{ "id": 3278776, "name": "TRI-STATE BANK, Plaintiff-Appellant, v. BLUE RIBBON SADDLE SHOP, INC., et al., Defendants-Appellees", "name_abbreviation": "Tri-State Bank v. Blue Ribbon Saddle Shop, Inc.", "decision_date": "1979-09-20", "docket_number": "No. 78-987", "first_page": "445", "last_page": "449", "citations": [ { "type": "official", "cite": "76 Ill. App. 3d 445" } ], "court": { "name_abbreviation": "Ill. App. Ct.", "id": 8837, "name": "Illinois Appellate Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "366 N.E.2d 1015", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "51 Ill. App. 3d 581", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 3386040 ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/51/0581-01" ] }, { "cite": "129 N.E. 513", "category": "reporters:state_regional", "reporter": "N.E.", "opinion_index": 0 }, { "cite": "295 Ill. 594", "category": "reporters:state", "reporter": "Ill.", "case_ids": [ 5065757 ], "opinion_index": 0, "case_paths": [ "/ill/295/0594-01" ] }, { "cite": "312 N.E.2d 806", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "19 Ill. App. 3d 980", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 2692706 ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/19/0980-01" ] }, { "cite": "269 N.E.2d 291", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1974, "opinion_index": 0 }, { "cite": "48 Ill. 2d 221", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 2906072 ], "year": 1974, "opinion_index": 0, "case_paths": [ "/ill-2d/48/0221-01" ] }, { "cite": "275 Ill. App. 382", "category": "reporters:state", "reporter": "Ill. App.", "case_ids": [ 3287176 ], "opinion_index": 0, "case_paths": [ "/ill-app/275/0382-01" ] }, { "cite": "149 N.E.2d 795", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1934, "opinion_index": 0 }, { "cite": "17 Ill. App. 2d 82", "category": "reporters:state", "reporter": "Ill. App. 2d", "case_ids": [ 5182336 ], "year": 1934, "opinion_index": 0, "case_paths": [ "/ill-app-2d/17/0082-01" ] }, { "cite": "327 N.E.2d 603", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1975, "opinion_index": 0 }, { "cite": "28 Ill. App. 3d 101", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 5412625 ], "year": 1975, "opinion_index": 0, "case_paths": [ "/ill-app-3d/28/0101-01" ] }, { "cite": "330 N.E.2d 881", "category": "reporters:state_regional", "reporter": "N.E.2d", "weight": 2, "year": 1975, "opinion_index": 0 }, { "cite": "29 Ill. App. 3d 921", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 2500413 ], "weight": 2, "year": 1975, "opinion_index": 0, "case_paths": [ "/ill-app-3d/29/0921-01" ] }, { "cite": "291 N.E.2d 27", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "8 Ill. App. 3d 388", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 2762908 ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/8/0388-01" ] }, { "cite": "350 N.E.2d 870", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1972, "opinion_index": 0 }, { "cite": "39 Ill. App. 3d 877", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 5381359 ], "year": 1972, "opinion_index": 0, "case_paths": [ "/ill-app-3d/39/0877-01" ] } ], "analysis": { "cardinality": 541, "char_count": 11101, "ocr_confidence": 0.876, "pagerank": { "raw": 1.2781711089949644e-07, "percentile": 0.6163152755237854 }, "sha256": "938d05ede477e3ce696d1791e9018a149814895e1285c8ab2ec86fb2b9f73800", "simhash": "1:a98f8066f659ddd8", "word_count": 1769 }, "last_updated": "2023-07-14T15:19:59.772889+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "TRI-STATE BANK, Plaintiff-Appellant, v. BLUE RIBBON SADDLE SHOP, INC., et al., Defendants-Appellees." ], "opinions": [ { "text": "Mr. JUSTICE LINN\ndelivered the opinion of the court:\nPlaintiff, Tri-State Bank, brought an action in the circuit court of Cook County against defendants, Blue Ribbon Saddle Shop, Inc. and Morris Suson, to recover money due on a note and security agreement executed by defendants. Plaintiff also sought injunctive relief to protect the collateral securing the note. After plaintiff had obtained a confession of judgment on the note, defendants moved to dismiss the complaint on the ground that the note sued upon had been marked \u201ccancelled upon renewal.\u201d At the conclusion of hearings on defendants\u2019 motion to dismiss, the trial court vacated the judgment by confession and dismissed the action with prejudice.\nOn appeal, plaintiff questions the sufficiency of defendants\u2019 motion to dismiss in connection with the opening of the judgment by confession. Plaintiff also contends that the trial court erred in vacating the judgment by confession and dismissing the action without granting plaintiff leave to amend its complaint.\nWe reverse the orders of the trial court vacating the confession of judgment and dismissing plaintiff\u2019s complaint and reinstate plaintiff\u2019s judgment by confession.\nIn December 1974, plaintiff loaned *200,000 to defendants. To secure repayment of the loan, plaintiff took a security interest in defendants\u2019 inventory and receivables, consisting primarily of riding apparel, western wear and equestrian goods. Defendants executed a note and security agreement containing a standard confession of judgment clause.