author: JUSTICE GORDON

text:
    DAVID SPITZ et al., Plaintiffs-Appellants, v. GOLDOME REALTY CREDIT CORPORATION, Defendant-Appellee.
    First District (5th Division)
    No. 1 — 88—0230
    Opinion filed February 15, 1991.
    — Rehearing denied March 27,1991.

      Alvin W. Block, Russell C. Green, and Jinhee Wilde, all of Block, Levy & Associates, of Chicago, for appellants.
    Baker & McKenzie, of Chicago, for appellee.
   JUSTICE GORDON

delivered the opinion of the court:

Plaintiffs, David and Barbara Spitz, appeal from an order of the circuit court of Cook County, chancery division, dismissing their class action complaint. No class had yet been certified. Plaintiffs alleged in their complaint that defendant, Goldome Realty Credit Corporation (Goldome), violated the Illinois Mortgage Escrow Account Act (IMEAA) (Ill. Rev. Stat. 1985, ch. 17, par. 4901 et seq.), by failing to notify plaintiffs in writing of their rights under the escrow provisions of the IMEAA. Defendant filed a motion to dismiss the complaint, asserting, among other things, that plaintiffs’ claim is barred under the doctrine of Federal preemption pursuant to section 2 — 619 of the Illinois Code of Civil Procedure (Ill. Rev. Stat. 1985, ch. 110, par. 2— 619). The court granted the motion on that ground, and plaintiffs appeal. For the following reasons, we reverse and remand.

Facts

Defendant is a wholly owned subsidiary service corporation of Goldome Secondary Markets, Inc. Goldome Secondary Markets, Inc., is itself a wholly owned subsidiary of Goldome Federal Savings Bank (Goldome Federal). At all times relevant to the case at bar, Goldome Federal was a chartered Federal savings institution subject to regulation by the Federal Home Loan Bank Board (Bank Board).

Plaintiffs obtained a mortgage loan from defendant for the purchase of a single-family residence. As a condition of the mortgage loan, defendant required plaintiffs to establish a tax escrow account. Plaintiffs then brought a class action lawsuit on their own behalf and on behalf of all other persons similarly situated, alleging that defendant violated section 11 of the IMEAA by failing to give plaintiffs and the other members of the class notice in writing of the IMEAA’s escrow provisions. These provisions allow the borrower to pledge an interest-bearing savings account in lieu of establishing an escrow account. Ill. Rev. Stat. 1985, ch. 17, par. 4906.

In its motion to dismiss the complaint, defendant asserted that because it was a wholly owned subsidiary of Goldome Federal, the Homeowners’ Loan Act of 1933 (HOLA), (12 U.S.C. §1461 et seq. (1987)), and the regulations promulgated thereunder (12 C.F.R. §545 et seq. (1987)), preempted the IMEAA under the supremacy clause of the United States Constitution. The trial court granted defendant’s motion, holding that the Bank Board’s plenary power to regulate federally chartered savings associations extends to subsidiary service corporations of such associations. Moreover, the trial court said, “the regulation of mortgage escrow or escrowlike accounts is exclusively federal.”

Opinion

Plaintiffs contend the trial court erred in dismissing the complaint, urging that: (1) although a State cannot regulate the “operations” of a federally chartered savings association, the activities of its subsidiary service corporation, including its home mortgage lending services, are not “operations” of the parent association so as to be precluded from State regulation; (2) Congress and the Bank Board have not manifested any intent to subject the entire field of service corporations to exclusive Federal regulation; and (3) there is no actual conflict between the IMEAA as it applies to service corporations and the HOLA.

Defendant argues that because Federal preemption of State regulation of federally chartered savings associations extends to the “operations” of those associations and a service corporation’s home mortgage activities are “operations” of its parent association, such activities are therefore preempted from State regulation. Defendant also contends that the Bank Board has regulated service corporations to such an extent so as to preclude any State regulation in that field. Furthermore, defendant asserts, there is a direct conflict between the HOLA and the IMEAA, so the Federal statute must control.

A reviewing court, on appeal from an order granting a motion to dismiss, must determine whether the allegations of the complaint interpreted in the light most favorable to the plaintiff are sufficient to set forth a cause of action upon which relief can be granted. Although the granting of a motion to dismiss is within the discretion of the trial court, the reviewing court can exercise its own judgment in determining if such a motion should be entertained. Harris Trust & Savings Bank v. Chicago Title & Trust Co. (1980), 84 Ill. App. 3d 280, 282-83, 405 N.E.2d 411, 414.

The supremacy clause of the United States Constitution provides “[the] Constitution, and the Laws of the United States which shall be made in Pursuance thereof *** shall be the supreme Law of the Land; *** any thing in the Constitution or Laws of any State to the Contrary notwithstanding.” (U.S. Const., art. VI.) Under this clause, Congress has the power to preempt any legislative field over which it has jurisdiction. (DeCanas v. Bica (1976), 424 U.S. 351, 47 L. Ed. 2d 43, 96 S. Ct. 933.) Preemption exists only where there is a “clear and manifest purpose of Congress” to foreclose a particular field to State legislation. (Jones v. Rath Packing Co. (1977), 430 U.S. 519, 51 L. Ed. 2d 604, 97 S. Ct. 1305.) That purpose may be expressly stated or may be inferred where “the scheme of federal regulation is sufficiently comprehensive” to make reasonable the assumption that Congress has left no room for supplementary State regulation. (California Federal Savings & Loan Association v. Guerra (1987), 479 U.S. 272, 280-81, 93 L. Ed. 2d 613, 623, 107 S. Ct. 683, 689.) Also, if the Federal legislation touches a field in which “the federal interest is so dominant that the federal system will be assumed to preclude enforcement of state laws” in the same field, preemption may be inferred. Rice v. Santa Fe Elevator Corp. (1947), 331 U.S. 218, 230, 91 L. Ed. 1447, 1459, 67 S. Ct. 1146, 1152.

