United States District Court, Northern District of Illinois, E.D
November 3, 1982
CITIBANK, N.A., PLAINTIFF,
BEARCAT TIRE, A.G., ET AL., DEFENDANTS.
The opinion of the court was delivered by: Shadur, District Judge.
MEMORANDUM OPINION AND ORDER
In this diversity action Citibank, N.A. ("Citibank") has sued
Bearcat Tire, A.G. ("Bearcat"), Jordan Fishman ("Fishman") and
Louis Fishman & Co. ("Company"). Citibank alleges Bearcat
defaulted on a promissory note (the "Note") (Count I), Fishman
defaulted on a personal guaranty of the Note (Count II) and
Bearcat transferred borrowed funds to Company in fraud of
Bearcat's creditor Citibank (Count III). This Court's August
24, 1982 Order (the "Order") granted Citibank a judgment by
confession against Bearcat. Bearcat has moved under
Fed.R.Civ.P. ("Rule") 59(e) to "vacate, alter or amend" that
judgment. Fishman has moved for dismissal under Rule
12(b)(6).*fn1 For the reasons stated in this memorandum
opinion and order, both Bearcat's and Fishman's motions are
In January 1982 Bearcat executed and delivered to Citibank the
Note in the principal amount of $551,282, consolidating and
renewing five previous demand notes (the "previous
notes").*fn3 After making several payments of principal and
interest on the Note, Bearcat tendered a payment by a check
then returned for insufficient funds. Since May Bearcat has
made no further payments on the Note despite Citibank's demand.
By an instrument (the "Guaranty") executed contemporaneously
with the Note, Fishman personally guaranteed payment of the
Note to Citibank. Fishman has failed
to make any payments pursuant to the Guaranty despite
In accordance with the Note's confession of judgment clause,
Citibank designated an attorney to appear for Bearcat before
this Court. On Citibank's motion judgment was confessed via the
Order in the sum of $462,884.17 (representing $416,281.99 in
principal amount, $42,202.18 in interest, and $4,400 in
Bearcat's Rule 59(e) Motion
Adoption of Rule 59(e) confirmed this Court's inherent power to
alter or amend its judgments. White v. New Hampshire Dep't of
Employment Security, 455 U.S. 445, 449-51, 102 S.Ct. 1162,
1165-66, 71 L.Ed.2d 325 (1982).*fn5 Motions under Rule 59
are addressed to this Court's sound discretion. See 6A Moore,
Federal Practice § 59.05, at 59-73 (1982). As with similar
Rule 60(b) motions, a Rule 59(e) motion will be granted if the
movant makes a "proper showing" of the grounds for relief. Cf.
Smith v. Widman Trucking & Excavating, Inc., 627 F.2d 792, 795
(7th Cir. 1980) (discussing Rule 60(b)).
Though a Rule 59(e) motion apparently may raise any ground in
its claim for relief, the motion itself should state its
grounds with the particularity required by Rule 7(b)(1).
Martinez v. Trainor, 556 F.2d 818, 819-20 (7th Cir.
1977).*fn6 Bearcat's motion is not as precise as Martinez
may require, but in sum Bearcat claims:
1. It executed the Note under duress.
2. Judgment was confessed by a member of the same law firm
that prepared the Note and that represents Citibank in this
3. Citibank's judgment was excessive.
It would not be hyperbolic to term those "grounds" frivolous.
Citibank accompanied its Complaint with documentary evidence
and its motion for judgment with affidavits. Bearcat has not
contested the authenticity of Citibank's documents, and it has
not tendered any factual showing of its own.*fn7
Bearcat's latter two arguments scarcely merit discussion.
First, the Note (at 2) specifically allows Citibank to
designate "any attorney" to confess judgment, and Illinois
courts*fn8 have squarely held confession
of judgment by an attorney of the same firm as plaintiff's
counsel does not invalidate the judgment. Gecht v. Suson,
3 Ill. App.3d 183, 188, 278 N.E.2d 193, 196 (1st Dist. 1971).
Second; Bearcat calculates the judgment "excess" by adding the
judgment principal amount to Bearcat's admitted payments to
Citibank, arriving at a sum greater than the Note's face
amount. But Bearcat's payments had of course included both
principal and interest, so they obviously did not reduce the
Note's face amount dollar for dollar. Bearcat has not cast any
doubt on Citibank's affidavits establishing the amount due. It
is frankly an affront for Bearcat to advance such a patently
Bearcat's "economic duress" argument is only slightly better:
It nearly attains the level of speciousness. In sum Bearcat
says it executed the Note and the confession of judgment under
threat of litigation over its default on the previous notes.
Illinois clearly recognizes judgments by confession in
nonconsumer transactions, however. Ill.Rev.Stat. ch. 110, §
2-1301(c) (1982). And Illinois courts do not find a one-to-one
correlation between a creditor's exercise of a hard bargaining
position and "duress" in the legal sense. Cf. Higgins v.
Brunswick Corp., 76 Ill. App.3d 273, 277-78, 32 Ill.Dec. 134,
138-139, 395 N.E.2d 81, 85-86 (1st Dist. 1979) (no duress where
lessee-creditor threatened financial ruin and legal action
against lessor-debtor in lease negotiations).
But the obvious key to the poverty of Bearcat's position is its
total silence as to any defense to its obligations on the
previous notes. Thus the picture is one of a debtor in default
of an admitted obligation on demand notes, availing itself of
the creditor's willingness to consolidate those previous notes
into a single note (the Note) providing for fixed installment
payments and an acceleration clause. Bearcat clearly obtained
financial respite from Citibank's alleged "hard bargain."
