Grundy County National Bank v. Westfall

STOUDER, J.

This is an appeal from a judgment of the Circuit Court of Grundy County denying the motion of Beth Westfall, Defendant-Appellant, to vacate and open up a judgment by confession entered in favor of Grundy County National Bank, Plaintiff-Appellee.

As it appears from affidavits and other documentary exhibits, prior to 1963, John Westfall and Beth, his wife, the defendant in this action, carried on a farm enterprise in Grundy County. The farm was leased from Beth Westfall’s mother, who had a life estate therein, the remainder going to Beth Westfall. Receipts from the farm were deposited in a joint account in plaintiff bank and prior to 1963 defendant had made occasional withdrawals for farm purposes and had joined with her husband in borrowing money from plaintiff.

On October 21, 1963, at the request of her husband, Beth Westfall signed a loan guaranty agreement which was delivered by her husband to the plaintiff. Thereafter, the bank made loans to John Westfall on his signature alone and in 1967, made loans to him represented by judgment notes in the amount of $46,226.51. The farming business did not prosper in 1967 and on November 20, 1967, plaintiff secured a judgment by confession in the Circuit Court of Grundy County against John Westfall in the total amount of $50,815.33. On November 21, 1967, plaintiff secured a judgment by confession against Beth Westfall, defendant in this case, for a like amount based on the guaranty agreement and the warrant of attorney contained therein. It is the circumstances surrounding the execution of the guaranty agreement, as well as the effect of such circumstances and provisions of the instrument itself, which form the basis of this controversy.

It is undisputed that Beth Westfall signed the printed form of loan guaranty agreement in October 1963 and it is also undisputed that except for her signature, the blanks were not filled in, either at the time she signed it, delivered it to her husband, or when it was received by the bank. The blanks which were not filled in included the date, the name of the debtor, the name of the bank and the limitation of extent of liability assumed. In their depositions which were included with defendant’s motion, two officials of the plaintiff stated that the blanks were completed in October, 1967, about one month prior to the date of the judgment.

Defendant amended her motion to vacate the judgment by confession by pleading an affirmative defense, namely, that in February, 1968, an agreement had been entered into between plaintiff and defendant’s husband, which according to defendant, was a release of the obligation. Copy of the agreement was attached as an exhibit. Plaintiff admitted the execution of the agreement, but in its motion in opposition thereto, contended that the agreement was not a release.

Plaintiff argues the judgment by confession is void because the warrant of attorney contained in the guaranty agreement was invalid. In particular, the defendant argues the warrant of attorney is uncertain and indefinite and further, that it requires resort to facts dehors the instrument to determine its application. Consequently, according to defendant, the warrant of attorney confers no authority to confess the judgments sought by plaintiff.

A warrant or power of attorney contained in a written document is like any other provision of the document, in that the intention of the parties governs its construction and application. Holmes v. Parker, 125 Ill 478, 17 NE 759 and First Nat. Bank of Elgin v. Husted, 57 Ill App2d 227, 205 NE2d 780. As a rule of construction it was early indicated that the warrant of attorney ought to be clearly given and strictly pursued. Frye v. Jones, 78 Ill 627. With respect to the aforementioned rule of construction, Holmes v. Parker, supra, states, “The rule that the power to confess a judgment must be clearly given and strictly pursued, otherwise the judgment may be set aside at the instance of the defendant, like all other rules, has its reasonable limitations, and must not be applied with such strictness as to defeat the obvious intentions of the party granting the power.”

There is no doubt concerning what the parties intended by the loan guaranty agreement. Its only purpose was to provide additional security for the obligations of a third party and the warrant of attorney as a part thereof, could have no other function or purpose. Accordingly, the intention of the parties should be given full effect unless contrary to some principle of law and, in our opinion, no such limitation is applicable.

Defendant relies upon and has directed our attention principally to three cases, namely, Little v. Dyer, 138 Ill 272, 27 NE 905, Weber v. Powers, 213 Ill 370, 72 NE 1070 and McFadden v. Lewis, 273 Ill App 343. We have examined these cases but believe that neither the reasoning nor the results therein are applicable to the case at bar. Each of the aforementioned cases involves a warrant of attorney contained in a written lease and the court holds that the parties did not intend or could not have intended to authorize confession of judgment in regard to that which was indefinite or uncertain. We believe the guaranty agreement sufficiently sets forth the basis for calculating the amount which may be due thereunder and the authority conferred is as definite as that pertaining to the periodic payments due under a lease. See Fortune v. Bartolomei, 164 Ill 51, 45 NE 274. It should be noted that there are many circumstances and conditions affecting the liability of a lessee which cannot be determined from the terms of the lease. See also Cutler v. Leader Cleaners, 12 Ill App2d 439, 139 NE2d 832. The cases which appear to have limited the intention of the parties were decided prior to the present Civil Practice Act and may be considered procedurally limited to some extent by the rigidity of common-law pleadings.