Even if Congress has not foreclosed a legislative field from State regulation, preemption exists if there is an actual conflict between a State statute and Federal legislation. Such a conflict arises when “compliance with both federal and state regulations is a physical impossibility” (Florida Lime & Avocado Growers, Inc. v. Paul (1963), 373 U.S. 132, 142-43, 10 L. Ed. 2d 248, 257, 83 S. Ct. 1210, 1217, rehearing denied (1963), 374 U.S. 858, 10 L. Ed. 2d 1082, 83 S. Ct. 1861), or where the State statute acts as an “obstacle to the accomplishment and execution of the full purposes and objectives of Congress” (Hines v. Davidowitz (1941), 312 U.S. 52, 67-68, 85 L. Ed. 581, 587, 61 S. Ct. 399, 404). However, when Federal law preempts State law, it does so only to the extent necessary to protect the achievement of Federal goals. Merrill, Lynch, Pierce, Fenner, & Smith, Inc. v. Ware (1973), 414 U.S. 117, 127, 38 L. Ed. 2d 348, 359, 94 S. Ct. 383, 389.

There is no question that the doctrine of preemption applies with respect to the parent corporation (Olsen v. Financial Federal Savings and Loan Association (1982), 105 Ill. App. 3d 364, 434 N.E.2d 406); nor do the parties dispute that there is exclusive Federal regulation of federally chartered savings associations and that the Bank Board has the exclusive and plenary power to “regulate all aspects of the operations of Federal associations.” (12 C.F.R. §545.2 (1987).) At issue is whether the preemption that applies to the parent Federal savings associations is applicable to the State-chartered subsidiary service corporation.

Defendant asserts that because it originates home mortgage loans, it relates to the “operations” of its parent association and should be subject to exclusive Federal regulation. We disagree. While defendant does provide home mortgage loans, an activity routinely conducted by Federal savings associations, it is not “irrelevant,” as defendant contends, whether the loans are originated by the service corporation or its parent association.

Service corporations are required by Federal regulation to be separate entities from their parent associations. The Bank Board has specifically provided that the two entities should operate so that the parent association “does not dominate the service corporation to the extent that the latter is treated as a mere department of the former.” (12 C.F.R. §570.10(a)(5) (1988).) As the parties acknowledge, the very reason federally chartered savings associations establish service corporations is because these subsidiaries are not subject to the same extensive Federal regulation as their parents. If it truly were irrelevant as to which entity originates a home mortgage loan, as defendant contends, service corporations would function merely as lending services departments of their parent associations. Such a result would be inconsistent with both the Bank Board’s express intention to keep the two entities separate, as well as the parent association’s reasons for creating separate service corporations.

Defendant relies on Community Title Co. v. Roosevelt Federal Savings & Loan Association (Mo. App. 1984), 670 S.W.2d 895, in which the plaintiffs sought injunctive relief against a federally chartered savings and loan association. In denying the relief, the court said that “lending practices are clearly within the ‘operations' of a savings and loan.” (Community Title, 670 S.W.2d at 903 n.6.) However, that case is inapplicable to the case at bar. Here, it is the lending practices of a service corporation, not a federally chartered savings and loan, that are at issue. Because such practices, including the service corporation’s home mortgage activities, should not be considered to be the “operations” of the parent association, State regulation of service corporations should not be preempted on that basis.

Defendant contends that, even if its lending activities are not “operations” of Goldome Federal, the Bank Board has regulated service corporations to such an extent so as to preempt State regulation in that entire field. For example, regulations promulgated under the HOLA allow service corporations to engage in “such activities reasonably related to the activities of Federal savings associations as the [Bank Board] may approve.” (12 C.F.R. §545.74(c) (1990).) The majority of common stock of a service corporation must be owned by one or more Federal savings associations. (12 C.F.R. §561.45 (1990).) In addition, the Bank Board has the power to limit service corporation activities for supervisory reasons (12 C.F.R. §545.74(b)(iv) (1990)), and to govern the investment of parent associations in their subsidiary service corporations (12 C.F.R. §563.98 (1990)).

While service corporations are subject to Federal regulation in other areas as well as those described above, neither Congress nor the Bank Board has manifested any intention to preempt the entire field of service corporation activities. Although Congress has set limitations on how federally chartered associations may invest in service corporations (12 U.S.C. §1464(c)(4)(B) (1988)), no Federal statute exists specifically precluding State regulation of service corporations. In fact, service corporations are State chartered and must be organized under the laws of the State in which their parent association’s home office is located. (12 U.S.C. § 1464(c)(4)(B) (1988).) Moreover, while the Bank Board does regulate service corporations in some areas, such regulation is selective and sporadic. For example, while some of the Federal regulations specifically include service corporations in their definition of “association” (e.g., 12 U.S.C. § 1464(d)(2)(A) (1988) (which gives the Bank Board power to guard against unsafe or unsound practices by associations)), others are silent as to whether “association” includes service corporations. Therefore, it does not appear that the Bank Board, based on the explicit content of its regulations or on its pattern of regulatory activity, has indicated any intent to preempt any State regulation of service corporations.

This position is consistent with that taken by the Bank Board in its opinion letters on the subject. While opinion letters from administrative agencies are not binding authority, they may be persuasive (Skidmore v. Swift & Co. (1944), 323 U.S. 134, 140, 89 L. Ed. 124, 129, 65 S. Ct. 161, 164), and may be given deference where the issue is not governed by clear expressions in the statute. Securities Industry Association v. Federal Home Loan Bank Board (1984), 588 F. Supp. 749, 757.

