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06/17/88 Municipal Trust and v. Grant Park Community

June 17, 1988

MUNICIPAL TRUST AND SAVINGS BANK, PLAINTIFF-APPELLANT

v.

GRANT PARK COMMUNITY DISTRICT NO. 6, DEFENDANT-APPELLEE



APPELLATE COURT OF ILLINOIS, THIRD DISTRICT

525 N.E.2d 255, 171 Ill. App. 3d 289, 121 Ill. Dec. 449 1988.IL.950

Appeal from the Circuit Court of Kankakee County; the Hon. Patrick M. Burns, Judge, presiding.

APPELLATE Judges:

JUSTICE SCOTT delivered the opinion of the court. STOUDER, P.J., and WOMBACHER, J., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE SCOTT

This case comes on appeal from the trial court's decision of August 25, 1987, granting defendant's motion to dismiss plaintiff's second amended complaint.

Plaintiff's second amended complaint alleged as follows: that it was an Illinois banking corporation having its principal place of business in the Village of Bourbonnais, Kankakee County, and that defendant was a unified school district located in Kankakee County; that on or about July 9, 1984, defendant entered into a contract with James Brosseau Roofing and Sheetmetal, Inc. (Brosseau), for work to be done on a building owned by defendant; that on or about March 8, 1984, Brosseau assigned all its right, title and interest in all its present and future accounts receivable to plaintiff and that defendant acknowledged said assignment; and finally, that Brosseau presently owed plaintiff $17,304, which defendant refused to pay. Attached to plaintiff's second amended complaint were copies of the July 9 contract, the March 8 assignment, and the acknowledgment.

The primary issue concerns the document containing the acknowledgment. Defendant asserts that the notice of Brosseau's assignment given by plaintiff was insufficient under section 9-318(3) of the Uniform Commercial Code (Ill. Rev. Stat. 1985, ch. 26, par. 9-318(3)) and, therefore, defendant was not required to make any payments owed to Brosseau after receipt of the letter. The letter sent to defendant by plaintiff was dated May 5, 1984, and stated as follows:

"This is to notify you that we are working with the aforementioned company (Brosseau) and thus would collectively appreciate you making all checks due Jim Brosseau Roofing and Sheetmetal, Inc. payable jointly to Municipal Trust & Savings Bank and Jim Brosseau Roofing and Sheetmetal, Inc. until notice is given to discontinue said practice."

The notice was signed by both a bank officer and Jim Brosseau. On the same document and underneath the notice was the aforementioned acknowledgment which stated: "I, the undersigned, hereby acknowledge the above and will comply with your request." It was signed by Robert W. Dunn on behalf of defendant. We find no dispute regarding whether Mr. Dunn had authority to sign the acknowledgment on behalf of defendant.

Defendant's motion to dismiss the second amended complaint was brought under both sections 2-615 and 2-619 of the Illinois Code of Civil Procedure (Ill. Rev. Stat. 1985, ch. 110, pars. 2-615, 2-619). The trial court, however, in granting defendant's motion ruled that the notice given by plaintiff was insufficient. Therefore, we consider defendant's motion to be allowed pursuant to section 2-615, which permits dismissal where a plaintiff has failed to allege facts sufficient to state a cause of action. (Ill. Rev. Stat. 1985, ch. 110, par. 2-615.) Thus, the procedural issue before this court is whether plaintiff has alleged facts sufficient to state a cause of action. That determination requires us to decide whether defendant received adequate notice of Brosseau's assignment to plaintiff under section 9-318(3) of the Uniform Commercial Code.

Section 9 -- 318(3) states:

"(3) The account debtor is authorized to pay the assignor until the account debtor receives notification that the amount due or to become due has been assigned and that payment is to be made to the assignee. A notification which does not reasonably identify the rights assigned is ineffective. If requested by the account debtor, the assignee must seasonably furnish reasonable proof that the assignment has been made and unless he does so the account debtor may pay the assignor." Ill. Rev. Stat. 1985, ch. 26, par. 9-318(3).

Illinois case law holds that under section 9 -- 318(3) an assignee seeking to enforce its rights under an assignment requires both notification of the assignment and a demand that future payments be made to the assignee. (First Trust & Savings Bank v. Skokie Federal Savings & Loan Association (1984), 126 Ill. App. 3d 42, 466 N.E.2d 1048; First National Bank v. Board of Education, School District No. 189 (1979), 68 Ill. App. 3d 21, 385 N.E.2d 811; First Finance Co. v. Akathiotis (1969), 110 Ill. App. 2d 377, 249 N.E.2d 663.) Accordingly, defendant ...


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