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Ninow v. Loughnane

OPINION FILED DECEMBER 31, 1981.

EARL A. NINOW ET AL., PLAINTIFFS-APPELLEES,

v.

JOHN P. LOUGHNANE, JR., ET AL., DEFENDANTS-APPELLANTS.



APPEAL from the Circuit Court of Cook County; the Hon. PAUL F. ELWARD, Judge, presiding.

JUSTICE MEJDA DELIVERED THE OPINION OF THE COURT:

Subsequent to the entry of judgment by confession in favor of plaintiffs, defendants filed an amended petition to vacate the judgment (Ill. Rev. Stat. 1979, ch. 110, par. 72), or, alternatively, to open the judgment with leave to file an answer (Ill. Rev. Stat. 1979, ch. 110A, par. 276). The trial court denied the amended petition and confirmed the judgment by confession against the defendants. Defendants appeal.

The issues presented for review are: (1) whether the warrant of attorney upon which the confessed judgment was based was void; (2) whether the trial court erred in denying defendants' petition to open the judgment pursuant to Supreme Court Rule 276 (Ill. Rev. Stat. 1979, ch. 110A, par. 276); (3) whether the trial court erred in denying defendants' petition to vacate the judgment pursuant to section 72 (Ill. Rev. Stat. 1979, ch. 110, par. 72); and (4) whether the trial court erred by confirming the judgment by confession without setting the matter for a hearing de novo, pursuant to section 12 of "An Act relating to wage deductions * * *" (Ill. Rev. Stat. 1979, ch. 62, par. 82).

On January 24, 1976, the plaintiffs entered into an agreement with defendant Loughnane, Ltd., to sell it all of the outstanding shares of stock in their solely owned corporation. Defendants John P. Loughnane, Jr., and John P. Loughnane III were guarantors under the agreement. The sale agreement provided for a purchase price of $123,460, payable with an initial payment of $35,000 on February 1, 1976, and defendants' judgment note for the balance of $88,460 with interest at 6% per annum. Defendants executed a judgment installment note for the $88,460 balance and 6% interest per annum on the balance of principal from time to time unpaid, payable $21,000 on February 1, 1977, and $21,000 or more on the first day of each February thereafter until paid in full with final payment of principal and interest on February 1, 1981. Prepayments were subject to the following penalties: 1977-$11,200; 1978-$6,900; 1979-$3,500; and 1980-$1,200. The penalties were payable simultaneously with the payment of the final principal payment.

On March 27, 1978, defendant John Loughnane III informed plaintiffs by letter that two severe problems encountered shortly after defendants purchased the business forced them to sell it on May 15, 1977. Defendant stated that it was now known that plaintiffs had been aware of these problems prior to the sale and had concealed them. The letter further stated that the concealment mandated "a substantial reduction of the purchase price, and if such reduction is not forthcoming we will decline further payments to you."

On May 9, 1979, plaintiffs filed their complaint to confess judgment on the note alleging that there was due on said note a balance of $88,460, interest $17,692.30, and attorney fees of $4,300 for a total of $110,452.30. Although the complaint indicates no payments on the note, in oral argument in this court counsel for plaintiffs conceded that the first installment due February 1, 1977, was in fact paid. Judgment for the full amount of $110,452.30 was entered on May 25, 1979. On August 1, 1979, summons to confirm judgment by confession directed to all defendants were served upon defendant John P. Loughnane III.

On January 28, 1980, defendants filed an amended petition to vacate the judgment by confession or to open the judgment by confession with leave to file answer, supported by the affidavits of the defendants that they had a meritorious defense to plaintiffs' claim in that the judgment installment note provided for renegotiation upon good cause shown "[i]f makers herein, are not able to make payment in full at any time within the foregoing five year period * * *." Attached were copies of the March 27, 1978, letter of defendant John Loughnane III, the installment note, and the sale agreement.

On July 15, 1980, a hearing on defendants' amended petition was held. A stipulation as to report of proceeding agreed to by the parties for purposes of appeal and filed as part of the record stated that both plaintiffs and defendants filed answers in open court. Plaintiffs filed an answer to defendants' amended petition and defendants filed an answer to plaintiffs' original complaint to confess judgment. Defendants' answer denied paragraph 4 of plaintiffs' complaint which had alleged that $110,452.30 including principal, interest and attorney fees was due and owing plaintiffs from defendants.

After reviewing the amended petition to vacate or open judgment and plaintiffs' answer, as well as the answer submitted by defendants to the original complaint, the court denied defendants' petition without hearing evidence and confirmed the judgment of $110,452.30 against defendants.

OPINION

Defendants first assert that the warrant of attorney contained in the installment note is void because its inconsistency with a typed provision calling for renegotiation if the maker is unable to make payments makes the conditions of default and the extent of their liability unascertainable from the face of the note.

• 1-3 The power to confess a judgment must be clearly given and strictly pursued. (Devon Bank v. Schlinder (1979), 72 Ill. App.3d 147, 390 N.E.2d 447.) A warrant of attorney is to be construed according to the rules which apply to written contracts generally. (Wolf v. Gaines (1961), 33 Ill. App.2d 428, 179 N.E.2d 466.) A warrant of attorney may be incorporated, as here, into a note and for purposes of construction they are to be regarded as one instrument. Sharp v. Barr (1924), 234 Ill. App. 214.

The installment note signed by defendants contains the standard acceleration and judgment by confession provisions which were part of the preprinted form. By the terms of the acceleration clause, the unpaid principal together with accrued interest becomes due upon default in the payment of any installment of principal due. The warrant of attorney clause authorizes any attorney to appear and confess judgment if this note is not paid when due. Taken together, these two provisions authorize a confession of judgment to be entered upon the failure by defendants to pay any installment of principal. Defendants do not assert that the language of these provisions is ambiguous or uncertain. Nor do we find them to be so. Nevertheless, defendants assert that the presence of an additional typed provision in the same installment note rendered the powers conferred by the warrant of attorney uncertain and thus void. That typed provision provides:

"If Makers herein are not able to make payment in full at any time within the foregoing five year period, for good cause shown, the payment of any balance remaining due at that time is subject to renegotiation between parties, interest on the unpaid balance to be 1 1/2% over the ...


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