source: Caselaw Access Project

author: JUSTICE McNAMARA

license: Public Domain

text:
    THEODORE ALPERT, Plaintiff-Appellant, v. CHARLES E. BERTSCH et al., Defendants-Appellees.
    First District (6th Division)
    No. 1—91—2731
    Opinion filed September 11, 1992.
    Rehearing denied October 27, 1992.

      Donald M. Thompson, of Chicago, for appellant.
    Patrick T. Driscoll, Jr., P.C., of Chicago, and Mark P. Wine and Robert J. McGillivray, both of Oppenheimer, Wolff & Donnelly, of Minneapolis, Minnesota, for appellees.
   JUSTICE McNAMARA

delivered the opinion of the court:

Plaintiff, Theodore Alpert, filed suit alleging breach of employment contract, breach of stock option contract, breach of fiduciary duty, breach of contract for medical insurance, interference with contract, invasion of privacy, defamation, common law fraud, and securities fraud against his former employer, International Cup Corporation (ICC) and four of the corporation’s individual shareholders and directors. Nonresidents Charles E. Bertsch, Gene Monnin, and James Watkins (defendants) filed a special and limited appearance to quash service of process for lack of personal jurisdiction. The trial court granted the motion, finding that plaintiff had failed to show that defendants had performed any acts which would submit them to personal jurisdiction under the long-arm statute. (Ill. Rev. Stat. 1989, ch. 110, par. 2 — 209.) (Neither ICC nor defendant shareholder Donald J. Hesch, a resident of Illinois, is a party to this appeal.)

We adduce the following background from the affidavits, pleadings and documents filed. In 1988, plaintiff, an Illinois resident, approached Bertsch, a resident of Indiana, with a business proposition which involved the acquisition of the assets of Advance Cup Corporation, a paper cup company located in Bennettsville, South Carolina, which was involved in bankruptcy proceedings. Bertsch conferred with Hesch, Monnin and Watkins about this opportunity. Monnin and Watkins are residents of Ohio and Minnesota, respectively. In December 1988, Bertsch, Hesch, Monnin and Watkins, together with Sherwood Properties Limited Partnership (Sherwood Properties), formed a joint venture to start a corporation to purchase the assets of Advance Cup Corporation. On December 14, 1988, ICC was incorporated as a Delaware corporation, licensed to transact business in South Carolina. The stock holdings of Bertsch, Hesch, Monnin and Watkins represent 84.2% of the issued and outstanding shares.

The first meeting of the board of directors of ICC was held on February 20, 1989. Bylaws were adopted, and plaintiff, Bertsch, Hesch and Monnin were elected as directors. Subscription agreements were also executed. On February 29, 1989, the bankruptcy court approved the sale of Advance Cup Corporation’s assets for the sum of $1,300,000.

On April 1, 1989, plaintiff and ICC entered into a written employment agreement wherein plaintiff agreed to serve as the president of ICC for five years. ICC reserved the right to terminate plaintiff “for cause,” which included the failure or refusal to perform duties under the agreement. The agreement provided that plaintiff would perform his duties at the principal executive offices in Bennettsville, South Carolina, and set forth a specified rate of compensation plus bonus, vacation, insurance and other employee benefits, as well as a stock option plan. The stock option plan permitted plaintiff to purchase 20% of the stock of ICC for $200,000, so long as he was employed by ICC. (Plaintiff owns 5.33% of the stock in ICC.) Plaintiff’s affidavit indicates that on February 27, 1989, he moved to South Carolina to manage ICC; however, he continued to maintain a residence in Chicago, where his wife lived.

The original capital structure of ICC provided for the issuance of 10.000 shares with a par value of $1, but a purchase price of $100. In March 1989, Bertsch, Hesch, Monnin and Watkins each purchased 2.000 shares of stock, leaving 20% of the outstanding stock available for plaintiff.

On December 1, 1989, a consent resolution was signed by plaintiff and defendant shareholders which stated that the original shareholders had contributed or agreed to contribute $1,800,000, part of which was to originally be treated as equity and part of which was to be treated as subordinated debt. The board determined that it would be better to convert this debt to equity so as to avoid any subordinated debt servicing obligations. Later that month, plaintiff decided to partially exercise his stock option and purchased 444.44 shares at a price of $225 per share.

ICC commenced operations in March 1989. A number of manufacturing problems developed, and many of the products manufactured were defective. In addition, a large quantity of products was produced but was not sold. Bertsch’s affidavit stated that at a board meeting in June 1989, plaintiff assured the directors that he could sell everything in the warehouse practically overnight and that the company would be breaking even within months. Plaintiff said that he needed additional funds, and the directors agreed to put an additional $1 million into the corporation. The directors also instructed plaintiff to straighten out the accounting department so that financial statements could be obtained.

The corporation continued to experience production problems and financial losses throughout the remainder of 1989. In December 1989, plaintiff sent a letter to the other directors attempting to explain the “larger than anticipated losses” and production problems. Nonetheless, plaintiff stated that the corporation was improving every day, and that business was getting better and “about to explode.”

On January 19, 1990, a meeting was held at the South Carolina plant to try to solve ICC’s problems. According to Bertsch, plaintiff did not recognize the existence of problems and continued to make excuses. At a formal board meeting on that date, plaintiff was asked to move back to Chicago and concentrate exclusively on sales. The board determined:

“[Plaintiff] had done nothing to improve sales or cash flow since our June meeting, nor had he done anything concerning better financial information for himself or us. After looking over the plant and talking to many people it was apparent that [plaintiff] was not going to get the job done and that all we could look forward to was a call for more money in the future.”

During the course of further investigation at the plant, the directors became aware of various ways in which plaintiff had mismanaged the plant. On February 16, 1990, a meeting was held because plaintiff had not sold much product, and the board was receiving threatening notes from him. The other directors attempted to discuss the seriousness of the company’s financial situation with plaintiff. In response, plaintiff stated: “We have a great company, everything is going to be all right. Again, if you had left me alone and given me more money, it would have been all right.”

A shareholder’s meeting was held later that day. All other shareholders, except plaintiff, signed a waiver of notice of the meeting. However, plaintiff did not object to the meeting and he attended it. Plaintiff was not elected as either a director or officer for the following year.

