Illinois Official Reports 

Appellate Court

Cole v. Davis, 2016 IL App (1st) 152716

Appellate Court 

Caption

FRANKLIN A. COLE, as Trustee or Representative of the Franklin

A. Cole IRA-PEN, Bank One N.A. Account No. 262093-1000,

Plaintiff-Appellant, v. ALLISON S. DAVIS; GALLERY PARK

PLACE, LLC; DAVIS GROUP V; DAVIS GROUP, LLC; ALL 

CHICAGO, LLC; NEW KENWOOD, LLC; and AMERICAN 

HOUSING, LLC, Defendants-Appellees.

District & No. First District, Fifth Division

Docket No. 1-15-2716

Filed August 26, 2016

Decision Under 

Review

Appeal from the Circuit Court of Cook County, No. 2014-L-050986; 

the Hon. Brigid Mary McGrath, Judge, presiding.

Judgment Certified question answered.

Counsel on

Appeal

Paul E. Peldyak and Charles A. Brizzolara, both of Chicago, for 

appellant.

Arnold H. Landis, of Chicago, for appellees.

Panel JUSTICE GORDON delivered the judgment of the court, with 

opinion.

Justices Lampkin and Burke concurred in the judgment and opinion.
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 OPINION 

¶ 1 The present interlocutory appeal arises out of defendants’ alleged default on a promissory 

note. The parties entered into an agreement under the promissory note (the note) on November 

17, 2000, by which defendants agreed to pay plaintiff, by December 15, 2000, the principal 

sum of $100,000 with interest accruing at the publicly announced prime rate of Bank One, 

N.A. The note contains a confession of judgment clause, which authorizes any attorney to 

confess judgment on behalf of defendants for the amount outstanding at any time after the 

payment’s due date. After defendants allegedly failed to pay off the principal and interest to 

plaintiff by the due date, plaintiff filed a confession of judgment suit on December 24, 2014. 

¶ 2 On January 7, 2015, the trial court entered judgment in favor of plaintiff for $153,453.97 

and costs of suit. Thereafter, defendants filed a motion to vacate and/or open the judgment, 

arguing that the confession of judgment clause in the note was invalid because it contained a 

variable interest rate. The trial court granted defendants’ motion. Plaintiff then filed a motion 

to certify a question under Illinois Supreme Court Rule 308 (eff. Jan. 1, 2015), arguing that 

Illinois courts have not addressed whether or not a confession of judgment clause is invalid 

where it contains a definite principal and a variable interest rate. Plaintiff further argued that 

section 3-112 of the Uniform Commercial Code (UCC) (810 ILCS 5/3-112 (West 2000)) 

expressly authorizes the use of a variable interest rate in instruments like the promissory note 

in question. The trial court granted plaintiff’s motion, and we granted the appeal. For the 

following reasons, we answer the certified question in the affirmative. 

¶ 3 BACKGROUND 

¶ 4 Plaintiff filed a complaint against defendants on December 24, 2014. The complaint 

alleges that on or about November 17, 2000, defendants made and delivered the note to 

plaintiff. The complaint attaches a copy of the note, which is dated November 17, 2000. The 

note heading specifies that it is for $100,000 and designates the location as Chicago, Illinois. 

The body of the note provides: 

“For value received, the Undersigned, and each of them, jointly and severally, 

promise to pay to the order of [plaintiff], Chicago, Illinois, the principal sum of 

$100,000. The principal sum shall bear interest at the rate of the publicly announced 

prime rate of BANK ONE, N.A. (which is not intended to be the lowest or most 

favorable rate at any one time) in effect from time to time (the ‘Prime Rate’), which rate 

of interest shall increase or decrease in a total amount equal to the amount by which the 

publicly announced Prime Rate of said bank is increased or decreased from time to 

time. Each change in the interest rate hereon shall take effect on the effective date of the 

change in the Prime Rate. Holder shall not be obligated to give notice of any change in 

the Prime Rate. The Prime Rate shall be computed on the basis of a year consisting of 

360-days and shall be paid for the actual number of days elapsed from the date 

principal or part thereof is drawn down, the Undersigned shall give Holder 24 hours 

written notice of intention to draw on the principal sum. This note may be prepaid at 

anytime without penalty. The Undersigned shall remit to Holder the outstanding 

principal sum and interest on December 15, 2000. 

 Any amount of the principal hereof which is not paid when due whether at stated 

maturity, by acceleration, or otherwise, shall bear interest payable on demand at an 
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interest rate equal at all times to two per cent (2%) [being 200 base points] above the 

applicable rate in effect on this note at such maturity. All payments hereunder shall be 

applied first to interest on the unpaid balance at the rate herein specified and then to the 

principal. 

