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Northwest Fed. Sav. & Loan Ass'n v. Weisberg

OPINION FILED JUNE 16, 1981.

NORTHWEST FEDERAL SAVINGS & LOAN ASSOCIATION OF CHICAGO, PLAINTIFF,

v.

SHELLY WEISBERG ET AL., DEFENDANTS. — (PURITAN FINANCE CORPORATION, COUNTERPLAINTIFF-APPELLEE,

v.

SHELLY WEISBERG ET AL., COUNTERDEFENDANTS-APPELLANTS.)



APPEAL from the Circuit Court of Cook County; the Hon. JOHN F. HECHINGER, Judge, presiding.

MR. JUSTICE DOWNING DELIVERED THE OPINION OF THE COURT:

Rehearing denied July 14, 1981.

This cause was initiated by a mortgagee seeking foreclosure of its first mortgage secured by a single-family residence. Counterplaintiff Puritan Finance Corporation (Puritan) filed the instant claim against the residence's owners, counterdefendants Shelly and Tarelyn Weisberg, seeking foreclosure of its second mortgage which is secured by the same property. The circuit court granted summary judgment for Puritan and against the Weisbergs on all issues raised in the counterclaim. The Weisbergs' motion to vacate that order was subsequently denied. They appeal from both dispositions contending their pleadings raise genuine issues of material fact precluding entry of summary judgment.

The pleadings indicate that after the initial complaint seeking foreclosure was filed, Puritan filed a verified counterclaim for foreclosure on its second mortgage. Puritan attached to its counterclaim a corporate installment note and a copy of its real estate mortgage as evidence of the Weisbergs' debt. The note evidences a $17,493 obligation incurred by Shelly Weisberg Associates, Inc. (SWA). Shelly Weisberg signed the note as president of SWA and his wife, Tarelyn, signed as secretary. The reverse side of the note includes a personal guaranty agreement signed by each of the Weisbergs. The guaranty indicates it is secured by the mortgage. The mortgage recites the indebtedness evidenced by the note. The Weisbergs initialed a change in the mortgage and also signed that document. Puritan's counterclaim alleges the Weisbergs are in default of the second mortgage with a principal balance due of $12,395.48. *fn1

The Weisbergs' amended answer and counterclaim, entered upon the record nunc pro tunc June 15, 1979, *fn2 alleges the note, second mortgage and guaranty were procured by fraud and violate the State usury statute (Ill. Rev. Stat. 1975, ch. 74, pars. 4, 6) and the Federal Truth in Lending Act (15 U.S.C. § 1601 et seq. (1976)). Deposition testimony by Shelly Weisberg disclosed he and his family lived in a house other than the residence securing the instant mortgage. He and Tarelyn are the sole owners, directors and officers of SWA, a manufacturers' representative corporation. Shelly Weisberg wanted financing to complete construction of a women's apparel showroom at his place of business. The construction costs were estimated at about $15,000. SWA had accumulated no assets during its 10-year existence. The Weisbergs originally sought financing for the showroom at their local bank. After the bank refused to loan funds in addition to those the Weisbergs had previously borrowed, an officer at the bank recommended Puritan as an alternate source of financing. The Weisbergs were contacted by William Zimmerman of Puritan. He obtained credit information from them and thereafter arranged financing through Puritan.

On October 19, 1976, the Weisbergs met at Zimmerman's office to sign the papers necessary for the transaction. After an hour the Weisbergs left with a $10,000 check to the order of the Weisbergs and their local bank. When the Weisbergs presented the check to the local bank it issued two other checks. One $6,000 check was issued to SWA and the local bank. The proceeds from that check were used to satisfy an unrelated debt and, as a consequence, retire the local bank's lien on the instant real estate. The other check was issued to SWA in the amount of $4,000.

Puritan received monthly payments on the corporate note for two years. Payments were made by checks drawn on SWA's account. Thereafter payments stopped.

I

The Weisbergs contend their amended answer and counterclaim raises four issues of material fact precluding entry of summary judgment for Puritan. They argue first that the note, mortgage, and guaranty were procured by fraud.

A motion for summary judgment should be granted "if the pleadings, depositions, admissions and affidavits on file reveal that there is no genuine issue as to any material fact * * *." (Econo Lease, Inc. v. Noffsinger (1976), 63 Ill.2d 390, 393, 349 N.E.2d 1.) When considering a motion for summary judgment, a court must construe the pleadings strictly against the movant and liberally in favor of the opponent. (Presto Manufacturing Co. v. Formetal Engineering Co. (1977), 46 Ill. App.3d 7, 10, 360 N.E.2d 510.) However, a "court need not strain to adduce some remote factual possibility that will defeat the motion. [Citation.]" (Erasmus v. Chicago Housing Authority (1980), 86 Ill. App.3d 142, 145, 407 N.E.2d 1031.) Therefore, to preclude entry of summary judgment upon Puritan's otherwise adequate foreclosure claim, the Weisbergs must allege sufficient affirmative matter to constitute a prima facie defense.

• 1 A prima facie claim of fraud is established by allegations that the wrongdoer knowingly misrepresented a material fact for the purpose of inducing the claimant to act, that the claimant reasonably believed the misrepresentation to be true, and that he detrimentally relied upon it. (Roda v. Berko (1948), 401 Ill. 335, 339-40, 81 N.E.2d 912; Goetz v. Avildsen Tool & Machines, Inc. (1980), 82 Ill. App.3d 1054, 1065, 403 N.E.2d 555, appeal denied (1980), 81 Ill.2d 591; see generally Mother Earth, Ltd. v. Strawberry Camel, Ltd. (1979), 72 Ill. App.3d 37, 48, 390 N.E.2d 393.) Furthermore, these allegations must be pleaded with specificity, particularity, and certainty. Goetz v. Avildsen Tool & Machines, Inc.

The essence of the Weisberg allegation is that Puritan, through its president, William Zimmerman, misrepresented the Weisbergs' obligations under the note and guaranty. They claim they were told by Zimmerman that "[w]e signed corporate but he would like us to sign personally and we never have to worry about it because they weren't going to bother us anyways * * *." The Weisbergs also assert they "didn't know [they] guaranteed [the note] personally" because they trusted Zimmerman and they read none of the papers they signed.

Shelly Weisberg's deposition transcript *fn3 reveals other statements, however, which we believe dilute the above allegations. During his deposition he stated that he provided Zimmerman with a legal description of the instant real estate and that he and his wife "were aware [they] were signing a second mortgage." In fact, in previous loan transactions between SWA and their local bank, the Weisbergs "always had to sign everything personally." Shelly Weisberg ...


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