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Bk Comp. Net. Corp. v. Cont. Ill. Nat'l Bk

OPINION FILED NOVEMBER 12, 1982.

BANK COMPUTER NETWORK CORPORATION, PLAINTIFF-APPELLANT,

v.

CONTINENTAL ILLINOIS NATIONAL BANK AND TRUST COMPANY OF CHICAGO ET AL., DEFENDANTS-APPELLEES.



Appeal from the Circuit Court of Cook County; the Hon. Warren D. Wolfson, Judge, presiding.

JUSTICE LINN DELIVERED THE OPINION OF THE COURT:

Plaintiff, Bank Computer Network Corporation (Bankcom), brought this action in the circuit court of Cook County claiming that defendants, Continental Illinois National Bank (Continental) and one of its vice-presidents, Patrick Goy (Goy), improperly setoff funds in Bankcom's checking account against a debt owed by Bankcom to Continental on two promissory notes. Continental counterclaimed, seeking judgment for the balance due on the same promissory notes. Following extensive discovery on both sides, Continental moved for summary judgment on all four counts in Bankcom's complaint and on its own counterclaim. The trial court granted both motions.

Bankcom appeals, claiming that the trial court erred in entering summary judgment on behalf of Continental and Goy because Bankcom had raised genuine issues of material fact on each of the counts in its complaint. After examining the pleadings, the extensive legal memoranda, and the voluminous depositions, affidavits, and transcripts of oral argument, we find that a genuine issue of material fact on Bankcom's claim of promissory estoppel does exist; therefore, the entering of summary judgment on that issue in favor of Continental and Goy was improper. Accordingly, with respect to that issue, we reverse and remand.

FACTS

Bankcom is a publicly owned corporation primarily engaged in the development and manufacture of automatic banking machines. As part of its growth strategy, it became a corporate customer of Continental in 1974. Among the various banking relationships maintained by the two parties were a corporate checking account, a frequently utilized line of credit, and other individual loan arrangements. As of October 1, 1977, Bankcom had a $150,000 outstanding loan due Continental. On October 31, 1977, following the receipt of an extension on the loan, Bankcom executed an unsecured promissory note (the October note) for the $150,000 plus interest, due on January 30, 1978.

In November of the same year, Bankcom requested an additional loan of $100,000 from Continental to finance the continuing development of a new automatic teller machine, the "Bankette." Continental initially denied this request but later agreed to lend Bankcom $50,000, in return for which Bankcom executed a second unsecured promissory note (the November note) due on February 13, 1978. All the negotiations were conducted by Leonard Fish, president and a director of Bankcom, and Patrick Goy, a second vice-president of Continental.

Even though the commercial relationship between Bankcom and Continental appeared to be ongoing, Continental's lending officers had noted in their records as far back as September 1977 that the bank was anticipating a termination of the relationship by the end of the year. Depositions of various bank officers established that Fish was a difficult customer to deal with, and the repeated overdrafts in the corporate checking account, although covered by the bank, were causing Goy problems in the management of his department section and in his harmonious relations with his superiors. Consequently, in November and December of 1977, Continental informed Bankcom in writing that the bank expected payment of both the October and November notes at their respective maturity dates; Bankcom responded that it expected to pay the notes when due, to terminate its relationship with Continental as soon as the notes were retired, and to secure future financing from another bank.

Prior to the January 30, 1978, maturity date, however, Howard Weiss, one of Bankcom's directors, began negotiating with Goy for an extension of both the October and November notes and for an additional $300,000 loan to Bankcom. Those negotiations continued past the maturity date of the October note, and Continental made no effort to collect. On February 6, 1978, Goy and Weiss orally agreed that Continental would (1) extend the existing $200,000 loan provided Bankcom secured the loan with a $125,000 irrevocable letter of credit from Itel Data Services Corporation and a $75,000 personal guarantee from Fish, and (2) advance Bankcom additional funds, to be guaranteed by other officers, directors, or financial supporters of Bankcom. However, on February 14, 1978, Goy informed Weiss in a handwritten note that the February 6 agreement was contingent on Fish's personal guarantee of the entire $200,000 instead of the originally agreed-upon $75,000. Also on February 14, Goy sent Fish a letter expressing Continental's desire to be paid in full on the maturity dates of the notes, outlining the additional loan and guarantee procedures discussed by Goy and Weiss, but warning that the letter was not a specific proposal to advance funds to Bankcom. The letter concluded with the statements, "The present borrowing and future borrowings will be on a secured demand note with interest * * *. This in general terms outline [sic] a rather detailed program of structuring the credit facility for the company. It is not meant to be a proposal to advance funds, but a basis for future discussion."

During the morning of February 21, 1978, Goy received notice from Continental's bookkeeping division that if all Bankcom's checks presented that day were to be paid, Bankcom's checking account would be overdrawn $10,270.39. Goy called Fish to inform him of the situation, whereupon Fish told Goy that deposits were in the mail and listed the specific items and amounts. Goy responded, "Fine." Although Bankcom actually showed a positive ledger balance, certain of the funds were as yet uncollected; Continental therefore returned one check for approximately $30,000 and thus prevented an overdraft. Subsequent mail notice was sent to Fish.

Later in the afternoon of February 21, 1978, Goy called Weiss to inform him that the bank's final position regarding any loan agreement was to consider future advances only if Weiss' personal guarantee was collateralized. A proposed alternative would be a loan by Continental to Weiss and his brother in return for their personal collateralized guarantees; they in turn would loan the money to Bankcom. A third possibility was Continental's agreeing to provide Bankcom with interim financing, guaranteed by the individual guarantors, during which Bankcom would move to another bank and secure new loans with which to pay the notes due Continental as well as to finance future development. Goy represented Continental as wanting to be "considerate of [Bankcom's] needs" during the transition, whereupon Weiss said he would soon be in touch with Goy.

On the next day, February 22, 1978, Goy, orally and by letter, informed Fish that Continental "confirmed" its demand for immediate payment of the entire balance of principal and interest on the two notes; accordingly, Goy had ordered the entire checking account balance, now over $95,000, offset against the notes. Several outstanding checks were dishonored. Bankcom quickly issued a press release disclosing the actions taken by Continental and affirming the stability of Bankcom's financial position.

On February 28, 1978, six days after the offset, Bankcom filed a two-count complaint against Continental and Goy, alleging that (1) Continental was promissorily estopped to collect on the notes by offsetting Bankcom's checking account on February 22, and (2) Continental's actions constituted tortious interference with Bankcom's business relationships. At the same time, Continental filed a counterclaim for $154,041.75, the balance remaining on the notes after the setoff. After engaging in extensive discovery, Bankcom amended its complaint, adding two more counts: (3) Goy fraudulently induced Fish to submit deposits to the checking account for the purpose of building up the balance in anticipation of the offset, not to pay outstanding checks; and (4) Continental breached its fiduciary duty to Bankcom in connection with its handling of the two notes, the negotiations, and the offset.

After granting motions to extend the period for discovery, reviewing the extensive legal memoranda, documents, depositions and affidavits, and hearing lengthy oral arguments, the trial court entered summary judgment in favor of Continental on all four counts of Bankcom's complaint and on that portion of Continental's counterclaim seeking recovery on the two promissory notes. For the ...


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