thereon given in payment of or as security for an antecedent obligation of any kind."
The parties agree that the Plan was not a holder in due course under para. 3-305. Aidem and Utah Mortgage argue that they received no consideration for tendering the check to the Plan, since the only entity owing an obligation to the Plan was Phoenix Homes, by virtue of Phoenix's note and guarantee. See Findings 4-5. The Plan submits that Aidem and Utah Mortgage are wrong. The Plan has presented evidence that Phoenix Homes tendered payment for its debt under the note on August 5, 1985, as indicated by Aidem's release of the mortgage securing the note and the absence of any record of Utah Mortgage's receipt of principal or interest payments after that date. See Finding 5. If in fact Phoenix had paid Utah Mortgage in full for the note in August 1985, at that point Utah Mortgage would have owed the Plan payment in full, by virtue of the parties' assignment agreement. See Finding 4. This obligation would have been an antecedent obligation within the meaning of para. 3-408, and thus Aidem and Utah Mortgage would not be able to establish a defense under para. 3-408.
Aidem and Utah Mortgage have the burden of establishing a defense of lack of consideration under Illinois law. Such evidence "must be of a very clear and cogent nature." See Levin v. 37th St. Drug & Liquors, Inc., 103 Ill. App. 2d 248, 253, 243 N.E.2d 504, 506 (1968). Aidem and Utah Mortgage have not carried their burden on this defense in this case. Their witnesses did not explain why Aidem contemporaneously released the mortgage securing the Phoenix note upon receiving in excess of the principal amount of the note, and why Ridge could not find any record of Utah Mortgage's receipt of principal and interest payments allegedly sent to Utah Mortgage after Aidem had discharged the mortgage. When a party contests a defense of lack of consideration and posits an antecedent obligation, it is up to the party asserting the defense to prove that no such obligation exists. See First National Bank of Elgin v. Achilli, 14 Ill. App. 3d 1, 7, 301 N.E.2d 739, 743 (1973). Aidem and Utah Mortgage have offered no evidence rebutting the Plan's suggestion of an antecedent obligation arising by virtue of Utah Mortgage's receipt of funds in August 1985. Aidem and Utah Mortgage thus have not made out a defense under para. 3-408.
Aidem argues that even if Utah Mortgage is liable for the check, he is not. para. 3-403(2)(b) of the Code provides: "An authorized representative who signs his own name to an instrument except as otherwise established between the immediate parties, is personally obligated if the instrument names the person represented but does not show that the representative signed in a representative capacity. . . ." The check named Utah Mortgage as the entity whom Aidem represented; Aidem did not indicate that he signed the check as Utah Mortgage's representative. See Finding 6. Aidem thus bears the burden of persuading this court that he signed the check in his representative capacity only. See Schwarzwalder v. Waitkoss, 101 Ill. App. 3d 337, 341, 428 N.E.2d 633, 636, 57 Ill. Dec. 83 (1981); Millstadt Drilling, Inc. v. So. Ill. Explor. Co., 135 Ill. App. 3d 85, 91, 481 N.E.2d 872, 876, 90 Ill. Dec. 72 (1985).
As noted in Finding 6, an agent for the Plan, Stuart Snider, understood that Utah Mortgage, and not Aidem personally, was liable to the Plan for any payments received from Phoenix Homes in the parties' arrangement. The Plan understood this from the written documents which evidenced the transaction, and Aidem never told Snider anything different when Aidem tendered the Utah Mortgage check to the plan. The court thus holds that Aidem has carried his burden in showing that the Plan understood when it received the check that it was Utah Mortgage's, not Aidem's own. *
The Plan last seeks costs and expenses, including attorneys fees and interest, for prosecuting this action. para. 3-806 of Illinois's version of the Code provides in part:
Any person who issues a check . . . which is not honored upon presentment because the drawer does not have an account with the drawee, or because the drawer does not have sufficient funds in his account, . . . shall be liable in the amount of $ 10, or for all costs and expenses, including reasonable attorney's fees, incurred by any person in connection with the collection of the amount for which such check . . . was written, whichever is greater, and shall be liable for interest upon the amount of such check . . . at the rate [of 9% per annum].
This court has found that there were insufficient funds in the Utah Mortgage Escrow Account to pay the check in dispute here, and that upon presentment the account was closed. See Findings 8-9. By the terms of the statute, the Plan is entitled to costs and expenses, including attorneys fees and interest. Utah Mortgage contends that this court should not allow attorneys fees and costs in this case, as it raised a defense to the Plan's claims in good faith. Utah Mortgage fails to indicate, however, which statutes or Illinois decisions allow a good faith defense to para. 3-408. Since this court presides over this case solely by its diversity jurisdiction, the court hesitates to create exceptions to Illinois statutes absent some argument that the Illinois Supreme Court would concur.
The court enters judgment in favor of Aidem and against the Plan on the Plan's complaint, as amended. The court enters judgment against Utah Mortgage and in favor of the Plan in the amount of $ 39,494.00, plus interest at the statutory rate. The court orders the Plan to submit a verified petition of costs and expenses, including attorneys fees.
DATE: April 19, 1990
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