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A.a. Store Fixture Co. v. Kouzoukas

OPINION FILED AUGUST 11, 1980.

A.A. STORE FIXTURE CO., INC., PLAINTIFF-APPELLANT,

v.

ERNEST KOUZOUKAS ET AL., DEFENDANTS-APPELLEES.



APPEAL from the Circuit Court of Cook County; the Hon. IRWIN COHEN, Judge, presiding.

MR. JUSTICE CAMPBELL DELIVERED THE OPINION OF THE COURT:

The plaintiff, A.A. Store Fixture Co., Inc., brought an action to revive a judgment entered by confession against the defendants, Ernest and Nicholas Kouzoukas, on June 8, 1967. The trial court denied plaintiff's motion to strike an affirmative defense presented by the defendants and dismissed the action. The plaintiff brings the present appeal from both of these orders of the trial court. Four issues are urged:

(1) whether the trial court incorrectly found that the plaintiff failed to notify the defendant of the sale of the collateral and failed to hold a commercially reasonable sale;

(2) whether a finding of inadequate notice of a sale of collateral will bar a deficiency judgment under section 9-504(3) of the Uniform Commercial Code;

(3) whether a claim of conversion is an improper defense to a scire facias action; and

(4) whether a claim of conversion is untimely in a scire facias action.

We affirm.

The controversy giving rise to the present revival action arose from the November 24, 1965, contract for the sale and installation of certain restaurant equipment by the plaintiff to the defendants. To finance this purchase, the defendants executed a note and security agreement on the equipment. Upon the defendants' default in their payments, the plaintiff filed suit on the note and a judgment by confession was entered on June 8, 1967, in the amount of $43,810.60. In October or November of 1967, the plaintiff repossessed the restaurant equipment which was subject to the security agreement.

The immediate action was filed on November 30, 1976, as an action to revive the judgment of June 8, 1967, by scire facias pursuant to section 25 of "An Act in regard to limitations" (Ill. Rev. Stat. 1975, ch. 83, par. 24b). The plaintiff's complaint alleged that the original judgment "had not been paid or satisfied in any part whatsoever." An amended complaint, however, acknowledged that the defendants had made payments to date in the amount of $1,500 and that equipment removed from defendants' store was valued at $9,500. Therefore, according to the amended complaint, the total amount credited to the defendants upon the judgment was $9,125, after deducting certain costs. On August 28, 1978, an evidentiary hearing took place. At that time, the defendants requested and were granted leave to file an affirmative defense grounded upon the failure of the plaintiff to comply with the notice requirements of section 9-504(3) of the Uniform Commercial Code (Ill. Rev. Stat. 1965, ch. 26, par. 9-504(3)).

The following evidence was received at the evidentiary hearing. The president of plaintiff corporation, Irving Naiditch, testified that his company repossessed the equipment when it was informed by the defendants' landlord, Sol Gabriel, that the defendants had abandoned the premises of the restaurant. During this conversation, Gabriel asked him to remove the equipment. Naiditch further testified that he thought his lawyers had sent a notice of the sale to the defendants, but on cross-examination admitted that he could not remember whether he or his lawyer had sent the notice. He was unable to produce a copy of the notice. He did state, however, that he had personally attempted to reach defendants both at the restaurant and at their home but was unable to do so. No third persons were notified of the sale. Naiditch also testified that, prior to the sale, he placed a fair market value of $9,500 on the equipment. He stated that this amount differed measurably from the contract price because the contract price included the cost of the installation charges. He based his opinion of the value of the equipment upon his expertise in the valuation of restaurant equipment derived from 33 years of having been in the restaurant equipment business and 17 years of working as an insurance appraiser of restaurant equipment. Naiditch also stated that his company purchased the equipment at its fair market value at the private sale, and he credited the defendants' account with this amount minus his costs.

Nicholas Kouzoukas testified that at the time that the equipment was repossessed his restaurant was closed for remodeling. Neither he nor his brother received a notice of sale of the equipment, although during this period he picked up mail from the restaurant. Furthermore, both he and his brother were in the Chicago area, had a telephone at their residence, and also received mail there. The plaintiff was aware of this home phone because he had contacted him at his residence prior to the repossession of the equipment. In fact, Kouzoukas testified that he and his brother did not have any notice of the first judgment or otherwise learn of the judgment until 1969, nearly two years after the repossession of the equipment.

After the evidentiary hearing, plaintiff filed a motion to strike the defendants' affirmative defense, which was denied on October 26, 1978. Subsequently, on December 20, 1978, the trial court dismissed the plaintiff's complaint. The trial court specifically found that (1) there was no notice of sale given to the defendants, and (2) no commercially reasonable sale was held. The order also included a provision which stated that the judgment in the first cause had been satisfied of record.

• 1 The pivotal issue raised in this appeal is whether a defendant debtor in a scire facias revival action may raise as an affirmative defense the plaintiff-secured party's failure to comply with the notice requirement of section 9-504(3) of the Uniform Commercial Code. (Ill. Rev. Stat. 1965, ch. 26, par. 9-504(3).) The burden of proving compliance with the notice requirement is on the creditor. Chicago City Bank & Trust Co. v. Wilson (1980), 86 Ill. App.3d 452, 407 N.E.2d 964; Commercial Discount Corp. v. Bayer (1978), 57 Ill. App.3d 295, 372 N.E.2d 926; General Foods Corp. v. Hall (1976), 39 Ill. App.3d 147, 349 N.E.2d 573; Tauber v. Johnson (1972), 8 Ill. App.3d 789, 291 N.E.2d 180.

• 2 The plaintiff argues that the evidence supports its contention that notice was given and that it was not necessary for it to show that the defendants received notice in order to sustain its burden of proof under section 9-504(3). (Tauber v. Johnson.) We disagree. Defendant Nicholas Kouzoukas testified that notice was never received. While the plaintiff's president did testify that it was his belief that notice was sent, he could not remember whether he or his attorney sent the notice. Moreover, no copy of such notice or evidence of its ...


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