Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

11/10/88 Stanley M. Vermeil, v. Jefferson Trust and

November 10, 1988




Before the second loan was issued, Vermeil and his son met with James Rossnagel, an employee and officer of the bank, on August 15, 1979, to discuss financial arrangements regarding the additional loan. At that meeting Rossnagel indicated that the bank would consider loaning Heartland the additional $350,000 if the Small Business Administration and Vermeil would guarantee the loan.


532 N.E.2d 288, 176 Ill. App. 3d 556, 126 Ill. Dec. 603 1988.IL.1631

Appeal from the Circuit Court of Peoria County; the Hon. Thomas G. Ebel, Judge, presiding.


PRESIDING JUSTICE STOUDER delivered the opinion of the court. HEIPLE and SCOTT, JJ., concur.


Jefferson Trust and Savings Bank of Peoria (the bank) appeals from the judgment entered for Stanley M. Vermeil (Vermeil) on his contract claim, from the dismissal of counts I through III of its counterclaim, from the judgment on the pleadings of counts IV through VI of its counterclaim, and from the judgment striking with prejudice its first and second affirmative defenses. In 1976 the bank entered into a contract with the plaintiff-counterdefendant, Vermeil, who at that time was the president and chairman of the board of the bank, whereby the bank agreed to pay $833 per month to Vermeil upon his retirement. Vermeil subsequently retired, and in April 1981, the bank stopped paying Vermeil the agreed-upon benefits. Vermeil thereupon brought suit against the bank. The bank responded by filing a counterclaim against Vermeil's contract claim. The counterclaim alleges as follows.

In 1979 the bank made two loans totaling $600,000 to Heartland Investments, Inc. (Heartland). Heartland requested the loans for the purpose of remodeling a discotheque known as the Poison Apple, which Heartland owned and operated in Peoria. At the time the loans were made, Vermeil was both an officer, director and shareholder of Heartland as well as a director of the bank and member of the bank's loan committee. Vermeil participated in efforts to obtain both loans from the bank.

The first of the two loans was for $250,000. Heartland's loan application for the $250,000 was approved based upon representations that the funds would be used for remodeling the discotheque, that the bank would obtain a security interest in the furniture, fixtures and equipment, and that the loan would be guaranteed by the principal shareholders of Heartland. Though the loan was disbursed in reliance on these representations, Vermeil did not personally guarantee the loan, nor did he obtain personal guarantees of the loan from any of the other shareholders of Heartland, nor did he notify the bank that the loan was so disbursed.

As of September 1979, Heartland owed its creditors and contractors $500,000 for the renovation work on the discotheque. In proceeding to obtain the additional loan for Heartland, Vermeil did not disclose to the bank the extent of Heartland's liability. Moreover, Vermeil knew that Heartland was not financially prepared to repay an additional loan.

In October 1979, Vermeil, his son, and others provided personal financial statements and SBA statements of personal history to the bank, pursuant to a requirement that all shareholders of Heartland guarantee the proposed loan. Subsequently, Vermeil and his son met again with Rossnagel to finalize negotiations for the loan. At the meeting, Rossnagel and Vermeil orally agreed that Vermeil would personally guarantee the prior $250,000 loan and that the other shareholders, including Vermeil's son and the SBA, would guarantee the $350,000 loan.

In November 1979, the SBA approved Heartland's loan application, and the first $100,000 of the $350,000 was issued. Contrary to the bank's loan policy, however, the disbursement was not presented to the bank's loan committee for approval. Not only was Vermeil aware that the second loan was issued contrary to bank policy, but he also did not provide his written guarantee of the $250,000 loan as he had earlier agreed. Subsequently, the remainder of the $350,000 was disbursed, also without proper approval.

In August of 1980, Heartland defaulted on both of its loans to the bank. The SBA purchased its 90% guaranteed portion of the $350,000 loan, but as of February 25, 1985, Heartland owed the bank $221,081.39 in principal, plus accrued interest on the $250,000 loan, and $30,977.60 in principal, plus accrued interest on its 10% share of the $350,000 loan.

In an attempt to recoup its losses, the new bank president, Lester Cassing, asked Vermeil to sign a guarantee of the $250,000 loan. When Vermeil refused, the bank began, as of April 1981, to apply Vermeil's $833.33 monthly benefits payment toward the debt. Vermeil then brought his breach of contract action against ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.