Shortly thereafter, the board of directors decided by consent resolution that plaintiff should be terminated as director and president of ICC. The board provided written notice to plaintiff that his employment was terminated as of that date, February 23, 1990, because of his failure to complete his duties in accordance with the business plan. The board of directors authorized eight weeks’ severance pay and discontinued plaintiff’s insurance rights.

On March 5, 1990, a telephone conference was held between plaintiff and defendant shareholders for the purpose of reconsidering the termination of plaintiff’s employment. Plaintiff was represented by counsel at this meeting. The shareholders upheld the termination.

Each defendant filed a supporting affidavit stating that he was not a resident of Illinois, that he did not transact any business in Illinois, and that he did not perform any of the enumerated acts under section 2 — 209 of the Illinois Code of Civil Procedure. Supplemental affidavits offered by defendants further indicated that any actions taken by them were made in a representative or fiduciary capacity as a shareholder of ICC.

The sole issue presented for review is whether defendants are subject to jurisdiction in Illinois under the long-arm statute. (Ill. Rev. Stat. 1989, ch. 110, par. 2 — 209.) That section provides in relevant part:

“§2 — 209. Act submitting to jurisdiction — Process.
(a) Any person, whether or not a citizen or resident of this State, who in person or through an agent does any of the acts hereinafter enumerated, thereby submits such person, and, if an individual, his or her personal representative, to the jurisdiction of the courts of this State as to any cause of action arising from the doing of any of such acts:
(1) The transaction of any business within this State;
(2) The commission of a tortious act within this State;
(7) The making or performance of any contract or promise substantially connected with this State;
(11) The breach of any fiduciary duty within this State;
(b) .A court may exercise jurisdiction in any action arising within or without this State against any person who:
(4) Is a natural person or corporation doing business within this State.” Ill. Rev. Stat. 1989, ch. 110, par. 2 — 209.

Initially we note that the burden of establishing personal jurisdiction rests with the party asserting the existence of jurisdiction. (Kutner v. DeMassa (1981), 96 Ill. App. 3d 243, 421 N.E.2d 231; Mergenthaler Linotype Co. v. Leonard Storch Enterprises, Inc. (1978), 66 Ill. App. 3d 789, 383 N.E.2d 1379.) In order to meet this burden, plaintiff must demonstrate that defendant committed one of the acts enumerated in the Hlinois long-arm statute; his cause of action arose from the act; and personal jurisdiction is consistent with due process. (Loos v. American Energy Savers, Inc. (1988), 168 Ill. App. 3d 558, 522 N.E.2d 841; Kutner v. DeMassa, 96 Ill. App. 3d 243, 421 N.E.2d 231.) The relevant inquiry in determining whether a nonresident defendant has the constitutionally requisite minimum contacts for personal jurisdiction to be asserted over him is whether the defendant engaged in some act or conduct by which he may be said to have invoked the benefits and protections of the law of the forum. (Gray v. American Radiator & Standard Sanitary Corp. (1961), 22 Ill. 2d 432, 176 N.E.2d 761.) The mere fact that a corporation by which a nonresident is employed, or in which he is a stockholder, is itself subject to Illinois jurisdiction does not subject that nonresident to jurisdiction. Mergenthaler Linotype, 66 Ill. App. 3d 789, 383 N.E.2d 1379.

In considering a challenge to its personal jurisdiction, a court may receive and weigh affidavits, and such conflicts as do exist in the affidavits and pleadings must be resolved in plaintiffs favor for purposes of determining whether a prima facie case for in personam jurisdiction has been established. (Wessel Co. v. Yoffee & Beitman Management Corp. (N.D. Ill. 1978), 457 F. Supp. 939, 940.) However, where well-alleged facts within an affidavit are not contradicted by counteraffidavit, they must be taken as true notwithstanding the existence of contrary averments in the adverse party’s pleadings. Central Clearing, Inc. v. Omega Industries, Inc. (1976), 42 Ill. App. 3d 1025, 356 N.E.2d 852.

The essence of plaintiff’s argument for his breach of contract claims is that the corporate veil should be pierced because each act of nonresident defendant shareholders described in the complaint was done on their own behalf and as agents for and in conspiracy and agreement with each other. In his complaint and affidavit, plaintiff alleges that the following acts committed by defendants took place in Illinois: (1) the stock option agreement was negotiated with plaintiff in Illinois by Hesch acting for ICC, and by Bertsch and Monnin making conference calls to plaintiff and Hesch in Illinois with Bertsch, Monnin and Hesch acting for ICC; (2) Bertsch’s misrepresention of the amount of capital the shareholders would invest; (3) refusal to deliver additional shares of ICC stock was given on behalf of ICC in writing to plaintiff in Illinois; further, Bertsch and Watkins placed a call to plaintiff in Illinois in which they refused to issue more shares of stock; (4) plaintiff was fired in Illinois; (5) after plaintiff’s termination, the parties agreed in Illinois that ICC would continue paying his medical insurance coverage if plaintiff paid the monthly costs to ICC; and (6) alleged defamatory statements made by Hesch that plaintiff was terminated because of his health were made to customers and distributors in Illinois. (Hesch is not a party to this appeal.)

We find a brief review of the principles underpinning corporate law to be instructive. It is well established that a corporation is a legal entity which exists separate and distinct from its shareholders, officers, and directors, who are not, as a general rule, liable for the corporation’s obligations. (Stop v. Chicago Aces Tennis Team, Inc. (1978), 63 Ill. App. 3d 23, 379 N.E.2d 1298; Berlinger’s, Inc. v. Beefs Finest, Inc. (1978), 57 Ill. App. 3d 319, 372 N.E.2d 1043.) The rule applies even in instances of a so-called close corporation, one in which the stock is held in a few hands and is not frequently bought and sold. There is no specified or required minimum number of stockholders for a valid corporate existence and corporations with a single shareholder have received judicial sanction. Amsted Industries, Inc. v. Poliak Industries, Inc. (1978), 65 Ill. App. 3d 545, 382 N.E.2d 393.