In a letter dated August 13, 1985, General Counsel to the Bank Board stated that the Bank Board did not have any position on the applicability of the preemption regulation (12 C.F.R. §545.2 (1990)) to service corporations. (FHLBB Opinion Letter, August 13, 1985.) This indicates that the Bank Board had no affirmative interest in excluding service corporations from any State regulation. That lack of interest was explicitly articulated in another letter from General Counsel dated September 16, 1986, concerning a Wisconsin law setting forth notice of relationship requirements. General Counsel said that while the Wisconsin law was preempted by Federal law as it related to federally chartered savings associations, it would apply to transactions between subsidiaries or affiliates that are not Federal associations. FHLBB Opinion Letter, September 16,1986.

In an opinion letter dated November 21, 1988, Deputy General Counsel addressed in depth the very question posed here. In that letter, the Bank Board disclaimed any intention to preempt any State regulation of service corporations. Deputy General Counsel said that “neither Congress nor the Bank Board has expressed an intent to preempt state law by occupying the field with regard to the service corporations of federal associations. In this regard, it is contemplated that there would be a system of dual federal and state regulation.” (FHLBB Opinion Letter, November 21, 1988.) General Counsel then went on to say that, absent a direct conflict, Federal regulation will not preempt State law with respect to service corporations.

It is therefore apparent from the Bank Board’s opinion letters, as well as from the scope and pattern of its regulatory activity, that it did not intend to preempt any State regulation of service corporations. As previously noted, neither Congress nor the Bank Board has attempted to set forth a comprehensive regulatory scheme for service corporations as they did for their federally chartered parent associations. Recognizing the lack of such a comprehensive scheme, it is difficult to conceive that Congress and the Bank Board would only regulate the home mortgage activities of service corporations in selected areas if they did not intend to subject these entities to additional State regulation. An intent to preempt without providing a comprehensive regulatory scheme could lead to the intolerable result of permitting service corporations to perform lending activities, which are traditionally highly regulated, unfettered by any regulation. While States may not expand upon the permitted activities of service corporations (see 12 C.F.R. §545.74(c) (1990)), it is clear that Congress and the Bank Board did not intend to preclude the States from the power to regulate how those permitted activities may be performed. Therefore, we find that subsidiary service corporations of Federal savings associations are subject to State regulation, as long as that regulation does not conflict with existing Federal law.

In contending that an actual conflict exists between the HOLA and the IMEAA, defendant relies on Olsen v. Financial Federal Savings & Loan Association (1982), 105 Ill. App. 3d 364, 434 N.E.2d 406. In Olsen, the court held that the escrow provisions of the IMEAA were not applicable to Federal savings associations because they conflicted with Federal regulations and were therefore preempted. While the Federal regulation that preempted the IMEAA in Olsen has been repealed, a similar provision was passed in its stead. 12 C.F.R. § 545.32(b)(6) (1990) provides:

“Escrow accounts. A Federal savings association may require that all or any part of the estimated annual taxes, assessments, insurance premiums, and other charges on any loan be paid in advance to the Federal savings association, in addition to interest and principal payments on the loan, to enable the Federal savings association to pay such charges as they become due, consistent with the Real Estate Settlement Procedures Act of 1974 (‘RESPA’) [citationj.” (Emphasis added.)

If an association requires escrow accounts, it must disclose to the borrower the purpose of requiring the account, how the amount of escrow payments will be established, and the rights of the association if the borrower fails to make the escrow payments. 12 C.F.R. §545.33(f)(3) (1990).

The IMEAA allows borrowers to pledge an interest-bearing savings account with the mortgage lender in lieu of establishing an escrow account. (Ill. Rev. Stat. 1989, ch. 17, par. 4906.) Defendant contends that because this provision conflicts with Federal escrow requirements, it should therefore be preempted as in Olsen. We disagree. In Olsen, the IMEAA was held inapplicable to Federal savings associations, not their subsidiary service corporations. This is fully consistent with section 545.32(bX6), which applies specifically to Federal savings associations. However, since defendant is not a Federal savings association, but merely a subsidiary of one, it is not within the intended scope of section 545.32(b)(6). Therefore, because we hold that the escrow provisions of the HOLA are inapplicable to service corporations, we need not address whether an actual conflict exists between the HOLA and the IMEAA as it relates to those entities.

For the reasons set forth, we reverse the order granting the motion to dismiss and remand for further proceedings.

Order reversed.

MURRAY and McNULTY, JJ., concur.


source: Caselaw Access Project

author: JUSTICE McNULTY

license: Public Domain

text:
    DENISE SMITH, Indiv. and as Adm’x of the Estate of Richard Robert Smith, Deceased, Plaintiff-Appellant, v. NORTHEAST ILLINOIS REGIONAL COMMUTER RAILROAD CORPORATION, Defendant-Appellee (Arthur Hurley et al., Defendants).
    First District (5th Division)
    1 — 89—1757
    Opinion filed February 15, 1991.

      Randall F. Peters & Associates, of Chicago (Randall F. Peters and Richard L. Wattling, of counsel), for appellant.
    Lord, Bissel & Brook, of Chicago (C. Roy Peterson, Hugh C. Griffin, and Susan M. Jordan, of counsel), for appellee.
   JUSTICE McNULTY

delivered the opinion of the court:

Plaintiff Denise Smith, special administratrix of the estate of Richard Robert Smith, sued defendant Northeast Illinois Regional Commuter Railroad Corporation, also known as “METRA,” and two of its employees, alleging that Smith was injured and killed when his car collided with a METRA train. Counts I through III of the amended complaint seek compensatory damages from all defendants pursuant to the Wrongful Death Act (Ill. Rev. Stat. 1989, ch. 70, par. 1 et seq.) and the Survival Act (Ill. Rev. Stat. 1989, ch. IIOV2, par. 27 — 6) as well as recovery under the family expense act. These counts are not involved in this appeal.