\nOn October 21,1977, plaintiff filed a three-count complaint seeking a judgment by confession against defendants on a *115,000 promissory note, plus interest and attorney\u2019s fees. The complaint also sought injunctive relief to restrain defendants from removing or disposing of the collateral which secured the debt.\nOn October 21, 1977, the trial court awarded plaintiff judgment by confession in the amount of *124,260.82, plus costs, and entered a temporary restraining order to prevent the sale or removal of the collateral securing the debt. After the restraining order expired on November 1, 1977, plaintiff sought and was granted further orders prohibiting defendants from removing the collateral from the Blue Ribbon Saddle Shop and allowing plaintiff to inventory the goods on the premises. On November 16, 1977, an order was entered on plaintiff\u2019s motion, requiring defendants to show cause why they should not be held in contempt for failure to obey the trial court\u2019s order restraining removal of the collateral. A hearing on the rule to show cause was set for November 30, 1977.\nOn November 23,1977, defendants filed an answer to the complaint for confession of judgment. As an emergency matter on November 29, 1977, the trial court heard defendants\u2019 motion for leave to withdraw their answer and file a motion to dismiss the complaint based on the ground that the note upon which judgement had been confessed was stamped \u201ccancelled upon renewal.\u201d That day, the court allowed defendants to withdraw their answer and file their motion to dismiss the complaint. The court also vacated the judgment by confession entered on October 21, 1977, and dismissed plaintiff\u2019s complaint. However, the following day the court, on its own motion, stayed the effectiveness of the previous day\u2019s order and set the matter for further hearing.\nPlaintiff presented all of the evidence considered at the November 29 and subsequent hearings. Plaintiff\u2019s president, David J. Robinson, testified that defendants had made two previous payments in reduction of the principal on the *200,000 loan. It was the practice of the bank upon receiving from defendants a payment on the principal and a renewal note reflecting the reduced principal amount, to stamp the existing note \u201ccancelled upon renewal.\u201d\nIn August of 1977, plaintiff received a check in the amount of *10,000 to be applied to defendants\u2019 indebtedness. The check was postdated to September 1, 1977. With the check, plaintiff received a new note in the principal amount of *105,000. Upon receiving this check, plaintiff stamped the *115,000 note \u201ccancelled upon renewal\u201d and transferred defendants\u2019 check to the Deerbrook State Bank with a notation requesting that the bank hold the check until payment became due. Plaintiff retained the *115,000 note. On September 9,1977, the check was returned unpaid to plaintiff, and plaintiff was notified that payment on the check had been stopped by defendants. Documents from the Deerbrook State Bank indicate that the check was returned to plaintiff unpaid when payment was stopped by defendants on August 26, 1977.\nAt the close of the hearings on December 12,1977, the court entered a final order reinstating the November 29 order which vacated the confession of judgment and dismissed plaintiff\u2019s complaint. Plaintiff\u2019s subsequent motion to vacate the November 29 and December 12 orders was denied and plaintiff brought this appeal.\nOpinion\nPlaintiff first contends that defendants\u2019 failure to open the judgment by confession in the manner set out in Supreme Court Rule 276 (Ill. Rev. Stat. 1977, ch. 110A, par. 276), requires reversal in this case. Rule 276 provides that a motion or petition to open a judgment by confession shall be supported by affidavit and accompanied by a verified answer which defendant proposes to file. If the motion and affidavit set forth a prima facie defense to the action, the court shall conduct a hearing on the merits of the motion. Here, defendants\u2019 unverified pleading entitled \u201cmotion to strike and dismiss\u201d clearly does not meet the literal requirements of Rule 276; however, the failure to strictly comply with the procedural aspects of the rule is not necessarily fatal. See Ritz v. Karstenson (1976), 39 Ill. App. 3d 877, 350 N.E.2d 870; Turner v. Smiley (1972), 8 Ill. App. 3d 388, 291 N.E.2d 27.\nIn the usual case, a defense to the merits of the claim is presented in an answer accompanying the motion to open the judgment, but there is authority for the proposition that if the trial court lacked jurisdiction to enter the confessed judgment, a defense on the merits need not be shown and the jurisdictional objection may properly be raised by motion to dismiss. (See Zimmerman Equipment Co. v. F.R. Orr Grain Co. (1975), 29 Ill. App. 3d 921, 330 N.E.2d 881; Rosenberg v. Ball (1975), 28 Ill. App. 3d 101, 327 N.E.2d 603.) If the motion establishes that the court lacked jurisdiction in the cause, the motion to set aside the confessed judgment must be granted and the cause dismissed. Zimmerman Equipment Co. v. F. R. Orr Grain Co. (1975), 29 Ill. App. 3d 921, 330 N.E.2d 881.