 All amounts outstanding under this note shall become immediately due and 

payable, at the option of Holder hereof, without any demand or notice whatsoever, in 

the event that the Undersigned or any of them be the subject of any assignment for the 

benefit or creditors of, or the commencement of any bankruptcy, receivership, 

insolvency, reorganization, dissolution or liquidation proceedings by or against any of 

them, or in the event that The Neighborhood Rejuvenation Partnership, L.P., an Illinois 

limited partnership (‘the Fund’), has not received firm commitments from investors of 

at least $17,000,000, and in respect of which there has been a closing, as that term is 

defined in the agreement of limited partnership in respect of the Fund, or is for any 

reason deprived of or surrenders its rights to build under existing authorities or its tax 

and zoning status, or if Gallery Park Place LLC ceases to be a functional part of and 

beneficiary of the Fund and its operations. 

 Advances of principal under this note will be made by Holder only upon 24 hours 

notice to Holder at his place of business in Chicago, Illinois. 

 All advances made by the Holder and all payments made by the Undersigned on 

account of the unpaid principal amount hereof, shall be recorded on the grid attached 

hereto. The Undersigned and each of them agrees that in any section or proceeding 

instituted to collect or enforce collection of this note, the amount endorsed on the 

reverse side of the note at that time shall be prima-facie evidence of the unpaid 

principal balance of this note. This note shall be governed by and construed under the 

law of the State of Illinois in all respects. 

 The Undersigned and each of them irrevocably authorizes any attorney of any court 

of record to appear for it in term time or vacation, at any time and from time to time 

after payment is due hereof, whether by acceleration or otherwise, and confess 

judgment, without process, in favor of holder hereof, for such sum as may appear to be 

due and unpaid hereon, together with interest, costs, and reasonable attorneys’ fees, 

and to waive and release all errors which may intervene in such proceeding, and 

consents to immediate execution upon such judgment, hereby ratifying and confirming 

all that said attorney may do by virtue hereof.” 

The note contains defendants’ signatures. 

¶ 5 The complaint further alleges that on June 12, 2001, by which date defendants had not paid 

their debt under the note, the parties entered into a letter agreement amending the note. The 

complaint attaches a copy of this letter agreement. The letter agreement is addressed to Allison 

S. Davis, Esq., and is signed by plaintiff, the sender of the letter agreement. The letter 

agreement is dated June 12, 2001. The body of the letter agreement provides: 

“Reference is made to that certain promissory note dated November 17, 2000, 

payable December 25, 2000 to Franklin A. Cole, IRA-PEN, Bank One N.A. Account 

#262093-1000, a copy of which is attached hereto. (The Note). 
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 Though by its term the Note was payable on December 15, 2000, and interest in 

respect thereof has not been paid, the parties have from time to time agreed to extend 

the due date and the date for payment of interest so that the Note is not now in default. 

 In order to assure that payments of principal and interest are made in a timely and 

manageable fashion the parties agree to amend the terms of The Note as follows: 

 (1) All accrued interest at the prime rate as charged from time to time by Bank 

One (the ‘prime rate’) shall be paid as of May 31, 2001 on the date of the execution 

of this letter. Thereafter accrued interest shall be paid on June 30, 2001 and at the 

end of each calendar quarter thereafter at the prime rate as defined in such Note so 

long as the Note is not in default. 

 (2) The principal balance of the Note shall be paid in 3 installments, $25,000 on 

or before September 30, 2001; $25,000 on or before November 30, 2001 and the 

balance of such note, $50,000 on or before March 31, 2002. 

 (3) In all other respects the Note shall remain in full force and effect. 

 If this arrangement is in accordance with your understanding and satisfactory to 

you, please sign and cause each of the parties noted below to sign this letter at which 

time it will become a binding amendment to The Note.” 

The letter agreement contains the signatures of plaintiff and defendants. 

¶ 6 The complaint next alleges that defendants failed to pay their debt under the note according 

to its amended terms and defaulted on it. It alleges that demand for payment was made upon 

defendants, but they failed to pay. The complaint alleges that plaintiff was the holder and 

owner of the note and that no part thereof had been paid except the principal sum of $6999.97, 

and several interest payments aggregating $24,088.07, for which defendants had been credited. 

The complaint alleges that a schedule of payments that were made and amounts paid is 

attached to the complaint, although no schedule of payments is attached to the complaint in the 

record. 

¶ 7 The complaint alleges that defendants owe plaintiff the sum of $93,000.03, “with interest 

at that certain rate of interest announced from time to time as its Prime Rate by Bank One N.A. 

