APPELLATE COURT OF ILLINOIS, THIRD DISTRICT
537 N.E.2d 1109, 181 Ill. App. 3d 1053, 130 Ill. Dec. 780 1989.IL.571
Appeal from the Circuit Court of Tazewell County; the Hon. Bruce W. Black, Judge, presiding.
JUSTICE STOUDER delivered the opinion of the court. WOMBACHER, P.J., and SCOTT, J., concur.
DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE STOUDER
Scott Theede appeals from the judgment of the circuit court of Tazewell County, denying his motion to open a judgment by confession. Theede's affidavit and supplemental affidavit in support of his motion indicate that Theede held a business account with Herget National Bank and was given a $30,000 line of credit. In September of 1986, the bank dishonored a $15,000 check drawn on Theede's business account. When Theede contacted Jerry Towle, a commercial loan officer for the bank, to determine the bank's reason for dishonoring the check, Towle informed Theede that his line of credit was depleted. Thinking that the bank had made a clerical error since he had not used his line of credit, Theede, along with his wife, Barbara, and a friend, Harold O'Hara, met with Towle on September 19, 1986, to discuss the problem.
At the meeting, Theede was shown a computer printout of multiple loans made to his wife secured by promissory notes which bore the signatures of both Theede and his wife. Theede explained that his signatures were not authorized, and he could not get an explanation for the situation from his wife, who "could only cry." Though his friend, O'Hara, was an attorney, he gave Theede no legal advice at the time.
Thereafter, Theede arranged to meet with Towle on September 23, 1986. Theede was concerned about his financial reputation and wanted to convince the bank to honor his check. Towle told Theede that the bank would honor his check if he would sign a promissory note for $60,800, which would consolidate all of the loans made to his wife. Because Theede thought and was led to believe by the bank that he was liable for his wife's debts, and because he was desperate to stay in the livestock business, he signed the $60,800 consolidation note.
When the note became due on March 23, 1987, Theede met with Towle and paid $800 on the principal plus $3,367.32 in interest. Thereafter, Theede sought legal advice and learned that he was not responsible for the debts of his wife. Accordingly, he ceased payment on the note.
In response, the bank, pursuant to a clause in the note, obtained a judgment by confession against Theede on August 4, 1987. Theede first learned of the judgment when he was served by a citation to discover his assets on November 25, 1987. He then filed his motion to open the judgment by confession. When the court denied his motion, he brought this appeal.
The first issue presented by this case is whether the circuit court erred in concluding that the cognovit note was not used in a consumer transaction. Section 2-1301(c) of the Illinois Code of Civil Procedure (the Code) (Ill. Rev. Stat. 1987, ch. 110, par. 1-101 et seq.) provides that any power to confess judgment in an instrument used in a consumer transaction "is null and void and any judgment entered by a court based on such power shall be unenforceable." (Ill. Rev. Stat. 1987, ch. 110, par. 2-1301(c).) The Code further provides that a loan is a "consumer transaction" if it was made "to an individual for purposes that are primarily personal, family, or household." Ill. Rev. Stat. 1987, ch. 110, par. 2- 1301(c).
The pleadings and affidavits filed by both parties indicate that the purpose of the loan at issue was to consolidate prior loans made to Barbara Theede, who allegedly forged her husband's name as comaker on notes evidencing the prior loans. The prior loans are all either renewal notes or consolidation notes or both. While Theede asserts that the purpose of his signing for the loan at issue was personal in nature, he does not deny that most of the proceeds from such prior loans are traceable to deposits made to his business account at the bank. Moreover, Theede admits that one reason for his signing the note was to assure that the bank would honor a check which was drawn on his business account.
While he also asserts that he signed because of his concern for his personal financial reputation, he does not deny that his personal financial reputation is indistinct from his financial reputation as a sole proprietor of Theede Livestock. Thus, other than Theede's bald assertion that the purpose for his signing the note was personal, there is nothing to indicate that the loan was made for any reason other than to maintain his business. Therefore, we agree with the circuit court and conclude that as a matter of law the confession of judgment clause in this promissory note was not used in a consumer transaction such as to render the clause void or the judgment entered thereon unenforceable.
The next issue is whether the circuit court erred in concluding that Theede failed to allege sufficient facts to support his asserted defenses. A trial court's review of a motion to open a judgment by confession examines the legal sufficiency of the well-pleaded allegations of the motion as filed with its accompanying affidavits. (Gleneke v. Lesny (1970), 130 Ill. App. 2d 116, 119, 264 N.E.2d 803, 804-05.) If such allegations disclose a cognizable defense to a judgment by confession, the defendant's motion will be granted and the cause will proceed to a hearing on the defense. (87 Ill. 2d R. 276; Harris Bank Argo v. Midpack Corp. (1986), 151 Ill. App. 3d 293, 294, 502 N.E.2d 1127, 1128.) The plaintiff may file counteraffidavits; however, its allegations are ...