FARM CREDIT BANK OF ST. LOUIS, Aрpellant, v. WALTER H. WHITLOCK et al., Appellees.
No. 71112
Supreme Court of Illinois
October 17, 1991
144 Ill. 2d 440 | 581 N.E.2d 664
For the foregoing reasons, the judgment of the appellate court is reversed and the judgment of the trial court is affirmed.
Appellate court reversed; circuit court affirmed.
Law Offices of Gustine & Theivagt, Ltd., of Carrollton (Charles E. Theivagt, of counsel), for аppellant.
Steven N. Mottaz, of Thomas, Mottaz, Eastman & Sherwood, of Alton, for appellees.
JUSTICE MORAN delivered the opinion of the court:
In January 1987, plaintiff, Farm Credit Bank of St. Louis (the Bank), filed a mortgage foreclosure suit in the circuit court of Greene County against the farm of Walter H. and Mary G. Whitlock (parents). Darrell L. Whitlock, Barbara S. Whitlock, Ronald K. Whitlock, Patricia A. Whitlock, and Helen M. (Whitlock) Phillips (collectively referred to as the children) were аlso named as defendants in the suit. The defendants answered the complaint with an affirmative defense, alleging that a general release in a contract between the Bank and the children served as a bar to the foreclosure suit. Both the
The Bank appealed the court‘s decision, and, with one justice dissenting, the appellate court affirmed. (202 Ill. App. 3d 609.) The Bank then filed a petition for leave to appeal to this court (
The issues raised are whether: (1) the mutual release paragraph in the “Agreement for Deed in Lieu of Foreclosure” released the loan on the parents’ farm; and (2) the parents were accommodation makers on the loan.
As this case comes to us on appeal from a grant of summary judgment, all of the facts are gleaned from the pretrial motions, and motions for summary judgment. In 1976, the parents and the children were engaged in separate farming partnerships. In late 1976, the children attempted to purchase a 200-acre farm, and approached the Bank concerning financing the $400,000 purchase price. At that time, the Bank refused to make the requested loan.
Following further discussions among the Bank, the children, and the parents, the Bank agreed to loan the children the entire purchase price for the farm, provided that the parents pledge their farm as security. (See
The second loan (Loan #2) consisted of a debt instrument (Loan No. 382075-2-0), in the principal amount
Loan #1 was executed by all the defendants (the parents and the children) on February 9, 1977, and Loan #2 was executed by the children alone on February 10, 1977. In his discovery deposition, Walter Whitlock testified that the understanding between him and the children was that the parents would continue to pay what they had originally owed on their preexisting mortgage with the Bank, while the children would pay off all of the excess debt on both loans.
The children subsequently defaulted on Loan #2. In order to avoid foreclosure, the Bank and the children negotiated a transfer of the new land to the Bank in exchange for a “Deed in Lieu of Foreclosure and Mutual Release of Liability” (release agreement). In pertinent part, section 5 of the release agreement, provides:
“As a part of the consideration of this agreement, Borrower, and each of them if more than one, for Borrower and for the heirs, personal representatives, successors and assigns of Borrower, does hereby remise, release and forever discharge The Federal Land Bank of St. Louis, The Federal Land Bank Association of Carrollton-Carlinville, Illinois, and the officers, employees, directors and stockhоlders thereof, and Bank, for itself and its successors and assigns, does hereby remise, release and forever discharge Borrower, and each of them if more than one, of and from all manner of actions, causes and causes of action, suits, debts, sums of money, accounts, reckonings, bonds, bills, specialties, covenants, сontroversies, agreements, promises, variances, trespasses, damages, judgments, executions, claims and demands, whatsoever, at law or in equity, and particularly without limiting the generality of the foregoing all claims relating to the mortgage loan transaction aforesaid and the conveyance of title hereunder, whiсh either party and their respective heirs,
personal representatives, successors, assigns and agents ever had, now have or may have in the future, for, upon or by reason of any matter, cause or thing, whatsoever.” (Emphasis added.)
In January 1987, the Bank filed the instant action to foreclose against the parents’ farm. In an affirmative defense, the defendants responded that the aforementioned deed-back liability release acted as a bar to the foreclosure action. See
Relying on their affirmative defense, the defendants filed a motion for summary judgment, with which they submitted the affidavit of Darrell L. Whitlock. (See
The Bank initially contends that the aforementioned general release language in the release agreement is restricted solely to Loan #2. The Bank argues that it was improper for the trial court to look beyond the language of the release agreement itself, as there are numerous references in the release agreement showing that it was meant to deal exclusively with Loan #2. For example,
The defendants argue that numerous factors support the conclusion that the general release language in the release agreement should apply to Loan #1 as well as Loan #2: (1) Loan #1 was executed by the parents and the children; (2) Loan #1 proceeds, in excess of the balance of the parents’ then-existing mortgage, were paid directly to the owners of the land that the children purchased; (3) the children paid the portion of the loan payments on Loan #1 that was in excess of the parents’ original mortgage payments; (4) the Bank‘s manager suggested this financing plan; and (5) the Bank‘s agents and attorneys prepared all the necessary loan documents.
A court properly grants summary judgment when the plеadings, depositions and admissions show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of
A release is a contract, and therefore is governed by contraсt law. (Polo National Bank v. Lester (1989), 183 Ill. App. 3d 411, 414.) The intention of the parties to contract must be determined from the instrument itself, and construction of the instrument where no ambiguity exists is a matter of law. Sutton Place Development Co. v. Bank of Commerce & Industry (1986), 149 Ill. App. 3d 513, 516.
