A.F.P. Enterprises, Inc. v. Crescent Pork, Inc.

• Decision Date: 08 April 1993
• Docket Number: No. 2-92-0451,2-92-0451
• Citation: 183 Ill.Dec. 356,243 Ill.App.3d 905,611 N.E.2d 619
• Parties: , 183 Ill.Dec. 356 A.F.P. ENTERPRISES, INC., Plaintiff-Appellant, v. CRESCENT PORK, INC., et al., Defendants-Appellees.
• Court: United States Appellate Court of Illinois

Page 619

611 N.E.2d 619

243 Ill.App.3d 905, 183 Ill.Dec. 356

A.F.P. ENTERPRISES, INC., Plaintiff-Appellant, v. CRESCENT PORK, INC., et al., Defendants-Appellees.

No. 2-92-0451.

Appellate Court of Illinois Second District.

April 8, 1993.

Peter D. Michling, Doreen T. Paluch, Dona S. Lowrimore, Weisz & Michling, William I. Caldwell, Jr., Caldwell, Berner & Caldwell, Woodstock, for A.F.P. Enterprises, Inc.

Ronald G. Klein, Philip M. Rice, Klein, Stoddard & Buck, Sycamore, for Crescent Pork Inc.

Justice BOWMAN delivered the opinion of the court:

Plaintiff, A.F.P. Enterprises, Inc. (AFP), appeals the circuit court's denial of its motion to reconsider the involuntary dismissal of its complaint (Ill.Rev.Stat.1991, ch. 110, par. 2-619(a)(9)) for forcible entry and detainer, foreclosure, breach of contract and foreclosure of a pledge agreement against defendants, Crescent Pork, Inc., Donald R. Huftalin, Saundra J. Huftalin, and Berton C. Huftalin. Plaintiff alleged that defendants defaulted on an installment contract for a warranty deed and loans made in connection with the agreement. In the March 24, 1988, agreement, defendants had agreed to purchase a certain hog farming operation including realty and improvements located in McHenry County, Illinois. The initial sale price stated in the agreement was $600,000. The seller also agreed to loan the purchaser up to $650,000 for the operation. The extensive agreement was executed in conjunction with a secured promissory note, a security agreement, a collateral assignment of land contract interest, and a pledge agreement. Among the documents is a memorandum of agreement executed by A. Franklin Pilchard, president of AFP, and Donald R. Huftalin, president of Crescent Pork.

On May 1, 1991, defendants filed a motion to dismiss the cause. Defendants interposed the affirmative defense of accord and satisfaction based on their tender of a check in the amount of $192,400.48, in attempting to settle disputed amounts due as of April 1, 1991. Having granted defendants' motion on the basis of an accord and satisfaction, the court subsequently denied plaintiff's motion to reconsider, and this timely appeal followed.

On appeal, plaintiff argues that, based on the pleadings, affidavits and counteraffidavits, the trial court erred in finding that defendants proved an accord and satisfaction defeating plaintiff's cause of action. Alternatively, plaintiff argues that the court's decision was clearly against the manifest weight of the evidence.

We generally agree with plaintiff's position. We reverse and remand for further proceedings.

The record reveals that sometime prior to March 25, 1991, disputes arose between the parties regarding the amount due under the installment agreement. On March 25, 1991, defendant Crescent Pork, through its attorney, Ronald Klein, sent plaintiff's attorney, Lori Kruizenga, a letter detailing what defendant believed it owed less expenditures for unspecified repairs and labor. In the letter, defendant offered to pay the sum of $192,400.48 for the payment of principal and interest due as of April 1, 1991, as a settlement of the amounts due. That amount included $102,000 allocated to principal and $90,400.48 allocated to interest at 8%. A check in the amount of $192,400.48 was tendered with the condition that, if plaintiff negotiated the check, it was with the understanding that the payment was in "full and final settlement" of all sums due or alleged to be due as of April 1, and that the remaining balance would be $1,028,006.09. In the letter, defendant also agreed as a part of the compromise to increase the balance due by approximately $60,000 so that the remaining balance would be $1,088,000. The letter also stated that this balance due would be allocated as $378,000 due for the farm loan and $710,000 due for the operating loan.

By letter dated April 1, 1991, plaintiff's attorney, Lori Kruizenga, returned the check. The letter stated: "Enclosed please find a check dated April 1, 1991, written by Saundra Huftalin, Secretary of Crescent Pork, Inc. Said check is unacceptable due to the wording on the back."

