from this decision arguing in part that there is insufficient evidence in the record to warrant a finding that the note was conditional. We agree.
1 A promissory note is conditional if it is to be paid only from a particular fund. In the instant case, if the note in question was a conditional note, it was fully paid if the payments made by the Jack & Jill store were properly credited to the note. In short, if the note is conditional, the plaintiff bank has no recourse against the defendant Nestrick on his personal liability.
2 There is considerable discussion in the case law as to whether a note or draft is conditional. Most of the case law hinges on the question of negotiability. In the case sub judice, negotiability is not an issue. Rather, the issue is collectability. Nevertheless, the same legal test applies. The statutory standard for determining whether a note is conditional is set forth in section ...