Opinion ID: 821020
Heading Depth: 3
Heading Rank: 2

Heading: Remaining Affirmative Defenses

Text: In another twist on the same theme, Asia Pulp insists that the notes are unenforceable because they were issued for a “special purpose”—that is, as temporary or “interim” financing—and were never intended to be repaid. 8 As Judge Holderman aptly put it, this argu- ment “defies common sense.” Asia Pulp has not ex- plained how this putative “special purpose” extinguishes its obligation to repay the notes. The terms of the credit agreements and notes plainly specify a repayment schedule and bind Indah Kiat and Tjiwi Kimia to pay the notes in full. Asia Pulp unconditionally guaranteed repayment. No bank would extend $40 million in credit 8 The only factual support for this so-called “special purpose” defense is a statement in the Tuomenoja declaration that “th[e] promissory note was meant to be a temporary measure.” The district court excluded this statement under the parol-evidence rule. This evidentiary ruling was sound. Main Bank of Chi. v. Baker, 427 N.E.2d 94, 100 (Ill. 1981) (“[A]lthough article 3 of the [Uniform Commercial] Code allows an instrument to be modified by a separate writing executed contemporaneously, . . . it otherwise follows the parol evidence rule that prior or collateral oral agreements are inadmissible to contradict the express terms of a written instrument.”). Nos. 10-3413 & 12-2123 23 in exchange for illusory promissory notes. And as we have noted, Indah Kiat and Tjiwi Kimia made payments on the notes from September 1998 to October 2000, and the Deed of Settlement, signed on October 3, 2000, specifically preserved their obligation to pay. Nothing further need be said on this point. Asia Pulp also argues that the notes lacked consideration. Consideration is “a bargained-for exchange, whereby the promisor . . . receives some benefit, or the promisee . . . suffers detriment.” Vassilkovska v. Woodfield Nissan, Inc., 830 N.E.2d 619, 624 (Ill. App. Ct. 2005). Under the relevant section of Illinois’s version of Article 3 of the Uniform Commercial Code, “any consideration sufficient to support a simple contract” satisfies the consideration requirement. 810 ILL. C OMP. S TAT. 5/3-303(b). A validly executed negotiable instrument is presumed to be supported by consideration. Pedott v. Dorman, 548 N.E.2d 541, 546 (Ill. App. Ct. 1989). A clause stating that an instrument was given “for value received” ordinarily is sufficient evidence of consideration. Id. The notes state that they were issued “for value received,” and Asia Pulp does not dispute that they were validly executed. Consideration is therefore presumed, and although the presumption may be rebutted, “the evidence offered in rebuttal must be of a very clear and cogent nature.” Id. Asia Pulp offers no evidence in rebuttal, much less “clear and cogent” evidence. Instead, it advances an argument from the existence of the underlying construction contracts; that is, Asia Pulp argues that its promise to repay the notes brought no new rights 24 Nos. 10-3413 & 12-2123 in return beyond those already contained in the PPM3 and MPM11 contracts. We fail to see—and Asia Pulp does not explain—how this operates to defeat the presumption of consideration. The notes served as partial construction financing, necessary for the completion and delivery of machines, and were thus an integral part of the larger transaction. The lack-of-consideration defense is meritless. Finally, Asia Pulp argues that JPMorgan is not a holder in due course of the notes. But this issue comes into play only if Asia Pulp has an affirmative defense that survives summary judgment. See Bank of N.C., N. A. v. Rock Island Bank, 630 F.2d 1243, 1246 (7th Cir. 1980). In other words, assuming it has the status of a holder in due course, JPMorgan would have a trump card to play against an otherwise valid defense to liability on the notes. See id. Because Asia Pulp has no valid affirmative defense, the question is irrelevant.