Gary-Wheaton Bk. v. Burt

Plaintiff, the Gary-Wheaton Bank (bank), brought this suit against the defendant, Henry J. Burt, Jr., seeking to collect on a duplicate original promissory note given to the bank as collateral for a loan it made to Little Bear, Ltd. The bank alleged that it had loaned money to Little Bear, Ltd., a limited partnership of which Burt was a limited partner, taking as collateral an assignment of this note which was payable to Little Bear, Ltd., by Burt as payor. The loan was not paid when it became due, and the bank obtained a default judgment against Little Bear, Ltd. for the amount of the loan plus interest. That judgment was not paid, and the bank in this action is seeking payment from Burt alone. Following a bench trial, the court found for Burt and against the bank. The evidence is substantially undisputed. It shows that in 1973, Burt purchased, in his name alone, a three-tenths interest in Little Bear, Ltd., a limited partnership. The interest which was in Burt's name was in fact a joint venture consisting of Burt, James Knippen, Fredrick Noorlag and Paul Matson. In June 1974, Burt acquired another three-tenths interest. For each three-tenths interest, Burt paid $30,000 cash and executed a nonnegotiable note for $121,200 which was in his name alone. The notes were to be paid in annual installments of $24,240 over a period of five years. The first note, the subject of this suit, was executed on December 15, 1973, and the first installment was due November 15, 1974. The second note was executed June 15, 1974, and the first installment was due December 1, 1974. The notes were made payable to Little Bear, Ltd.