Newell v. Newell
942 N.E.2d 776
Ill. App. Ct.2011Background
- Jarred Newell sued Ruth Newell and First Midwest Bancorp for conversion and breach of contract over Ruth's unauthorized withdrawals from a savings account opened for Jarred's benefit.
- A 1993 settlement order required jarred’s funds be deposited in a federally insured depository and barred withdrawals without court order.
- Ruth opened a guardianship account for Jarred in 1994, signing as guardian; the account had a court-order withdrawal restriction tied to age.
- Ruth deposited $210,050.11 into the account and later withdrew funds without a court order; by 1997 the balance dwindled to $46.
- Jarred learned of the account in his teens; he was told the age requirement could be extended, and he waited years before investigating.
- Jarred filed suit on April 11, 2007; the trial court granted summary judgment to FMB, ruling the claim was time-barred under UCC 4-111.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Which statute of limitations applies to the bank claim | Newell argues UCC 4-111 governs the claim. | Newell asserts breach of contract 10-year term should apply. | UCC 4-111 applies; three-year limit governs. |
| Discretion whether discovery rule tolls accrual | Discovery rule tolls until Jarred knew or should have known of the injury and cause. | Discovery rule does not apply to UCC article 4 claims. | Discovery rule tolls accrual; remand to determine when Jarred knew or should have known. |
| Whether the discovery rule applies to breach of contract within UCC | Discovery rule can apply to UCC breach of contract claims. | Discovery rule not applicable absent fraud; cases limit to specific UCC contexts. | Discovery rule applicable to this breach of contract claim under UCC article 4 context. |
Key Cases Cited
- Haddad's of Illinois, Inc. v. Credit Union 1 Credit Union, 286 Ill.App.3d 1069 (1997) (discusses limitations for UCC article 3 conversion actions and fraud distinction)
- Watseka First National Bank v. Horney, 292 Ill.App.3d 933 (1997) (addresses related limitations considerations for bank-related claims)
- Continental Casualty Co. v. American National Bank & Trust Co. of Chicago, 329 Ill.App.3d 686 (2002) (discovery rule and accrual in mixed UCC/breach contexts; tolling discussion)
- Rodrigue v. Olin Employees Credit Union, 406 F.3d 434 (7th Cir. 2005) (discovery rule in some concealment contexts; tolling considerations)
- Castello v. Kalis, 352 Ill.App.3d 736 (2004) (discovery rule potential in certain circumstances)
- Knox College v. Celotex Corp., 88 Ill.2d 407 (1981) (origin of discovery rule concept in Illinois)
- Swann & Weiskopf, Ltd. v. Meed Associates, Inc., 304 Ill.App.3d 970 (1999) (breach of contract; discovery timing considerations)
- Zielinski v. Miller, 277 Ill.App.3d 735 (1995) (breach of implied warranties; discovery rule applicability in UCC context)