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Bee Jay's Truck Stop v. Dept. of Revenue





APPEAL from the Circuit Court of Cook County; the Hon. EARL ARKISS, Judge, presiding.


This is an appeal by the garnishee, Bridgeview Bank and Trust Company (bank), from a judgment for $35,841.39 recovered by the Illinois Department of Revenue (State), the appellee. The State, as judgment creditor, sought to garnish the account of Bee Jay's Truck Stop, Inc. (Bee Jay's), the judgment debtor, held by the bank. The Department of Revenue previously had obtained a judgment in the amount of $842,495.73, inclusive of interest, against Bee Jay's. Three garnishment summonses were served upon the bank, and on the last two occasions the bank sought to invoke its statutory right of set-off for loans it had made to Bee-Jay's. The State brought an action against the garnishee alleging the bank forfeited its right of set-off by conduct designed to frustrate the objective of the garnishment proceedings. The trial court agreed and rendered judgment in favor of the State against the bank.

On appeal the bank argues that the judgment should be reversed because the trial court relied upon a factually inappropriate case (Burke ex rel. Birney v. Congress Hotel Co. (1935), 280 Ill. App. 493) and because an insufficient factual basis existed for the court to conclude that the bank employed the statutory offset provision to frustrate the garnishment proceedings.

The State commenced garnishment proceedings on March 25, 1977. The interrogatories in the affidavit for nonwage garnishment were completed by Robert Altepeter, president of the bank, on March 31, 1977, and pursuant to a conditional judgment the bank turned over to the State $63,129.74 from Bee Jay's checking account. In April 1977, $65,858 was deposited in Bee Jay's checking account, the proceeds of a loan evidenced by a promissory note. Whether the maker of the note was Bee Jay's Truck Stop, Inc., or Nick James Massarella, the corporation's vice-president, is disputed. As security for the loan, Massarella hypothecated to the bank his beneficial interest in a land trust having a net value of $100,000. On May 28, 1977, upon receipt of the second garnishment summons and interrogatories, the bank's president completed the affidavit and denied holding any funds belonging to Bee Jay's. The bank did not disclose that it had offset funds in Bee Jay's checking account in the amount of $38,089.77 against the April loan which had an outstanding balance of $65,858.

The promissory note became due on October 1, 1977, and was paid off with a 90-day renewal note secured by the same collateral. This latter note, in the amount of $27,171.13, was executed by Benjamin Massarella, as president, and Nick Massarella, as vice-president of Bee Jay's Truck Stop, Inc., and specifically provided that the proceeds would be used solely for business purposes. Thereafter, a third garnishment summons was served on the bank and the interrogatories to garnishee were completed by Robert Altepeter on October 31, 1977, as follows:

"1. When you were served with summons did you have in your possession, custody or control any property, other than cash monies, time or demand deposits, belonging to the judgment debtor or in which he had an interest?

Answer Yes (yes or no)

2. If your answer to number 1 above is yes, describe the property:

Checking $8,543.14

3. When you were served with the summons were you otherwise indebted to him by cash monies, time or demand deposits, no matter when payable, except for wages?

Answer No " (yes or no).

The State contested this answer *fn1 and moved for a conditional judgment against the bank for $35,739.27. A hearing was held on January 4, 1978, and the bank was granted leave to amend its answers to the third interrogatories to indicate that at the time of service of the garnishment summons, the bank was indebted to Bee Jay's in the amount of $35,739.27 held in a checking account and due on demand. The bank further indicated a deduction by offsetting the amount of money outstanding on the renewal note, $27,171.13, and stated the net amount subject to the garnishment was $8,543.14.

At the January 4th hearing the State produced one witness, Robert Altepeter, the garnishee's president. Altepeter admitted that, with the exception of the October renewal note, all the bank's documents regarding the two loans referred to Nick James Massarella as the maker or debtor. These documents, which were entered into evidence, included the bank's ledger card for its maturity tickler file, the bank's ledger card reflecting Nick Massarella's total indebtedness on miscellaneous dates when transactions occurred, and the papers filed by the bank to perfect its security interest in the assignment of the beneficial interest. Also admitted into evidence was a loan work-sheet that Altepeter completed on October 6, 1977, after Benjamin Massarella requested that the April note be renewed. This work-sheet listed the maker of the note as "Nick James Massarella D/B/A B.J.'s Truck Stop, Inc."

Altepeter testified that when a loan is made to a corporation, its name is usually recorded on the bank's records when the collateral is in the corporation's name. He stated the bank's ledger cards should have been typed with Bee Jay's name, but that the papers perfecting title in the collateral for the notes were properly captioned with Nick Massarella's ...

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