(and its successor bank, J.P. Morgan Chase N.A.) (the ‘Prime Rate’), and after September 30, 

2001, the Prime Rate plus 200 basis points (the ‘Interest Charge’) percent per annum from 

September 30, 2001 to the present, on the principal outstanding and unpaid.” The complaint 

prays that judgment be entered against defendants “in the sum of $93,000.03 with accrued 

interest of $59,859.02 computed at the Interest Charge to January 31, 2013, and thereafter until 

the date of entry of judgment at the per diem interest rate of $13.56 together with attorneys’ 

fees for $500 and costs of suit.” 

¶ 8 Following the complaint’s prayer for judgment is the confession of judgment, which is 

attached to the complaint. The confession of judgment states that: 

“[Defendants], by Robert P. Groszek,[1] their attorney, waive service of process and 

confess that there is due from [defendants] to [plaintiff] the following: 

 Principal $100,000.00 less amounts paid: $6,999.97 

 Balance: $93,000 

 

1Robert P. Groszek is not defendants’ present counsel. The record does not indicate if or when 

defendants ever retained Groszek. 
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 Interest (to 5/5/14) $66,029.95 

 Per Diem ($13.56 to 12/9/14 219 days: $2,969.64 

Attorneys’ Fee: $ 500.00

 Total: $162,499.62”

¶ 9 The confession of judgment next provides that “[defendants] agree that judgment may be 

entered against them for the total of the above and for costs, release and waive all rights as 

authorized in the warrant of attorney.” The confession of judgment contains a signature from 

John P. Bergin,2

 who is designated as the attorney for defendants. 

¶ 10 On January 7, 2015, plaintiff filed “Documents in Support of Entry of Judgment.” This 

filing included an affidavit of Cass D. Scholes of JPMorgan Chase Bank (successor to Bank 

One, N.A.) with the calculation of amount due. In his affidavit, Scholes averred that he is vice 

president of JPMorgan Chase Bank (the Bank), N.A, and manager of the loan administration 

unit, which handled the calculation of interest due on various notes on behalf of the Bank in its 

custodial or trustee capacity. Scholes confirmed that the Bank was the custodian of the note at 

issue in the present case. Scholes averred that he performed the calculations of interest and 

principal due and that as of May 5, 2014, a total of $159,029.98 (the sum of the outstanding 

principal, $93,000.03, and accumulated interest of $66,029.95) was due under the note. 

Scholes’ affidavit contains his signature and is notarized. A table showing Scholes’ calculation 

of defendants’ debt under the note is attached to the January 7, 2015, filing. 

¶ 11 On January 7, 2015, the trial court entered judgment on behalf of plaintiff for $153,453.97 

and costs of suit. 

¶ 12 On January 20, 2015, defendants filed a motion to vacate and/or open the judgment by 

confession entered on January 7, 2015.3

 In this motion, defendants argued that the judgment 

for confession should be vacated and/or opened (1) because the power to confess judgment 

was invalid, insofar as the variable interest rate required consultation of extrinsic evidence to 

determine the extent of defendants’ liability, (2) because there was another action pending 

between the same parties for the same cause in the same court, (3) because plaintiff waived his 

right to a judgment by confession, and (4) because plaintiff’s authority to file this lawsuit on 

behalf of the holder of the note was not established. 

¶ 13 On February 18, 2015, plaintiff filed a response to defendants’ motion to vacate and/or 

open the judgment. Plaintiff argued that the power to confess judgment is not invalid because 

 

2

John P. Bergin is not defendants’ present counsel. The record does not indicate if or when 

defendants ever retained Bergin. 

3Although not relevant to the present appeal, defendants’ motion claimed that plaintiff originally 

filed a lawsuit against defendants on February 7, 2013, which plaintiff voluntarily dismissed on 

December 9, 2014, before filing the present lawsuit. Defendants’ motion attached documents from the 

first lawsuit, including plaintiff’s complaint, defendants’ answer, plaintiff’s amended complaint,

defendants’ response to plaintiff’s motion for summary judgment, and defendants’ response to 

plaintiff’s motion to clarify the designation of plaintiff. In his response to defendants’ motion to vacate, 

plaintiff agreed that he voluntarily dismissed this first lawsuit on December 9, 2014. The grounds for 

dismissing the first lawsuit appear to have been related to defendants’ contention that the plaintiff in the 

first lawsuit was improperly designated. Although defendants raise issues in their appellee brief about 

whether or not plaintiff is properly designated in the present lawsuit, such issues are not relevant to this 

appeal, which is solely aimed at answering the question certified for review by the trial court. 
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of the note’s variable interest rate. Plaintiff contended that Illinois courts have only held 

confessions of judgments invalid for indefinite principal amounts, not indefinite amounts of 

interest. Furthermore, plaintiff argued that section 3-112 of the UCC allows interest in such an 

instrument to be fixed or variable. Addressing defendants’ other arguments, plaintiff countered 

that there was no other action pending between the parties, that plaintiff had not waived his 

right to a judgment by confession, and that his authority to file this lawsuit was self-evident 

from the verified complaint. 