A corporate entity will be disregarded and the veil of limited liability pierced where it would otherwise present an obstacle to the protection of private rights or where the corporation is merely the alter ego or business conduit of a governing or dominating personality. (Gallagher v. Reconco Builders, Inc. (1980), 91 Ill. App. 3d 999, 415 N.E.2d 560.) For the doctrine traditionally known as the “piercing of the corporate veil” to apply, two requirements must be met: first, there must be such unity of interest and ownership that the separate personalities of the corporation and the individual no longer exist; and second, circumstances must be such that an adherence to the fiction of separate corporate existence would sanction a fraud or promote injustice. Central States, Southeast and Southwest Areas Pension Fund v. Gaylur Products, Inc. (1978), 66 Ill. App. 3d 709, 384 N.E.2d 123; Stap v. Chicago Aces Tennis Team, Inc., 63 Ill. App. 3d 23, 379 N.E.2d 1298; Berlinger’s, Inc. v. Beefs Finest, Inc., 57 Ill. App. 3d 319, 372 N.E.2d 1043.

In this case, plaintiff failed to demonstrate that the corporate veil should be pierced and defendants subjected to personal jurisdiction. The record reveals that defendants entered into a joint venture to purchase the assets of Advance Cup Corporation, and became incorporated as a Delaware corporation licensed to transact business in South Carolina. The assets of Advance Cup were purchased for $1,300,000. We are unpersuaded by plaintiff’s conclusory allegations that ICC was undercapitalized from its inception, for the total capital invested. was $1,800,000, which appears adequate for a corporation of this size. The directors signed consent resolutions as required to resolve any significant problems confronting the corporation. We also note that there has been no allegation of any commingling of funds between the shareholders and ICC, or that the shareholders have treated ICC’s assets as their own.

At the first board meeting on February 20, 1989, ICC adopted its bylaws, elected directors and executed subscription agreements. Thereafter, the directors met on a regular basis to discuss the various manufacturing problems encountered by ICC. Corporate records and minutes of the meetings were also taken. While the notice requirements for certain meetings may not have been strictly adhered to in each instance, we do not find that fact, in itself, fatal to the corporate existence.

In sum, we find no evidence in the record to indicate that ICC did not have a separate ownership existence, or that it was merely the alter ego of defendant shareholders. In light of this determination, plaintiff’s counts against nonresident appellees sounding in breach of contract for termination of the employment agreement, breach of stock option agreement and breach of contact for medical insurance must fail.

Moreover, we further find that defendants are not subject to personal jurisdiction through application of the fiduciary shield doctrine. The fiduciary shield doctrine provides that “if an individual has contact with a State only by virtue of his acts as a fiduciary of a corporation” (Olinski v. Duce (1987), 155 Ill. App. 3d 441, 443-44, 508 N.E.2d 398), such acts may not form the predicate for the exercise of jurisdiction over him as an individual. (Hurletron Whittier, Inc. v. Barda (1980), 82 Ill. App. 3d 443, 402 N.E.2d 840.) The foundation supporting this doctrine is that “ ‘it is unfair to force an individual to defend a suit brought against him personally in a forum with which his only relevant contacts are acts performed not for his own benefit but for the benefit of his employer.’ ” Washburn v. Becker (1989), 186 Ill. App. 3d 629, 632, 542 N.E.2d 764, quoting State Security Insurance Co. v. Frank B. Hall & Co. (N.D. Ill. 1981), 530 F. Supp. 94, 97.

In this case, all the acts complained of by plaintiff were undertaken by defendants in their representative or fiduciary capacity on behalf of the corporation, and not as part of a conspiracy or secret partnership. In his complaint, plaintiff admits that the stock option negotiations made in Illinois by Bertsch and Monnin were made while acting for ICC. Too, any representations concerning the amount of equity that would be invested in ICC were made for the benefit of the corporation and not defendants. We also find that plaintiff’s complaint alleging that Bertsch and Watkins placed a conference call to plaintiff in Illinois in which they refused to allow ICC to deliver more shares of stock to plaintiff was also made in their fiduciary capacity as shareholders of ICC and is thus not actionable against them personally. Assuming that these acts may in fact subject a foreign corporation such as ICC to Hlinois jurisdiction, we still need not conclude that an employee, shareholder, president, or member of the board of directors of that corporation is also subject to Hlinois jurisdiction. Olinski v. Duce, 155 Ill. App. 3d 441, 508 N.E.2d 398; Illinois National Bank & Trust Co. v. Gulf States Energy Corp. (1981), 102 Ill. App. 3d 1113, 429 N.E.2d 1301.

We turn now to plaintiff’s contention that jurisdiction exists because of the breach of fiduciary duty claim. Plaintiff maintains that by virtue of their majority ownership of ICC, defendants owed him and other minority shareholders a duty to act fairly with them. Plaintiff alleges that defendants breached this duty by wrongfully valuing and issuing stock to themselves without proper board action. In addition, plaintiff’s wrongful termination prevented him from purchasing more stock. Plaintiff argues that the breach of fiduciary duty constitutes a tortious act in Illinois.

However, in Young v. Colgate-Palmolive Co. (7th Cir. 1986), 790 F.2d 567, it was determined that the situs of the tort is the place where directors took board action, and the fact that shareholders might have been injured in Illlinois by the allegedly tortious act did not mean that the tort was committed in Illlinois for purposes of long-arm jurisdiction. “[T]he place of a wrong is where the last event takes place which is necessary to render the actor liable.” (Green v. Advance Ross Electronics Corp. (1981), 86 Ill. 2d 431, 437, 427 N.E.2d 1203.) In view of the fact that the board action which plaintiff complains of occurred in South Carolina and not in Illinois, we do not find that the alleged breach of fiduciary duty subjects defendants to Illinois jurisdiction.

Plaintiff next asserts that defendants interfered with his employment, stock option and medical insurance contracts by causing wrongful termination. He again argues that his employment and stock option contracts were terminated in Illinois by Hesch; also, that he received written notice from ICC’s counsel of the termination of all three contracts. However, as previously discussed, the actions taken by defendants and their counsel were in their capacity as representatives of ICC, and do not provide a proper basis for personal jurisdiction in Hlinois.

In the counts alleging invasion of privacy and defamation, plaintiff argues that defendants falsified the circumstances of the termination of plaintiff’s employment by making false statements about his health. Plaintiff claims that the circumstances of his termination and health are matters about which he has a legitimate expectation of privacy, and that the dissemination of said information precluded him from obtaining other employment.

