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Rebaque v. Forsythe Racing





Appeal from the Circuit Court of Cook County; the Hon. Edwin M. Berman, Judge, presiding.


Rehearing denied August 7, 1985.

Plaintiff Hector Rebaque, Sr. (Rebaque), filed suit against defendant Forsythe Racing, Inc. (Forsythe Racing), to recover $36,000 the balance due on an automobile he had sold defendant. Defendant, in an attempt to set off the amount it alleged plaintiff owed defendant under a separate contract to provide sponsorship funds in connection with the 1982 Indy Car World Series, filed a counterclaim against plaintiff seeking $175,000. Defendant claimed that its liability for the balance of the contract sale price would be more than offset by the damages it claimed under the separate contract. On cross-motions for summary judgment the trial court entered judgment for plaintiff for the unpaid balance, finding that defendant owned the car. The court also awarded plaintiff prejudgment interest, made its judgment immediately enforceable and denied defendant's subsequent motion to modify the judgment so as not to make its judgment immediately enforceable.

Defendant contends that the trial court improperly found that it could not, as a matter of law, set off against the balance due on the contract of sale any damages it might have sustained because of a breach of the separate contract for sponsorship. It also contends that the trial court improperly allowed prejudgment interest.

The record discloses the following undisputed facts: Forsythe Racing is an Illinois corporation engaged in the business of automobile racing. Gerald R. Forsythe has been its president since 1982. Manuel Medina Ortiz (Medina), Rebaque, Sr., and Hector Rebaque, Jr., all are residents and citizens of Mexico.

In April-May 1982, Forsythe Racing entered into an oral agreement with Medina and the Rebaques under which Rebaque, Jr., was to serve as a race car driver for an Indy-Type race car owned by Forsythe Racing for the 1982 Indy Car World Series. Forsythe Racing agreed to provide the equipment and support staff for the racing team. Forsythe Racing alleged that plaintiff agreed to furnish it in turn with $675,000 in sponsorship funds for the 1982 season. Plaintiff Rebaque, Sr., claims that he was obligated to furnish only $500,000. The amount actually paid to Forsythe Racing by plaintiff was $500,000.

On July 19, 1982, Hector Rebaque, Sr., purchased in Italy a Lamborghini Countach "s", serial No. ZA9C00500CLA12477. The sports car, valued in excess of $70,000, left Italy for the United States on July 27, 1982. Prior to the automobile's arrival in the United States, Rebaque and Gerald Forsythe orally agreed that Forsythe Racing would purchase the automobile from Rebaque for $72,000.

On June 2, 1982, Forsythe Racing paid to Rebaque $36,000 toward the purchase price. Upon the automobile's arrival into the United States, Forsythe Racing took immediate possession of it. On August 4, 1982, Forsythe Racing issued a check to Rebaque for the balance owing on the sales agreement. However, at the request of Rebaque and as a result of Mexican government restrictions on United States funds, Forsythe Racing stopped payment on the check. After the payment was stopped, Forsythe Racing never paid the balance of $36,000 to Rebaque. Forsythe Racing withheld the balance due as a $36,000 credit against an amount it believed Rebaque owed to Forsythe Racing under the sponsorship agreement. Despite Rebaque's repeated requests, Forsythe Racing subsequently refused either to complete payment or to relinquish the Lamborghini.

On March 26, 1984, plaintiff moved for summary judgment against Forsythe Racing, seeking judgment in the amount of $36,000 together with prejudgment interest, arguing that Forsythe Racing had no right to set off its debt to him against its claim against him because such set-off was prohibited by section 2-717 of the Uniform Commercial Code (Ill. Rev. Stat. 1983, ch. 26, par. 2-717). Forsythe Racing also moved for summary judgment in its favor as to seeking declaratory relief to confirm its ownership of the Lamborghini and as to its right to assert a set-off. Forsythe Racing further argued that any judgment, or at a minimum any enforcement of judgment, should await the trial of its counterclaim seeking $175,000 against Rebaque.

On May 15, 1984, the trial court, after arguments on the cross-motions, entered judgment in favor of plaintiff in the amount of $36,000 plus $2,914 for prejudgment interest from October 1, 1982. The court also found Forsythe Racing to have been the lawful owner of the Lamborghini in question since August 4, 1982, and ordered plaintiff to furnish and execute all documents necessary for registration and domestication of that vehicle by Forsythe Racing. The trial court also found that there was no just cause to delay these provisions of its order. In entering judgment in plaintiff's favor, the court held that the right of set-off embodied in sections 2-608 and 2-614 of the Code of Civil Procedure (Ill. Rev. Stat. 1983, ch. 110, pars. 2-608, 2-614) was subject in this case to the limitation on the right of deduction set forth in section 2-717 of the Uniform Commercial Code (Ill. Rev. Stat. 1983, ch. 26, par. 2-717).

On May 23, 1984, Forsythe Racing moved for modification of the May 15 order by deletion of the finding making that order immediately enforceable and appealable. In support of its motion, Forsythe Racing argued that it would be inequitable to permit Rebaque to immediately collect his judgment against it, while its claim against him remained pending, since Rebaque was a nonresident alien without assets in this country sufficient to satisfy any judgment which may be ultimately entered against him. In its motion, defendant offered to post a letter of credit or set aside sufficient funds under court supervision to ensure payment to plaintiff of any net judgment which might be entered in his favor. The trial court denied this motion to modify on May 24, 1984.

• 1 Defendant argues that the trial court improperly refused to allow a set-off from the purchase price based on its claim under the separate sponsorship agreement. We disagree.

Section 2-717 of the Uniform Commercial Code provides (Ill. Rev. Stat. 1983, ...

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