¶ 14 In their reply, defendants largely reiterated the same arguments that they made in their 

motion but additionally introduced a written memorandum decision from a different circuit 

court case in support of their argument that a variable interest rate invalidates a confession of 

judgment clause. In that memorandum opinion, the judge found that a confession of judgment 

clause containing a variable interest rate attainable from the Wall Street Journal Prime Index 

was impermissible because it required extrinsic evidence to prove the amount for which 

judgment was authorized. 

¶ 15 On May 20, 2015, the trial court granted defendants’ motion and opened the January 7, 

2015, judgment. The trial court opened the judgment on the basis that “the note contains a 

variable interest rate requiring evidence de hors the record.” 

¶ 16 On June 23, 2015, plaintiff filed a motion to certify a question of law under Illinois 

Supreme Court Rule 308 (eff. Jan. 1, 2015). In his motion, plaintiff argued that prior Illinois 

case law has not answered the question of whether a confession of judgment containing a 

definite principal and variable interest rate can be valid. Plaintiff further argued that all 

relevant Illinois case law precedes the adoption of section 3-112 of the UCC, which condones 

the use of variable interest rates. As such, plaintiff contended that this issue of first impression 

warranted an interlocutory appeal under Rule 308. Defendants did not respond to plaintiff’s 

motion. 

¶ 17 On September 25, 2015, the trial court granted plaintiff’s motion for interlocutory appeal 

under Rule 308. The trial court certified the following question to this court: 

“Whether a confession of judgment under a note drafted under the Uniform 

Commercial Code is valid where the note references a variable interest rate and has a 

definite principal sum?”

On October 1, 2015, plaintiff filed a petition to this court for leave to appeal. This court granted 

the appeal on November 5, 2015. 

¶ 18 ANALYSIS 

¶ 19 Illinois Supreme Court Rule 308 (eff. Jan. 1, 2015) provides a remedy of permissive appeal 

from interlocutory orders where the trial court has deemed that they involve a question of law 

as to which there is substantial ground for difference of opinion and where an immediate 

appeal from the order may materially advance the ultimate termination of the litigation. We 

apply a de novo standard of review to legal questions presented in an interlocutory appeal 

brought pursuant to Rule 308. Simmons v. Homatas, 236 Ill. 2d 459, 466 (2010). De novo

consideration means we perform the same analysis that a trial judge would perform. Khan v. 

BDO Seidman, LLP, 408 Ill. App. 3d 564, 578 (2011). Additionally, we are limited to the 

issues raised in the certified questions and will not go beyond those questions to consider other 

matters. See Townsend v. Sears, Roebuck & Co., 227 Ill. 2d 147, 153 (2007) (“An interlocutory 
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appeal pursuant to Supreme Court Rule 308 is ordinarily limited to the question certified by the 

circuit court ***.”).

¶ 20 As noted above, the trial court has certified the following question of law: “Whether a 

confession of judgment under a note drafted under the Uniform Commercial Code is valid 

where the note references a variable interest rate and has a definite principal sum?” Defendants 

contend that the confession of judgment clause in the note is void under Illinois case law 

interpreting section 2-1301(c) of the Code of Civil Procedure (Code) (735 ILCS 5/2-1301(c) 

(West 2000)), which authorizes confessions of judgment. Plaintiff argues that the note’s 

confession of judgment clause is not inconsistent with Illinois case law and is expressly 

condoned by section 3-112 of the UCC. We find that the certified question is an issue of first 

impression in Illinois and that section 3-112 of the UCC dictates the outcome. 

¶ 21 I. Illinois Law on Confessions of Judgment 

¶ 22 The power to confess judgment derives from section 2-1301(c) of the Code (735 ILCS 

5/2-1301(c) (West 2000)), which provides that “any person for a debt bona fide due may 

confess judgment by himself or herself or attorney duly authorized, without process.” By its 

terms, the statute does not apply to consumer transactions or to agreements that do not meet 

certain jurisdictional requirements. 735 ILCS 5/2-1301(c) (West 2000). Neither party argues 

that the note in question is part of a consumer transaction nor that the statute’s jurisdictional 

requirements are not met. Despite the statute’s otherwise open-ended language, Illinois case 

law views confessions of judgment “circumspectly” and has imposed other limitations on the 

power to confess judgment. Grundy County National Bank v. Westfall, 49 Ill. 2d 498, 500-01 

(1971). Accordingly, a review of relevant case law interpreting the power to confess judgment 

is necessary to establish the precise parameters of the power. 

