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Bank of Lincolnwood v. Comdisco





Appeal from the Circuit Court of Cook County; the Hon. Myron T. Gomberg, Judge, presiding.


Plaintiff, Bank of Lincolnwood (Bank), sued defendant, Comdisco, Inc. (Comdisco), in a three-count amended complaint for breach of an oral contract to borrow money upon discounted equipment leases (count I), for unjust enrichment (count II), and for misrepresentation (count III). The Bank appeals from the dismissal of its amended complaint.

Count I asserts that Comdisco requested meetings to discuss the possibility of obtaining advances from the Bank by discounting the future rental payments of computer equipment leases. Both parties "orally mutually agreed" that advances could be made by discounting the leases at rates to be determined on a later date. This agreement was conditioned upon the acceptance by the Bank of the creditworthiness of each lessee under the lease to be discounted. On or about April 29, 1980, 16 leases were submitted to the Bank by Comdisco. Creditworthiness of the lessees was evaluated by the Bank. On May 2, 1980, the Bank approved the credit of the lessees "under at least" 13 of the leases, such leases to be discounted at a rate of 16%. The Bank and Comdisco negotiated a lower rate of 15 1/2% and, on May 2, 1980, Comdisco accepted the Bank's offer to discount the leases at 15 1/2%. Between May 15, 1980, and June 1, 1980, Comdisco submitted 19 additional leases to the Bank, requesting a discount rate of 13 1/2%. On or about June 1, 1980, the Bank orally confirmed it would discount the leases. Comdisco sent a letter to the Bank, dated June 3, 1980, which recapped the status of "various transactions." After a drop in interest rates, Comdisco requested the 15 1/2% interest rate of the first group of leases be lowered. The Bank refused "to modify its agreement with Comdisco" in that respect. Comdisco then "failed to comply with its obligation to discount" the leases with the Bank.

In count II the Bank incorporates the facts stated in count I and further alleges that Comdisco "wilfully and intentionally" discounted the leases with private investors at lower interest rates, that such actions deprived the Bank of the benefits of its agreement and that Comdisco was unjustly enriched.

Count III includes the facts alleged in both counts I and II and further alleges that Comdisco planned and schemed to benefit from the drop in interest rates and that Comdisco misrepresented its commitment to discount leases with the Bank. Both counts II and III seek compensatory and punitive damages and costs of the litigation.

Attached to the amended complaint is the letter dated June 3, 1980, from Comdisco to the Bank. By its own language, this letter "recap[s] the status of various transactions recently committed to by the Bank of Lincolnwood along with anticipated funding dates." The letter contains a list of 20 leases, the interest rate, estimated proceeds and anticipated funding date for each lease.

Without filing an answer, Comdisco moved to dismiss the amended complaint. Based on section 45 of the Civil Practice Act (Ill. Rev. Stat. 1979, ch. 110, par. 45), now section 2-615 of the Civil Practice Law (Ill. Rev. Stat. 1981, ch. 110, par. 2-615), the motion attacked the amended complaint as substantially insufficient at law. After hearing arguments, the trial court granted the motion.

• 1 The Bank contends that a lender has a valid cause of action for breach of contract against a borrower who breaches a commitment to borrow. Comdisco's position is that no such remedy exists. The Bank argues that courts> have long recognized that a cause of action exists for recovery against a borrower who fails to honor his commitment to borrow, citing Walter E. Heller & Co. v. American Flyers Airline Corp. (2d Cir. 1972), 459 F.2d 896.

Illinois cases appear to be in agreement with the Bank's contention. In H.F. Philipsborn & Co. v. Suson (1974), 59 Ill.2d 465, 322 N.E.2d 45, a borrower deposited promissory notes with a loan application. After the borrower went elsewhere for a loan, the lender sued. In affirming a judgment for the lender on the notes, the supreme court said (59 Ill.2d 465, 473):

"The purpose of depositing the notes in lieu of the standby fee was to obtain the commitment from the lender that the mortgage funds would be made available in accordance with the terms of the loan agreement. The record shows that such commitment was obtained, and when [the borrower] breached its agreement to borrow the money thus committed, plaintiff was entitled to demand payment of the notes. We have considered Suson's contentions that there was no consideration for the standby fee and that it cannot be recovered by plaintiff for the reason that it was a penalty, and not liquidated damages, and find them to be without merit."

Likewise, this court has recognized that a lender may incur damages when it promises to commit a specified sum of money for a specified time. (Applegate-Leason & Co. v. Reilly (1978), 61 Ill. App.3d 120, 377 N.E.2d 1135.) There, we found the borrower promised to pay a service charge in consideration of the lender's promise to commit funds for a specified time; thus the lender was entitled to demand payment of the service charge when the borrower breached his agreement to borrow. 61 Ill. App.3d 120, 123-24.

A common denominator in this type of case is the existence of a contract, a commitment agreement or a loan application. The binding effect of an oral loan commitment, however, was recognized in Coastland Corp. v. Third National Mortgage Co. (4th Cir. 1979), 611 F.2d 969. In that case, a borrower sought damages from a lender for a breach of an oral commitment to provide construction financing. The court upheld an award of damages for one-half of the expenses the lender knew the borrower incurred in preparing for its construction project. 611 F.2d 969, 979.

From the above authorities, we hold that a lender may have a cause of action when a borrower breaches a loan agreement, whether oral or written.

The controlling question before us is whether the Bank's amended complaint states a cause of action against Comdisco. We have passed on the legal sufficiency of count I above. Next, we address the issue of whether this count is factually sufficient. To be factually sufficient, a complaint must plead facts which bring the claim within the legally recognized cause of actin ...

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