Bank of Marion v. Robert 'Chick' Fritz, Inc.
| Decision Date | 29 March 1974 |
| Docket Number | No. 45683,45683 |
| Citation | 311 N.E.2d 138,57 Ill.2d 120 |
| Parties | The BANK OF MARION, Appellant, v. ROBERT 'CHICK' FRITZ, INC., Appellee. |
| Court | Illinois Supreme Court |
Fowler & Novick, Marion, for appellant.
Sam S. Pessin, Belleville, for appellee.
This case involves an action by the Bank of Marion for damages for breach of an alleged contract. A jury verdict was returned in favor of the defendant in the circuit court of Williamson County. The trial court then entered a judgment notwithstanding the verdict for $25,567.92 in favor of the plaintiff. The trial court also conditionally ruled that in case of the reversal of its order a new trial be granted to the plaintiff. The appellate court reversed the judgment notwithstanding the verdict and the conditional order granting a new trial and reinstated the jury verdict. (9 Ill.App.3d 102, 291 N.E.2d 836.) We granted leave to appeal.
The defendant is a beer distributor. In 1969 it contracted with Diversified Contractors, Inc., for the construction of a warehouse. Diversified had difficulty in securing financing for the construction project. To overcome this financing difficulty, the plaintiff Bank and Diversified agreed that the Bank would advance construction funds if Diversified secured a promise from the defendant to make the periodic payments due under the construction contract jointly to Diversified and the Bank. Diversified then succeeded in having defendant's president, Fritz, sign the following instrument:
This certification of contract is to confirm the contract between our company and Diversified Contractors, Inc., for the contract amount of $111,664.00--plus extras to date of $3,745.00--for a total of $115,409.00. The total amount plus any other extras and/or deletions will be made Jointly to the Bank of Marion and Diversified Contractors, Inc.
Signed:
ROBERT 'CHICK' FRITZ, INC.
Diversified delivered this instrument to the Bank, which then made the construction loans. However, none of the warehouse payments were ever paid jointly to Diversified and the Bank; all payments were made directly to Diversified. Diversified eventually defaulted in its loan repayments and the Bank sued the defendant, claiming that because of the defendant's failure to make its payments jointly to Diversified and the Bank, it had suffered $34,697.28 in damages.
Fritz testified that he signed the instrument without reading it and did not know that it would be used to induce the Bank to make a loan to Diversified. According to his testimony the instrument was presented to him by Robert Morgan, vice president of Diversified, while he was busy at the plant. Morgan allegedly said that the Bank wanted assurances that Diversified was completing its contract with the defendant. It wanted to know where the defendant was working and what it was doing. Fritz accepted this explanation and signed the paper without reading it. The defendant did not receive a copy of the instrument and prior to Diversified's default the Bank never informed defendant that the instrument had been delivered to it nor did it inform the defendant that it had advanced money in reliance on the instrument.
A reading of this instrument, however, clearly shows that standing alone it does not constitute a contract. The instrument recites no consideration flowing from the Bank to the defendant. The only promise which the instrument contains is the statement of the defendant that it would make joint payments to the Bank and Diversified. It is elementary that an executory agreement without consideration cannot be enforced either in law or equity. (Moehling v. W. E. O'Neil Construction Co., 20 Ill.2d 255, 265, 170 N.E.2d 100.) However, the Bank advances several theories in support of its argument that the instrument is binding.
The Bank first contends that it gave consideration for the promise of the defendant when it made loans in reliance upon the instrument. However, the consideration which will support an action on a unilateral promise must be the bargained-for consideration. 'it is only where the defendant has had the benefit of the consideration for which he bargained that he can be held bound.' (Richardson v. Hardwick, 106 U.S. 252, 1 S.Ct. 213, 27 L.Ed. 145; see also 17 Am.Jur.2d, Contracts, sec. 86 (1964); Restatement of Contracts, sec. 75 (1932).) The making of the loan would be consideration for the promise of joint payment if the defendant had bargained for such action by the Bank. In that case a unilateral contract would have been formed. The consideration would have been given by the plaintiff when the loans were made. However, according to the uncontradicted testimony of the defendant's president he had no knowledge that the instrument which he signed would be used or that it was in fact used to induce bank loans. The Bank may have conveyed this information to Morgan, the vice president of Diversified, but neither Morgan nor the Bank conveyed this information to the defendant.
Although there may be absent a bargained-for consideration, a person who makes a promise may nonetheless be bound by its terms. The Restatement of Contracts states the situation in this manner: 'A promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise.' (Restatement of Contracts, sec. 90 (1932).) This is generally referred to as the doctrine of promissory estoppel and is usually considered as a substitute for consideration or an exception to its ordinary requirements. (Estate of Beatty v. Western College, 177 Ill. 280, 293, 52 N.E....
To continue reading
Request your trial
-
Wigod v. Wells Fargo Bank, N.A.
...is lacking.” Dumas v. Infinity Broadcasting Corp., 416 F.3d 671, 677 (7th Cir.2005), citing Bank of Marion v. Robert “Chick” Fritz, Inc., 57 Ill.2d 120, 311 N.E.2d 138 (1974). The doctrine is “commonly explained as promoting the same purposes as the tort of misrepresentation: punishing or d......
-
Matthews v. Chi. Transit Auth.
...of a contract exist (offer, acceptance, and mutual assent), but consideration is lacking. See Bank of Marion v. Robert “Chick” Fritz, Inc., 57 Ill.2d 120, 124, 311 N.E.2d 138 (1974) ; see also Dumas v. Infinity Broadcasting Corp., 416 F.3d 671, 677 (7th Cir.2005) (citing Bank of Marion, 57 ......
-
Quake Const., Inc. v. American Airlines, Inc.
...detriment. (Yardley v. Yardley (1985), 137 Ill.App.3d 747, 754, 92 Ill.Dec. 142, 484 N.E.2d 873; see Bank of Marion v. Robert "Chick" Fritz, Inc. (1974), 57 Ill.2d 120, 124, 311 N.E.2d 138.) Plaintiff's reliance must be reasonable and justifiable. (S.N. Nielsen, 32 Ill.App.3d at 944, 337 N.......
-
Local 165, Intern. Broth. of Elec. Workers, AFL-CIO v. Bradley
...burden of proof. (See Bank of Marion v. Robert "Chick" Fritz, Inc. (1972), 9 Ill.App.3d 102, 108, 291 N.E.2d 836, 840, aff'd (1974), 57 Ill.2d 120, 311 N.E.2d 138.) Defendants contend, in essence, that summary judgment was premature because plaintiff has not yet produced sufficient evidence......