Defendants tendered another check in the amount of $192,400.48 dated April 1, 1991, and signed by Saundra Huftalin. On the lower left-hand corner were the notations "farm loan principal $51,000.00"; "operating loan princ 51,000.00"; and "interest $90,400.48." In one version of a copy of the check found in the record the notations appear to have been lined out. Defendants' check was accompanied by a letter dated April 3, 1991, from attorney Klein to attorney Kruizenga which stated simply: "Enclosed is a check from Crescent Pork, Inc. computed as set forth in my letter to you of March 25, 1991."

The affidavit of Saundra J. Huftalin which was appended to the motion to dismiss stated that, on April 3, 1991, she tendered a check numbered 1002 to Kruizenga and hand delivered the April 3 letter to her concurrently with the tender of the check. She further stated that the check was "tendered in full satisfaction of all claims alleged in A.F.P., Inc.'s Complaint, and was tendered pursuant to the terms of letters dated April 3, 1991, and March 25, 1991, and addressed to Attorney Lori J. Kruizenga." She also stated: "Neither A.F.P Inc., nor its attorney have [sic] rejected said check or given any other indication that said check was not acceptable as full satisfaction of all claims A.F.P. Inc., alleged in its Complaint filed herein."

A second affidavit of Saundra Huftalin states that she is a shareholder of Crescent Pork; that she hand delivered a check to Kruizenga in Sycamore, Illinois, with a letter from attorney Klein and that, at the time of delivery, neither Pilchard nor anyone else was present. Saundra stated at that time to Kruizenga that she was delivering the check and letter to her, and Kruizenga stated that "it was good that Crescent Pork was making this payment as their failure to do so would look bad." In her affidavit, Saundra also stated that she did not recall that Kruizenga said that the check was insufficient or that it did not totally cover the amount due and owing to AFP. She further concluded that she tendered the check and letter to Kruizenga in full payment of all sums due by Crescent Pork to AFP as of April 1, 1991.

Plaintiff's response in opposition to the motion to dismiss argued that the second check was not accepted with the understanding that it was payment in full or with notice of a condition because the letter did not mention a condition and there was only a reference to the calculation made. Plaintiff therefore informed defendants that the check was not accepted as payment in full and cashed the check.

The affidavit of A. Franklin Pilchard in support of plaintiff's response stated that the complaint was filed because defendants were in default on their loan from AFP because on April 1, 1990, there was due and payable the sum of $161,946.36; defendants paid $124,000, leaving $37,946.36 still owing to AFP. On April 1, 1991, there was due to AFP on the loan for the period from April 1, 1990, to March 31, 1991, the sum of $229,850.96; this sum did not include the $37,946.36 over which the suit was filed. On March 26, 1991, AFP's attorney received a letter from defendants' attorney which computed the amount he felt was due on April 1. Enclosed with the letter was a check for $192,400.48 with conditions that were unacceptable to AFP, and the check was returned. On April 3, 1991, defendant Saundra J. Huftalin hand delivered a different check with a letter which stated that the check had been computed as set forth in the first letter. At the time of delivery, Saundra was informed that the check was insufficient to cover the amount due and owing and that Saundra did not request that the check be returned to her at that time. AFP negotiated the check in an attempt to mitigate its damages.

On October 8, 1991, defendants filed an answer and counter-claim in which they alleged that the sale price negotiated between the parties was based on the presumption that a hog-waste digester on the premises would be in working order and would be able to produce electricity; that AFP had agreed to bring the digester into working condition and authorized Crescent Pork to make expenditures in excess of $90,000 to bring it into working order, but defendants had not been reimbursed, and, as a result, defendants were damaged in excess of $15,000, plus attorney fees and costs of suit. On October 21, 1991, plaintiff moved to dismiss defendants' answer and counterclaim and to voluntarily dismiss its suit.

The trial court took defendants' motion to dismiss under advisement. In an order entered December 24, 1991, the court stated that it had heard the arguments of counsel; the court found that when plaintiff accepted and cashed the second check, it accepted the check pursuant to the conditions of the letter of March 25, 1991, and that the acceptance and cashing of the check constituted an acceptance of the settlement agreement. The court dismissed the cause of action with prejudice.

On January 10, 1992, plaintiff filed a motion to reconsider and emphasized its position that the acceptance of the second check should not be deemed an accord and satisfaction under Illinois law where there were no conditions stated but merely a reference to computations and there was no explicit understanding by both parties that the check was tendered as payment in full. Defendants argued that an accord and satisfaction need not be explicit, but could be inferred from the parties' words and actions.

The affidavit of attorney Lori J. Kruizenga was filed on March 6, 1992. In it, she states that she had represented AFP, and, on March 25, 1991, she received the letter from defendants attorney which stated that the (first) check was sent in full and final settlement of all sums alleged to be then due. After receiving the letter, she returned the check to defe...