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Kennedy v. First National Bank





Appeal from the Circuit Court of Macon County; the Hon. Donald W. Morthland, Judge, presiding.


On September 23, 1983, plaintiff, Samuel F. Kennedy (Kennedy), filed an amended complaint in the circuit court of Macon County, alleging that he had suffered damages as a result of certain actions and representations made by defendant, the First National Bank of Decatur (the bank). Kennedy appeals from an order entered by the trial court granting a motion filed by the bank and dismissing the amended complaint with prejudice. We previously reversed the circuit court's decision in part and affirmed it in part. We then granted defendant's petition for rehearing. Upon further consideration, we affirm the decision of the circuit court in toto.

Kennedy was the president and majority shareholder in an Illinois corporation known as S.F. Kennedy Industries, Inc. (the corporation). On July 14, 1983, Kennedy filed his original complaint against the bank. That complaint was subsequently dismissed on the bank's motion, and Kennedy filed the amended complaint, which contained the following allegations. For approximately two years prior to July 1981, Kennedy and the corporation had maintained a banking relationship with the bank. The bank had extended a $1 million line of credit to the corporation, and Kennedy had personally guaranteed the corporation's line of credit. Kennedy, in his capacity as president of the corporation, had agreed to allow the bank to withdraw from the corporation's demand deposits with the bank the amount of interest which had accrued each month on the corporation's outstanding loans.

The amended complaint further alleged that on July 15, 1981, while Kennedy was engaged in a trial in Indiana, the bank's president advised Kennedy by telephone that the bank desired to demand a portion of the outstanding principal owed by the corporation to the bank and personally guaranteed by Kennedy. Kennedy stated that as soon as he could return from Indiana he would make arrangements to comply with the bank's desires. The bank's president then agreed that the bank "would forebear from any further action" until the Indiana trial was concluded. Subsequently, without further notice to Kennedy or the corporation and "contrary to the [parties'] express and explicit agreement," the bank seized corporate bank accounts, dishonored corporate checks and rendered the corporation unable to pay its current obligations.

The amended complaint also alleged that "as a direct result and consequence of the bank's actions and false representations and assurances," (1) Kennedy's creditors deemed themselves "insecure" and looked to Kennedy "to pay accelerated obligations and sums otherwise not yet due," (2) Kennedy's creditors sued him, seized his property, levied on his property and "ravaged and plundered" his estate, and "impaired and destroyed" his other business and opportunities, and (3) Kennedy incurred damages exceeding $1 million "to his business, property and credit."

In the amended complaint, Kennedy (1) stated that the injuries "herein complained of have been inflicted on [Kennedy] personally, and are completely separate from and not intended to reflect any injuries" suffered by the corporation, and (2) explicitly disclaimed any damages reflecting injuries to the corporation.

Although counts I and II each request compensatory damages, count II further alleges that Kennedy's business reputation was impaired. Count III alleges that the bank's alleged actions were wilful and requests punitive damages.

The bank filed a motion to dismiss on September 30, 1983, asserting that (1) the cause of action was barred by the doctrine of res judicata, (2) the cause of action was barred by the statute of limitations, and (3) Kennedy did not have the legal capacity to sue because the cause of action was the property of the trustee in bankruptcy.

Prior to the hearing on the motion to dismiss, the bank filed an affidavit in support of its motion stating that the United States Bankruptcy Court for the Central District of Illinois had entered an order on October 12, 1983, in a proceeding in which the bank was plaintiff and Kennedy and the trustee in bankruptcy of the corporation and related companies were defendants. In that case the bank sought to recover on the corporation's indebtedness which Kennedy had guaranteed. In the order, a copy of which was attached to the affidavit, the Bankruptcy Court determined that the corporation's trustee in bankruptcy did not have a cause of action, counterclaim, or setoff against the bank in connection with any of the activities between the corporation and the bank, relating to the bank's claims or activities in offsetting corporate bank accounts and dishonoring outstanding corporate checks.

Following a hearing, the trial court dismissed the amended complaint with prejudice. Upon rehearing and after considering the record, we conclude that the trial court properly dismissed the amended complaint.

• 1 In the motion to dismiss, the bank asserted that this cause of action was barred by the doctrine of res judicata based upon a prior judgment entered by the circuit court of Macon County in an action between the same parties. In the previous action, the bank obtained a judgment by confession on a note of the corporation which was guaranteed by Kennedy, individually. Kennedy subsequently filed a motion to open that portion of the judgment by confession relating to the award of attorney fees (87 Ill.2d R. 276).

We note that although Kennedy could have filed a counterclaim in the previous action asserting the same cause of action as that alleged here, he was not required to do so. Section 2-608(a) of the Code of Civil Procedure (Ill. Rev. Stat. 1983, ch. 110, par. 2-608(a)) provides that a defendant may plead a counterclaim against a plaintiff. However, section 2-608(a) does not require a defendant to immediately assert his rights by way of a counterclaim if it would be inconvenient or strategically inadvisable for him to do so. (See Miller v. Bank of Pecatonica (1980), 83 Ill. App.3d 424, 403 N.E.2d 1262.) Here, had Kennedy been injured in a manner permitting recovery, he might not have known the fullest extent of those damages at the time of the prior action.

We also note that the previous case between the parties was based upon a different cause of action and involved different issues than the cause of action and issues alleged in the case at bar. Accordingly, we conclude that the instant cause of action is not barred by the prior judgment by confession obtained by the bank.

• 2 The bank also argued that the instant case was barred by the statute of limitations because the "cause of action [was] asserted more than two years" after it arose. We believe that this argument must fail. We note that although the amended complaint was filed more than two years after the bank's alleged actions which occurred "on or about" July 15, 1981, the original complaint was filed on July 14, 1983, within the two-year period after the cause of action arose. The instant case was not barred by the statute of limitations because the cause of action alleged in the amended ...

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