In count IV against METRA, only, plaintiff individually sought punitive damages from METRA under the Public Utilities Act (Ill. Rev. Stat. 1989, ch. 1112/3, par. 5 — 201). METRA moved to strike and the circuit court struck, with prejudice, count IV of the amended complaint on the ground that METRA is a “governmental entity” under the Local Governmental and Governmental Employees Tort Immunity Act and as such “not liable to pay punitive or exemplary damages in any action.” (Ill. Rev. Stat. 1989, ch. 85, par. 2 — 102.) The circuit court’s order further stated that it was final and appealable pursuant to Supreme Court Rule 304(a) (134 Ill. 2d R. 304(a)).

For the following reasons, we affirm.

Facts

Plaintiff’s amended complaint alleges that decedent Richard Robert Smith was fatally injured on August 29, 1986, about 8 a.m. at the 1430 West 107th Street crossing in Chicago by METRA train No. 408. METRA employee-defendants, Arthur Hurley and Neil Hallahan, allegedly controlled and operated the northbound train. As Smith was travelling west over the tracks on 107th Street, his auto collided with the METRA train. Smith died shortly thereafter. Plaintiff allegedly incurred medical and burial expenses as a result of the accident.

Plaintiff filed a four-count complaint against METRA, Hallahan and Hurley. The only count on appeal is count IV of the amended complaint, seeking punitive damages from METRA alone, which the circuit court dismissed by final order on July 5, 1989.

Opinion

Plaintiff contends that Northeast Illinois Regional Commuter Railroad Corporation (METRA) is a separate public corporation established by ordinance of the Commuter Rail Board pursuant to section 2.20(a)(xii) (Ill. Rev. Stat. 1989, ch. 1112/3, par. 702.20(a)(xii)), and thus not within the definition of “local public entity” exempt from punitive damages liability under the Local Governmental and Governmental Employees Tort Immunity Act (Act or Tort Immunity Act) (Ill. Rev. Stat. 1989, ch. 85, pars. 2-101,1-206).

“Local public entity” as defined in section 1 — 206 of the Act at the time of decedent’s demise August 29, 1986, “includes a county, township, municipality, municipal corporation, school district, school board, forest preserve district, park district, fire protection district, sanitary district, and all other local governmental bodies.” Ill. Rev. Stat. 1985, ch. 85, par. 1 — 206.

Plaintiff contends that since METRA is defined by section 2.20(a)(xii) of the Regional Transportation Authority Act (111. Rev. Stat. 1989, ch. 1112/3, par. 701.01 et seq.) as a “separate public corporation” it was not a local public entity as defined in section 1 — 206 of the Tort Immunity Act at the time plaintiff's cause of action arose and thus not exempt from punitive damage claims.

Plaintiff further contends that Bilyk v. Chicago Transit Authority (1988), 125 Ill. 2d 230, 531 N.E.2d 1, and George v. Chicago Transit Authority (1978), 58 Ill. App. 3d 692, 374 N.E.2d 679, are inapplicable because the Chicago Transit Authority was designated as a municipal corporation in the statute that created it, while METRA was not. Plaintiff distinguishes West v. Northeastern Illinois M.R. Corp. (1989), 180 Ill. App. 3d 307, 535 N.E.2d 987, on the basis that both parties in West assumed that NIRC (METRA) was a local public entity for the purpose of the notice of claims provision of the Tort Immunity Act and, therefore, the court was not called upon to decide its status, the matter at issue here.

METRA asserts:

(1) the Regional Transportation Authority (RTA) is “a unit of local government, body politic, political subdivision and municipal corporation” (Ill. Rev. Stat. 1989, ch. 1112/3, par. 701.04); and

(2) the Commuter Rail Board, pursuant to section 2.20(a)(xii) (Ill. Rev. Stat. 1989, ch. 1112/3, par. 702.20(a)(xii)), “shall continue the separate public corporation known as the Northeast Illinois Regional Commuter Railroad Corporation [also known as METRA] ***. *** Such corporation shall have all the powers given the Authority [RTA] *** under Article II of this Act *** as are delegated to it by ordinance of the Commuter Rail Board *** and the same exemptions, restrictions and limitations as are provided by law with regard to the Authority [RTA] shall apply to such Corporation.”

METRA contends that its parent corporation, RTA, is a municipal corporation exempt from punitive damage liability under section 2— 102 (Ill. Rev. Stat. 1989, ch. 85, par. 2 — 102), and under section 2.20(a)(xii) (Ill. Rev. Stat. 1989, ch. 1112/3, par. 702.20(a)(xii)), it enjoys the same exemption as RTA.

In West, the court stated that METRA was a local public entity entitled to the then applicable notice of claim provisions of the Tort Immunity Act (Ill. Rev. Stat. 1983, ch. 85, par. 8 — 102).

Section 1 — 206 of the Tort Immunity Act was amended by Public Act 84 — 1431, effective November 25, 1986, to include within the definition of local public entity, “library systems and any intergovernmental agency or similar entity formed pursuant to the Constitution of the State of Illinois or the Intergovernmental Corporation Act as well as any not-for-profit corporation organized for the purpose of conducting public business.”

METRA is a not-for-profit corporation with no shareholders, funded with public funds from RTA and operates a commuter rail line in the public interest. The purpose of punitive damages is to punish the defendant, to teach him not to repeat outrageous conduct and to deter others from similar conduct. George v. Chicago Transit Authority (1978), 58 Ill. App. 3d 693, citing Mattyasovszky v. West Towns Bus Co. (1975), 61 Ill. 2d 31, 330 N.E.2d 509.

There are three principal reasons for exempting local public entities engaged in transportation from punitive damages liability:

(1) Punitive damage liability would deplete public transportation funds and be borne by taxpayers and fare-paying passengers.

