Court Opinion

ID: 9721316
Source: CourtListenerOpinion
Date Created: 2023-08-26 08:56:12.614986+00
Date Added: 2024-06-11T18:24:24.730431
License: Public Domain

JUSTICE GREEN, dissenting: I cannot agree with the majority that the record shows, as a matter of law, that the settlement agreement discharged the Whitlock children as to the February 9, 1977, loan secured by the mortgage on the parents’ farm. Thus, the record did not show, as a matter of law, that the indebtedness underlying the mortgage, for which foreclosure was sought, was discharged as to the mortgagors pursuant to section 3 — 606 of the Uniform Commercial Code — Commercial Paper. Accordingly, I would reverse the summary judgment entered for defendants and remand for further proceedings. I recognize the strong force of the statement in the release that the bank releases the borrowers “from all manner of actions, *** and particularly without limiting the generality of the foregoing all claims relating to the mortgage loan transaction aforesaid and the conveyance of the title hereunder, which either party *** ever had, now have or may have in the future.” (Emphasis added.) However, such general language is not always conclusive of the scope of a release. (Ainsworth Corp. v. Cenco, Inc. (1987), 158 Ill. App. 3d 639, 650, 511 N.E.2d 1149, 1156; Gladinus v. Laughlin (1977), 51 Ill. App. 3d 694, 366 N.E.2d 430; Perschke v. Westinghouse Electric Corp. (1969), 111 Ill. App. 2d 23, 249 N.E.2d 698.) The entire instrument may be examined and, if it is found to be ambiguous, extrinsic facts may be examined. (Murphy v. S-M Delaware, Inc. (1981), 95 Ill. App. 3d 562, 565, 420 N.E.2d 456, 459.) The release makes no reference to the total credit transaction involved, and the majority examines that transaction in reaching its interpretation of the release agreement. I agree the release is sufficiently ambiguous on its face to permit examination of extrinsic facts. The only indebtedness referred to in the release is the indebtedness of the February 10, 1977, loan in the original principal sum of $255,000. The release recites the borrowers’ desire to convey the real estate mortgaged by that loan to the bank “in exchange for a release from personal liability, including any deficiency, in connection with said indebtedness." (Emphasis added.) The release agreement also recites that (1) the borrowers acknowledge they have requested the transaction concerning the release; (2) the release of the borrowers from “said indebtedness” is fair value for the conveyance of the real estate; and (3) the release is the “sole inducement” for the conveyance of the tract mortgaged by the Whitlock sons. Thus, the instrument does not unambiguously set forth an intent to release the Whitlock sons and wives as to the other note. I find very little in the surrounding circumstances to indicate any intention of the parties to the release agreement to also release the Whitlock sons and wives from the very substantial indebtedness of the February 9, 1977, loan. I do not see how the close relationship between the two loans creates any inference that the bank or the Whitlocks intended the release to forgive the earlier note as well. Rather, because of the close relationship between the two loans, the parties would have been more likely to have referred to the February 9, 1977, loan in the release agreement if the indebtedness of the Whitlock children on that loan were also to be released. The two most favorable factors to indicate that a release of both notes was intended are (1) a provision in the release agreement making it contingent upon the ability of the bank to obtain a title policy for the farm being conveyed to it in the amount of $280,000; and (2) the natural desire the children would have had to clear all other liability at the same time. The sum of $280,000 was in excess of the balance of the indebtedness on the February 10, 1977, loan and this could have indicated a willingness on the part of the bank to give up more than the indebtedness on that loan in order to obtain the farm to be conveyed. From the standpoint of the bank, any theory it intended to release the children from liability on both loans presupposes a lack of understanding upon the part of its agents as to the jeopardy such a release would have as to the security for the February 9, 1977, loan. This seems unlikely, and the most likely explanation for the inclusion of the general language in the release is that it was placed there by inadvertence. The language of the release concerning the amount of the title insurance policy is countered by language in the release stating that the release on the note mentioned there is deemed to be sufficient consideration for the conveyance. The children would, no doubt, have been interested in discharging all of their liability at the same time, but, as the bank had greater security for the February 9, 1977, loan, it may well have been pushing harder for payment on the February 10, 1977, loan thus requiring a settlement in that respect sooner. The majority agrees the release should be interpreted according to contract law. Evidence of the construction of a contract placed upon it by the subsequent conduct of the parties is relevant to show intent of parties when that is doubtful. (Pocius v. Halvorsen (1963), 30 Ill. 2d 73, 195 N.E.2d 137.) Here, the evidence of dealings of the parties to the release, after its execution and prior to litigation is entirely consistent with the release being limited to the February 10, 1977, note. Under the circumstances shown here, I do not deem a summary judgment for the defendants to have been proper.