Southern Wine and Spirits of Illinois v. Steiner
2014 IL App (1st) 123435
Ill. App. Ct.2014Background
- Guaranty executed May 7, 2001 by Steiner and Nelson for Superior Wine Selections to Morand Brothers Beverage Co.; guaranty stated it was continuing until written discontinuance and waived notice of protest or default.
- Morand later purchased by Southern Wine & Spirits of Illinois, Inc., acquiring Morand’s assets and continuing relationship with Superior.
- Superior began purchasing from Southern in 2003 after Morand-ownership period, and Southern became supplier.
- Superior bought $19,080.49 of goods from Southern in December 2010; Superior defaulted on payment and defendants refused to pay under the guaranty.
- Trial court dismissed Southern’s complaint with prejudice, holding the guaranty non-assignable; Southern appealed theorizing assignment to Southern and continued liability.
- Court affirmed the dismissal, concluding the guaranty was not assignable due to a material change in risk when Morand’s guaranty was assigned to Southern, which defendants did not know about.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the guaranty assignable to Southern without notice? | Southern argues no cancellation required; assignment transferred liability. | Guaranty prohibits assignment; no knowledge of assignment by Guarantors. | Yes, assignability issue resolved in favor of defendants; not assignable. |
| Did the assignment to Southern constitute a material change in the guaranty terms? | Assignment did not change obligations; risk unchanged. | Assignment created a material change in risk unknown to Guarantors. | Guaranty was not assignable due to material change in risk. |
| Were the allegedly admitted business records properly stricken, and would admission affect outcome? | Records show purchase history; should be admitted. | Records lack proper foundation; hearsay issue. | Even if admitted, outcome unchanged; court preserved dismissal. |
Key Cases Cited
- Claude Southern Corp. v. Henry’s Drive-In, Inc., 51 Ill. App. 2d 289 (1964) (assignment not a material alteration where terms unchanged and payment direction shifts may occur)
- Chicago Exhibitors Corp. v. Jeepers! of Illinois, Inc., 376 Ill. App. 3d 599 (2007) (modifications to lease not a material change releasing guarantors)
- Second National Bank of Peoria v. Diefendorf, 90 Ill. 396 (1878) (general rule guaranties are not assignable but exceptions apply based on material change in contract)
- Harris Trust & Savings Bank v. Stephans, 97 Ill. App. 3d 683 (1981) (discharge of guarantor depends on material change in debtor-creditor relations)
- Roels v. Drew Industries, Inc., 240 Ill. App. 3d 578 (1992) (discusses assignment nuances in guaranty contexts)
- Du Quoin State Bank v. Daulby, 115 Ill. App. 3d 183 (1983) (underlying contract construction governs guarantor liability)