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Mid-city Ind. Sup. Co. v. Horwitz

OPINION FILED MARCH 25, 1985.

MID-CITY INDUSTRIAL SUPPLY COMPANY, PLAINTIFF-APPELLANT,

v.

DONALD HORWITZ, DEFENDANT-APPELLEE.



Appeal from the Circuit Court of Cook County; the Hon. Paul Elward, Judge, presiding.

JUSTICE BUCKLEY DELIVERED THE OPINION OF THE COURT:

Rehearing denied April 25, 1985.

The present appeal arises out of an action brought by plaintiff Mid-City Industrial Supply Company (Mid-City) to recover amounts owed under a purported personal guarantee for the debt of another executed by defendant Donald Horwitz. Plaintiff had previously brought an action against the original debtor, Wesco Products Company, Inc. (Wesco), but Wesco had filed a bankruptcy petition in Federal district court and the proceedings were stayed. Thereafter, plaintiff filed the instant action against Horwitz, the vice-president and a principal stockholder of Wesco. Plaintiff alleged that defendant had previously executed a document personally guaranteeing the debts of the now defunct Wesco Products Company and sought a recovery based on that guarantee. Defendant answered, denying that the document in question was a personal guarantee and alleged that the document was executed by him in his corporate or representative capacity as an agent for Wesco.

The case was tried without a jury. At the close of plaintiff's case in chief, defendant moved for a directed finding under section 2-1110 of the Code of Civil Procedure. (Ill. Rev. Stat. 1983, ch. 110, par. 2-1110.) The trial court granted defendant's motion, specifically finding that plaintiff had failed to satisfy its burden of proof in the following respects: (1) plaintiff failed to establish standing where the present corporate existence of Mid-City was in doubt; (2) plaintiff failed to establish that a demand for payment was ever made on defendant personally; and (3) plaintiff failed to make a prima facie showing that the instrument in question was a personal guarantee of defendant where the mode of execution could only indicate that the guarantee was a corporate obligation of Wesco Products, Inc. Accordingly, judgment was entered in favor of defendant and plaintiff appealed. We reverse and remand for further proceedings.

The record reveals that seven or eight years prior to the commencement of this suit, Mid-City had supplied Wesco with certain gears and other industrial supplies. These components were essential parts in certain universal joints manufactured by Wesco. During 1978 and the early part of 1979, Wesco's account with Mid-City was in arrears because Wesco was consistently unable to make timely payments. As a result, Mid-City stopped shipping supplies.

Being anxious for shipments to resume, Wesco's plant manager, Donald Kellner, contacted Mid-City to see if an agreement could be worked out. He was told that shipments would resume only upon full payment of all outstanding invoices, with payment for future orders to be tendered in advance of delivery. In the alternative, Mid-City would only ship supplies if defendant Horwitz personally guaranteed the debts of Wesco. Kellner told Mid-City to draw up the necessary documents, and a meeting was arranged between Alan Gutman, president of Mid-City, and Donald Horwitz.

The meeting took place on May 17, 1979, with five people in attendance. Gutman and his accounting manager, Almarie Williams, were present for Mid-City and Horwitz, Kellner and two others were present for Wesco. Neither company was represented by an attorney.

Williams testified that she brought two documents to the meeting which she had previously prepared. One was a guaranty contract copied from a preprinted form and the other was a letter describing terms and conditions for payment and delivery of the merchandise. Williams further testified that defendant initially resisted signing the guaranty document but Gutman refused to ship any goods without defendant's personal guarantee. Defendant then agreed to sign the document, but he wanted to make a few changes. The document states in relevant part:

"GUARANTEE

MID-CITY INDUSTRIAL SUPPLY CO. Date May 17, 1979

Gentlemen:

We, the undersigned, for the purpose of inducing MID-CITY INDUSTRIAL SUPPLY CO. (* * * [Seller]) to extend credit to, or accept a contract or purchase order of: Wesco Products Company, 1333 South Cicero, Cicero, Illinois 60650 [Buyer].

* * * hereby jointly and severally guarantee unto said Seller, MID-CITY INDUSTRIAL SUPPLY CO., its successors and assigns, absolutely and unconditionally, the due and prompt payment by the Buyer to said Seller of any and all sums which are now owing or may hereafter become owing, from Buyer to said Seller, and we hereby jointly and severally agree to indemnify and save harmless said Seller against any and all loss, damage and expense of every nature * * * by reason of any and all defaults on the part of the Buyer * * *. The undersigned agrees that its liability hereunder to the Seller shall be absolute upon default by the buyer and that no action against the Buyer by the Seller shall constitute a condition precedent to such liability.

In witness whereof, the undersigned has hereunto set his hand and seal (or caused this instrument to be executed by its duly authorized officer and its corporate seal to ...


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