In his affidavit, plaintiff attributes the defamatory statements to Hesch, who is a resident of Illinois and not a party to this appeal. Defendants have each specifically denied making such a statement. Thus, plaintiff must demonstrate the existence of a conspiracy in order to justify attributing these alleged statements to defendants for jurisdictional purposes, which he has failed to do.

Finally, plaintiff charges defendants with common law and securities fraud by making false statements about the capitalization of ICC to induce plaintiff into entering the stock option agreement. Plaintiff again relies upon representations made by Bertsch and Hesch in conference calls made to him while he was in Illinois. As heretofore discussed, these statements were made by defendants as representatives of ICC, and not in furtherance of their own personal interests.

For the reasons stated, the judgment of the circuit court of Cook County is affirmed.

Judgment affirmed.

EGAN, P.J., and RAKOWSKI, J., concur.

      Justice Rosemary LaPorta participated in oral argument prior to her death. Presiding Justice Edward J. Egan was substituted on the panel and has listened to the oral argument tape and has read the briefs.


author: JUSTICE MURRAY

text:
    THOMAS OQUENDO, Plaintiff-Appellant, v. TELEDYNE PINES, a Division of Teledyne Industries, Inc., Defendant-Appellee (Teledyne Industries, Inc., Third-Party Plaintiff; Sterline Manufacturing Corporation, Third-Party Defendant).
    First District (5th Division)
    No. 1—91—2846
    Opinion filed September 18, 1992.

      Michael W. Rathsack, of Chicago (Louis S. Goldstein, Cindy G. Fluxgold, and Michael W. Rathsack, of counsel), for appellant.
    Thomas R. Schutt and Mark T. Schmidt, both of Donovan & Olsen, of Chicago, for appellee.
   JUSTICE MURRAY

delivered the opinion of the court:

This is an appeal from an order of the circuit court granting summary judgment in favor of defendant, Teledyne Pines, a division of Tele-dyne Industries, Inc. (Teledyne), in a negligence action brought by plaintiff, Thomas Oquendo (Oquendo). The trial court ruled that, as a matter of law, Teledyne, the manufacturer of a pipe bending machine which allegedly caused plaintiff injury, owed no duty to Oquendo. We affirm.

The facts are not in dispute. In 1953 Teledyne manufactured a pipe bending machine bearing serial No. 106 11A 53 2020 and sold it to Sterline Showers Corporation in Chicago. The pipe bending machine, which had been designed by Teledyne in the 1940’s, was powered by a hydraulic system. Hoses containing hydraulic fluid hung underneath the machine.

On April 22, 1986, in the course of his employment with Sterline Manufacturing Corporation (Sterline), Oquendo operated the pipe bending machine bearing the above-stated serial number. While doing so, one of the hoses burst and sprayed Oquendo with the oily hydraulic fluid. As a result of being covered with this oily fluid, Oquendo slipped, fell and was injured.

Oquendo brought suit against Teledyne, alleging in his two-count third-amended complaint that the pipe bending machine was defective. Teledyne moved to dismiss the complaint, asserting that it was a product liability action brought more than 12 years after the date of sale and, as such, was barred by the statute of repose. (Ill. Rev. Stat. 1989, ch. 110, par. 13—213(b).) The trial court ruled that count II was premised on strict liability and dismissed that count. However, the trial court refused to dismiss count I, finding that it was premised on a theory of negligence.

Teledyne subsequently moved for summary judgment on count I, alleging that Oquendo failed to show that Teledyne owed a duty to him. The trial court reviewed the record, including the deposition testimony of Oquendo and his proffered expert, Thomas Green. After hearing argument, the trial court granted Teledyne’s motion for summary judgment in its favor. Oquendo then brought this timely appeal.

The sole issue in this appeal is whether the trial court erred in granting summary judgment to Teledyne. Oquendo argues that summary judgment was improper because it was reasonably foreseeable to Teledyne that a hydraulic hose on one of its pipe bending machines could rupture and cause an operator injury. Therefore, plaintiff argues it was incumbent upon Teledyne to guard against such risk. We disagree.

As stated in Ward v. K mart Corp. (1990), 136 Ill. 2d 132, 140, 554 N.E.2d 223, the essential elements of a cause of action based upon common law negligence are (1) the existence of a duty running from the defendant to the plaintiff, (2) a breach of that duty, and (3) an injury proximately caused by the breach of duty. Whether a duty exists is a question of law to be determined by the court. 136 Ill. 2d at 140.

The concept of duty in negligence cases is complex. However, there are certain factors that may be considered which are relevant to the inquiry as to whether a legal duty exists. They are: the reasonable foreseeability of injury, the likelihood of injury, the magnitude of the burden to guard against it, and the consequences of placing the blame on defendant. Ward, 136 Ill. 2d at 140-41; Kirk v. Michael Reese Hospital & Medical Center (1987), 117 Ill. 2d 507, 513 N.E.2d 387.

Although Ward discussed, in general, the method by which a court goes about determining whether a duty exists in a negligence action, the rationale for finding a duty in the Ward case itself is not applicable to the present case. Nor are any of the other cases cited to by plaintiff analogous to the situation presented here.

In Ward a duty was founded upon the common law duty that a landowner/occupier traditionally owed entrants upon his premises. In Dillion v. U.S. Steel Corp. (1987), 159 Ill. App. 3d 186, 511 N.E.2d 1349, and Brannon v. Southern Illinois Hospital Corp. (1978), 69 Ill. App. 3d 1, 386 N.E.2d 1126, other cases cited by plaintiff, the duty was premised upon the nondelegable duty of an employer to provide an employee with a safe place to work.

In the present case, however, plaintiff is not attempting to hold the employer responsible for failing to keep the workplace safe. Rather, plaintiff is attempting to hold the manufacturer of a machine, purchased by the employer and used by plaintiff, responsible for the safety of the workplace when plaintiff, in his own deposition, testified that the reason for the rupture of the pipe bending machine’s hoses was “old age.”

If any breach of duty occurred on the facts in the present case, it was the breach of the employer’s duty to keep the machine in working condition and its failure to replace worn hoses.

Even in this appeal plaintiff is unable to identify any specific duly running from defendant to plaintiff. It appears that plaintiff believes that the mere fact that an injury occurred gives rise to some form of duty. However, a manufacturer is not required to guard against every harm that could possibly occur, only that harm that is reasonably foreseeable.

