Court Opinion

ID: 9726831
Source: CourtListenerOpinion
Date Created: 2023-08-26 13:10:13.33822+00
Date Added: 2024-06-11T13:14:53.195647
License: Public Domain

JUSTICE HEIPLE, dissenting: Wick manufactures prefabricated farm buildings. William Bunning wanted to sell them. Accordingly, he and Wick entered into a contract authorizing Running to do so. Later, Mr. Running assigned such contract to Mel-O-Dee Builders, Inc. The latter Iowa corporation was wholly owned by Mr. Bunning. In June 1979, Mel-O-Dee ordered a building from Wick. The building cost $14,926 and was delivered and erected. Mel-ODée did not pay for it. In March 1980, Wick filed a four-count complaint in Peoria County against Mel-O-Dee and Mr. Bunning. The complaint’s first two counts, pertaining to Mel-O-Dee, were dismissed for lack of in personam jurisdiction. No appeal was lodged. The remainder of the complaint, seeking to impose personal liability on Mr. Bunning, was dismissed for failure to state a cause of action. Wick appeals. The issue in this cause is whether Mel-O-Dee’s obligation to pay is one arising under the dealer agreement which discharges Bunning from his personal guarantee to pay Mel-O-Dee’s debt. If it is, Wick loses: if not, plaintiff wins. Mr. Bunning acknowledges he is personally liable as a guarantor to Wick for unfulfilled obligations of third-party customers of Wick. Bunning says Mel-O-Dee’s failure to pay is not a personal obligation he assumed under the assignment agreement. My colleagues have concluded that Mel-O-Dee assumed Running's obligations by virtue of the assignment. Thus, Wick should look to Mel-O-Dee for payment. Both these theories are highly technical, strained, and unpersuasive. Under the dealer agreement Mr. Bunning personally assured Wick that: “* * *in the event the customer shall fail, or be unable to pay the full purchase price to Manufacturer ° * * then Dealer shall, and hereby does agree to, indemnify, and save harmless Manufacturer * * * and pay to Manufacturer, the balance of the purchase price at at * * *." And, when Mr. Running assigned the dealer agreement to Mel-O-Dee he did not necessarily release himself from personal liability under the dealer agreement. As assignor, Mr. Running, “* * * agree (d) to remain personally liable and responsible to Manufacturer for the full and complete performance of all the duties, responsibilities, and obligations of Dealer under said agreement, notwithstanding this Assignment * * *." (Emphasis added.) Since Mel-O-Dee acceded to the status of “dealer” under the dealer agreement, the majority says, Running was released from personal liability on his original obligation to pay third-party debts. As assignee, Mel-O-Dee acquired all title and interest in the Dealer Agreement. Thus, Mel-O-Dee became the dealer and therein personally liable for defaulting third parties in purchase contracts with Wick. In other words, my colleagues conclude, a novation, or substituted contract, occurred which discharged Running from his obligations under the dealer agreement. Arguably, the dealer agreement and the assignment agreement contain elements of a novation. These include: a valid prior obligation; a subsequent agreement of all parties to a new agreement; discharge of a previous contractual duty; and the validity of a new contract. (Kiefer v. Reis (1928), 331 Ill. 38, 43; and see generally J. Calamari and J. Perillo, Contracts sec. 345, at 526-27 (1970).) Novation, however, is an affirmative defense that must be pleaded and proven. Defendant did not follow that procedure. Rather, defendant filed a motion to dismiss the complaint for failure to state a claim. The trial court granted the motion to dismiss. The dismissal order was not only premature, it was improper. The complaint did and does state a cause of action that turns on the claim of plaintiff against defendant based on defendant’s personal guarantee. That claim was properly pleaded. The motion to dismiss should have been denied and the defendant ordered to plead over. Had that been done, defendant could have pleaded novation as an affirmative defense, the issues could have been joined and the matter could have proceeded to trial. Whether the assignment clause discharged Mr. Running’s personal liability might be resolved either way. Rut neither resolution could properly be decided as a matter of law on the motion to dismiss. The assignment agreement is without terms which state that upon execution Mr. Running’s personal liability somehow evaporates or is transferred. In fact, it is unreasonable to assume such assent was contemplated since the language "* * * notwithstanding the assignment * * *" lends itself to the conclusion that Mr. Running remained liable regardless of what obligations or duties Mel-O-Dee was assuming. Moreover, it cannot be ignored that, in reality, Mr. Sunning and Mel-O-Dee are one and the same. The trial judge was wrong in deciding this case against plaintiff on the defendant’s motion to dismiss. The matter should be remanded to the trial court so that the issues can be joined and the merits tried. Accordingly, I dissent.