¶ 23 In Little v. Dyer, 138 Ill. 272, 281 (1891), the Illinois Supreme Court held that the statutory 

right4

to confess judgment does not extend to “uncertain and unliquidated” sums. Little 

involved a lease of real estate. Little, 138 Ill. at 278-79. The confession of judgment clause5 in 

the lease warranted an attorney “to waive process and service thereof,” and “to confess 

judgment from time to time for any rent which may be then due by the terms of this lease, with 

costs, and to waive all errors and all right of appeal from any such judgment or judgments.” 

(Emphasis and internal quotation marks omitted.) Little, 138 Ill. at 278. Furthermore, the 

amount owed under the lease would include “so much additional rent” as would accumulate 

from the lessor’s payment of water and gas bills and maintenance of the premises. Little, 138 

Ill. at 279. The supreme court found that the confession of judgment clause was invalid 

because the amount owed under the lease could not be ascertained without judicial inquiry. 

Little, 138 Ill. at 279-80. 

¶ 24 Importantly, the Little court explained the rationale and policy behind limiting the scope of 

confessions of judgment, and subsequent cases have not elaborated on the explanation offered 

 

4At the time of Little, the confession of judgment statute provided “ ‘any person, for a debt 

bona fide due, may confess judgment by himself or attorney duly authorized, either in term time or 

vacation, without process.’ ” Little, 138 Ill. at 277 (quoting Ill. Rev. Stat. 1891, ch. 110, ¶ 66). 

5Although we refer to clauses in instruments providing for confessions of judgment as “confession 

of judgment clauses,” the case law alternatively refers to such clauses as “warrants of attorney” or 

“cognovit clauses.”
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in Little. The Little court observed that a determination of the unliquidated debt owed under the 

lease would require a judicial investigation and an evidentiary hearing to ascertain and thus 

would directly contradict the characteristic of confessions of judgment that they be “without 

process.” Little, 138 Ill. at 278. Furthermore, the court stressed that “[i]t would be absurd to 

contend that such unrestricted power was given to the creditor or his attorney, and a rule such 

as that would be in the highest degree productive of fraud, and subversive of justice, and would 

be tantamount to making one of the parties in interest not only both plaintiff and defendant, but 

court also,—and that, too, in his own cause.” (Emphasis omitted.) Little, 138 Ill. at 279. 

¶ 25 More recent cases have followed and refined the doctrine of Little. See Grundy, 49 Ill. 2d at 

501; see also State National Bank v. Epsteen, 59 Ill. App. 3d 233, 234-35 (1978). For instance, 

in Grundy, our supreme court found a confession of judgment clause in a loan guaranty 

agreement to be legally insufficient where the loan instrument guaranteed payment from the 

defendant to the plaintiff (a bank) of “any and all indebtedness, liabilities and obligations of 

every nature and kind of said Debtor to said Bank, and every balance and part thereof, whether 

now owing or due, or which may hereafter, from time to time, be owing or due, and howsoever 

heretofore or hereafter created or arising or evidenced to the extent of [blank].” (Internal 

quotation marks omitted.) Grundy, 49 Ill. 2d at 501. The blank space was not filled in at the 

time the defendant signed the agreement, but was later filled in by the bank for the amount of 

$50,000. Grundy, 49 Ill. 2d at 500-01. The agreement contained a confession of judgment 

clause authorizing any attorney to confess judgment in favor of the defendant at any time. 

Grundy, 49 Ill. 2d at 501-02. After the bank successfully obtained a confession of judgment in 

court for the $50,000, the defendant appealed, arguing that the confession of judgment clause 

was void because the extent of liability could be determined only by evidence outside of the 

instrument. Grundy, 49 Ill. 2d at 500. The court agreed, finding that the instrument “[did] not 

state the amount which may be confessed nor permit its ascertainment.” Grundy, 49 Ill. 2d at 

502. Accordingly, the confession of judgment clause was void because “[t]he extent of liability 

[could] be ascertained only by evidence dehors the instrument granting the power to confess 

judgment.” Grundy, 49 Ill. 2d at 502. 

¶ 26 This court found Grundy distinguishable in Sears Bank & Trust Co. v. Scott, 29 Ill. App. 3d 

1002, 1010 (1975). Scott involved a sales contract whereby the defendant contracted to 

purchase an automobile from the plaintiff. Scott, 29 Ill. App. 3d at 1003. The contract stated a 

fixed sum owed and specified that the defendant would pay off the sum in monthly 

installments. Scott, 29 Ill. App. 3d at 1003. The contract authorized confession of judgment for 

the amount of the fixed sum or for any lesser amount that a court might find due under the 

contract. Scott, 29 Ill. App. 3d at 1003-04. The plaintiff obtained a confession of judgment, and 

the defendant appealed, arguing that the judgment was impermissibly entered for an uncertain 

and unliquidated amount. Scott, 29 Ill. App. 3d at 1004, 1010. However, this court found that 

the confession of judgment was valid because “the instrument as written established a definite 

sum owed and thus set a limit on the authority conferred.” Scott, 29 Ill. App. 3d at 1010. 

