APPEAL from the Circuit Court of Lake County; the Hon. JOHN L.
HUGHES, Judge, presiding.
MR. JUSTICE UNVERZAGT DELIVERED THE OPINION OF THE COURT:
The defendants, George Sotos and Lambert Sotos, appeal from the order of the circuit court of Lake County granting summary judgment against them on a note executed in favor of the plaintiff, Maywood-Proviso State Bank (hereafter Bank), also from the order denying their motion to open a judgment by confession.
George and Lambert Sotos were the sole shareholders and officers of a corporation named "Mr. George's Restaurant, Ltd." which owned and operated the Nordic Steak House and Pub.
Consumers Packing Company was a supplier of meat for the corporation. The corporation ran up a bill of $19,000 to Consumers Packing Company (hereafter Consumers). Consumers demanded payment and the corporation gave it checks in payment but the checks were dishonored. Dean Paps, president of Consumers, then suggested to the Sotos brothers that possibly they could borrow the money to pay the bill. The affidavit of Clay Belongia, vice-president of the Bank, states that around October 1, 1979, Dean Paps approached him regarding the possibility of his bank lending money to George and Lambert Sotos to allow them to satisfy an existing obligation due to Consumers from Mr. George's Restaurant. The affidavit states that he, Belongia, had a number of telephone conversations with George Sotos regarding such a loan and he tried to arrange an appointment on several occasions for the Sotos brothers to come to the bank to execute a note "evidencing such loan arrangement," but the Sotos brothers did not keep any of these appointments. However, according to the affidavit of Belongia, George Sotos phoned Belongia and asked if he could have the note brought to Mr. George's Restaurant by Dean Paps, which he, Belongia, agreed to. The affidavit of Lambert Sotos states that on October 21, 1979, Dean Paps appeared at the restaurant, "presented the promissory note and security agreement to George Sotos and myself and pressured us to sign both instruments." The affidavit continues, "I informed Dean Paps that the way the promissory note was drafted would impose a personal obligation on George Sotos and myself and that we would only sign the note if it were a corporate obligation. I inserted the words `Mr. George's Restaurant, Ltd.' in pen on the face of the original note and George Sotos and I signed our names and initialed the additional hand written language." The cashier's check accompanying the note was then endorsed by George and Lambert Sotos and delivered to Dean Paps.
The note contained a provision for confession of judgment if a default occurred. Default having occurred, the Bank confessed judgment on the note against George and Lambert Sotos as their personal obligation and judgment on the note was accordingly entered. George and Lambert Sotos then moved to open the judgment, stating that they had a meritorious defense. They filed their answer alleging the circumstances set forth above as to the facts surrounding the execution of the note and in addition asserted that they had affirmative defenses. The trial court, after argument on the motion to open the judgment, denied the motion. The defendants then filed a motion for reconsideration of the trial court's ruling denying their motion to open the judgment and filed an amended answer setting up not only the contention that the note was a corporate obligation but also two affirmative defenses: (1) that the note, if it was held to be a personal obligation, was clearly usurious since it provided for a 16% rate of interest, whereas only 8% interest is allowed by statute, and (2) that under the Federal Truth in Lending Act the note was invalid as not complying with certain provisions of that act. (Since the contention regarding the Federal Truth in Lending Act was waived by defense counsel at oral argument, we will not consider it here.)
The trial court denied the motion to reconsider the issue of personal liability on the note but opened the judgment by confession to allow a trial on the issues raised by the two affirmative defenses and continued the matter of the defendants' motion for discovery of certain documents. The Bank then filed a motion for summary judgment as to the two affirmative defenses. After a hearing, the trial court granted the Bank's motion for summary judgment as to the issues raised by the affirmative defenses and confirmed the judgment by confession against George and Lambert Sotos on the promissory note.
In this appeal the defendants contend (1) that the trial court erred in ruling as a matter of law that the defendants were personally liable on the note; (2) that if the defendants were personally liable on the note then the trial court erred in holding the note was not usurious; (3) as to the violation of the Federal Truth in Lending Act raised in the brief as an affirmative defense, as noted above, this was waived at oral argument.
An examination of the original note submitted as an affidavit in this case raises at least a doubt as to the intention of the signers in executing the note. The note is typewritten and is signed in the right-hand space (the space for signatures) by George Sotos and Lambert Sotos, but on the left-hand side (the space provided for address) is printed in ink "Mr. George's Restaurant, Ltd." and underneath also appears in ink "OK Dean Paps George Sotos L. Sotos." The handwriting of the Sotos brothers resembles the signatures on the right-hand side, and Dean Paps admits the notation bearing his signature was made at the time the note was signed by the Sotos brothers. In an affidavit Dean Paps states that "on October 21, 1979, when I delivered said note for execution by Messrs. George and Lambert Sotos, Mr. Lambert Sotos requested that I make a notation on the note which was then initialed by myself, Mr. George Sotos and Mr. Lambert Sotos, identifying the address of 2750 Grand Avenue, Waukegan, Illinois, as the address of Mr. George's Restaurant."
In our opinion, the manner in which the note was executed renders the intention of the signers unclear. The specification of the typewritten address on the note "2750 Grand Avenue," as being the address of Mr. George's Restaurant, hardly seems important enough to require the signature of all of these parties to acknowledge it and it would logically appear that the parties were validating a correction or change, in adding "Mr. George's Restaurant, Ltd." to the note rather than merely explaining that the typewritten address was that of the restaurant, rather than that of the individuals signing. It would logically seem that if the only correction intended was the proper address of the signers of the instrument, they would simply have crossed out the address of the restaurant and inserted their own address. This would hardly have required the Sotos brothers to sign again, but in any event there was no reason for Dean Paps to acknowledge that change if it was intended only to clarify whose address was on the note. Moreover, it seems unnecessary to be concerned with the address of the restaurant since, according to Dean Paps, the restaurant was not intended to be involved. Thus, the manner of executing the note creates some doubt as to the intention of both George and Lambert Sotos and Dean Paps, in acknowledging the handwritten correction.
We are not, of course, concerned here with the merits of this case — whether Lambert and George Sotos executed a personal note making them individually liable or whether they executed only a corporate note, not rendering them personally and individually liable, is not the question immediately before us. However, we see a basis in the note itself for allowing further evidence to be heard as to the intention of the signers.
Section 3-403 of the Uniform Commercial Code (Ill. Rev. Stat. 1979, ch. 26, par. 3-403) provides in part as follows:
"(2) An authorized representative who signs his own name to an instrument
(a) is personally obligated if the instrument neither names the person represented nor shows that the representative signed in a representative capacity;
(b) except as otherwise established between the immediate parties, is personally obligated if the instrument names the person represented but does not show that the representative signed in a representative capacity, or if the instrument does not name the person represented but does show that the representative signed ...