Upper Ave. Nat. Bank of Chicago v. First Arlington Nat. Bank of Arlington Heights

• Decision Date: 20 February 1980
• Docket Number: No. 79-111,79-111
• Parties: , 36 Ill.Dec. 525, 28 UCC Rep.Serv. 615 UPPER AVENUE NATIONAL BANK OF CHICAGO, Plaintiff, v. FIRST ARLINGTON NATIONAL BANK OF ARLINGTON HEIGHTS, etc., et al., Defendants. AMERICAN ENGINEERING, INC., Cross-Plaintiff, Appellee, v. John S. LIVADITIS and Claire Livaditis, Cross-Defendants, Appellants.
• Court: United States Appellate Court of Illinois

Page 1105

400 N.E.2d 1105

81 Ill.App.3d 208, 36 Ill.Dec. 525,

28 UCC Rep.Serv. 615

UPPER AVENUE NATIONAL BANK OF CHICAGO, Plaintiff, v. FIRST ARLINGTON NATIONAL BANK OF ARLINGTON HEIGHTS, etc., et

al., Defendants.

AMERICAN ENGINEERING, INC., Cross-Plaintiff, Appellee, v. John S. LIVADITIS and Claire Livaditis, Cross-Defendants, Appellants.

No. 79-111.

Appellate Court of Illinois, Second District.

Feb. 20, 1980.

Rehearing Denied March 17, 1980.

Meinhardt & Kightlinger, Ltd., John D. Kightlinger, Arlington Heights, for plaintiff.

Victor Potysman, Chicago, for defendants.

LINDBERG, Justice.

Cross-defendants, John S. Livaditis and Claire Livaditis, (hereinafter "the Livaditises"), appeal from an order of the Circuit Court of Lake County which allowed a motion by cross-plaintiff, American Engineering, Inc., (hereinafter "American"), for judgment on the pleadings. The only question presented is whether the release pleaded by the Livaditises was valid.

On review of an order granting judgment on the pleadings, we must ascertain whether the trial court correctly determined that no genuine issue as to any material fact was presented by the pleadings; if there was no such issue, then we must determine whether judgment was correctly entered for American. (Baillon v. S. S. Kresge Co. (1972), 4 Ill.App.3d 82, 84, 277 N.E.2d 719.) To that end we will summarize the facts before the trial court as established by the pleadings.

John Livaditis owned certain real property which was held in trust with the First Arlington National Bank of Arlington Heights. Livaditis, through his trustee, entered into a contract with American to perform heating and air-conditioning services for a K-Mart building that was being constructed on the property. When the project ran into financial difficulties, Livaditis induced American to accept a note for the last 10 percent on the amount originally due, that is, $13,515 plus 10 percent interest. At the same time, Livaditis made a collateral assignment of $13,515 for security purposes.

American filed a cross-complaint against Livaditis on the note and a mechanics' lien foreclosure. Subsequently, Livaditis entered into a release agreement with American, where Livaditis paid the sum of $8,000 to American in satisfaction of the amount due and owing. Notwithstanding the agreement, American continued to demand payment of the balance, which Livaditis has refused to pay.

This is an action at law in two counts. In Count I of its amended cross-complaint, American seeks the balance due on the note after crediting the payment of $8,000 that is, $5,515 plus 10 percent interest due on the original balance. In Count II, American essentially re-alleges Count I and seeks the same balance due from Claire Livaditis based upon a guarantee of the note executed by her.

American filed a motion for judgment on the pleadings. After a hearing, the trial court found the release invalid as a matter of law and entered judgment against the Livaditises for principal and interest due on the promissory note. The Livaditises appeal.

Turning first to the question whether there was any genuine issue of material fact, we conclude that the trial court properly determined that there was no such issue presented by the pleadings. In its final order, the trial court noted that the attorneys for the Livaditises had agreed to strike the denials contained in paragraphs 6 and 7 of its answer to the same paragraphs of the amended complaint. All other allegations in the cross-complaint were admitted. Therefore, we deem all material facts contained in the amended cross-complaint unequivocally admitted. Moreover in an order dated September 29, 1978, the parties stipulated that there was no issue of fact. By failing to alert the trial court of a possible question of fact, the Livaditises have waived the issue of the existence of a factual dispute. Tippet v. Tippet (1978), 65 Ill.App.3d 1018, 383 N.E.2d 13; 2 I.L.P., Appeal and Error, § 181.

We next consider whether the trial court properly found that the release was invalid as a matter of law. The well-established general rule is that an agreement to accept part payment of an amount undisputably due is not satisfaction of the whole debt and will not bar recovery of the balance unpaid. (Bekins Moving and Storage Co. v. Morrell (1977), 46 Ill.App.3d 1, 4 Ill.Dec. 567, 360 N.E.2d 503, A. & H. Lithoprint v. Bernard Dunn Advertising Co. (1967), 82 Ill.App.2d 409, 226 N.E.2d 483.) The doctrine rests upon the ground that the agreement to discharge the entire debt is without consideration. (Mederacke v. Becker (1970), 129 Ill.App.2d 434, 438, 263 N.E.2d 257, 258.) Thus, it is clear under Illinois law that a release given without consideration is void and part payment of an amount undisputably due does not constitute consideration. Salvaggio v. Schafroth (1971), 133 Ill.App.2d 811, 272 N.E.2d 53 (Abst.), Toffenetti v. Mellor (1926), 323 Ill. 143, 153 N.E. 744; note however that a contrary rule applies to transactions governed by the Uniform Commercial Code (Ill.Rev.Stat.1977, ch. 26, par. 1-107).

The Livaditises contend that the general rule is inapplicable because other consideration was given in addition to the $8,000, and further contend that the consideration cited is presumed to be adequate. The Livaditises rely on language in the release agreement providing that "for and in the consideration of the sum of $8,000 and other good and valuable consideration, receipt whereof is hereby acknowledged * * *," and that all claims "of whatever nature and kind, that Releasor may now have, or at any time hereafter may have * * * ." (Emphasis supplied.) The Livaditises apparently rely on 1 Williston on Contracts, § 121 (3d ed. 1957) to the effect that, "If a debtor does something more or different in character from that which he was legally bound to do, this is sufficient consideration for a promise." However, this exception cannot avail...