Because the judgment entered was within the specified limitation, it was valid. Scott, 29 Ill. 

App. 3d at 1010. 

¶ 27 This court subsequently found Grundy controlling and Scott distinguishable in Epsteen. 

Epsteen, 59 Ill. App. 3d at 235-36. Epsteen involved a “Limited Continuing Guaranty and 

Security Agreement,” in which the defendant guaranteed prompt payment “of any and all 

indebtedness not in excess of the aggregate principal sum of . . . ($120,000.) and the interest 
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thereon, upon which [defendant] is now or hereafter may become obligated to you.” (Internal 

quotation marks omitted.) Epsteen, 59 Ill. App. 3d at 234. The potential debt under the 

instrument included “all indebtedness of whatsoever kind” that existed or might arise and 

contained a confession of judgment clause. (Internal quotation marks omitted.) Epsteen, 59 Ill. 

App. 3d at 234. After the trial court entered judgment for $71,483.35 in favor of the plaintiff, 

the defendant appealed, and this court vacated the judgment. Epsteen, 59 Ill. App. 3d at 

233-34. This court found the confession of judgment clause legally insufficient, citing Grundy

for the proposition that “[i]f the extent of liability can be established only by evidence dehors

the instrument granting the power, the power to confess judgment is invalid and any judgment 

entered under the warrant is void.” Epsteen, 59 Ill. App. 3d at 235. 

¶ 28 In Epsteen, this court distinguished Scott as follows: 

“The instant instrument, unlike that in Scott, established no certain and liquidated 

amount at the creation of the instrument. It is true that the instant argument [sic] 

contains a ceiling amount of $120,000 of possible liability which may arise from future 

dealings. However, even considering this ceiling amount, any certain liquidated 

amount due and owing can be established only by resort to documents dehors the 

instrument. Indeed, to establish any indebtedness whatsoever a consideration of 

documents dehors the instrument is necessary.” Epsteen, 59 Ill. App. 3d at 236. 

¶ 29 Finally, this court found Grundy and Epsteen distinguishable, and Scott analogous, in 

Ninow v. Loughnane, 103 Ill. App. 3d 833, 838 (1981). In Ninow, the defendants and the 

plaintiffs entered into an agreement for the defendants to purchase the plaintiffs’ corporation. 

Ninow, 103 Ill. App. 3d at 835. The agreement contained a payment schedule for the 

defendants to pay off a fixed principal sum at a fixed interest rate. Ninow, 103 Ill. App. 3d at 

835. The agreement also had a renegotiation provision, which provided that the parties could 

renegotiate the payment schedule in the event of default “upon good cause shown.” Ninow, 

103 Ill. App. 3d at 836. The agreement contained a standard confession of judgment clause. 

Ninow, 103 Ill. App. 3d at 837. When the defendants defaulted on the agreement, the plaintiffs 

filed a complaint to confess judgment. Ninow, 103 Ill. App. 3d at 835-36. The trial court 

granted judgment by confession in the plaintiffs’ favor. Ninow, 103 Ill. App. 3d at 836. On 

appeal, the defendants argued that the confession of judgment was void because the confession 

of judgment clause and the renegotiation provisions were inconsistent and thus rendered the 

extent of their liability unascertainable from the face of the instrument. Ninow, 103 Ill. App. 3d 

at 837-38. 

¶ 30 This court found that the confession of judgment clause was valid. Ninow, 103 Ill. App. 3d 

at 839. This court distinguished Grundy and Epsteen on the grounds that the instruments in 

Grundy and Epsteen did not “state a liquidated sum for which the signatory was liable at the 

creation of the instrument. Rather, each set for a ceiling amount for which the signatory could 

become liable, and for which judgment could be confessed.” Ninow, 103 Ill. App. 3d at 838. 

This court found that the agreement was similar to the instrument in Scott, insofar as the 

agreement, like the agreement in Scott, “establishe[d] the total amount of defendants’ 

indebtedness to plaintiffs at the time of signature and further contain[ed] a schedule by which 

such payments [were] to be made.” Ninow, 103 Ill. App. 3d at 838. Furthermore, this court was 

not persuaded by the defendants’ arguments that the renegotiation provision rendered the 

extent of their liability indefinite because pursuant to the renegotiation clause the “payment” of 
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the balance, and not the “amount” of the balance, was subject to renegotiation. Ninow, 103 Ill. 

App. 3d at 838-39. 

