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Midwest Bank & Trust Co. v. Roderick





Appeal from the Circuit Court of Cook County; the Hon. Brian B. Duff, Judge, presiding.


Plaintiff appeals the dismissal of its action for judgment on the unpaid balance of a promissory note. It contends that section 9-504 of the Uniform Commercial Code (Ill. Rev. Stat. 1983, ch. 26, par. 9-504(3)) did not require it to give defendant Roderick notice of the sale of collateral where Roderick's co-debtor, rather than plaintiff, sold the collateral. In the alternative, plaintiff contends that lack of notice is not a complete bar to a deficiency judgment, but instead gives rise to the rebuttable presumption that the value of the collateral was equal to the amount of the debt.

In March 1981, plaintiff loaned $80,000 to Connie's Pizza Systems, Inc. (Connie's), secured by all of Connie's equipment at its Lombard location. The promissory note was executed on behalf of Connie's by defendants Roderick and Stolfe — its secretary and president, respectively — who are also personally liable on the note. The debtors eventually stopped making payments, and Connie's recovered approximately $23,000 by selling some of its equipment. Plaintiff, after applying the proceeds of that sale to the loan, brought an action against Roderick and Stolfe seeking judgment for the amount of the loan outstanding plus interest. Stolfe was never served, and Roderick moved to dismiss — alleging that the bank repossessed and sold the collateral without notifying him of the sale. The trial court granted Roderick's motion, and this appeal followed. After oral argument in this court, plaintiff moved to rearrange Stolfe as plaintiff-appellant, pursuant to Supreme Court Rule 366 (87 Ill.2d R. 366), because it had assigned its interest in the note and in the remaining collateral to Stolfe.


• 1 We first address the motion to rearrange the parties. Supreme Court Rule 366 grants a reviewing court the discretionary power to substitute or rearrange parties by reason of assignment, and we note that we are to do so on such terms as we deem just. 87 Ill.2d R. 366(a)(2); see also Ill. Rev. Stat. 1983, ch. 110, par. 2-1008(a).

Roderick correctly observes that this court has not been properly informed of the details surrounding the assignment to Stolfe, and we have previously stated that attorneys owe this court a duty to present a record "in such form that it may be understandingly read without wading through a maze of doubt as to what was done and what was intended in a given matter." (Norek v. Herold (1975), 31 Ill. App.3d 514, 520-21, 334 N.E.2d 220, 225, quoting Vick v. Illinois Banker's Life Association (1934), 276 Ill. App. 432, 436.) This well-established principle is equally applicable to the present situation, where the bank is asking us to exercise our discretion on a motion filed after oral argument without providing us with information necessary for us to determine whether there should be such a rearrangement. Taking into consideration the scarcity of facts before us concerning the assignment, the nature of the original notice issue, and the fact that nothing further needs to be done in this appeal by the parties, we believe it is more appropriate to proceed with the parties as presently aligned, and we therefore deny plaintiff's motion to rearrange defendant Stolfe as plaintiff-appellant.

• 2, 3 In addition to opposing plaintiff's motion to rearrange, Roderick also asks this court to dismiss the appeal as moot. He argues in his response to the motion to rearrange that Stolfe may properly bring an action for contribution, but — as co-maker — cannot maintain an action on the note. Interestingly, this argument demonstrates the necessity of proceeding with this appeal as briefed, because an action for contribution does not exist unless the party who brings the action paid more than his share of the joint indebtedness or would be liable to the original plaintiff for the debt. (Cunningham v. Lawrence (1959), 16 Ill.2d 201, 157 N.E.2d 50; see also Roberts v. Heilgeist (1984), 124 Ill. App.3d 1082, 465 N.E.2d 658.) Thus, even if we were to find that this appeal is moot, a finding which we do not make, *fn1 we could not dismiss this appeal and leave in effect an erroneous order which might adversely affect the rights of the parties. See Kohan v. Rimland School for Autistic Children (1981), 102 Ill. App.3d 524, 430 N.E.2d 139.

• 4 Although we will not go into an extensive discussion of the other defenses raised by Roderick at this time, we do note that — as co-maker — he expressly consented to any renewal, extension, or modification of the note and, on the basis of such language in the note, the defense of discharge (Ill. Rev. Stat. 1983, ch. 26, par. 3-601) upon which Roderick also relies in asking for dismissal may not be available to him. (See American National Bank v. Warner (1984), 127 Ill. App.3d 203, 468 N.E.2d 184.) We therefore cannot find, on the record before us, that this appeal must be dismissed, and we will not speculate regarding other defenses available to Roderick. Upon remand, it is within the discretion of the trial court to allow Stolfe to be substituted as plaintiff pursuant to section 2-1008 of the Code of Civil Procedure (Ill. Rev. Stat. 1983, ch. 110, par. 2-1008), and any defenses available to Roderick would more appropriately be addressed at the trial court level after the facts surrounding the assignment are known.

