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03/24/87 First National Bank of v. Guerra Construction

March 24, 1987





505 N.E.2d 1373, 153 Ill. App. 3d 662, 106 Ill. Dec. 582 1987.IL.362

Appeal from the Circuit Court of Lake County; the Hon. John L. Hughes, Judge, presiding.


Justice Hopf delivered the opinion of the court. Dunn and Unverzagt, JJ., concur.


Plaintiff, the First National Bank of Antioch, sued three defendants, Guerra Construction Company, Inc.; JVN, Inc.; and Hill-Behan Lumber Company, for payments allegedly due plaintiff under an assignment of accounts receivable which the bank obtained from Midwest Underground-Pierce & Sons, Inc. Of the three defendants, only Hill-Behan Lumber Company (hereafter referred to as defendant) is a party to this appeal. Defendant moved for a directed verdict at the close of plaintiff's evidence, which motion was denied by the trial court. Defendant elected to stand on its motion and presented no evidence at trial. At the close of all the evidence, the court entered judgment for plaintiff, and defendant appeals, contending that the trial court erred in denying its motion for directed verdict because plaintiff failed to introduce sufficient evidence that it mailed the required notice of assignment to defendant.

In 1983, Midwest Underground-Pierce & Sons, Inc. (Midwest) performed excavating and landscaping work for defendant at its Villa Park lumberyard pursuant to a written contract. Defendant made a number of payments under this contract, the last occurring on March 26, 1984. Midwest in turn was indebted to plaintiff for numerous loans made by plaintiff to Midwest. As collateral for these loans, Midwest assigned its accounts receivable, including defendant's, to plaintiff. On November 30, 1983, Midwest defaulted on its obligations to plaintiff. Midwest eventually filed bankruptcy. On November 30, 1983, Louis Korom, a vice-president of plaintiff, compiled a list of corporations he thought might be account debtors of Midwest, seeking to notify them of the assignment and request them to make future payments directly to the bank.

When the bank did not receive the final payment on the Midwest contract from defendant, it filed suit in the circuit court of Lake County on February 6, 1985. At trial, the key issue was whether the bank had properly notified defendant of the assignment from Midwest. After plaintiff's initial presentation of evidence, the court granted defendant's motion for a directed verdict. It then allowed plaintiff to reopen its case and, following additional evidence, denied defendant's renewed directed verdict motion. As previously noted, defendant elected to stand on this motion and presented no evidence. The court eventually found for plaintiff in the amount of $16,759. Defendant appeals, renewing its contention that the evidence was insufficient to prove that the bank sent defendant notice of the assignment as required by law.

Defendant argues that its operations manager, George Schiller, who handled all payments and correspondence under the Midwest contract, never received notice of the assignment from Midwest to the bank. Defendant claims that plaintiff's evidence is insufficient because it demonstrates only plaintiff's customary practice as to mailing and does not show that the practice was followed on this particular occasion. Defendant also contends that plaintiff's exhibit No. 14, tending to corroborate defendant's receipt of the notice, was improperly admitted into evidence and that, if the notice was mailed, mailing was insufficient as a matter of law because it was addressed to Hill-Behan Lumber Company generally and not to George Schiller, who was responsible for the transactions in question. Since defendant questions the sufficiency of the evidence, it is necessary to examine the evidence presented by plaintiff related to mailing of the notice.

Mary Owens testified that she was the supervisor of plaintiff's data processing department. She described the bank's mailing procedures at the relevant time. Mail was taken to the mail operations department by clerks and secretaries, who placed it in one of two bins, one for Antioch mail and one for out-of-town mail. A postal clerk then collected the mail, weighed it, affixed postage with a meter, placed it in postal trays, and took it to the post office. Any mail returned by the post office would be routed to the audit department and would eventually be returned to the person who originated it.

Korom testified that after Midwest defaulted on its obligations to plaintiff, he compiled a list of names of accounts receivable of Midwest for use in mailing notices of assignment. Korom identified the list of 13 such names at trial. He testified that he gave the list to a secretary, who prepared 13 original notices of assignment in duplicate. She then gave them back to Korom, who signed them and returned them to the secretary for mailing. Hill-Behan Lumber Company's correct address appeared on this list, which was admitted into evidence.

The witness corroborated Owens' testimony as to plaintiff's usual mailing procedure. He also stated that the notices were to be sent by regular mail. Korom received a written acknowledgement of the assignment from only one of the 13 names, so he called the others on the list, including defendant. He testified that he spoke with someone at Hill-Behan named Sue, who said the notice had been received.

Korom did not know when or how the notice was received by defendant. He did not mail the assignment himself and did not know who did. He did not know if the correct amount of postage was placed on it or if it was placed in a mailbox.

Korom also identified and testified regarding plaintiff's exhibit No. 14. Plaintiff's No. 14 consisted of two pages stapled together. The first page appeared to be typed on Hill-Behan stationery, was addressed to ...

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