¶ 31 Based on the foregoing case law, defendants argue that the confession of judgment clause 

in the case at bar is legally insufficient. Specifically, defendants rely on the language from 

Epsteen that “[if] the extent of the liability can be established only by evidence dehors the 

instrument granting the power, the power to confess judgment is invalid and any judgment 

entered under the warrant is void.” Epsteen, 59 Ill. App. 3d at 235. Because defendants’ debt 

under the note requires consultation of the prime rate of Bank One, N.A.—i.e., evidence 

dehors the instrument granting the power—to determine the accrued interest, defendants assert 

that the confession of judgment clause is necessarily invalid. 

¶ 32 For his part, plaintiff argues that Illinois case law has never addressed the exact situation 

presented by the confession of judgment clause in the present case. Plaintiff contends that the 

case law has only held confession of judgment clauses to be invalid where the principal

amount owed was indefinite. Plaintiff argues that the above cases, by contrast, have never 

addressed the present situation, in which the principal amount is fixed in the instrument but the 

interest rate is variable. Accordingly, plaintiff concludes that case law to date is distinguishable 

and that section 3-112 of the UCC is controlling (an argument we address below). 

¶ 33 First, the present case is distinguishable from Grundy and Epsteen. As this court observed 

in Ninow, Grundy, and Epsteen are similar in that the instrument in both cases did not “state a 

liquidated sum for which the signatory was liable at the creation of the instrument. Rather, each 

set for a ceiling amount for which the signatory could become liable, and for which judgment 

could be confessed.” (Emphasis added.) Ninow, 103 Ill. App. 3d at 838. By contrast, the note in 

the present case clearly states a liquidated principal amount for which defendants were liable at 

the creation of the instrument. The only uncertainty regarding the amount owed stems from the 

amount of interest that would accrue on the fixed principal. 

¶ 34 Furthermore, contrary to defendants’ assertion, the plain language of Epsteen does not 

render the confession of judgment clause in the note legally insufficient. As noted, Epsteen

cited Grundy for the proposition that “[if] the extent of the liability can be established only by 

evidence dehors the instrument granting the power, the power to confess judgment is invalid 

and any judgment entered under the warrant is void.” (Emphasis added.) Epsteen, 59 Ill. App. 

3d at 235. On appeal, defendants rely exclusively on this language. However, in both Grundy

and Epsteen, the instruments themselves provided no evidence of any liability whatsoever. 

Thus, the extent of liability could be established only by extrinsic evidence. In the case at bar, 

the extent of defendants’ liability is primarily evidenced by the note itself, but requires 

extrinsic evidence for exact calculation of interest. In other words, the extent of defendants’ 

liability is not calculable only by evidence dehors the instrument. Accordingly, the above 

language from Epsteen does not invalidate the note’s confession of judgment clause. 

¶ 35 Second, the rationale and policy for restricting confessions of judgment does not apply in 

the present case. As noted above, the Little court reasoned that a confession of judgment clause 

that requires an evidentiary hearing and judicial inquiry would contravene the basic 

characteristic of such clauses that they provide relief “without process.” Little, 138 Ill. at 278. 

Calculation of the amount owed under the note in the present case does not require an 

evidentiary hearing or judicial inquiry; plaintiff has demonstrated as much by attaching 

documents—the accuracy of which defendants do not dispute—that transparently show the 

simple calculation of the amount owed under the note. The Little court also expressed concern 
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that a limitless power to confess judgment would be conducive of fraud, “subversive of 

justice,” and would allow a plaintiff to function as his own opponent and his own judge. Little, 

138 Ill. at 279. It is hard to imagine how the power to confess judgment in the present case 

would be in any way conducive of fraud or subversive of justice. The note simply documents a 

$100,000 loan that must be paid back at a publicly announced interest rate. Transparent 

calculation of the amount owed under the note is attached to the complaint. It is again 

noteworthy that defendants do not dispute the existence of their debt to plaintiff or the accuracy 

of plaintiff’s computation of their debt. 

¶ 36 For the above reasons, we find that the note’s confession of judgment clause is not legally 

insufficient. As noted, Illinois case law has not addressed the situation presented on this 

appeal, where the principal owed is fixed in the instrument but the interest rate is variable. 

Accordingly, we proceed to analyze the effect of section 3-112 on the dispute. 

¶ 37 II. The Effect of Section 3-112 on Confessions of Judgment 

¶ 38 In 1991, the Illinois legislature adopted updated sections of article 3 of the UCC. Pub. Act 

87-582 (eff. Jan. 1, 1992). Article 3 of the UCC governs “negotiable instruments.” 810 ILCS 

5/3-102(a) (West 2000). Section 3-104(a) provides a definition of negotiable instrument: 

“Except as provided in subsections (c)[6] and (d),[7]‘negotiable instrument’ means an 

unconditional promise or order to pay a fixed amount of money, with or without 

interest or other charges described in the promise or order, if it: 

 (1) is payable to bearer or to order at the time it is issued or first comes into 

possession of a holder; 

 (2) is payable on demand or at a definite time; and 

 (3) does not state any other undertaking or instruction by the person promising 

or ordering payment to do any act in addition to the payment of money, but the 

promise or order may contain (i) an undertaking or power to give, maintain, or 

protect collateral to secure payment, (ii) an authorization or power to the holder to 

confess judgment or realize on or dispose of collateral, or (iii) a waiver of the 

benefit of any law intended for the advantage or protection of any obligor.” 