(2) It is unsound public policy to punish taxpayers for misconduct of employees over whom they have no control.

(3) Punishing the public and fare-paying passengers who are not shareholders and who have no authority to change corporate management serves no societal interest.

See George v. Chicago Transit Authority, 58 Ill. App. 3d 693.

The amendment to section 1 — 206 of the Tort Immunity Act (Ill. Rev. Stat. 1985, ch. 85, par. 1 — 206) effective November 25, 1986, includes within the definition local public entity not-for-profit corporations like METRA organized for the purpose of conducting public business. This enactment did not confer a status on METRA of being exempt from punitive damage liability under the Act which it had not theretofore enjoyed; rather, it clarified the tax-exempt status from punitive damage liability that METRA already had.

Appellant’s analysis of applicable statutes and case law would subject METRA to punitive damage liability under the Tort Immunity Act for carrying on a public transportation function which its parent RTA could perform exempt from such liability. That result makes no sense and furthers no worthwhile social or governmental policy.

For the policy reasons set forth above, METRA is the type of local public entity exempt under Illinois common law later codified by statute from punitive damages liability.

Affirmed.

LORENZ, P.J., and MURRAY, J., concur.


author: PRESIDING JUSTICE LORENZ

text:
    SJS INVESTMENTS, LTD., Plaintiff-Appellant, v. La SALLE NATIONAL BANK, as Trustee, Defendant (The 450 East Partnership, a/k/a The 450 East Ohio Partnership, Indiv. and as Beneficial Owner of 450 East Ohio Street, Chicago, Defendant-Appellee).
    First District (5th Division)
    No. 1 — 89—2649
    Opinion filed February 15, 1991.

      Melbourne A. Noel, Jr., of Katten, Muchin & Zavis, of Oakbrook Terrace, and Stephen J. Schostok, of Laser, Schostok, Kolman & Frank, of Chicago, for appellant.
    Gerald D. Mindell, of Sperling, Slater & Spitz, of Chicago, for appellee.
   PRESIDING JUSTICE LORENZ

delivered the opinion of the court:

Plaintiff, SJS Investments, Ltd., appeals from an order granting defendant, 450 East Partnership, summary judgment. We consider whether this court has jurisdiction over plaintiff’s appeal when it was filed while defendant’s motion for attorney fees under section 2 — 611 of the Civil Practice Law (Ill. Rev. Stat. 1989, ch. 110, par. 2 — 611) was pending. For the following reasons, we dismiss the appeal for lack of jurisdiction.

On July 15, 1988, plaintiff filed a complaint for specific performance against defendant and La Salle National Bank. The trial court subsequently entered summary judgment in defendant’s favor and dismissed La Salle National Bank from the case. Within 30 days of that order, plaintiff filed a motion to reconsider which was denied on August 24,1989.

Also on that day, defendant filed a motion for attorney fees under section 2 — 611 which was set for hearing on October 19, 1989. While that motion was pending, on September 15, 1989, plaintiff filed a notice of appeal from the order granting defendant summary judgment and the order denying its motion to reconsider.

Opinion

In its brief, plaintiff states that the appeal was taken under Supreme Court Rule 303 (134 Ill. 2d R. 303), which requires a notice of appeal to be filed within 30 days of a final judgment or, if a post-trial motion was filed, within 30 days of the order disposing of the post-trial motion. The question this court must consider is what effect the pendency of defendant’s section 2 — 611 motion for attorney fees had on plaintiff’s ability to appeal.

The Illinois Supreme Court recently decided the issue presented in Marsh v. Evangelical Covenant Church (1990), 138 Ill. 2d 458, 563 N.E.2d 459. In Marsh, judgment was entered against plaintiffs, and within 30 days, they filed a notice of appeal. The same day the notice of appeal was filed, defendant filed a motion for attorney fees under section 2 — 611 (Ill. Rev. Stat. 1989, ch. 110, par. 2 — 611 (substantially preempted by Supreme Court Rule 137 (134 Ill. 2d R. 137))).

Defendant in Marsh moved to dismiss the appeal, contending that it was filed prematurely because its section 2 — 611 motion was pending. The court discussed Hise v. Hull (1983), 116 Ill. App. 3d 681, 452 N.E.2d 372, which stated that a section 2 — 611 motion filed after the entry of judgment was a separate action and the judgment may be appealed without a finding under Supreme Court Rule 304(a) (134 Ill. 2d R. 304(a)) that there was no just reason to delay enforcement or appeal.

The court in Marsh noted, however, that after the decision in Hise, section 2 — 611 was amended, effective November 25, 1986, and now provides that a motion for attorney fees under the section is part of the same proceeding and is not a separate cause of action. Therefore, under the amendment, an appeal could not be taken from a judgment if a section 2 — 611 motion was pending without a Rule 304(a) finding. The court found that the amendment to section 2 — 611 was applicable to plaintiffs’ complaint because it was filed after the effective date of the amendment. As a result, the court affirmed the dismissal of plaintiffs’ appeal because it was premature when defendant’s section 2 — 611 motion was pending and the order appealed from did not contain a Rule 304(a) finding.

Similarly, in this case, plaintiff filed a notice of appeal while defendant’s motion for attorney fees under section 2 — 611 was pending. The amendment to section 2 — 611 relied on in Marsh, which provides that a section 2 — 611 motion continues the proceeding, is also applicable to plaintiff’s complaint, filed after its effective date. Under Marsh, plaintiff’s appeal was premature because defendant’s section 2 — 611 motion was pending and the order appealed from did not have a Rule 304(a) finding. As a result, this court does not have jurisdiction under either Supreme Court Rule 303 or 304(a).

Appeal dismissed.