Furthermore, even if we were to decide that some duty existed, the plaintiff’s injury, based upon the facts of this case, would fall outside the scope of defendant’s duty. This was not a situation where plaintiff alleged that the hydraulic hose was defective because it was too thin to withstand the high pressures that would be necessitated by the hydraulic system of the machine. Nor did plaintiff allege that the hose was defectively designed because it had a tendency to burst forth from the machine upon rupture, striking the operator or bystanders. Plaintiffs instead would like this court to determine that the pipe bending machine was a dangerous instrumentality because it utilized hoses which were not impervious to cuts and the wear and tear of old age, thereby allowing such hoses to release their contents of hydraulic fluid, which by its nature is oily and slippery. To find a duty under these circumstances would be like allowing a suit against God for defectively designing the human body because it bleeds when cut.

As stated above, we are unable to find, on the facts of this case, that Teledyne owed any legal duty to plaintiff Oquendo. Therefore, we affirm the trial court’s order granting Teledyne summary judgment.

Affirmed.

LORENZ and GORDON, JJ., concur.


author: JUSTICE MANNING

text:
    THE PEOPLE OF THE STATE OF ILLINOIS, Plaintiff-Appellee, v. MICHAEL JONES, Defendant-Appellant.
    First District (1st Division)
    No. 1—90—0493
    Opinion filed September 21, 1992.
    Donna Hickstein-Foley, of Chicago, for appellant.
    Jack O’Malley, State’s Attorney, of Chicago (Renee Goldfarb, Veronica X. Calderon, and Mary Killough, Assistant State’s Attorneys, of counsel), for the People.
   JUSTICE MANNING

delivered the opinion of the court:

This case is before us the second time. Defendant, Michael Jones, along with codefendant James Nowden, was charged by indictment with five counts of murder, one count of rape, one count of robbery, two counts of aggravated kidnapping, one count of conspiracy, and one count of unlawful restraint. Following a joint jury trial in 1985, both defendants were found guilty of murder, aggravated kidnapping, rape and robbery, and both men were sentenced to concurrent terms of natural life imprisonment on the murder counts, a 60-year extended term on the rape count and seven years each on the aggravated kidnapping and robbery counts.

On June 13, 1988, this court reversed Jones’ conviction on sixth amendment grounds and remanded for a new trial. (See People v. Jones (1988), 169 Ill. App. 3d 883, 524 N.E.2d 593 (hereafter Jones I).) In Jones I, we held that under Cruz v. New York (1987), 481 U.S. 186, 95 L. Ed. 2d 162, 107 S. Ct. 1714, Jones was impermissibly prejudiced by the admission of Nowden’s statement which incriminated Jones, which was the only evidence that placed Jones at the scene of the crime with the victim, and which denied Jones his sixth amendment right to confrontation.

Following a retrial, the jury found Jones guilty of the same counts, and on January 16, 1990, the court sentenced him to concurrent terms of natural life imprisonment on the murder counts, and 45 years each on the rape and robbery counts. No sentence was imposed on the aggravated kidnapping count.

On this second appeal, Jones again contends that his sixth amendment right of confrontation was violated where a statement allegedly made by Nowden was introduced through the verbatim transcription of the 1985 trial testimony given by a witness, now deceased. He argues that trial counsel’s failure to object to the admission of said statement and his further failure to preserve the issue by raising it in the post-trial motion constitutes ineffective assistance of counsel. Jones also asserts that the trial court improperly sentenced him to 45 years’ imprisonment on the robbery conviction when a prior sentence for the same offense in an earlier trial had only resulted in a seven-year sentence.

The State presented the following evidence during Jones’ second trial. On March 31, 1984, around 3 a.m., Jones and Nowden kidnapped, robbed, raped and beat the victim which resulted in her subsequent death. Several State witnesses placed Jones at or near the scene of the crime. One witness, Mr. Walker, positively identified Jones in a lineup. Another prosecution witness, the codefendant’s girlfriend, testified that she saw Jones and Nowden in the apartment shared by her brother, Jerry Lloyd, and Jones around 9 a.m. on the morning of the incident. At that time, she noticed dirt on Jones’ shirt and stains that looked like blood on the bottom of his right pant leg.

Several police officers and law enforcement personnel testified about their respective investigations of the incident and the events which led to the arrest of the defendants. Detective Antonacci testified that Jones made several statements to him. Initially, Jones denied any involvement in the incident. However, after being told he was seen holding the victim in a headlock, Jones changed his version of what happened and stated that he acted as a lookout for Nowden. He admitted to planning the robbery and that he watched as Nowden raped the victim because he wanted a “blow job” from her. However, after seeing a car which he believed to be the police pass through the alley, Jones went upstairs to Jerry Lloyd’s apartment. As he was about to return to the basement, Nowden arrived at the apartment and told Jones what he had done to the victim. Detective Antonacci also stated that he was present when Jones spoke to the assistant State’s Attorney, Ms. Kawamoto-Degand, and heard her advise Jones of his constitutional rights before taking a four-page statement from him. During the trial, Ms. Kawamoto-Degand identified Jones’ statement and published it to the jury.

In addition to the testimony of medical personnel, the transcription of two deceased witnesses’ testimony from the Jones I trial was entered into evidence and published to the jury. Mr. Rayborn, the victim’s uncle, testified as a life and death witness. Lloyd also testified as a State witness. His testimony revealed that on the day in question he overheard both defendants engaging in a conversation about the attack on the victim. Lloyd knew both men, and on that night, he let Jones in the apartment through the back door and Nowden into the apartment through the front door approximately 10 minutes later. Both men told Lloyd not to let anyone else in the apartment. As Lloyd lay in his bed, he heard Jones say he was sorry that he had “raped the b — ” like he did and then heard Nowden say that all he did was “burn the b — -.” The State rested. Jones presented a certified copy of an arrest warrant for one of the State’s witnesses but presented no other evidence or testimony in his behalf.

Jones first contends that his constitutional right of confrontation was violated when the statement made by Nowden, that all he did was “bum the b — ,” was introduced in evidence through the publication of the transcription testimony given by witness Lloyd, who was deceased at the time of the second trial. The People first maintain that Jones waived this issue for review on appeal by failing to object at trial or raise the issue in the post-trial motion for a new trial. They also assert that the alleged error was not of the magnitude to invoke the plain error doctrine. People v. Enoch (1984), 122 Ill. 2d 176, 522 N.E.2d 1124.

