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12/31/87 Daniel J. Mcclellan, Indiv v. Banc Midwest

December 31, 1987

DANIEL J. MCCLELLAN, INDI

v.

AND F/D/B/A HYBRID SEEDS, INC., ET AL., PLAINTIFFS-APPELLANTS,

v.

BANC MIDWEST, MCLEAN COUNTY, N.A., F/K/A CORN BELT BANK, DEFENDANT-APPELLEE



APPELLATE COURT OF ILLINOIS, FOURTH DISTRICT

517 N.E.2d 762, 164 Ill. App. 3d 304, 115 Ill. Dec. 351 1987.IL.2000

Appeal from the Circuit Court of McLean County; the Hon. Luther H. Dearborn, Judge, presiding.

APPELLATE Judges:

JUSTICE LUND delivered the opinion of the court. GREEN, P.J., and SPITZ, J., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE LUND

On motion of defendant Banc Midwest (bank), the circuit court of McLean County dismissed plaintiffs Daniel McClellan, Marialys McClellan and Hybrid Seeds, Inc.'s, amended complaint. Plaintiffs appeal.

The various counts of the complaint refer to an alleged agreement between the bank as lender and Daniel J. McClellan, Marialys McClellan, John P. Mathias, Barbara Mathias, and Hybrid Seeds, Inc., as borrowers. The financing was connected to the 1979 purchase by McClellans and Mathiases of Hybrid Seeds, Inc., an Iowa corporation. Counts I and II of the complaint are based upon breach of oral contract. The crux of the plaintiffs' allegation in these counts is that defendant violated its agreement to loan the contract price for Hybrid Seeds, Inc., in the amount of $760,000 over a period of seven years at the rate of $108,571.43 per year plus the yearly contract interest of 6% on the remaining balance. In essence, it was also alleged that the bank agreed to provide long-term financing for the operation of the seed business "as needed." It allegedly was understood that the business would eventually become profitable and that operation loans would continue until the profitability was established. There was an agreement as to the method of determining the rate of interest, and security was furnished.

According to the allegations, the initial one-year note was executed on December 3, 1979, in the amount $600,000. Various sums of money were borrowed pursuant to the agreement. Over the years, $1,455,000 was paid on principal, and $465,792.28 was paid as interest. In mid-1984, Hybrid Seeds was requested to reduce its then outstanding debt from $950,000 to $500,000. Subsequently, as will be explained later in this opinion, additional funds were advanced by the bank, but on or about February 1, 1985, the bank discontinued its relationship with the plaintiffs, calling all loans.

In considering a motion to dismiss, all well-pleaded facts, as well as the reasonable inferences which may be drawn from those facts, are taken as true. (Morrow v. L. A. Goldschmidt Associates, Inc. (1984), 126 Ill. App. 3d 1089, 468 N.E.2d 414.) Allegations of the complaint are to be interpreted in the light most favorable to the plaintiff. Denkewalter v. Wolberg (1980), 82 Ill. App. 3d 569, 402 N.E.2d 885.

A complaint based upon breach of contract must allege the existence of the contract purportedly breached by the defendant; the plaintiff's performance of all contractual conditions required of him; the fact of the defendant's alleged breach; and the existence of damages as a consequence. (Martin-Trigona v. Bloomington Federal Savings & Loan Association (1981), 101 Ill. App. 3d 943, 946, 428 N.E.2d 1028, 1031; Wait v. First Midwest Bank/Danville (1986), 142 Ill. App. 3d 703, 706, 491 N.E.2d 795, 799.) Allegations demonstrating the existence of a contract must contain facts indicating an offer, acceptance, and consideration. Martin-Trigona, 101 Ill. App. 3d at 946, 428 N.E.2d at 1031; Wait, 142 Ill. App. 3d at 706, 491 N.E.2d at 799.

A valid cause of action for breach of an oral contract to lend money in the future is recognized in Illinois. (142 Ill. App. 3d at 707, 491 N.E.2d at 800; Bank of Lincolnwood v. Comdisco, Inc. (1982), 111 Ill. App. 3d 822, 444 N.E.2d 657.) The plaintiff must show that the alleged agreement contains sufficient definitiveness to be enforceable. (Wait, 142 Ill. App. 3d at 708, 491 N.E.2d at 801; Carrico v. Delp (1986), 141 Ill. App. 3d 684, 688, 490 N.E.2d 972, 975.) In Wait and Carrico, our court cited McErlean v. Union National Bank (1980), 90 Ill. App. 3d 1141, 414 N.E.2d 128, where the court held an agreement to loan money in the future was enforceable only if it contemplated the terms upon which the future loan should be made. That court stated:

"These terms would include, for example, the intended duration of the line of credit; the applicable rate of interest to be charged for any loan emanating from such an agreement, or the basis for how such interest would be ascertained; what duration or date or dates were contemplated for maturity of such loans; and what mode or rate of repayment was contemplated, i.e., whether the entire amount would be repayable or if repayment in installments would be acceptable." (90 Ill. App. 3d at 1146, 414 N.E.2d at 132.)

The trial court in the present case dismissed the complaint due to the failure of the complaint to show these specific terms.

We recognize that in some fact situations "duration" can be inferred based on custom (Wait, 142 Ill. App. 3d at 709, 491 N.E.2d at 801), and part performance of an agreement may remove uncertainty and establish an enforceable contract. (Yoder v. Rock Island Bank (1977), 47 Ill. App. 3d 486, 491, 362 N.E.2d 68, 72.) We do not find that this can be done under the facts alleged in the plaintiffs' complaint.

Plaintiffs are seeking to enforce what is alleged to be an oral agreement to loan funds to pay for and finance a seed corn business. For the agreement to be binding, duration of the financing must be ascertainable. Plaintiffs argue the $760,000 cost was to be paid over seven years, and duration of the financing must then be at least seven years. The complaint does not set forth the payment terms of the "required" annual loans, nor does it provide for the method of paying interest costs. The operation financing, it is argued, must continue until the ...


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