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Trident Ind. Pr. Corp. v. Am. Nat'l Bank

OPINION FILED NOVEMBER 19, 1986.

TRIDENT INDUSTRIAL PRODUCTS CORPORATION, PLAINTIFF-APPELLANT,

v.

AMERICAN NATIONAL BANK AND TRUST COMPANY, N.A., DEFENDANT-APPELLEE (ST. BERNICE MANUFACTURING COMPANY, DEFENDANT).



Appeal from the Circuit Court of Cook County; the Hon. Richard L. Curry, Judge, presiding.

JUSTICE MCGILLICUDDY DELIVERED THE OPINION OF THE COURT:

Plaintiff, Trident Industrial Products Corporation (Trident), appeals from a judgment order entered March 21, 1985, in favor of the defendant, American National Bank and Trust Company of Chicago, N.A. (American). The following issues are presented for our review: (1) whether the trial court's findings of fact and conclusions of law were manifestly erroneous; (2) whether the trial court abused its discretion in denying Trident's motion to supplement its first amendment to complaint and denying its motion at the close of evidence to file a second amendment to the complaint to conform the pleadings to the proofs; and (3) whether the judgment order entered disposed of all the issues in the cause.

In 1979 St. Bernice was in default of its payment on a promissory note for $330,528.53 to Mercantile National Bank of Chicago, its secured lender. In December 1979 the note was assigned to American, which succeeded to a security interest in St. Bernice's accounts receivable, inventory, and other assets. In late 1980 St. Bernice advised American that it had been awarded a defense contract to manufacture sleeping bags for the United States Air Force. St. Bernice unsuccessfully sought loans from American to allow it to perform the contract and simultaneously pursued other avenues of credit. Trident had previously been one of St. Bernice's material suppliers but had severed its relationship with St. Bernice for nonpayment in the latter part of 1980, at which time it was owed $45,000.

St. Bernice approached Trident about supplying money and materials so that St. Bernice could perform the defense contract, but Trident refused to do so without either a letter of credit or an assignment of the contract proceeds. In September 1980, however, St. Bernice and American reached an agreement whereby the contract proceeds would be assigned to American, which would forward 90% of those proceeds to Trident. In December 1980 Trident started advancing materials to St. Bernice.

The September 1980 agreement was contingent upon cash contributions from outside investors who failed to provide the money, and the agreement was declared void. It was succeeded by a second agreement dated January 19, 1981. The signatories were American, Mercantile Holdings, Inc., and St. Bernice and its principals, David and Marjorie Goldberg. Trident was not a party to either the September 1980 or the January 1981 agreement.

The January 19, 1981, agreement provided that St. Bernice would pay off its indebtedness to American in monthly installments of $6,000 beginning February 19, 1981, and thereafter on the 19th of each month until the debt was extinguished. St. Bernice was to direct its account debtors to remit directly to American all money owed St. Bernice. Such money was to be placed in a special account. St. Bernice also was to assign to American its accounts receivable from the defense contract, which would be placed in the special account. American was authorized to deduct 10% of all funds so collected to credit against the principal balance on the promissory note. American was further authorized to deduct and pay 90% of all funds collected to Trident until notified jointly by Trident and St. Bernice that such payments should be discontinued.

The agreement also provides that the payments authorized "shall be made by [American] without prejudice to any of [American's] rights and remedies which [it] may have on the note against [St. Bernice and/or its principals]." Paragraph 10 of the agreement states: "That in the event of a breach or default by [St. Bernice], or by any of the individual parties hereto, of any of the terms and conditions of this Agreement, such breach or default shall constitute default of the note and guarantees and shall thereupon cause the full aggregate indebtedness of [St. Bernice] * * *, to become immediately due and owing to [American, which] shall be entitled to exercise all rights and remedies available to it."

The Department of the Army Defense Logistics Agency received and acknowledged the notice of assignment from St. Bernice but sent the first payment under the contract directly to St. Bernice. St. Bernice then transmitted 10% of the payment to American and $75,000 to Trident. On February 4, 1981, American received a government payment of $86,844, kept 10% and sent $78,159.60 to Trident.

On February 19, 1981, the first $6,000 installment on the promissory note became due. A notice of default was sent to St. Bernice when the payment was not received. St. Bernice assured American that more money would be forthcoming in the near future. A government check was received on March 9, 1981, from which American deducted $6,000 for the installment which was due on February 19, 1981, and of the remainder, kept 10% and sent 90% to Trident.

From each of the checks for defense contract proceeds received March 16, April 13, and May 22, 1981, American deducted $6,000, and, of the remainder, kept 10% and sent 90% to Trident. From the government check received on June 11 for $91,914, American deducted $6,000 and 10%, sent Trident $59,122.60 and also issued a cashier's check to St. Bernice for $17,600.

On June 30, 1981, American received a government check for $70,332. It kept 10% and remitted 90% to Trident, as no loan payment was due. Between July 1, 1981, and August 30, 1981, American received neither proceeds from the government contract nor the July 19 or August 19 loan payments. On August 20 a demand letter for default of the agreement was sent to St. Bernice and its principals. On September 3, 1981, a default letter was issued. Trident was notified of St. Bernice's default shortly thereafter.

American received more contract proceeds during the months of September and October 1981. Based upon meetings and phone conversations with St. Bernice, it was decided that American would keep 10% of the receipts to credit against the note. Sundry withdrawals in the amount of $10,918.26 were also credited to the note. The balance was transferred to St. Bernice so it could continue its operations. American received no proceeds from the defense contract after October 31, 1981.

On December 24, 1981, Trident filed a complaint in chancery seeking injunctive and declaratory relief, specific performance, and an accounting of the funds collected by American pursuant to the January 19, 1981, agreement. On March 1, 1982, American filed a motion to strike and dismiss the complaint, and to transfer the cause to the law division for want of equity. American's motion to dismiss the complaint was granted on June 29, 1982, and Trident was given leave to replead over American's objection.

On August 17, 1982, Trident filed its first amendment to complaint in chancery for imposition of a constructive trust and other relief. The complaint alleges the creation of an oral agency agreement between American and Trident and the breach of that agency agreement and its attendant fiduciary duty. Trident prays for an accounting and equitable tracing of the funds collected by American from the defense contract. After American's ...


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