Contract Law - Cryptic Promissory Note Is A Written Contract

The case was captioned Kranzler v. Saltzman, 07 L 6809.

Kranzler loaned Saltman $100,000 on March 10, 1997. Saltzman signed a written "memo" that stated, "Loaned, to Lewis Saltzman $100,000 to be paid back with interest." Saltzman made partial payments, but did not pay the entire balance of the loan. Saltzman's last payment was dated July 5, 2005.

In November 2007, Kranzler sued Saltzman for breach of contract. The trial court found in favor of Kranzler and entered a judgment in his favor in the amount of $81,344.12.

Saltzman appealed on several grounds. Saltzman argued that the lawsuit was governed by the five year statute that applies to unwritten contracts (735 ILCS 5/13-205). Kranzler argued that the applicable statute of limitation was the ten year statute which applies to written contracts (735 ILCS 5/13-206).

The Court concluded that the promissory note was a written contract. Under Illinois law, "where the writings attached to the complaint do not contain the essential terms of the contract, even if the essential terms may be easily ascertained elsewhere, the contract is not written but oral." Clark v. Western Union Telegraph Co., 141 Ill. App. 3d 174, 176 (1986). A writing is considered "complete" "when the language of the instrument may fairly be construed to contain a promise to pay money or contains facts from which the law implies a promise to pay, so long as parol evidence is not necessary to establish any essential elements." Toth v. Mansell, 207 Ill. App. 3d 665, 670 (1990).

The required elements to prove a promise to pay are "(1) the parties to the agreement, (2) the nature of the transaction, (3) the amount in question, and (4) at least a reasonable implication of an intention to repay the debt." In re Estate of Garrett, 24 Ill. App. 895 (1975).

The Court found the instrument contained all of the required elements to establish a promise to pay under Illinois law.

The Court also held that the statute of limitations began to run on the date of the last payment made on the debt. The statute began to run when a payment is due but remains unpaid. Thus, the lawsuit was timely.

Comment: the defendant's position was unsympathetic. The defendant wanted to be excused from the obligation based on the statute of limitations. Furthermore, the case shows that even crude and simple documentation can be sufficient to provide a creditor with legally enforceable rights. Plaintiff would have been better to hire a lawyer, but his own simple note was enforceable.

Edward X. Clinton, Jr.