The record indicates that this issue was not preserved for review. However, due to the magnitude of the alleged error, we will review it on appeal pursuant to the plain error doctrine. (See 134 Ill. 2d R. 615(b).) In reviewing this issue, we also will consider Jones’ claim of ineffective assistance of counsel. At the beginning of the trial the court addressed a defense preliminary motion with respect to who would read the prior recorded transcript of the testimony of deceased witnesses. Defense counsel did not, however, raise an issue as to the admissibility of the testimony. The court, however, stated, “I still would allow the defense, if they found something in those transcripts that they thought was inadmissible, for some reason, to make an objection.” Neither did counsel raise an objection at the time Lloyd’s testimony was read to the jury. Strickland v. Washington (1984), 466 U.S. 668, 80 L. Ed. 2d 674, 104 S. Ct. 2052, sets forth a two-prong test for defendants to demonstrate when they are challenging counsel’s representation. In order to prevail on a claim of ineffective assistance of counsel, a defendant must establish: (1) the defense counsel’s performance deviated from an objective standard of reasonableness, and (2) the defendant was substantially prejudiced by the alleged errors, such that the verdict would have been different. Although we believe defense counsel’s failure to redact any part of Lloyd’s testimony may be considered conduct below an objective standard of reasonableness, we find that Jones suffered no substantial prejudice because of the error. Neither do we believe that the admission of the verbatim testimony, which includes the complained-of statement of Nowden, violated Jones’ right of confrontation.

This court reversed the first conviction and remanded for a new trial because of confrontation problems; however, we find no similar reversible error present in the second trial. The right of confrontation is guaranteed to an accused. (See People v. Smith (1967), 38 Ill. 2d 13, 230 N.E.2d 188.) However, such right is not absolute and there are exceptions to the right. (See People v. Fiddler (1970), 45 Ill. 2d 181, 258 N.E.2d 359.) Moreover, confrontation errors, although constitutional violations, do not automatically mandate reversal. People v. Johnson (1987), 116 Ill. 2d 13, 28, 506 N.E.2d 563.

Unlike the trial in Jones I, other State evidence, independent of the single and isolated complained-of statement made by Nowden, placed Jones at the scene of the crime. Moreover, Nowden’s statement when viewed in the context of the discussion between the defendants did not inculpate Jones. The complained-of testimony revealed statements made by Nowden and Jones in which each of them discussed his respective involvement in the incident. The complained-of testimony did nothing more than repeat a conversation by Jones and Nowden which was overheard by the witness. There was no recount of the details of the crime, but only an admission of Nowden’s involvement in the crime. Jones’ own admission, as testified to by the detective and assistant State’s Attorney, shows his involvement in the incident. In that statement, Jones admitted that he and Nowden planned and carried out a robbery against the victim.

Moreover, neither the circumstances surrounding the admission nor the “interlocking” character of it evidenced presumptive unreliability. The statement was not made while Nowden was under arrest and was not connected to a confession given to the police or an assistant State’s Attorney.

Accordingly, we hold that the admission of codefendant Nowden’s statement here through the transcribed testimony of a third-party witness, now deceased, did not violate Jones’ right of confrontation; said statement did not specifically inculpate Jones and Jones’ own voluntary confession admitted his participation in the crime. Moreover, Jones’ confession was not contradicted thereby, and the testimony of the State’s witnesses regarding the persons seen and the occurrences at the scene corroborate the confessions. Thus, we find that reversal is not mandated.

The State has conceded during oral argument that this court should vacate Jones’ robbery sentence and either remand for a new sentencing hearing or impose a different sentence on the robbery conviction. The trial court imposed a more severe sentence following retrial and such is improper unless there is a showing that the court based such a sentence on objective information concerning identifiable conduct which occurred after the time of the original sentence proceeding. (People v. Baze (1969), 43 Ill. 2d 298.) Here, the State did not present any evidence of such conduct since the first trial and original sentence proceeding; therefore, we vacate the robbery sentence and reduce the sentence to seven years.

Affirmed in part; vacated in part and robbery sentence reduced.

BUCKLEY, P.J., and O’CONNOR, J., concur.


author: JUSTICE O’CONNOR

text:
    JOHN G. KOTSIAS, Plaintiff-Appellant, v. CONTINENTAL BANK, N.A., Defendant-Appellee.
    First District (1st Division)
    No. 1—91—1359
    Opinion filed September 21, 1992.
    John G. Kotsias, of Chicago, appellant pro se.

    Mayer, Brown & Platt, of Chicago (William E. Deitrick, Ruth Miller, and Ira J. Belcove, of counsel), for appellee.
   JUSTICE O’CONNOR

delivered the opinion of the court:

Plaintiff John Kotsias filed this action for monetary damages against Continental Bank, N.A. (Continental), alleging that it had wrongfully honored a forged letter of direction, purportedly authored by the then living settlor, George Korovinis, to remove plaintiff as the sole beneficiary of a Totten trust opened and maintained at defendant’s bank. Plaintiff’s amended complaint pursued theories of negligence, fraud, breach of contract and breach of various sections of the Uniform Commercial Code — Bank Deposits and Collections (the Code) (HI. Rev. Stat. 1989, ch. 26, par. 4 — 101 et seq.).

After a bench trial, the circuit court of Cook County entered judgment against plaintiff on all claims, holding that: (1) the Moorman doctrine, first enunciated in Moorman Manufacturing Co. v. National Tank Co. (1982), 91 Ill. 2d 69, 435 N.E.2d 443, barred plaintiff’s negligence count; (2) plaintiff failed to show that the letter of direction was a forgery; and (3) plaintiff’s claims were affirmatively barred by the doctrine of judicial estoppel and plaintiff’s failure to mitigate damages.

Plaintiff on appeal contests these findings and, in addition, alleges that the circuit court erred in failing to address his fraud and Code claims and that the court abused its discretion in allowing Continental to add during trial the affirmative defenses of judicial estoppel and mitigation of damages. We affirm.

On January 6, 1984, George Korovinis, age 94, opened and deposited $143,000 into a Totten trust account at Continental, naming plaintiff as the sole beneficiary. Plaintiff accompanied Korovinis, his “teacher, mentor and life-long friend,” to Continental and was present during the opening procedure.