MURRAY and McNULTY, JJ., concur.


author: JUSTICE LaPORTA

text:
    SKIPPER MARINE ELECTRONICS, INC., Plaintiff-Appellant, v. UNITED PARCEL SERVICE, INC., Defendant-Appellee.
    First District (6th Division)
    No. 1 — 89—0629
    Opinion filed February 15, 1991.

      Shifris & Barry, Ltd., of Northbrook (Kevin G. Barry and Donald S. Shifris, of counsel), for appellant.
    Keck, Mahin & Cate, of Chicago (Robert E. Arroyo and Kevin Tottis, of counsel), for appellee.
   JUSTICE LaPORTA

delivered the opinion of the court:

This is an appeal by plaintiff, Skipper Marine Electronics, Inc., of the entry of summary judgment by the trial court in favor of defendant, United Parcel Service, Inc. (UPS).

Plaintiff raises three issues on appeal: (1) whether a motion for summary judgment must be denied where the verified pleadings raise issues of fact; (2) whether defendant, as a common carrier, exercised reasonable care and skill in making the delivery and collecting payment for the COD shipment; and (3) whether the defendant breached its contract with plaintiff when it failed to collect the COD amount in accordance with plaintiffs directions.

On March 18, 1988, plaintiff, a California corporation, shipped a COD parcel by defendant carrier to Steven Gunay in New Jersey. Defendant was a corporation registered to do business in the States of California and Illinois as a shipper of small parcels. The parties agree that plaintiff specifically instructed defendant in writing to accept payment of $1,394.00 in “cash, money order, certified or cashier’s check only,” that the COD tag contained these instructions, and defendant accepted the parcel for delivery on that basis. Plaintiff paid the required shipping charges.

Thereafter defendant delivered the parcel to Gunay and accepted in payment Gunay’s check (which does not appear to be a company check) dated March 2, 1988, payable to plaintiff’s order in the amount of $1,394.00. The check was stamped with the word “certified” on the back of the instrument. Plaintiff refused to accept the check when defendant forwarded it, stating that the payment was not in accordance with its shipping instructions since it was not cash, money order, cashier’s or certified check, and demanded compliance with its shipping instructions. Defendant refused to comply with plaintiff’s demand and again forwarded the original check to plaintiff, who refused to deposit the check for collection but instead filed suit alleging breach of contract and sought to recover the full shipping amount from defendant.

Defendant moved for summary judgment, alleging that its acceptance of the check which was stamped “certified” complied with plaintiff’s shipping instructions. Defendant also alleged that as a carrier it had no duty to guaranty the validity of the check.

The trial court entered summary judgment in favor of the defendant and dismissed the complaint with prejudice. Plaintiff appeals the judgment.

Initially, we note that defendant did not collect cash, money order or cashier’s check in payment of the COD charges and we need not consider the legal characteristics of any of those forms of payment. Plaintiff contends on appeal that defendant also did not collect a certified check from Gunay in payment of the COD charges and therefore defendant breached their contract by its failure to comply with plaintiff’s specific instructions as to the form of payment acceptable to plaintiff.

The defendant responds that, upon delivery of the parcel, the defendant accepted a check from the addressee which was stamped “certified” but which plaintiff claims is an improper and unauthorized instrument because it is not a “certified check.” The defendant on appeal cites to its applicable tariffs on file with the Interstate Commerce Commission as controlling and which provide in part at Rule 480:

“Unless instructions to collect cash only are written on the COD tag, the carrier will accept a check issued by or on behalf of the consignee. When instructions to collect cash are written on the COD tag, the carrier reserves [the] right to accept cash, cashier’s check, certified check, money order or other similar instrument issued by or on behalf of the consignee. All checks (including cashier’s check and certified checks) and money orders tendered in payment of COD’s will be accepted by the carrier at shipper’s risk, including, but not limited to, risk of nonpayment and forgery, and carrier shall not be liable upon any such instrument. All checks and money orders will be transmitted to the shipper together with the carrier’s own check for amounts collected in cash.”

Defendant argues that accordingly the risk of “nonpayment and forgery” of COD checks rests solely with the plaintiff.

Although a copy of the defendant’s tariff Rule 480 filed with the Interstate Commerce Commission was not a part of the trial court record and appears for the first time on appeal in defendant’s responding brief, we will consider it under the settled doctrine enunciated by this court in Ingram v. License Appeal Comm’n (1971), 131 Ill. App. 2d 218, 220, 268 N.E.2d 469, that although an appellant waives a point not raised in the trial court, an appellee may urge any point in support of the judgment on appeal even if not ruled on by the trial court as long as it finds support in the record. In its report of proceedings filed with the court, the defendant stated the trial judge inquired whether the tariff referred to in The Only Guitar Shop, Inc. v. United Parcel Service (N.Y. Sup. Ct., Special Term, Saratoga County, August 11, 1988), RJI No. 45 — 1—88—0728, was operative in the case before the court, and defendant responded that it was. The trial court then entered summary judgment in favor of defendant and dismissed plaintiff’s complaint with prejudice.

The Illinois Code of Civil Procedure provides, “The [summary] judgment sought shall be rendered without delay if the pleadings, depositions and admissions on file, together with the [supporting] affidavits, if any, 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.” Ill. Rev. Stat. 1987, ch. 110, par. 2 — 1005(c).

The record here included plaintiff’s verified complaint, defendant’s unverified summary judgment motion without affidavit, supported by its memorandum and copies of the cases on which defendant relied, plaintiff’s unverified memorandum answer without affidavit to the summary judgment motion, and copies of the cases on which plaintiff relied, and defendant’s unverified memorandum reply without affidavit in support of its motion. Defendant filed no answer to the complaint. No transcript of the hearing on the motion was filed. Each party prepared and filed a separate report of proceedings pursuant to Supreme Court Rule 323(c) (107 Ill. 2d R. 323(c)), both of which were approved and ordered filed by the court.

