Fifth Third Bank v. Brazier
144 N.E.3d 71
Ill. App. Ct.2019Background
- In 2004 Byron T. Brazier executed a promissory note and mortgage in favor of Heritage Community Bank; the note required payment on demand or by a definite date and named Heritage as lender.
- The note was modified in writing several times (including increasing principal to $150,000) and the final maturity was extended to February 22, 2008; the original note expressly vested rights in the lender’s “successors and assigns.”
- Heritage was placed in receivership in 2009; the FDIC sold Heritage’s assets to MB Financial Bank (MB) under a Purchase and Assumption Agreement, transferring MB’s interest in the note.
- MB filed a foreclosure/breach action in February 2015 (seven years and one day after maturity). MB admitted the original note named only Heritage and that the suit was filed more than five years after maturity.
- Defendant moved to dismiss/for summary judgment arguing the 5-year statute for unwritten contracts (735 ILCS 5/13-205) barred the suit because MB was not named in the note and parol evidence was needed; MB contended the 10-year statute for promissory notes (735 ILCS 5/13-206) applied.
- The trial court granted MB summary judgment applying the 10-year statute; defendant’s motion to reconsider was denied, final judgment entered, and Fifth Third (successor to MB) substituted on appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Which statute of limitations governs: 10-year (written/promissory notes) or 5-year (unwritten contracts)? | 13-206 (10 years) applies because the instrument is a promissory note and the Code and UCC treat notes as written evidences of indebtedness. | 13-205 (5 years) applies because MB (a later holder) is not named in the instrument and parol evidence is required to prove MB’s holder status, so the contract should be treated as unwritten. | 13-206 governs; promissory notes are subject to the 10-year period even when transfer/holder status is shown by extrinsic evidence. |
| Was MB entitled to enforce the note as successor/holder? | Yes — MB acquired Heritage’s interest under the Purchase Agreement and was the holder/owner entitled to enforce the note. | MB is not a named party in the instrument; thus its enforcement rights are challenged. | MB was properly found to be the owner/holder under the Purchase Agreement and entitled to enforce the note. |
| Does the need for parol evidence to prove the plaintiff’s status convert a negotiable note into an "unwritten" contract for limitations purposes? | No — negotiable promissory notes remain governed by the specific 10-year statute; parol evidence to prove transfer does not change that result. | Yes — following cases holding a contract that requires parol evidence is treated as oral for limitations purposes; therefore 5-year rule applies. | The court rejected that extension to negotiable instruments; the cited parol-evidence cases concern ordinary contracts and do not override the specific statute for notes. |
| Did the trial court’s prior denial of defendant’s motion create an irreconcilable inconsistency? | The interlocutory denial was revisable and the final judgment governs; any supposed inconsistency is immaterial on appeal. | The court made conflicting rulings between the two summary-judgment motions. | No reversible inconsistency; interlocutory rulings can be revised and appellate review attends the final judgment. |
Key Cases Cited
- Espinoza v. Elgin, Joliet & Eastern Ry. Co., 165 Ill. 2d 107 (1995) (summary-judgment standard: view evidence in favor of nonmovant)
- DeLuna v. Burciaga, 223 Ill. 2d 49 (2006) (statute of limitations defines period to commence suit after accrual)
- Sundance Homes, Inc. v. County of Du Page, 195 Ill. 2d 257 (2001) (purpose of limitations statutes is to encourage diligence)
- BAC Home Loans Servicing, LP v. Mitchell, 2014 IL 116311 (2014) (use legislative history and construction aids when statute ambiguous)
- Sadler v. Service, 406 Ill. App. 3d 1063 (2011) (legislative amendment moved negotiable note limitations into 13-206)
- Reconstruction Finance Corp. v. Lucius, 320 Ill. App. 57 (1943) (action by subsequent holder on promissory notes governed by the notes’ limitations period despite need for parol evidence)