On September 18, 1984, Continental received a letter of direction, purportedly handwritten and signed by Korovinis, to remove plaintiff as a beneficiary from the account. The letter stated that plaintiff “ha[d] been dishonest to me” and requested Continental to send a confirmation of the change.

Donna Bylina, a personal banking investigator with Continental, testified that she compared the letter’s signature with the trust account’s signature card. After concluding the two matched, Bylina caused Continental on September 19, 1984, to change the title of the account as directed from “George J. Korovinis Trustee for John G. Kotsias” to that of Korovinis in his individual capacity. Continental sent a letter of confirmation to Korovinis bearing the same date as the change. Continental never received any response to its confirmation letter.

Korovinis died on January 29, 1985. Within days, plaintiff contacted Continental regarding the account and was informed his name was no longer on the account. Plaintiff had not seen Korovinis for at least three or four months prior to his death. Plaintiff consulted with lawyers to determine any rights he may have had to the funds.

Following the appointment of a public administrator, Continental paid over to the administrator of the Korovinis estate the proceeds of the account, which then totaled $156,105.83. Although plaintiff testified that he knew the trust account funds were not going to him as early as August 1985, plaintiff never filed any claim against the estate during its administration relative to the trust account funds. On August 20, 1986, the estate was ordered closed, and the proceeds of the account were distributed to Korovinis’ heirs at law in Greece. No evidence exists that any heir knew of the account’s existence.

At approximately the same time that the Korovinis estate was being probated, Kotsias was pursuing a voluntary petition for bankruptcy. In that petition, filed on November 27, 1985, Kotsias affirmatively answered “none” to a question asking for a listing of all “contingent and unliquidated claims of every nature.” Kotsias did list an $11,000 debt to the Korovinis estate, but labeled the debt “disputed.”

Plaintiff obtained a discharge of his debts from the bankruptcy court on May 20, 1986, and plaintiff’s bankruptcy estate was closed on August 29, 1986, nine days after the closure of the Korovinis estate. Two months later, plaintiff filed an appearance with the probate court and later petitioned to reopen the Korovinis estate. The probate court denied plaintiff’s petition on the grounds of tardiness and plaintiff’s failure to provide any justification for his delay.

Plaintiff filed the instant action against Continental on September 6, 1989, four years and nine months following Korovinis’ death. In his initial pro se complaint, plaintiff did not specify what legal theory of recovery formed the basis of his suit, but he nevertheless sought $20 million in damages.

The circuit court heard three days of testimony in late October 1990. Kotsias filed an amended complaint, and the court permitted Continental to file an amended answer which included the affirmative defenses of judicial estoppel and mitigation of damages. The trial concluded with a short day of testimony in December 1990.

On April 11, 1991, the circuit court entered final judgment against plaintiff. In part, the circuit court concluded that not only did plaintiff fail to prove the letter of direction to be a forgery, but that Continental, although not required to do so, proved by a preponderance of the evidence that the letter originated with Korovinis.

On review, we agree with Continental that whether it breached a contract or duty of care, committed fraud or wrongfully dishonored an item under section 4 — 402 of the Code turned on whether plaintiff proved by a preponderance of the evidence that the letter of direction was a forgery. We believe, therefore, that the dispositive issue on appeal is whether the circuit court’s factual conclusion on the authenticity of the letter of direction was contrary to the manifest weight of the evidence. As discussed more fully below, our review of the evidence leads us to conclude that the manifest weight of the evidence supports the court’s belief that Korovinis authored the letter.

Because Korovinis is deceased, and no person testified to have witnessed Korovinis’ execution of the letter of direction, no direct evidence exists that Korovinis authored the letter. However, Korovinis’ authorship could be proven by circumstantial evidence:

“Proof of authenticity or identification may be by direct or circumstantial evidence.
*** In reaching its determination as to admissibility, the court must view all the evidence introduced as to authentication ***, including issues of credibility, most favorable to the proponent. If upon consideration of the evidence as a whole, the court determines that the evidence is sufficient to support a finding by a reasonable juror that it is more probably true than not true that the matter in question is what its proponent claims, the evidence will be admitted. *** The ultimate decision as to whether a person, document, or item of real or demonstrative evidence admitted in evidence is as purported is for the trier of fact.” M. Graham, Cleary & Graham’s Handbook of Illinois Evidence §901.1 (5th ed. 1990).

Support for our affirmance on the factual issue of the letter’s authenticity begins with an analysis of plaintiff’s own testimony. Plaintiff testified that he, his -wife and grandmother, and Korovinis were the only people whom plaintiff knew to have knowledge of the fact that plaintiff was a beneficiary of the account. Plaintiff testified that Korovinis was extremely secretive about his finances and that Korovinis told plaintiff numerous times that he did not want others to know about the account. Plaintiff presented no proof that others, particularly Korovinis’ legal heirs, knew of the account.

The above circumstances support the trial court’s conclusion that Korovinis authored the letter of direction. (See People v. Buford (1982), 110 Ill. App. 3d 46, 441 N.E.2d 1235; People v. Munoz (1979), 70 Ill. App. 3d 76, 388 N.E.2d 133.) Authenticity on this ground is supported by the following rationale:

“ ‘For this principle to operate the [writing] must deal with a matter sufficiently obscure or particularly within the knowledge of the persons corresponding so that the contents of the [writing] were not a matter of common knowledge.
The evidential hypothesis in the authentication step is this: only those who knew the details in the [writing] could have written it; if the purported writer can be shown to have probably known the details and if no other person is likely to have known them when the [writing] was written, it is likely that he wrote it. The force of the inference decreases as the number of people who know the details and may have written the [writing] increases.’ ” Munoz, 70 Ill. App. 3d at 87, 388 N.E.2d at 141, quoting 5 J. Weinstein & M. Berger, Weinstein’s Evidence par. 901(b)(4) [01], at 46.

The Munoz rationale also applies to a statement in the letter of direction that plaintiff “has been dishonest to me.” At trial, Continental demonstrated that plaintiff and Korovinis may indeed have been having problems at the time the letter was authored.

Plaintiff testified that after the account was opened and prior to the letter of direction, Korovinis loaned plaintiff $11,000. Plaintiff never reimbursed Korovinis, and plaintiff’s obligation to repay Korovinis was discharged in bankruptcy. Plaintiff admitted to not seeing Korovinis for a period of about 3 to 4 months prior to Korovinis’ death, a period corresponding to the time the letter of direction was sent.