(Emphasis added.) 810 ILCS 5/3-104(a) (West 2000). 

¶ 39 In turn, section 3-112(b) contains provisions on interest in negotiable instruments: 

“Interest may be stated in an instrument as a fixed or variable amount of money or it 

may be expressed as a fixed or variable rate or rates. The amount or rate of interest 

may be stated or described in the instrument in any manner and may require reference 

to information not contained in the instrument. If an instrument provides for interest, 

 

6

Subsection (c) provides: “An order that meets all of the requirements of subsection (a), except 

paragraph (1), and otherwise falls within the definition of ‘check’ in subsection (f) is a negotiable 

instrument and a check.” 810 ILCS 5/3-104(c) (West 2000). Subsection (c) does not apply here because 

the note is not a check. 

7

Subsection (d) provides: “A promise or order other than a check is not an instrument if, at the time 

it is issued or first comes into possession of a holder, it contains a conspicuous statement, however 

expressed, to the effect that the promise or order is not negotiable or is not an instrument governed by 

this Article.” 810 ILCS 5/3-104(d) (West 2000). Subsection (d) does not apply here because the note 

contains no such statement. 
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but the amount of interest payable cannot be ascertained from the description, interest 

is payable at the judgment rate in effect at the place of payment of the instrument and at 

the time interest first accrues.” (Emphasis added.) 810 ILCS 5/3-112(b) (West 2000). 

The official comment to section 3-112 of the UCC specifies that “[t]he purpose of subsection 

(b) is to clarify the meaning of ‘interest’ in the introductory clause of Section 3-104(a). It is not 

intended to validate a provision for interest in an instrument if that provision violates other 

law.” Unif. Commercial Code § 3-112, 2 U.L.A. 82, Official Comment (2004).8 

¶ 40 The note in question is a negotiable instrument, as defined in section 3-104. As noted, a 

negotiable instrument is “an unconditional promise *** to pay a fixed amount of money, with 

*** interest,” that “(1) is payable to bearer at the time it is issued ***; (2) is payable on demand 

or at a definite time; and (3) does not state any other undertaking or instruction by the person 

promising *** payment to do any act in addition to the payment of money.” 810 ILCS 

5/3-104(a) (West 2000). Furthermore, section 3-104(a) explicitly allows for negotiable 

instruments to contain confession of judgment clauses. 810 ILCS 5/3-104(a) (West 2000). In 

the case at bar, payment of the note in question is not conditioned on anything, the note is for a 

fixed sum ($100,000) with interest, the note was payable to plaintiff when it was issued, the 

note was payable at a definite time (December 15, 2000), and the note permissibly contains a 

confession of judgment clause. Accordingly, the note is a negotiable instrument. Defendants 

have made no arguments to the contrary. 

¶ 41 Since the subject note is a negotiable instrument, section 3-112 applies. Section 3-112(b) 

explicitly allows for interest to be stated at a “variable rate or rates.” 810 ILCS 5/3-112(b) 

(West 2000). Although the official comment makes clear that section 3-112(b) “is not intended 

to validate a provision for interest in an instrument if that provision violates other law” (Unif. 

Commercial Code § 3-112, 2 U.L.A. 82, Official Comment (2004)), we have concluded that a 

variable interest rate in a confession of judgment clause where the principal is fixed does not 

violate Illinois law. Accordingly, we answer the certified question in the affirmative: A 

confession of judgment under a note drafted under the UCC is valid where the note references 

a variable interest rate and has a definite principal sum. 

¶ 42 CONCLUSION 

¶ 43 The certified question is an issue of first impression. We have found that a note containing 

a confession of judgment clause with a fixed principal amount due and a variable interest rate 

is not legally insufficient under Illinois case law interpreting the statutory right to confess 

judgment. We have further concluded that section 3-112 of the UCC is applicable and 

explicitly allows for negotiable instruments, like the note in question, to contain a fixed 

principal and a variable interest rate. 

¶ 44 Certified question answered. 

 

8The official comment to section 3-112 of the UCC was not adopted by the Illinois legislature, and 

is thus not part of section 3-112 (810 ILCS 5/3-112 (West 2000)). Nevertheless, the official comment is 

instructive to an interpretation of section 3-112.