First Nat. Bank of Geneva v. Lively

• Decision Date: 01 April 1991
• Docket Number: No. 2-90-0497,2-90-0497
• Citation: 569 N.E.2d 1247,155 Ill.Dec. 636,211 Ill.App.3d 1
• Parties: , 155 Ill.Dec. 636 The FIRST NATIONAL BANK OF GENEVA, Plaintiff-Appellant, v. Norman E. LIVELY, et al., Defendants-Appellees, (The First National Bank of Geneva, as Trustee, Defendants).
• Court: United States Appellate Court of Illinois

Page 1247

569 N.E.2d 1247

211 Ill.App.3d 1, 155 Ill.Dec. 636

The FIRST NATIONAL BANK OF GENEVA, Plaintiff-Appellant, v. Norman E. LIVELY, et al., Defendants-Appellees, (The First National Bank of Geneva, as Trustee, Defendants).

No. 2-90-0497.

Appellate Court of Illinois,

Second District.

April 1, 1991.

Paul A. Lewis, Lisa M. Nyuli, Alschuler, Putnam, McWethy, Funkey & Lewis, P.C., Aurora, for First Nat. Bank of Geneva.

Stephen M. Cooper, Law Offices of Cooper, Storm & Petesch, Geneva, for Norman E. Lively and Shirley J. Lively.

Justice BOWMAN delivered the opinion of the court:

Plaintiff, The First National Bank of Geneva (Bank), appeals from an order entered in the circuit court of Du Page County granting the motion of defendants, Norman E. Lively and Shirley J. Lively (Livelys), to dismiss plaintiff's action pursuant to section 2-619(a)(6) of the Civil Practice Law (Ill.Rev.Stat.1989, ch. 110, par. 2-619(a)(6)). The issue raised on appeal is whether the trial court erred in granting defendants' motion to dismiss based on a previous release executed between the Livelys and the Bank. We reverse the judgment and remand the cause for further proceedings.

On May 29, 1982, a promissory note and a mortgage on property located in St. Charles, Illinois, were executed by the Livelys to the Bank. This property was later conveyed to a land trust of which the Bank became trustee and Mrs. Lively the sole beneficiary. The Livelys also had other dealings with the Bank as a result of the Livelys' connection to Sunstream Aircraft, Inc., and Sunstream Jet Express, Inc. The Livelys and the two corporations subsequently were involved in litigation with the Bank which resulted in a settlement ending the litigation. The settlement consisted of three documents, contemporaneously entered into by the Livelys, the corporations, and the Bank. These documents, dated January 23, 1989, are: the "Final Settlement Agreement" signed by Mr. and Mrs. Lively individually, Mr. Lively as president of Sunstream Aircraft, Inc., and the First National Bank of Geneva, Inc., by its president John Van Thournout; the "Mutual Release" signed by the Livelys, Mr. Lively as president of Sunstream Aircraft, Inc., and the Bank; and the "Release" signed by First National Bank of Geneva, Inc., by John Van Thournout, its president. At the time these documents were signed, the bank was continuing as trustee of the property now in default.

In December 1989 the Bank instituted this suit to foreclose on the property it held in trust. The defendants filed a motion to dismiss under section 2-619(a)(6) of the Civil Practice Law (Ill.Rev.Stat.1989, ch. 110, par. 2-619(a)(6)). The defendants asserted that under the "Mutual Release" the note held by the Bank and signed by the Livelys had been discharged. The "Mutual Release" contained very broad language of general release. The relevant parts include:

"THIS MUTUAL RELEASE is executed on the 23rd day of January, 1989, by and between NORMAN E. LIVELY, SHIRLEY LIVELY, and SUNSTREAM AIRCRAFT, INC. (hereinafter collectively referred to as 'Lively'), and the FIRST NATIONAL BANK OF GENEVA, an Illinois banking corporation, its officers and directors (hereinafter collectively referred to as the 'BANK');

WHEREAS, LIVELY is indebted to the BANK by virtue of various notes, some, but not all of which have been reduced to judgment;

WHEREAS, LIVELY, has made certain claims against the BANK, which claims have been denied by the BANK;

WHEREAS, LIVELY and the BANK have settled and compromised all matters between them, and each agrees to release and discharge the other from any and all obligations arising from any and all past and present relationships now or previously existing between the parties.

NOW, THEREFORE, in consideration of payments made contemporaneously made [sic ] with the execution hereof and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, LIVELY and the BANK hereby mutually release and discharge each other, their heirs, and legal representatives from all claims, demands, and causes of action, known or unknown, that either may now have or may claim to have arising out of or connected with, whether directly or indirectly, any relationship now or previously existing between them."

The circuit court agreed with the Livelys that under the "Mutual Release" the note had been discharged, and the action for foreclosure was dismissed.

The plaintiffs now appeal and argue that the "Mutual Release" was not intended to have such a broad effect as the defendants assert since the "Mutual Release" does not mention specifically the note and mortgage in question or the trust relationship. The plaintiff also argues that the three documents executed on January 23, 1989, must be read together to discern the actual claims being released.

The recent case of Gillilan v. Trustees for Central States, Southeast & Southwest Areas Pension Fund (1989), 183 Ill.App.3d 306, 131 Ill.Dec. 950, 539 N.E.2d 303, clearly states how releases are to be treated in Illinois.

"A release is a contract, whereby one party abandons a claim to another against whom the claim exists, and its interpretation is governed by the principles that govern contract law cases. (Aqua-Aerobic Systems, Inc. v. Ravitts (1988), 166 Ill.App.3d 168, 171 [117 Ill.Dec. 77, 520 N.E.2d 67]; Shultz v. Delta-Rail Corp. (1987), 156 Ill.App.3d 1, 10 [108 Ill.Dec. 566, 508 N.E.2d 1143].) The intention of the parties controls the scope and effect of the release, and such intent is to be discerned from the language used and the circumstances of the transaction. (Whitehead v. Fleet Towing Co. (1982), 110 Ill.App.3d 759, 762-63 [66 Ill.Dec. 449, 442 N.E.2d 1362].) Where a written release is clear and explicit, the court must enforce the release as written, and the meaning and intention of the parties should be gathered from the face of that document." Gillilan, 183 Ill.App.3d at 312, 131 Ill.Dec. 950, 539 N.E.2d 303.

In the present case, there are several problems with the release presented by the defendants. The "Mutual Release" itself speaks only very generally. While it does mention notes, it does not mention any specific notes, and again while it mentions claims the Livelys might have against the Bank, it does not mention specific claims. The "Mutual Release" then goes on to release both the Livelys and the Bank in very general terms.

"NOW, THEREFORE, in consideration of payments made contemporaneously made [sic ] with the execution hereof and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, LIVELY and the BANK hereby mutually release and discharge each other, their heirs, and legal representatives from all claims, demands, and causes of action, known or unknown, that either may now have or may claim to have arising out of or connected with, whether directly or indirectly, any relationship now or previously existing between them."

If this language were strictly construed, any claim arising out of any relationship existing at the time of the signing of the lease would be barred. This could potentially affect any claim arising out of the trust relationship that also existed at the time the release was signed. Under these circumstances, "Illinois courts will restrict the language of a general release to the thing or things intended to be released and refuse to...