\nDefendants\u2019 motion to dismiss purports to question the jurisdiction of the trial court to enter a judgment by confession against defendants. Relying on O\u2019Toole v. Helio Products, Inc. (1958), 17 Ill. App. 2d 82,149 N.E.2d 795, and Genden v. Bailen (1934), 275 Ill. App. 382, defendants argue that where a note and the accompanying power of attorney to confess judgment against the defendants have been cancelled, the trial court lacks personal jurisdiction over the defendant and the confessed judgment is void. Although this type of jurisdictional objection may properly be raised by motion to dismiss, the motion and the evidence presented in hearings thereon must substantiate that objection.\nHere, defendants\u2019 motion states only that the *115,000 note was stamped \u201ccancelled upon renewal.\u201d This cancellation stamp is apparent from the face of the note; however, the evidence presented in hearings on defendants\u2019 motion indicates that the cancellation stamp was placed on the note in anticipation of the receipt of the *10,000 represented by the postdated check on which payment was eventually stopped. Plaintiff\u2019s president stated that the note was stamped and retained by plaintiff, and the *10,000 check was transferred to defendants\u2019 bank to be held until the payment date. Before payment on the check became due, the defendants directed their bank to stop payment on the check and the check was returned to plaintiff unpaid. The defendants did not refute this testimony.\nIt is well established that the giving of a draft or check by a debtor to the payee is not a payment or discharge of the underlying indebtedness; however, the same does constitute a conditional payment of the obligation, the condition being its collectability from the bank. (See Consolidated Freightways v. Industrial Com. (1971), 48 Ill. 2d 221, 269 N.E.2d 291.) The obligation is revived if the check is later dishonored. Leavitt v. Charles R. Hearn, Inc. (1974), 19 Ill. App. 3d 980, 312 N.E.2d 806.\nMoreover, the giving of a note in renewal does not necessarily discharge the original note. (See Boulter v. Joliet National Bank (1920), 295 Ill. 594, 129 N.E. 513.) Whether the new note extinguishes the precedent debt depends on the intentions of the parties. Thus, whether the plaintiff\u2019s act of stamping the *115,000 note \u201ccancelled upon renewal\u201d when in receipt of defendants\u2019 renewal note and check for *10,000 had the effect of actually cancelling the old indebtedness and voiding the power of attorney to confess judgment on that amount is a question of the intent of the parties to be determined, for purposes of defendants\u2019 motion, from the evidence presented. The notation stamped on the note is not controlling in light of conflicting evidence. The record before us convincingly reveals that the cancellation of the note sued upon was conditional on the payment of the check. In this regard, it is interesting to note that defendants have at no time alleged that the debt had been satisfied or that the check for *10,000 was not dishonored by virtue of defendants\u2019 stop payment order.\nWe can find no evidentiary support for the trial court\u2019s conclusion that plaintiff had presented the check for early payment in violation of its agreement with defendants or that the note sued upon has been effectively cancelled. For this reason, defendants\u2019 motion seeking to vacate the judgment by confession and dismiss the complaint should have been denied.\nThe trial court\u2019s orders vacating the confession of judgment and dismissing plaintiff\u2019s complaint are reversed and plaintifFs judgment by confession is reinstated and the cause is remanded for further proceedings consistent with this opinion.\nReversed, judgment reinstated and cause remanded.\nJOHNSON and ROMITI, JJ., concur.\nIf the trial court lacked personal jurisdiction over defendants when the confession of judgment was entered, defendants did not waive the right to challenge that judgment when they appeared generally after the judgment had been entered. See Mason v. Freeman National Printing Equipment Co. (1977), 51 Ill. App. 3d 581, 366 N.E.2d 1015.", "type": "majority", "author": "Mr. JUSTICE LINN" } ], "attorneys": [ "Michael B. Nash and Kenneth M. Lodge, both of Burke, Nash and Shea, Ltd., of Chicago, for appellant.", "Myron Minuskin and Roderick F. Mollison, both of Chicago, for appellees." ], "corrections": "", "head_matter": "TRI-STATE BANK, Plaintiff-Appellant, v. BLUE RIBBON SADDLE SHOP, INC., et al., Defendants-Appellees.\nFirst District (4th Division)\nNo. 78-987\nOpinion filed September 20, 1979.\nMichael B. Nash and Kenneth M. Lodge, both of Burke, Nash and Shea, Ltd., of Chicago, for appellant.\nMyron Minuskin and Roderick F. Mollison, both of Chicago, for appellees." }, "file_name": "0445-01", "first_page_order": 467, "last_page_order": 471 }