Champaign Nat. Bank v. Landers Seed Co., Inc.

• Decision Date: 21 January 1988
• Docket Number: No. 4-87-0460,4-87-0460
• Citation: 165 Ill.App.3d 1090,519 N.E.2d 957,116 Ill.Dec. 742
• Parties: , 116 Ill.Dec. 742 The CHAMPAIGN NATIONAL BANK, a National Banking Association, Plaintiff-Appellee and Cross-Appellant, v. LANDERS SEED CO., INC., Charles Landers, Glen Landers, Maxine Landers, and Lorelyn Landers, Defendants-Appellants and Cross-Appellees.
• Court: United States Appellate Court of Illinois

Page 957

519 N.E.2d 957

165 Ill.App.3d 1090, 116 Ill.Dec. 742

The CHAMPAIGN NATIONAL BANK, a National Banking Association Plaintiff-Appellee and Cross-Appellant, v. LANDERS SEED CO., INC., Charles Landers, Glen Landers Maxine Landers, and Lorelyn Landers Defendants-Appellants and Cross-Appellees.

No. 4-87-0460.

Appellate Court of Illinois Fourth District.

Jan. 21, 1988.

Rehearing Denied March 16, 1988.

Law Offices of John H. Bisbee, Macomb, for defendants-appellants and cross-appellees; John H. Bisbee, of counsel.

James W. Evans, Ltd., Evans & Froehlich, Champaign, for plaintiff-appellee and cross-appellant.

Justice LUND delivered the opinion of the court:

The plaintiff Champaign National Bank, a national banking association, and defendant Landers Seed Company, Inc., both appeal from a judgment on a jury verdict returned in the circuit court of Moultrie County.

Plaintiff brought an action on a promissory note against defendant, and the jury returned a verdict in favor of the plaintiff for $724,637.37. Defendant counterclaimed on a theory of contract to make future loans, and the jury returned a verdict in favor of defendant, against plaintiff, for $60,833.31. Judgment on the verdicts was entered.

A condensed statement of defendant's position on appeal is (1) the trial court erred in not entering judgment n.o.v. in favor of the defendant because the evidence establishes waiver as to the plaintiff's right to call the debt evidenced by the promissory note; and (2) the verdicts are inconsistent, and the verdict in favor of the plaintiff must be set aside and a new trial granted. Defendant basically claims any judgment against it is against the manifest weight of the evidence.

Plaintiff contends (1) the trial court allowed evidence in violation of the parol evidence rule; (2) the trial court erred in not granting its motion to set aside the judgment in favor of defendant for $60,833.31 as being against the manifest weight of the evidence; and (3) the trial court erred in giving jury instruction No. 23 which provided for consideration of, in plaintiff's opinion, inappropriate items of contract damages.

Defendant was a seed business operated by Charles Landers in Sullivan, Illinois. Plaintiff originally participated in loans defendant obtained through the First National Bank of Sullivan. On August 23, 1982, the plaintiff became a direct lender to defendant, and, at that time, the $1,200,000 representing plaintiff's share of the participating indebtedness to the First National Bank of Sullivan, plus interest due on the $1,200,000 in the amount of $81,126.83, was transferred to a 120-day promissory note due plaintiff from defendant in the amount of $1,281,126.83. This note was secured by various guarantees and mortgages executed by Charles Landers, his wife, his father, and his mother. This note was renewed for 120 days on December 21, 1982, and it is uncontested that the unpaid principal and interest at the time of the verdict was $724,637.37.

The plaintiff called the debt in July 1983, directing liquidation of the corporation. On January 16, 1984, plaintiff filed its complaint seeking judgment on the note. Defendant eventually filed counterclaims which, at trial time, were based on breach of contract, fraud, and bad-faith dealings. The allegations in the counterclaims also resulted in affirmative defenses of waiver, estoppel, and bad faith.

Basically, all of defendant's counterclaims and defenses are based on allegations of promises made to the Landers at the August 23, 1982, meeting where notes and security documents were executed. The alleged commitment was to continue financing Landers Seed Company as long as there was progress towards profitability and a chance at profitability. These so-called promises are the basis for the counterclaim based on contract, as well as the basis for all other defenses and counterclaims.

Some discussion of the evidence is necessary. In answer to a question as to whether Lee O'Neill, the plaintiff's agent, made any representations respecting profitability at the August 23, 1982, meeting, Charles Landers stated:

"As far as any, we didn't talk about any dollars, no. All we talked about was the idea that as long as we made progress towards profitability, had a chance at profitability, paid our interest and worked with Lee, gave him the information he wanted from us that he would not collect on the note."