Linda Schiewe Wolf, a former social worker for Catholic Charities, testified that when she visited Korovinis a short time before his death in the winter of 1984-85, Korovinis was concerned about not being repaid a sum of money which he had loaned a former student. Korovinis repeated this concern several times.

Apart from the evidence supplying certain inferences of authorship based on the Munoz rationale, another statement in the letter is inconsistent with an inference of forgery: a request for confirmation of the change in title. We agree with the circuit court’s observation that an alleged forger would not likely place a confirmatory request in a forged letter of direction.

Belative to the requested confirmatory memoranda, Donna Bylina of Continental identified the letter she sent in confirmation of the title change. She testified that she typed the letter and envelope herself, placed the letter in the envelope, and placed the envelope in one of Continental’s out boxes for mailing. This mailing routine was the office practice. Continental never received a response to its confirmation.

Two inferences arise from Bylina’s testimony. The first is that Korovinis presumptively received the confirmation letter. (See First Na tional Bank v. Guerra Construction Co. (1987), 153 Ill. App. 3d 662, 668, 505 N.E.2d 1373; Tabor & Co. v. Gorenz (1976), 43 Ill. App. 3d 124, 129, 356 N.E.2d 1150.) The second is that, assuming Korovinis received the letter, Korovinis’ failure to respond evinces his agreement with the change in title, otherwise he would have responded to the contrary. Even if no letter of confirmation was sent as argued by plaintiff, plaintiff cannot get around the fact that the letter of direction requested confirmation, an unlikely request of a forger.

Plaintiff’s only evidence that the letter of direction was in fact a forgery came from his handwriting analysis expert. While the expert believed the letter of direction constituted a forgery, his testimony is suspect. First, the latest standard the expert used was written in January 1983, 20 months prior to the alleged authorship of the letter of direction. Other standards the expert utilized were written by Korovinis in the early 1940’s. On cross-examination, the expert could not rule out that a near-death change in Korovinis’ health accounted for the change in writing he observed.

Second, the expert concluded that the signature card and check used to fund the account were forgeries. This conclusion, as the circuit court noted, is indeed “curious,” in light of the undisputed evidence that plaintiff and Korovinis opened the Totten trust account together.

Finally, plaintiff’s expert evidence was in contrast to the testimony of Bylina, who testified that she personally compared the signature on the letter of direction with the signature card and concluded that they matched. The respective weight and credibility of plaintiff’s expert and Bylina were for the trial court to determine (Dayan v. McDonald’s Corp. (1984), 125 Ill. App. 3d 972, 986, 466 N.E.2d 958), as was the entire factual issue of who authored the letter of direction.

After reviewing the record evidence, we believe that the manifest weight of the evidence supports the trial court’s determination that Korovinis authored the letter of direction. Accordingly, as proof of a forgery was central to plaintiff’s claims, plaintiff’s causes of actions all must fail.

Although unnecessary to our disposition, we believe plaintiff’s claims against Continental are barred by the doctrine of laches. To assert the defense of laches, a party must show an unreasonable delay in bringing the action and that the delay materially prejudiced him. (Eckberg v. Benso (1989), 182 Ill. App. 3d 126, 537 N.E.2d 967.) Whole traditionally the doctrine has been viewed as barring equitable actions only (Mother Earth, Ltd. v. Strawberry Camel, Ltd. (1979), 72 Ill. App. 3d 37, 390 N.E.2d 393), recent cases have applied it to bar claims of law as well. See Coleman v. O’Grady (1990), 207 Ill. App. 3d 43, 565 N.E.2d 253, appeal denied (1991), 137 Ill. 2d 664, 571 N.E.2d 147; see also People ex rel. Jackson v. Degroot Motors Services, Inc. (1991), 222 Ill. App. 3d 594, 584 N.E.2d 263 (reviewing conflicting law on legal/equitable distinction).

In this case, plaintiff cannot readily dispute his knowledge of a potential claim to the trust account’s proceeds. He was present when the account was opened and witnessed Korovinis sign the necessary bank forms to establish him as beneficiary. Approximately one year following the opening of the account, Korovinis died. Within days, plaintiff learned he would not get the proceeds of the account.

Plaintiff testified that during the summer months following Korovinis’ death, he researched the filing of claims against an estate and consulted with an attorney. When this attorney failed to investigate plaintiff’s claim to his satisfaction, other attorneys were contacted, and one was even retained.

During the pendency of the Korovinis estate, plaintiff’s November 1985 petition for bankruptcy proceeded forward. In sworn disclosure statements, plaintiff did not disclose his contingent claim for the proceeds of the Totten trust account. However, plaintiff did list his debt to Korovinis in his bankruptcy petition. This debt was successfully discharged. Plaintiff’s bankruptcy case terminated in August 1986.

About the same time that plaintiff emerged from bankruptcy, the Korovinis estate was closed. Two months later, plaintiff sought to reopen the estate to assert a claim to the account proceeds. Plaintiff did not seek to amend his bankruptcy petition to include his claim against the estate. Plaintiff’s effort to reopen the estate was denied in June 1987. Plaintiff commenced the instant action against Continental in September 1989, some four years and nine months following Korovinis’ death.

We believe plaintiff’s failure to file a claim against Continental until almost five years after Korovinis’ death was an unreasonable delay. Whether this delay was motivated by plaintiff’s desire to “have his cake and eat it too” is not necessary for us to conclude. It is sufficient that plaintiff knew of a potential claim and failed to act upon it for almost five years.

The prejudice to Continental which resulted from plaintiff’s delay is manifest. Upon presentation of the public administrator’s letters of office, Continental paid over the account proceeds. Continental was merely a stake holder of the account proceeds at this time; it did not care who ultimately received the money. Had Continental timely received a claim from plaintiff to the funds, it could have taken appropriate actions to protect its interests. Failing such claim, Continental did what it was required to do: pay the funds to the Korovinis estate. Clearly, to now allow plaintiff to seek redress from Continental in light of plaintiff’s harmful delay is inequitable.

For the foregoing reasons, the judgment of the circuit court of Cook County is affirmed.

Judgment affirmed.

BUCKLEY, P.J., and CAMPBELL, J., concur.