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said “No funds shall be withdrawn from the minor’s account without prior court order.” Notwithstanding
that order, the bank permitted the mother to dissipate substantially all the funds before the child reached
majority and discovered the withdrawals.

Arguing that the essence of the action was breach of contract, the son sued his mother and the bank
after reaching majority. Invoking the 10-year limitation of 735 ILCS 5/13-206, the son was met by a
motion for summary judgment from the bank, which invoked the UCC’s three-year limitation set forth in
810 ILCS 5/4-111. The Appellate Court ruled that the more specific UCC provision prevailed over the
more general contract provision and hence the action was subject to the three-year bar.

► However, the court went on to hold that the “discovery rule” applied. Under this common-law rule,
the limitations period does not begin to run until the plaintiff discovers, or has reason to discover, the
cause of action. Because the mother had concealed her dissipation from the son and he allegedly had no
practical way to discover it until less than three years before the action was filed, the court ruled that the
action may have been timely. It reversed summary judgment for the bank and sent the case back for
proceedings to determine when the son knew or had reason to know that a cause of action might exist.

Memo Meets Requirements for 10-Year Statute of Limitations

A signed memo stating simply “Loaned to [Debtor] $100,000 to be paid back with interest” is a
sufficient writing to invoke Illinois’ 10-year period for the statute of limitations, a panel in the First District of
the Appellate Court ruled in January.

In Kranzler v. Saltzman, __ Ill.App.3d __, 2011 WL 181444 (2011), the court rejected an argument that
the memo did not constitute a sufficient contract for purposes of the statute set forth in 735 ILCS 5/13-
206, and held that it met the “other evidences of indebtedness in writing” clause in that statute. The
memo fairly contained an implied promise to pay, and that was sufficient, the court said. Moreover, the
court said, the statutory period on such a claim begins to run not when the writing or loan is made, but
when the defendant stops making payments.

Exchange Investigated Check in Reasonable Manner

A currency exchange which investigates a suspicious check in a commercially reasonable manner can
be treated as a holder in due course despite its suspicions regarding the legitimacy of the check it cashes,
a panel in the Appellate Court’s First District ruled recently.

In New Randolph Halsted Currency Exchange, Inc. v. Regent Title Ins. Agency, LLC, 405 Ill.App.3d
923, 939 N.E.2d 1024 (2010), the check misspelled the payee’s name, misstated the purpose, and was
significantly greater in amount than checks the payee had cashed at the exchange previously. However,
the exchange phoned the check writer and confirmed the check payee and amount (only later was it
uncovered that an employee of the payor-title company was issuing improper checks). The court held
that in light of the payor’s confirmation of the check, the mere suspicions of the exchange were insufficient
to prevent it from being treated as a holder in due course.

--John Hundley, Jhundley@lotsharp.com, 618-242-0246

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