The parties agree to certain basic facts: the agreement of plaintiff-shipper to ship a parcel COD to Gunay and the agreement of defendant-carrier to deliver it on a COD basis in exchange for “cash, money order, certified or cashier’s check” in the designated amount; defendant-carrier delivered the parcel to Gunay and accepted a check drawn on the purported account of Gunay on funds at the Chase Manhattan Bank N.A. in the sum of $1,394.00 payable to “Skipper,” which check was stamped with the word “certified” on the back; defendant forwarded the check to plaintiff, who refused to accept the check and returned it to defendant with a demand for payment in conformity with the COD instructions; defendant thereupon returned the same check to plaintiff and plaintiff filed suit.

At the hearing on its motion for summary judgment, defendant argued that no question of material fact existed and that its acceptance of a “check stamped certified” as full compliance of its duty under the COD agreement was a question of law properly raised by its summary judgment motion. Plaintiff argued in opposition that the question of defendant’s compliance with their agreement was a question of fact and therefore was inappropriate for summary determination.

In considering a motion for summary judgment, all inferences are resolved in favor of respondent, and summary judgment will not be granted unless, viewing all evidence most favorably to the respondent, there is no genuine issue of material fact. (Rubin v. City National Bank & Trust Co. (1980), 81 Ill. App. 3d 1020, 1022, 402 N.E.2d 281.) The right of the moving party to judgment must be clear beyond question. (Rubin v. City National Bank, 81 Ill. App. 3d at 1022; Murphy v. Urso (1981), 88 Ill. 2d 444, 464, 430 N.E.2d 1079.) The right of the moving party to entry of judgment must be clear and free from doubt and the evidence strictly construed against the moving party (Miklos v. Caliendo (1987), 161 Ill. App. 3d 132, 137, 514 N.E.2d 35; Hansen v. Ruby Construction Co. (1987), 155 Ill. App. 3d 475, 479, 508 N.E.2d 301). Accordingly, entry of summary judgment has two requisites: the absence of any issue as to material fact and the unmistakable conclusion of law that the moving party is entitled to the judgment he seeks.

If what is contained in the pleadings and affidavits would have constituted all of the evidence before the court, and upon such evidence there would be nothing left to be decided by the trier of fact, then summary judgment is appropriate. (Fooden v. Board of Governors of State Colleges & Universities (1971), 48 Ill. 2d 580, 587, 272 N.E.2d 497, cert. denied (1972), 408 U.S. 943, 33 L. Ed. 2d 766, 92 S. Ct. 2847; Kroll v. Sugar Supply Corp. (1983), 116 Ill. App. 3d 969, 975, 452 N.E.2d 649.) An affidavit in support of a motion for summary judgment is actually a substitute for testimony taken in open court and should meet the same requirements as competent testimony. (Fooden, 48 III. 2d at 587.) The averments will be taken as true where not controverted by counteraffidavits notwithstanding the existence of contrary allegations in the opposing party’s pleadings which merely purport to establish bona fide issues of fact. Fooden, 48 Ill. 2d at 587.

However, where the facts support more than one conclusion or inference, including one unfavorable to the moving party, the motion for summary judgment should be denied. (Smothers v. Butler (1979), 78 Ill. App. 3d 1018, 1020, 398 N.E.2d 12, 14.) Where reasonable minds might draw different inferences from the facts of the case, summary judgment is improper. (Moran v. Aken (1981), 93 Ill. App. 3d 774, 777, 417 N.E.2d 846.) Where no fair-minded person could draw different inferences from undisputed facts, there is no triable issue and summary judgment should be granted. (Peltz v. Chicago Transit Authority (1975), 31 Ill. App. 3d 948, 951, 335 N.E.2d 74.) However, the movant must be the appropriate party for whom judgment should be entered.

Here the only sworn document before the court was plaintiff’s verified complaint. Defendant filed no answer to it. Neither did defendant file any sworn affidavit in support of its motion for summary judgment or in support of its reply to plaintiff’s response to the motion. Nor did plaintiff file any supporting sworn affidavit with its response to the motion.

The parties agree that their agreement required that delivery be made only upon the consignee’s payment in one of four acceptable forms, among them by certified check. A copy of the challenged “check stamped certified” is part of the record and from the record it appears the original instrument was before the court at the hearing on the motion.

The parties differ on the question of whether the carrier’s acceptance of the “check stamped certified” complied with plaintiff shipper’s instructions to defendant carrier to deliver the parcel only upon payment of cash, money order, certified or cashier’s check and they differ as to whether the check was a certified check.

The term “certified check” has a definite and accepted commercial meaning with specific characteristics unique to such an instrument and to no other. Because banking practices are subject to Federal regulation, a search of the Federal statutes lends guidance.

The United States Code defines the term “certified check” as follows:

“The term ‘certified check’ means any check with respect to which a depository institution certifies that—

(A) the signature on the check is genuine; and

(B) such depository institution has set aside funds which—

(i) are equal to the amount of the check; and

(ii) will be used only to pay such check.” 12 U.S.C.

§4001(6) (Supp. V 1987).

Black’s Law Dictionary defines “certified check” as “[t]he check of a depositor drawn on a bank on the face of which the bank has written or stamped the words ‘accepted’ or ‘certified’ with the date and signature of a bank official. The check then becomes the obligation of the bank. The certification of a check is a statement of fact, amounting to an estoppel of the bank to deny liability; a warranty that sufficient funds are on deposit and have been set aside. It means that [the] bank holds money to pay [the] check and is liable to pay it to [the] proper party.” Black’s Law Dictionary 207 (5th ed. 1981).

The parties to a check are the drawer, who signs the check authorizing payment from funds on deposit in his account, the drawee, which is the bank upon which the check is drawn, and to whom the direction to pay is given, and the payee, who is the person to whom the check is payable.