He further stated in answer to questions:

"A. Well, I think he gave us the assurances at that particular point in time that they would forebear; they would be willing to work with our firm until such time as we became profitable or even had a chance of becoming profitable, as long as we paid the interest and we worked with them and we did the things that they wanted us to do, they were going to stay with us. And he understood that was going to take some time. He understood that might take up to three years.

Q. Did he say up to three years?

A. That was in the discussion and we talked about it and I think he understood and yes, I believe he said it."

According to Charles Landers, the assurances were required before the Landers executed the various documents on August 23, 1982. O'Neill denied the execution of the documents was conditioned on any assurances by him, and he denied offering terms of any kind. He did testify that he had indicated:

"[T]he bank was willing to work with the corporation as long as the corporation was performing and as long as the corporation was moving toward profitability, as long as the financial structure of the corporation and the financial structure of the guarantors was not adversely changed."

We reverse the $60,833.31 judgment against the plaintiff and affirm the $724,637.77 judgment against the defendant for two reasons.

INSUFFICIENT EVIDENCE OF CONTRACT

We are aware that counsel for plaintiff appeared to admit sufficient evidence existed for a jury determination of the fact issue relating to the contract count of the defendant's countercomplaint. However, a contrary argument was made in the brief filed by the plaintiff. We have examined the trial evidence, and for purposes of creating proper precedent, have elected to base our opinion upon the evidence and the law, not upon the opinions of counsel.

The terms of a contract must be reasonably certain. Some terms may be missing or left to be agreed upon, but if the essential term or terms are so uncertain that there is no basis for deciding whether the agreement has been kept or broken, there is no contract. Restatement (Second) of Contracts sec. 33 (1981).

An agreement to continue to refinance or roll over a debt appears similar to an oral contract to lend money in the future. A valid cause of action for breach of an oral contract to lend money in the future is recognized in Illinois. (Wait v. First Midwest Bank/Danville (1986), 142 Ill.App.3d 703, 707, 96 Ill.Dec. 516, 521, 491 N.E.2d 795, 800; Bank of Lincolnwood v. Comdisco, Inc. (1982), 111 Ill.App.3d 822, 67 Ill.Dec. 421, 444 N.E.2d 657.) The party claiming such a contract must show that the alleged agreement contains sufficient definitiveness to be enforceable. ( Wait, 142 Ill.App.3d at 708, 96 Ill.Dec. at 522, 491 N.E.2d at 801; Carrico v. Delp (1986), 141 Ill.App.3d 684, 688, 95 Ill.Dec. 880, 883, 490 N.E.2d 972, 975.) In Wait and Carrico, our court cited McErlean v. Union National Bank (1980), 90 Ill.App.3d 1141, 46 Ill.Dec. 406, 414 N.E.2d 128, where it was held an agreement to loan money in the future was enforceable only if it contemplated the terms upon which the future loan should be made. The McErlean court stated:

"These terms would include, for example, the intended duration of the line of credit; the applicable rate of interest to be charged for any loan emanating from such an agreement, or the basis for how such interest would be ascertained; what duration or date or dates were contemplated for maturity of such loans; and what mode or rate of repayment was contemplated, i.e., whether the entire amount would be repayable or if repayment in installments would be acceptable." 90 Ill.App.3d at 1146, 46 Ill.Dec. at 410, 414 N.E.2d at 132.

We recognize that in some fact situations "duration" can be inferred based on custom ( Wait, 142 Ill.App.3d at 709, 96 Ill.Dec. at 522, 491 N.E.2d at 801), and part performance of an agreement may remove uncertainty and establish an enforceable contract. (Yoder v. Rock Island Bank (1977), 47 Ill.App.3d 486, 491, 5 Ill.Dec. 755, 759, 362 N.E.2d 68, 72.) We find that this cannot be done under the facts established by the evidence in the present case.

According to Charles Landers' testimony, O'Neill agreed not to collect on the note "as long as we make progress toward profitability, had a chance at profitability." Who is to judge the element of "progress towards profitability," or the element of "chance of profitability?" As will be discussed in more detail later in this opinion, the evidence indicated a loss by defendant of $375,551 for the fiscal year ending June 30, 1982, and a loss of $854,492 for the fiscal year ending June 30, 1983. The corporate debts exceeded assets on June 30, 1983, by $1,000,000. Charles Landers had failed in his projection as to corporate income in the fall of 1981, in the spring of 1982, and at various times during the 1982-83 fiscal year.

No cost of money terms were included in the alleged agreement; no terms exist as to additional capital advances or duration of loans; maturity dates were not provided; mode or rate of repayment was not contemplated.

Previous decisions upholding oral contracts to loan money involved facts which were not necessarily in conflict with the parol evidence rule. Recognizing the possibility of an oral contract in the present case, to renew notes in the future, appears to necessarily create an exception to the rule. The promissory note provides for payment in 120 days after date and also specifically allows for...