Appeal from Circuit Court of Macoupin County. No. 92CH42. Honorable Thomas P. Carmody, Judge Presiding.
As Corrected November 28, 1994. Released for Publication November 28, 1994. Petition for Leave to Appeal Denied February 1, 1995.
Honorable James A. Knecht, J., Honorable Robert J. Steigmann, J., Honorable Frederick S. Green, J., Concurring
The opinion of the court was delivered by: Knecht
JUSTICE KNECHT delivered the opinion of the court:
Plaintiff First National Bank in Staunton (Bank) brought an action to foreclose upon loans made to defendant McBride Chevrolet, Inc., and mortgages and personal guarantees executed by defendants John Michael McBride and Verda McBride (McBrides) to secure the corporation's loans. Defendants filed counterclaims and affirmative defenses alleging the collapse of the corporate business, and resulting defaults on the notes and mortgages, was caused by the wrongful acts of the Bank returning a check from the defendant corporation due to insufficient funds, when one of plaintiff's officers had told defendants the check would be held to await a deposit to make the check good.
The court ruled defendants' counterclaims and affirmative defenses were barred by the Illinois Credit Agreements Act (Act) (815 ILCS 160/0.01 et seq. (West 1992)), and granted plaintiff's motions to dismiss the counterclaims and strike the affirmative defenses. Plaintiff's motion for summary judgment on the corporation's loans, the personal guarantees, and for foreclosure of the property securing the loans was granted. Defendants then filed an appeal with this court arguing the trial court's dismissal of their counterclaims and striking of their affirmative defenses was error since plaintiff's promise to hold a check was not a "credit agreement" within the meaning of the Act.
For purposes of this appeal of the dismissal of defendants' counterclaims and striking of their affirmative defenses, the well-pleaded facts of their counterclaims and affirmative defenses are taken as true. Burdinie v. Village of Glendale Heights (1990), 139 Ill. 2d 501, 505, 565 N.E.2d 654, 657, 152 Ill. Dec. 121.
Pursuant to a dealership agreement with General Motors, the McBrides owned and operated McBride Chevrolet, Inc., in Staunton, Illinois, beginning in 1969. They also at some time entered into an arrangement with General Motors Acceptance Corporation (GMAC) for financing. GMAC had a policy which provided if a dealer delivered a check to GMAC which was returned for insufficient funds, GMAC had a right to--and as a routine course of business did--terminate its relationship with the dealer. Such a termination would effectively destroy the business and eliminate the income of the owners of the dealership. Rory Makler, an officer of the Bank, and the Bank were aware of this policy.
From 1970 on, the defendant corporation and the McBrides had an ongoing business relationship with plaintiff. Plaintiff provided business loans to the corporation, secured by mortgages on the business property and personal guarantees of the McBrides and mortgages on their residence. On several occasions plaintiff had informed the McBrides or the corporation of checks written by the corporation which created an overdraft in the corporation's account, and on each occasion plaintiff had allowed the corporation to deposit funds to cover the overdraft.
On Saturday, March 28, 1992, Makler informed defendants the corporation had an overdraft of approximately $20,000 on a check written to GMAC. The McBrides and the corporation were ready, willing, and able to cover the overdraft with a cash receipts deposit of approximately $34,000. Makler informed defendants the check to GMAC would be held until Monday, March 30, 1992, and a deposit to cover the overdraft was not necessary until March 30. This representation was false, as plaintiff returned the check to GMAC for insufficient funds on March 28.
Upon receiving the returned check, GMAC terminated its relationship with defendants. As a result of GMAC's termination of financing, the corporation was forced out of business. With the loss of its income, the corporation was unable to remain current on its payments to plaintiff.
Plaintiff filed a complaint in foreclosure against defendants to collect on the loans, foreclose on the property securing the loans, and enforce the McBrides' personal guarantees. Defendants filed a counterclaim alleging tortious interference with a business relationship, breach of fiduciary duty, breach of implied covenant of good faith and fair dealing, and fraud. The counterclaims were later amended to allege estoppel and wrongful dishonor. Defendants also filed a motion to dismiss. Defendants filed an answer and affirmative defenses alleging wrongful dishonor of the check to GMAC by plaintiff. All the affirmative defenses and counterclaims were based on plaintiff's dishonor of the check to GMAC contrary to its established practice, and contrary to Makler's representation to defendants.
Plaintiff filed a motion to strike defendants' affirmative defenses and a motion to dismiss the counterclaims on the basis that Makler's representation was an oral agreement to extend credit, and claims and defenses based on such an agreement are barred by the Act. Plaintiff also submitted an affidavit from Makler which stated the bank's midnight deadline, beyond which if plaintiff held the check it would become obligated to pay it, with respect to the defendant corporation's check to GMAC was March 28, 1992.
The trial court, in a ruling which included a very helpful summary of the facts and issues involved and the reasoning followed in reaching its decision, held the Act applied to bar defendants' counterclaims and affirmative defenses based on Makler's representation the check to GMAC would be held until March 30, 1992. The court ruled since the bank's midnight deadline was March 28, and holding the check until March 30 would have obligated the bank to pay it, Makler's promise to hold the check was a credit agreement within the coverage of the Act. Since the ...