Appeal from the Circuit Court of Winnebago County; the Hon.
Alan W. Cargerman, Judge, presiding.
JUSTICE UNVERZAGT DELIVERED THE OPINION OF THE COURT:
Rehearing denied November 10, 1983.
The plaintiff, Beynon Building Corporation, appeals a judgment denying its complaint for a release from a mortgage held consecutively by the defendants, Rockford Mortgage Company (hereinafter Rockford) and National Guardian Life Insurance Company (hereinafter National), and reforming the mortgage and note secured by the mortgage. Although Rockford was named as a defendant, it was no longer in business and did not participate in the lawsuit. The following issues are presented for review:
(1) Whether the trial court erred in denying the plaintiff's motion to strike National's affirmative defenses.
(2) Whether the affirmative defense of mistake and the prayer for reformation were barred by the statute of limitations or by laches.
(3) Whether the affirmative defense of mistake and the prayer for reformation were barred by the statute of frauds.
(4) Whether National met its burden of proving that a mistake was in fact made on the mortgage and note.
On October 23, 1964, the plaintiff executed a mortgage and note with Rockford. The mortgage document provided that the plaintiff would pay:
"the principal sum of Eighty-Five Thousand and no/100 Dollars ($85,000.00) as evidenced by a principal promissory note of even date herewith, payable in 180 equal monthly installments of Six Hundred Forty-Nine and 60/100 Dollars ($649.60) beginning December 15, 1964 and with a final payment November 15, 1979."
The installment note provided that the plaintiff would pay Rockford $85,000 as follows:
"Six Hundred Forty-Nine and 60/100 Dollars on the Fifteenth day of December A.D. 1964; Six Hundred Forty-nine and 60/100 Dollars on the Fifteenth day of each and every month beginning on the Fifteenth day of January A.D. 1965 for 178 months succeeding, and a final payment of Six Hundred Forty-nine and 60/100 Dollars on the Fifteenth day of November A.D., 1979, with interest at the rate of 5 1/2 per cent. per annum, payable Monthly * * *."
Rockford assigned the mortgage and note to National by a document also dated October 23, 1964.
The plaintiff made 178 monthly payments of $649.60. In September 1979, the plaintiff sent National a check for $1,299.20, with an accompanying letter explaining that it was to cover the final two payments and requesting a release of the mortgage. National refused to accept the check as the final payment and sent a reply letter explaining that an error had been made in drafting the original promissory note in that the correct monthly payments should have been $694.60 rather than $649.60.
When further attempts to obtain a release from the mortgage based on the 180th payment failed, the plaintiff filed a complaint for release from the mortgage on January 9, 1980. National filed an answer denying that the payments tendered by the plaintiff were in full payment of the mortgage. National also asserted as an affirmative defense that there was an inadvertent mistake in the amount of monthly payments shown on the note, that the mistake was discovered and in 1965 a new amortization schedule was sent to the plaintiff showing that amortization would take 200 rather than 180 months, and that the plaintiff's former president acknowledged the longer loan term in a letter written to National in 1973. The loan amortization schedule was dated November 18, 1965, and showed that payments of $649.60 at 5 1/2% interest would take 200 months, with the final payment due on August 15, 1981. The letter written ...