Rockford Bell Credit Union v. White
| Decision Date | 29 August 1963 |
| Docket Number | Gen. No. 11733 |
| Citation | 42 Ill.App.2d 318,192 N.E.2d 300 |
| Parties | ROCKFORD BELL CREDIT UNION, Appellant, v. Walter R. WHITE and Cecilia White, Wayne L. McClintock, Kenneth Stone and George Lister, Appellees. |
| Court | United States Appellate Court of Illinois |
B. P. Reese, Jr., Rockford, for appellant.
Miller, Thomas, Hickey & Collins, Rockford, for appellees.
Just when the relationship of debtor and creditor between plaintiff, Rockford Bell Credit Union, and Walter R. White began, does not appear from this record. It does appear, however, that on March 6, 1959, White executed a note for $5,000.00, payable to Rockford Bell Credit Union, and secured its payment by a chattel mortgage. The property described in the chattel mortgage was, 'A 1957 Palace Trailer Coach, Serial No. 1045-57-13550.' This indebtedness was to be liquidated by 'payments of $90.00 or more each month,' and the mortgage recites, 'This mortgage to further keep secure any renewals, extensions, or new notes signed by said mortgagor which include any or all of the aforesaid principal balance.'
On December 4, 1959, this loan was refinanced and a new note was executed by Mr. White and delivered to the plaintiff and the note of March 6, 1959, was cancelled. On October 11, 1960, a similar transaction was had, and at that time the note of December 4, 1959, was cancelled and surrendered to Mr. White and a new judgment note of that date for $5,000.00 was executed by Walter R. White, Mrs. Cecilia White, Wayne L. McClintock, Kenneth Stone, and George Lister, and delivered to the plaintiff.
On August 22, 1961, there was due on this note $4,386.39 and judgment was rendered on that date, by the Circuit Court of Winnebago County, in favor of the plaintiff and against all the makers of the note for this sum, together with $554.63, attorney fees, as provided by the warrant of attorney.
Upon the motion of Messrs. McClintock, Stone, and Lister, supported by the affidavit of George Lister, an order was entered, opening this judgment as to these defendants directing that the lien of the judgment stand as security, and granting these defendants leave to answer the complaint.
Pursuant to this order, an answer was filed by these defendants, admitting the execution of the note, but averring as an affirmative defense, that plaintiff, through its duly authorized agents, represented to defendants that it had a good and valid chattel mortgage as security for said note; that said chattel mortgage was on a certain Palace House Trailer, 1957 Model, Serial No. 1045-57-13550, which had a value in excess of the principal amount of the note; that relying upon this representation, defendants signed the note; that none of these defendants received any consideration for executing the note and did not receive any of the proceeds represented by the note; that on or about December 11, 1961, these defendants discovered that plaintiff did not have a valid chattel mortgage on said trailer; that plaintiff had taken a chattel mortgage on said trailer, but failed to record the same, and as a result thereof, had no valid lien thereon as security for the payment of said note; that Walter R. White has been adjudicated a bankrupt, and that the Federal Court, which made the adjudication, has entered an order in the bankruptcy proceedings, declaring said mortgage void and of no force and effect. A reply to this answer was filed by the plaintiff, denying the allegations of the affirmative defense.
The issues thus made by the pleadings were submitted to the court, without a jury, resulting in an order finding the issues for the defendants, and vacating the judgment as to defendants, McClintock, Stone, and Lister. To reverse this order plaintiff appeals.
The note, upon which the judgment herein was rendered, is dated October 11, 1960. It is signed by Walter R. White, Mrs. Cecilia White, Wayne L. McClintock, Kenneth Stone, and George Lister. It is for the principal sum of $5,000.00, and was payable in installments of $90.00 per month with one per cent (1%) interest per month on the balance remaining unpaid. It contained the usual power of attorney authorizing any attorney of any court of record to appear for defendants at any time hereafter and confess judgment, without process, in favor of the holder of the note for such amount as may appear unpaid thereon, together with costs and reasonable attorney fees. The concluding paragraph of this note reads: 'This note is secured by wage assignments and/or a chattel mortgage of even date herewith, given to the Rockford Bell Credit Union on personal property situated in Rockford, Illinois.'
It is conceded that a valuable consideration passed from appellant to Walter R. White at the time of the execution of this note and that appellant is a holder for value of this note. It is not contended that any agent or representative of appellant ever had any conversation with appellees or that anyone ever represented to appellees that appellant had any security for the payment of this note. It is insisted, however, that appellees did believe that appellant had security for the payment of this note; that they were led into this belief because the note they signed recited: 'This note is secured by wage assignments and/or a chattel mortgage of even date herewith.'
It was the contention of appellees in the trial court, and they insist in this court, that this concluding paragraph in the note was a misrepresentation of a material fact; that it led them to place their signatures on this note in the belief that appellant had security for the payment of this note, which it did not have; that the evidence discloses that the chattel mortgage referred to as such security, was executed by Walter R. White, and Cecilia White in 1959, to secure a loan made by Rockford Bell Credit Union, to them at that time and that the mortgage was not filed for record in the county where the mortgaged property was located, and therefore constituted no valid lien. In support of this contention, counsel cite and rely upon Kehl v. Abram, 112 Ill.App. 77, and Hill v. Coates, 127 Ill.App. 196.
Kehl v. Abram, 112 Ill.App. 77, was an action for fraud and deceit. The declaration charged that the defendant falsely and fraudulently represented to the plaintiff that a certain note of $2,000.00, secured by a trust deed on certain described real estate, was a valid and first lien upon said real estate, and that there were no other trust deeds or mortgages upon said premises prior to or ahead of the lien of said trust deed. The declaration further charged that these representations were not only false and fraudulent, but were known to the defendant to be false and were made for the fraudulent purpose of inducing the plaintiff to purchase said trust deed and note. The court, in affirming a judgment on a verdict of a jury for the plaintiff, stated that the evidence was conflicting, but tended to prove the allegations of the declaration. In its opinion, the court quoted from Antle v. Sexton, 137 Ill. 410, at pages 413 and 414, 27 N.E. 691, at page 692, where it is said: '[W]here a misrepresentation is made as to a material fact, and such misrepresentation is made knowingly, and for the express purpose of deceiving and defrauding, and the party injured relies upon the statement made, and under circumstances...
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