Defendant also relies on Brown v. Atwood, 200 Ill App 210, which held invalid a judgment by confession where the warrant of attorney was included in an arbitration agreement. The Brown case follows Duffy v. Odell, 117 Ill App 336, and accordingly, it would appear that arbitration agreements constitute a special situation in which warrants of attorney are proscribed without regard to the intention of the parties.

Defendant also argues that the guaranty agreement was invalid as a matter of law because blanks were not filled in at the time she signed the document. Alternatively, she argues that the facts and circumstances described in the affidavits concerning the execution of the agreement present a meritorious defense requiring that the judgment be vacated.

As indicated above, blanks on the guaranty agreement were not filled in at the time the document was signed by defendant but were filled in prior to application for judgment. That there were blanks does not render the agreement invalid, as contended for by defendant. In O’Toole v. Helio Products, 17 Ill App2d 82, 149 NE2d 795, a case principally relied upon by defendant, a promissory note was included as part of a retail sales contract. Defendant’s signature appeared on the note portion but all other blanks were not filled in, neither at the time the instrument was executed nor at the time judgment was applied for. The court did not hold that the instrument was void on account of unfilled blanks but held only defendant intended to sign an order for storm windows and did not intend to execute a promissory note. Indeed, the cases of F. W. Cook Brewing Co. v. Goldblatt, 184 Ill App 266 and Fisk Tire Co. v. Burmeister, 252 Ill App 545, cited by defendant, which, in fact, deal with guaranty agreements, are contrary to defendant’s position. Both of these cases hold that a guaranty agreement is not invalid because it contains blanks at the time it is signed and delivered. Invalidity may result if the blanks are filled in contrary to the authorization of the obligor, such completion being considered a material alteration. See also, section 8-206 of the Uniform Commercial Code, chapter 26, Ill Rev Stats, which provides, “(1) Where a security contains the signature necessary to its issue or transfer but is incomplete in any other respect (a) Any person may complete it by filling in the blanks as authorized.”

Defendant also argues that the authority to complete the blanks is a question of fact entitling defendant to a trial on the merits.

Supreme Court Rule 276 which governs the opening up of a judgment by confession, requires affidavits in accord with Rule 191 relating to motions for summary judgment. Such affidavits must disclose facts to which the affiant is competent to testify presenting a prima facie defense.

No claim is made by defendant of any fraud, misrepresentation, concealment, deception or other improper conduct either by her husband or by plaintiff which induced or caused her to sign and deliver the guaranty agreement. Nor does defendant claim or set forth facts in support of any such claim that she signed the document involuntarily or by mistake. In this court defendant argues that the blanks were filled in contrary to her authority, but such argument is not supported by any facts set forth in the documents filed in behalf of defendant. With respect to the execution of the guaranty agreement defendant states in her answer, “2. Said Guaranty Agreement was signed solely at the urging of defendant’s husband, John B. Westfall. 3. Never before, after, or during the time that defendant signed said Guaranty was there any discussion between defendant and her husband as to the purpose for which said Guaranty Agreement would be used.” Such statements fall short of being facts to which the affiant would be competent to testify. In addition to being somewhat contradictory, there is nothing in such statements from which it can be inferred that any condition or limitation was imposed by defendant at the time she signed the document or delivered it to her husband. Thus, it cannot be said that the blanks were filled in contrary to her authority when according to her own statement, no limitations were imposed.

Lastly defendant argues that the agreement entered into between plaintiff and her husband constituted a release of her obligation. We believe it is unnecessary to consider this assignment of error because admittedly, the agreement was executed subsequent to the entry of judgment by confession and could not have constituted a defense to plaintiff’s claim at the time judgment was sought and entered.

Accordingly, we find no error in the judgment of the Circuit Court of Grundy County and the judgment of said Court is affirmed.

Judgment affirmed.