A contract will be considered ambiguous if it is capable of being understood in more sense than one. (National Tea Co. v. American National Bank & Trust Co. (1981), 100 Ill. App. 3d 1046, 1049.) Where a court determines that a contract is ambiguous, its construction is then a question of fact, and parol evidence is admissible to explain and ascertain what the parties intended. (Quake Construction, Inc. v. American Airlines, Inc. (1990), 141 Ill. 2d 281, 288.) For the following reasons, we find that the general release is ambiguous on its face.
Where the releasing party was unaware оf other claims, Illinois case law has restricted general releases to the specific claims contained in the release agreement. (See, e.g, Todd v. Mitchell (1897), 168 Ill. 199.) However, where both parties were aware of an additional claim at the time of signing the release, courts have given effect to the general release language of the agreement to release that claim as well. Frank Rosenberg, Inc. v. Carson Pirie Scott & Co. (1963), 28 Ill. 2d 573, 578; Perschke v. Westinghouse Electric Corp. (1969), 111 Ill. App. 2d 23, 31; Cwik v. Condre (1954), 4 Ill. App. 2d 380, 383.
Nevertheless, the releаse agreement recites in section 5 that the Bank releases the borrowers from all manner of actions, suits, debts, promises, damages, claims and demands whatsoever, and, ”particularly without limiting the generality of the foregoing,” to all claims relating to Loan #2. (Emphasis added.) In other words, section 5 states that the Bank releases the borrowers from all actions and claims, but particularly those relating to Loan #2.
Both parties were aware of claims which might arise from Loan #1. It is not clear on the face of the release agreement whether the parties intended to limit the release to Loan #2 or to extend it to Loan #1 as well. Thus, we conclude that the parties’ intent must be determined from an examination of extrinsic evidence by the trier of fact.
In granting a motion for summary judgment it is improper for the court to speculate in order to determine the parties’ intent, as the courts below have done. Caution must be exercised in granting summary judgment so as not to preеmpt the right of a party to present the factual basis of his case to the fact finder. (Chaplin v. Geiser (1979), 79 Ill. App. 3d 435.) We therefore reverse the judgments of the circuit and appellate courts.
As this case comes to us on appeal from a grant of summary judgment, it is necessary to remand the cause for further proceedings. Because wе are re-
For the foregoing reasons, the decisions of the appellate and trial courts are reversed, and the cause is remanded to the circuit court of Greene County for further procеedings consistent with this opinion.
Appellate court reversed; circuit court reversed; cause remanded.
JUSTICE HEIPLE, dissenting:
In January 1977, the Whitlock children approached the Farm Credit Bank of St. Louis (Bank) to finance the purchase of additional land for their farming operation. The Bank initially refused the loan due to insufficient credit worthinеss but eventually agreed to the loan on condition that the parents would offer their own farm as collateral. The cash necessary to complete the purchase was advanced on two separate notes. Note #1 was secured by the equity in the parents’ farm. Note #2 was secured by the equity in the children‘s farm. Thе children subsequently defaulted and, to avoid foreclosure, negotiated a deed of their land to the Bank in lieu of foreclosure. This settlement included the execution of a mutual release of liability between the Whitlocks and the Bank. The release provides, in pertinent part:
“5. As a part of the consideration of this аgreement, Borrower *** does hereby remise, release and forever discharge The Federal Land Bank of St. Louis, the Federal Land Bank Association of Carrollton-Carlinville, Illinois, and the officers, employees, directors and stockholders thereof, and Bank, for itself and its successors and assigns, does hereby remise, release and forever discharge Borrower *** from all manner of actions, causes and causes of action, suits, debts, sums of money, accounts, reckonings, bonds, bills, trespasses, damages,
judgments, executions, claims and demands, whatsoever, at law or in equity, and particularly without limiting the generality of the foregoing all claims relating to thе mortgage loan transaction aforesaid and the conveyance of title hereunder, which either party and their respective heirs, personal representatives, successors, assigns and agents ever had, now have or may have in the future, for, upon or by reason of any matter, cause or thing, whatsoever.”
In January 1987, the Bank initiated foreclosure proceedings against the parents’ farm. Defendants moved for summary judgment, citing the release as a bar. The trial court granted the motion, finding that the two loan agreements constituted one single transaction and that the release was a general release encompassing the liability of the Whitlock children on the entire purchase price of the new land. The appellate court affirmed.
The majority opinion reverses, finding that factual issues concerning the extent of the release remain, making summary judgment inappropriate. The trial and appellate court rulings were correct. The majority opinion of this court is wrong. Accordingly, I respectfully dissent.
The loan and release agreements are contracts and, as the majority correctly concedes, governed by contract law. Contracts are properly interpreted by examination of the instruments themselves. The intentions of the partiеs to a contract must be determined from the instrument itself, barring ambiguity. (Sutton Place Development Co. v. Bank of Commerce & Industry (1986), 149 Ill. App. 3d 513.) The majority, in order to justify reversal, concludes that the release agreement is ambiguous and, therefore, parol evidence is admissible to determine what the parties intended upon its execution. However, in reviewing the language of the release, the majority states that “section 5 states that the Bank releases the
The trial court, in considering the motion for summary judgment, had before it all of the relevant documents in the сase. The release being clear on its face, there is no occasion to consider parol evidence. Summary judgment is properly rendered when the pleadings, depositions, and admissions on file show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.
Accordingly, I dissent.