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Mcgrew v. Mix





Appeal from the Circuit Court of Clay County; the Hon. Frank G. Schniederjon, Judge, presiding.


Plaintiff, William F. McGrew, commenced this action in the circuit court of Clay County to recover $20,545.18 plus 7% interest on a promissory note executed by defendants, Larry Mix, Sandra Mix and Grace Mix. The trial court, sitting without a jury, entered judgment for plaintiff and against Larry and Sandra Mix in the amount of $27,598.11, and entered judgment in favor of Grace Mix and against plaintiff. Defendants' post-trial motion to vacate judgment or, in the alternative, to modify the judgment was denied, and defendants, Larry Mix and Sandra Mix, now appeal. Plaintiff's cross-appeal against defendant, Grace Mix, has been abandoned.

The material facts of this case are uncontroverted. On March 28, 1973, Larry and Sandra Mix, husband and wife, executed a promissory note payable to the First National Bank of Flora, Illinois. The note was in the amount of $26,200 and was payable in installments of $651.84 per month. Interest on the note was set at 8%. The note was payable on demand, or if not demanded, it was to be paid on March 29, 1977.

Grace Mix, mother of Larry Mix, signed as an accommodation party at his request because the collateral offered as security was insufficient. Subsequent to the execution of the note, plaintiff married Grace Mix on November 11, 1973. After the marriage, Grace Mix informed plaintiff that she had co-signed the note.

In March 1975, defendant, Grace Mix, then Grace McGrew, received a letter from Roger Wells, president of the First National Bank, which advised her that payments on the note were in arrears. The letter suggested that she come in with the other co-makers to discuss the arrearage. From March 18, 1975, the arrearage increased from $5,220.40 to $6,775. Sometime during this period, plaintiff saw the letter sent by Mr. Wells to his wife.

Plaintiff discussed the note with Larry Mix, his stepson, but did not tell him or the other defendants that he intended to pay the note. On June 9, 1975, plaintiff went to the bank and paid $20,313.68 in principal and $213.22 in interest. Roger Wells, president of the bank, marked the note "paid, June 9, 1975, R.W.," and gave the note to plaintiff. Plaintiff took the note home and placed it in a dresser drawer.

On June 26, 1975, defendant, Larry Mix, stated to plaintiff that he learned at the bank that plaintiff had paid the note, and inquired about what arrangements would be made for his payment of the note. Defendant wrote out a check to plaintiff for $300 as a payment on the note. Sometime thereafter, the note was delivered by either plaintiff or his wife to Larry and Sandra Mix. Plaintiff testified that this was done so that they would have the note for bookkeeping purposes.

Defendants, Larry and Sandra Mix, made payments on the note on October 30, 1975-$281.57; December 17, 1975-$513.33; January 27, 1976-$513.33, and February 9, 1976-$1,000. Plaintiff and defendant, Grace Mix, were separated on December 29, 1976, and were divorced on April 23, 1979. After plaintiff and Grace Mix were separated in December 1976, defendant Larry Mix stopped making payments on the note. Plaintiff asked defendant, Larry Mix, for payment of the note and when none was forthcoming, brought this suit.

On appeal, defendants, Larry and Sandra Mix, challenge plaintiff's right to recover on the note under the several theories set forth in the complaint. The primary issue for review, we believe, is whether the plaintiff's payment and receipt of the promissory note entitled him to recover on the note from defendants under the Uniform Commercial Code. This case appears to be one of first impression in this State.

At the outset, we note that the trial court's decision implicitly rests upon the finding that plaintiff's payment of the note did not constitute a gift. This conclusion is well-founded upon the record which discloses that plaintiff and defendant, Larry Mix, discussed the note and that defendant testified that he knew that plaintiff expected him to pay on it. Plaintiff's adjustment of the interest on the note from 8% to 7%, and defendants' several payments on the note lend additional support to the court's finding of fact.

The evidence further establishes that on June 9, 1975, plaintiff went to the First National Bank and paid the promissory note which defendants had executed. After receiving this payment, Roger Wells, the bank president, stamped the note "paid," put his initials and the date on it and handed it to plaintiff. On the basis of these facts, plaintiff contends that he acquired the bank's rights in the note including the right to demand payment.

In support of his position, plaintiff cites section 3-603(2) of the Uniform Commercial Code (Ill. Rev. Stat. 1981, ch. 26, par. 3-603(2)) which provides:

"Payment or satisfaction may be made with the consent of the holder by any person including a stranger to the instrument. Surrender of the instrument to such a person gives him the rights of a transferee. (Section 3-201.)"

The rights of a transferee are discussed in section 3-201 of the Uniform Commercial Code (Ill. Rev. ...

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