Bearcat's claim it had no "option or choice" when confronted
with the Note distorts that concept. Cf. Staren & Co. v.
Shapiro, 3 Ill. App.3d 417, 420, 279 N.E.2d 470, 472 (1st Dist.
1972) (economic duress "does not exist when the person upon
whom it has been so charged had an option or choice as to
whether he will do the thing or perform the act said to have
been done under duress," quoting Joyce v. Year Investments,
Inc., 45 Ill. App.2d 310, 314, 196 N.E.2d 24, 26 (1st Dist.
Bearcat also says, in apparent support of its claim of duress,
it was not represented by counsel during the Note transaction.
That is the one factual issue between the parties. Citibank has
submitted a copy of a letter, in which an attorney (a partner
in the firm representing all defendants in this action) returns
to Citibank's counsel the Note and Guaranty, both executed by
Fishman. To that submission Bearcat responds only (R. Mem. 2 n.
2) that the attorney represented Fishman, not Bearcat.
Both the Note and the attorney's forwarding letter (Exhibit A
to this opinion) reflect Fishman's execution of the Note as
Bearcat's Chairman and Managing Director. Nor does the letter
contain the slightest hint of the distinction now asserted by
Bearcat's counsel. Finally it should be said that lack of
representation, even were that established in fact, also does
not equate with "duress." Overreaching or substantive
disadvantage to the unrepresented party must be shown, and it
has not been. Thus any factual dispute is irrelevant in legal
Frankly the types of arguments put forth on Bearcat's behalf
are what give our common profession a bad name. Counsel's
responsibility to represent clients zealously does not
justify the submissions here. See
ABA Code of Professional Responsibility EC 7-4 (1980) (". . . a
lawyer is not justified in asserting a position in litigation
that is frivolous").
Fishman states two bases for avoiding liability under the
1. Fishman received no consideration for executing the
Guaranty, rendering it non-binding.
2. Because the Guaranty purports to guarantee a preexisting
debt without any consideration flowing to Fishman, it is
Both arguments*fn9 depend on Fishman's claim no
consideration passed to him personally.
First year law school principles teach us that consideration,
ample to support contract liability, may stem from detriment
to the promisee rather than benefit to the promisor. See 1
Corbin, Contracts § 122, at 523-31 (1963); Restatement
(Second) of Contracts § 71(3)(b), at 172 (1981). And there is
no dispute that promisee Citibank, by forbearing from immediate
action against its debtor (Bearcat) and guarantor (Fishman),
both of whom were in current default under the previous notes
and earlier guaranty, sustained such a detriment. That alone
suffices to defeat Fishman's argument. But even on the narrower
benefit-to-the-promisor test, Illinois law is squarely against
Fishman signed the Note and the previous notes as "Managing
Director" or "President." That position was reconfirmed by the
attorney's letter (Exhibit A to this opinion). Fishman is
scarcely a stranger to the Bearcat-Citibank transactions.
Unlike an "accommodation guarantor," under Illinois law Fishman
was a party deriving personal benefit (in the contract
consideration sense) from the reprieve granted Bearcat. See
Weger v. Robinson Nash Motor Co., 340 Ill. 81, 84, 88,
172 N.E. 7, 9, 10 (1930) (directors' guaranty of note in
consideration for extension of credit to corporate borrower);
State Bank v. Sentel, 10 Ill. App.3d 86, 90, 293 N.E.2d 444,
447-48 (4th Dist. 1973) (shareholders' and officers' notes in
consideration for extension of credit to corporate borrowers);
National Bank & Trust Co. v. Becker, 38 Ill. App.2d 307, 312,
187 N.E.2d 355, 357 (1st Dist. 1962) (shareholders' guaranties
in consideration for loans and renewals extended to corporate
Fishman has not contested that forbearance from suit
represented adequate consideration to Bearcat (R. Mem. 5).
But Illinois law teaches such forbearance, in the circumstances
here, supports the guaranty as well. See First National Bank
of Red Bud v. Chapman, 51 Ill. App.3d 738, 740, 9 Ill. Dec.
426, 429-430, 366 N.E.2d 937, 940-41 (1st Dist. 1977); 1 Corbin
§ 144, at 625.*fn10
Fishman raises one additional argument that does his cause
little good — that the Guaranty is defective on its face
because he guarantees loans to Beatcat Tire A.G. in which he
has "no holdings or interest," Mem. 6, "not Bearcat Tire A.G."
(R. Mem. 5).*fn11 Fishman's attempt to use a typographical
error as a shield implicitly confirms he has the kind of
interest in Bear cat that makes its consideration his.
What was said at the end of the preceding section is equally
applicable here. True enough, both the Note and the Guaranty
provide the creditor with interest to compensate for delays and
attorneys' fees to reimburse for expenses. But the affront to
the system goes uncompensated and unreimbursed.
Judgment on that score will be reserved to the end of the
Bearcat's motion to alter, amend or vacate the judgment
contained in the Order is denied. Fishman's motion to dismiss
is also denied. Fishman is ordered to answer the Complaint on
or before November 10, 1982.
CHATZ, BERMAN, MARAGOS, HABER & FAGEL
ATTORNEYS AND COUNSELORS AT LAW
140 South Dearborn Street, 14th Floor, Chicago, Illinois
60603 • 312/346-7500
January 29, 1982
H. Bruce Bernstein, Esq.
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Re: Bearcat Tire A.G./Citibank, N.A.
Enclosed please find Promissory Note in the principal amount of
$551.282.00 as executed by Jordan Fishman, Chairman and
Managing Director. I have also enclosed a Personal Guaranty.
Please call me should there be any further questions regarding
Very truly yours,
/s/ Joel A. Haber
Joel A. Haber