• 5 We proceed, then, to plaintiff's contention that it was not required by the statute to give notice of the sale of the collateral where it was not the seller. Roderick argues that plaintiff cannot collect a deficiency judgment *fn2 because the statute which establishes the secured party's right to dispose of collateral after default also provides that "reasonable notification of the time and place of any public sale or reasonable notification of the time after which any private sale or other intended disposition is to be made shall be sent by the secured party to the debtor" (Ill. Rev. Stat. 1983, ch. 26, par. 9-504(3)), and the parties here agree that no notice was sent by plaintiff to Roderick, a debtor. We note also that in his affidavit, Roderick stated he was vice president and secretary of Connie's at the time the collateral was sold and his mailing address was Evergreen, Colorado; that he received correspondence regarding the note from plaintiff at his Colorado address; but that he received no notice of the sale of the equipment.

The record indicates that Roderick's argument and the subsequent trial court decision emphasized the duty of a selling-secured-party to notify each of the debtors. Plaintiff does not disagree with such an interpretation, and the issue on appeal here is whether the notice requirement of section 9-504(3) applies to a secured party who does not actually dispose of the collateral. We believe it is clear that section 9-504 applies only to a disposition effected by the secured party. The captions of the Uniform Commercial Code, as enacted by the Illinois legislature, are parts of the Act (Ill. Rev. Stat. 1983, ch. 26, par. 1-109), and the caption of section 9-504 states: "Secured party's right to dispose of collateral after default — Effect of disposition." (Emphasis added.) (Ill. Rev. Stat. 1983, ch. 26, par. 9-504.) Nowhere in the body of the section is reference made to disposition by any other party, and since "[a] construction of a statute, variant from the strict and literal meaning, is justified only upon the ground that it effectuates the intention of the legislature manifestly disclosed by a consideration of the whole context" (emphasis added) (Davis v. Bughdadi (1983), 120 Ill. App.3d 236, 241, 458 N.E.2d 177, 180), we do not believe section 9-504 may be interpreted to include dispositions otherwise not within the statute which are neither specifically referred to in the body of the statute nor encompassed by the caption.

Although our research has found little case law which specifically addresses the application of the notice requirement where the collateral was not disposed of by the secured party, courts presented with the issue have generally rejected such an interpretation with little comment. (See Lewis v. Mount Greenwood Bank (1980), 91 Ill. App.3d 481, 414 N.E.2d 1079; see also Krueger v. Bank of America National Trust & Savings Association (1983), 145 Cal.App.3d 204, 193 Cal.Rptr. 322.) Apparently, the parties' search was even less fruitful, because no authority whatsoever has been cited by either party. At oral argument, Roderick referred us to cases cited in his brief which concerned impairment of collateral, but we note that the defense of impairment of collateral (Ill. Rev. Stat. 1983, ch. 26, par. 3-606) is not available to Roderick as a co-maker of the note (Main Bank v. Baker (1981), 86 Ill.2d 188, 427 N.E.2d 94), and thus the analogy offered by Roderick lends little support to his argument.

Roderick himself agrees with the basic interpretation of section 9-504, because he initially brought his motion to dismiss based on an allegation that the secured creditor repossessed the collateral and began to sell it. When he discovered that the bank had merely consented to the debtor's request to be allowed to sell the equipment, however, Roderick attempted to bring the sale within the statute with two alternative arguments.

• 6 His first argument is that the section 9-504(3) notice requirements cover "other intended dispositions" and therefore cover a situation where a party other than the secured creditor makes the disposition, including, as here, the debtor's selling the equipment in an attempt to pay the loan. However, we may not adopt an interpretation of the statute which would have the effect of making the legislature say what it has not said (Davis v. Bughdadi (1983), 120 Ill. App.3d 236, 458 N.E.2d 177), and the language of section 9-504 neither expressly indicates nor implicitly implies that the legislature intended the interpretation advanced by Roderick.

"A statute which directs responsibility to an identifiable person speaks with greater force and vigor. To say that `[w]henever a structure is in disrepair it shall be destroyed' requires an unnecessary amount of conjecture and interpretation. Who shall determine when it is in disrepair? Who shall destroy it? The draftsman should have determined these questions ...

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