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North Shore Community Bank and Trust Co. v. Kollar

March 31, 1999


The opinion of the court was delivered by: Justice Greiman

Appeal from the Circuit Court of Cook County.

Honorable David G. Lichtenstein, Judge Presiding.

Plaintiff North Shore Community Bank and Trust Company (Bank) appeals the dismissal of its one-count complaint, alleging a cause of action pursuant to section 15(a)(1) of the Illinois Rights of Married Persons Act (commonly referred to as the Family Expense Act) (Act) (750 ILCS 65/15(a)(1) (West 1996)) against defendant Mary Ann Kollar for an unpaid promissory note executed by her husband only.

Although the Act was passed in 1874, this appeal raises an issue of first impression as to whether a promissory note falls within the term "family expense" under the Act. We find that borrowed money obtained from a bank and secured by a promissory note does not constitute a family expense and, therefore, one spouse cannot be held responsible for the default of the payment of the note executed by the other spouse under the Act. Thus, we affirm the dismissal of the complaint.

On cross-appeal, defendant asserts that the trial court erred in denying her request for an award of costs, expenses and attorney fees under section 15(a)(3) of the Act (750 ILCS 65/15(a)(3) (West 1996)). We find that the language of section 15(a)(3) is mandatory, not discretionary. Accordingly, we reverse the trial court's order denying such award and remand the matter for a determination of an appropriate amount.

In its one-count complaint, the Bank alleged that defendant was the wife of Robert Jeffs Kollar (Robert), who died on April 19, 1997. Prior to his death, Robert had executed a promissory note in the amount of $150,000 with the Bank in December 1995, due in 90 days. The note, which was attached to the complaint, revealed that it and its three subsequent renewals were signed only by Robert and the collateral for the note was 152,500 shares of stock in BioSolutions, Inc. In 1996, the Bank renewed the note on three consecutive occasions, i.e., March 18, September 18, and December 18. The last renewal was due on April 18, 1997. On April 19, 1997, Robert died, leaving a balance due of $148,777.19.

The Bank alleged that in December 1995, Robert "represented and warranted to" the Bank that the money was "to be used for payment of family tax obligations" and the Bank's purpose "in making the loan to Robert was to facilitate his payment of family tax obligations." The Bank further alleged that Robert had deposited the money into his personal checking account and, with defendant, disbursed the entire sum of the loan. In paragraph 16 the Bank specifically alleged that the proceeds from the Bank's loan "to Robert were, upon information and belief, drawn against and disbursed upon the written directions of Robert and Mary Ann, and were used for family expenses." The Bank listed family expenses as including "payment of taxes, acquisition and maintenance of shelter, home improvement, transportation, medical insurance, food and beverages, travel, legal fees, residential utilities, personal financial services, security services, magazine subscriptions, club expenses, safe deposit box rental, interest and principal payments on personal loans, clothing, support and education of themselves and their [three minor] children." Based on these allegations, the Bank claimed that it was a creditor entitled to recovery of the sums due it from defendant under section 15(a)(1) of the Act.

In response, defendant filed a section 2-615 motion to dismiss (735 ILCS 5/2-615 (West 1996)), alleging that the complaint was substantially insufficient at law. Defendant contended that the Bank, as a mere lender of money, is not entitled to pursue a cause of action under the Act because the Bank merely seeks repayment of a loan, not payment for goods and articles provided to the family. Defendant further stated that the loan was provided by a promissory note executed by Robert only and the Bank's right of recovery for the debt owed by him rests against Robert's estate, not defendant individually.

Following a hearing on June 19, 1998, the trial court granted defendant's motion to dismiss with prejudice. In addition, the order denied "defendant's oral motion for the recovery of costs, expenses and attorney's fees incurred in defending the action, brought in accordance with 750 ILCS 65/15(a)(3)."

Thereafter, the Bank filed a notice of appeal, seeking reversal of the dismissal of its complaint and a finding that it has stated a good cause of action under section 15(a)(1) of the Act. In addition, defendant filed a notice of cross-appeal, seeking a reversal of the denial of costs, expenses and attorney fees and remandment to the trial court for a determination of the amount of costs, expenses and attorney fees to be awarded defendant.

We review de novo the dismissal of a complaint under section 2-615. Vernon v. Schuster, 179 Ill. 2d 338, 344 (1997). We must take as true all well-pled allegations of fact contained in the complaint and construe all reasonable inferences therefrom in favor of the plaintiff. Vernon, 179 Ill. 2d at 341. A section 2-615 motion attacks the legal sufficiency of a complaint, and our inquiry under these circumstances is whether the allegations of the complaint, when viewed in a light most favorable to the plaintiff, are sufficient to state a cause of action upon which relief can be granted. Vernon, 179 Ill. 2d at 344.

As a threshold matter, we reject defendant's contention that the complaint is deficient on its face, arguing that it contains allegations unsupported by any facts. From our review of the complaint, we find that the allegations are adequately pled for the purpose of a section 2- 615 motion. Proof of the factual allegations would be a matter for discovery.

On the direct appeal, the Bank asserts that section 15(a)(1) of the Act entitles a bank to recover from one spouse money borrowed by the other spouse where the money was alleged to have been used for family expenditures. The Bank argues for such result based on the history, text and purpose of the statute. The Bank further maintains that current society, as distinguished from the world of 100 years ago, requires a more expansive interpretation of the Act.

Defendant contends that the Act does not allow a bank to recover on a failed loan from the spouse of the borrower where the spouse was not a party to the loan. Defendant argues that (1) the Act does not apply to the Bank's loan agreement with Robert; (2) borrowed money is not an item for which recovery is contemplated by the ...

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