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01/10/89 Richard Finn Et Al., v. Heritage Bank & Trust

January 10, 1989





533 N.E.2d 539, 178 Ill. App. 3d 609, 127 Ill. Dec. 667 1989.IL.13

Appeal from the Circuit Court of Will County; the Hon. Herman Haase, Judge, presiding.


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


Plaintiff Richard Finn filed suit against the defendant Heritage Bank and Trust Company, Inc. (Heritage), seeking relief from a guaranty Finn signed on a bank loan made by Heritage to Finn's cousin. The trial court entered judgment in favor of Finn, declaring the plaintiff's guaranty null and void.

On appeal Heritage argues the trial court erred in finding there was no consideration for Finn's guarantees for his cousin's loans. Heritage also contends the doctrine of promissory estoppel precluded Finn's rescission, and that Finn's contentions are barred by laches. Because of the view we take with regard to Heritage's consideration argument, it is not necessary to discuss the defendant's remaining contentions.

Thomas F. Guilbault, Finn's cousin, requested a $75,000 loan from Heritage Bank. As a part of the request, Guilbault was required to complete a "personal loan statement." After reviewing the Guilbault file, bank president, and close friend of Finn, John D'Arcy, submitted Guilbault's application to the bank loan committee with the recommendation that the loan request be approved as an unsecured loan. The committee approved the loan, subject to renewal for a second year. In approving the loan the committee did not require a personal guaranty. However, sometime after the loan was approved, John D'Arcy altered the committee's memorandum, making it appear that D'Arcy had recommended the loan's approval provided the loan was guaranteed by Richard and Mary Finn.

From December 1976 to December 1977, the Guilbault loan performed adequately. In December of 1977, Heritage renewed its loan to Guilbault for another three-month period. In early 1978, D'Arcy received a letter Guilbault's attorney stating that Heritage should protect itself because Guilbault was having financial difficulties.

Approximately two months later, in March or April of 1978, D'Arcy called Finn and asked the Finns to come to the bank and sign a guaranty. D'Arcy told Finn that the Federal bank examiners were walking into the bank and that, in light of the letter from Guilbault's attorney, D'Arcy would lose his job without a guaranty in the file. A short time after the call, Finn met D'Arcy in the bank lobby, at which time D'Arcy handed Finn the guaranty, which Finn took home for his wife's signature. Finn and his wife signed the guaranty and returned it that same day. The guaranty was placed in the Guilbault file and was dated December 6, 1976.

The 1977 Guilbault loan was not paid, and on April 12, 1978, Heritage filed suit against Thomas and Beatrice Guilbault. On November 3, 1978, Tom Guilbault filed for bankruptcy. Heritage litigated its claim in the bankruptcy court and obtained a non-dischargeable judgment for $75,000 against Thomas Guilbault. On or about May 1, 1981, Heritage assigned to Finn all of the bank's rights in the $75,000 judgment. In the collection of the judgment against Guilbault and liquidation of assets in the bankruptcy estate Finn received approximately $23,153.70. Finn did not deposit these sums with Heritage.

The Finns obtained their original home mortgage with Heritage. Later it became necessary for the Finns to build an addition on their house, and the Finns approached D'Arcy in regard to obtaining a mortgage to pay off the addition. D'Arcy stated that Heritage would give the Finns a series of construction loans and then provide a junior mortgage for the total loan amounts upon completion.

Sometime prior to July 31, 1980, D'Arcy called Finn and told him that he would have to come to Heritage and "sign off" on the construction loans for his home addition. The new Heritage mortgage Finn signed was for $190,000; this amount included what was due the bank on the Guilbault loans. At trial Finn stated he expressed surprise at the inclusion of the Guilbault debt into his wrap around mortgage, but expected that the money to cover the Guilbault debt would come from the Guilbault bankruptcy estate. From the time the Finns signed the wrap around mortgage, on July 31, 1980, they faithfully made monthly payments to Heritage.

In 1983 and 1984 Finn made repeated inquires of D'Arcy seeking relief from the Guilbault obligation. According to Finn D'Arcy assured Finn that the Guilbault obligation would be "taken care of." However, when the loan was not reduced, Finn filed suit claiming his guaranty was invalid because of a lack of ...

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