APPELLATE COURT OF ILLINOIS, SECOND DISTRICT
512 N.E.2d 378, 159 Ill. App. 3d 275, 111 Ill. Dec. 262 1987.IL.1158
Appeal from the Circuit Court of Du Page County; the Hon. Francis W. Faris, Judge, presiding.
JUSTICE NASH delivered the opinion of the court. LINDBERG, P.J., and INGLIS, J., concur.
DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE NASH
Defendants bring this interlocutory appeal pursuant to Supreme Court Rule 307(a)(1) (107 Ill. 2d R. 307(a)(1)) from an order granting a preliminary injunction sought by plaintiffs. The underlying action was brought in October 1986, by the Delcon Group, Inc., a holding company which owns all of the common stock of the other corporate plaintiffs, Kane Environmental Systems, Inc.; Midwest Delta Contractors, Inc.; and Delcon Realty and Development, Inc. Jon C. Ginder, the principal officer and shareholder of the companies, is also named as a plaintiff. For convenience the plaintiffs will be referred to collectively as "Delcon." The defendants are the Northern Trust Corporation, a holding company which owns the other corporate defendant, Northern Trust Bank/Naperville. Hereinafter the corporate defendants will be referred to collectively as "Northern Trust." James V. Zaring, a former vice-president of Northern Trust Bank/Naperville, was also named as a defendant.
Delcon filed a "VERIFIED COMPLAINT IN CHANCERY FOR SPECIFIC PERFORMANCE AND INJUNCTIVE AND OTHER EQUITABLE AND LEGAL RELIEF." This pleading identified the parties involved and set forth a number of paragraphs containing allegations applicable to all counts. Count I was entitled "FRAUD AND MATERIAL MISREPRESENTATIONS" and sought a preliminary injunction enjoining Northern Trust from accelerating a demand note executed by Delcon on December 11, 1985, and any and all other notes relating to Delcon; from taking any action against Jon C. Ginder relating to his guarantee of Delcon's indebtedness to Northern Trust; and from taking any further action against Delcon which would operate to its detriment. Count I also sought $800,000 as actual damages and $1 million as punitive damages against defendants. Count II was captioned "BREACH OF CONTRACT AND SPECIFIC PERFORMANCE" and sought an order directing Northern Trust to specifically perform an alleged contract with Delcon, together with compensatory and punitive damages. Count III was also entitled "BREACH OF CONTRACT AND SPECIFIC PERFORMANCE" in which Delcon sought specific performance, together with compensatory and punitive damages. Count IV was captioned "INTERFERENCE" and alleged interference by defendants with Delcon's contractual relationships and sought a preliminary injunction enjoining Northern Trust from further interfering with Delcon's contractual obligations and requiring Northern Trust to advance the necessary funds for Delcon to perform its contractual obligations. Count V was captioned "BREACH OF FIDUCIARY DUTY" and sought compensatory and punitive damages. Count VI was captioned "BREACH OF CONTRACT" and sought money damages and other relief to which Delcon may be entitled.
Delcon, which engages in the business of commercial and industrial painting, fireproofing, and asbestos removal, essentially sought to enjoin Northern Trust from collecting an amount due under a note and from collecting Delcon accounts receivable which secured payment of the note. Delcon alleged that Northern Trust committed fraud when it failed to extend Delcon's line of credit, breached an oral contract to lend Delcon additional money, wrongfully interfered with the contractual relationships between Delcon and certain school districts when it failed to extend Delcon's line of credit, breached a purported fiduciary duty owed to Delcon which arose in the borrowing transaction, and breached the existing lending agreement with Delcon by wrongfully refusing to include receivables from bonded work in Delcon's borrowing base.
The pertinent facts are as follows: On November 13, 1985, Delcon and Northern Trust entered into a lending agreement under the terms of which Northern Trust agreed to make working capital and equipment financing available to Delcon. Northern Trust agreed to make a line of credit loan of up to 80%, but no more than $300,000, of Delcon's eligible accounts receivable, and further agreed to make a term loan of up to 80%, but no more than $50,000, of the purchase price of machinery and equipment. This line of credit loan was payable by Delcon on demand of Northern Trust, or no later than one year from closing, and the term loan was to be amortized over a period of either 36 or 48 months. The agreement called for the execution of, inter alia, a promissory note and security agreement.
Pursuant to the terms of the lending agreement Delcon executed a master demand note and a security agreement on December 11, 1985. Under the terms of these instruments, Northern Trust obtained a security interest in all assets of Delcon, including inventory and accounts receivable. The security agreement defined "default" as including, inter alia, the failure to pay any liability when due or demanded, and the insolvency of the debtor.
The testimony and exhibits presented in the hearing for preliminary injunction establish that under the lending agreement, master demand note, and security agreement Delcon borrowed $235,000 by the end of June 1986, and in August 1986, Delcon stopped making the payments due under the master demand note. The Delcon balance sheet of August 31, 1986, showed that it was insolvent.
On December 3, 1986, the trial court entered an order for preliminary injunction which enjoined Northern Trust from collecting the $235,000 due under the master demand note executed by Delcon and from collecting the accounts receivable which secured the note. The trial court found as follows:
"Plaintiffs have established a clearly ascertainable right which needs protection, that is, the right to continue the operation of their business.
The Defendant Northern Trust Bank/Naperville has, by its indiscriminant [ sic ] use of notice to the customers and accounts of Plaintiffs virtually stopped the flow of cash due to the Plaintiffs from its customers and accounts. The evidence demonstrated that the dollar amounts of the accounts receivable relating to Plaintiffs' customers and accounts who received such notice, were far in excess of the dollar amounts due the Northern Trust Bank/Naperville from Plaintiffs; that the Northern Trust Bank/Naperville sent such notice to certain customers and accounts of Plaintiffs who did not owe the Plaintiffs any money at the time of such notice; and that such notices were sent at a time when it was questionable whether the ...