A certified check is one which a proper officer of the drawee bank recognizes and accepts as an appropriation of the amount specified thereon, for payment to the payee or holder (9 C.J.S. Banks & Banking §371 at 788 (1938).) A certified check is in effect an ordinary bill of exchange of an individual or corporation, drawn on a bank by a depositor and recognized and accepted by a proper officer of the bank as an appropriation of the amount specified therein to the payee named; a check drawn by a depositor on funds to his credit in a bank which a proper officer of the bank certifies will be paid when duly presented for payment. 9 C.J.S. Banks & Banking §371, at 788 (1938).

Certification implies that the check is drawn on sufficient funds in the bank’s possession, that they have been set aside for its payment, and that they will be thus applied when the check is presented for that purpose and binds the bank as a direct promisor or debtor of the holder (9 C.J.S. Banks & Banking §373, at 789-90 (1938).) By the certification, the bank enters into an absolute undertaking to pay the check when it is presented to the party entitled to the funds and guarantees that the signature of the drawer is genuine and that he has the capacity and authority to draw the instrument. (9 C.J.S. Banks & Banking §373, at 789 (1938).) The certification, in legal contemplation, transfers the funds represented by the check from the credit of the maker to that of the payee. (9 C.J.S. Banks & Banking §373, at 790 (1938).) Certified checks may be considered as the equivalent of cash. 9 C.J.S. Banks & Banking §380, at 795 (1938).

The Illinois Uniform Commercial Code at section 3 — 411 states that “[cjertification of a check is acceptance. Where a holder procures certification the drawer and all prior endorsers are discharged.” (Ill. Rev. Stat. 1987, ch. 26, par. 3 — 411(i).) The statute further defines "acceptance”: “(1) Acceptance is the drawee’s signed engagement to honor the draft as presented. It must be written on the draft, and may consist of his signature alone. It becomes operative when completed by delivery or notification.” Ill. Rev. Stat. 1987, ch. 26, par. 3-410(1).

The supreme court of Iowa considered the legal requirements for certification of a check (Menke v. Board of Education (Iowa 1973), 211 N.W.2d 601) and whether the stamped certification placed on the checks without the signature of an authorized bank official was sufficient at law to constitute proper certification of the check. There the bank contended that the stamped certification was sufficient. The court did not agree. In its analysis, the court rejected the stamped certification and observed that rubber stamps may be easily copied and secured with facility and reasoned that it is consistent with customary certification practice to conclude that the bank had adopted the stamp but that the present intention to authenticate a check required the script signature of a bank official to indicate certification. The court held, therefore, that a check stamped with words of certification and a signature line, but without any written, printed, stamped or facsimile signature thereon, does not provide sufficient evidence of intent to authenticate certification by a bank to a holder in a commercial transaction and, as a matter of law, does not comply with the legal requirement for certification. The purported check therefore was found to be a nonconforming instrument under the agreement between the parties. Menke v. Board of Education (Iowa 1973), 211 N.W.2d 601.

The plaintiff-shipper here clearly sought the protection of bank certification if the carrier were to accept a certified check in payment of the COD charges by the consignee. The check accepted by the carrier bore the stamped word “certified,” but no indication that the purported certification was stamped on the check by the Chase Manhattan Bank nor that the purported certification was by an authorized bank officer or signatory. The word “certified” did not appear on the face of the check but instead was stamped diagonally across the back with no words indicating any bank responsible for certification and signatory in any official bank officer capacity. It is clear to us that the “check stamped certified” is not the certified check plaintiff instructed carrier to accept.

We note that Illinois reviewing courts have not addressed the precise question of a carrier’s responsibility to the shipper in accepting a “check stamped certified” as a “certified check” in payment of a COD charge in accordance with shipper’s instructions although other jurisdictions have considered similar questions. The parties cite several decisions from other jurisdictions in support of their respective positions.

The Appellate Court, First District, is not bound to follow decisions by Federal courts other than the United States Supreme Court, or by courts of any State other than Illinois (Corbett v. Devon Bank (1973), 12 Ill. App. 3d 559, 299 N.E.2d 521). Decisions of the reviewing courts of foreign jurisdictions are not binding on Illinois courts (People v. Chandler (1980), 88 Ill. App. 3d 644, 653, 411 N.E.2d 283 (supplemental opinion on denial of rehearing)), although decisions of courts of the respective States, where relevant, should be examined for such value as Illinois courts may find in them when out-of-State courts have construed certain language and the Illinois courts have not. In re Estate of Melvin (1972), 5 Ill. App. 3d 463, 283 N.E.2d 303.

The obligations between a shipper and a carrier arise out of their contractual agreement, here out of a COD agreement whereby the carrier agreed to deliver shipper’s goods and to accept in payment cash, money order, certified or cashier’s check, for which service shipper paid the carrier its requisite fee. Where goods are tendered to a carrier with specific shipping directions to which it assents, the carrier assumes the obligation to follow such directions. (13 C.J.S. Carriers §405, at 350 (1990).) All properly authorized tariff rules and regulations published by carriers are part of the shipper-carrier contract in legal effect. Eastern Motor Express, Inc. v. A. Maschmeijer, Jr., Inc. (2d Cir. 1957), 247 F.2d 826, cert. denied (1958), 355 U.S. 959, 2 L. Ed. 2d 534, 78 S. Ct. 535.

Plaintiff argues that defendant breached its duty to comply with the agreement between them by its acceptance of an improper, unauthorized form of payment and, based solely on the record before the trial court, there was a genuine issue of fact as to defendant’s failure to exercise due care as plaintiff’s agent, as alleged in the only verified pleading before the court. Plaintiff contends that summary judgment in favor of defendant is inappropriate and cites in support Littleton Stamp & Coin Co. v. Delta Airlines, Inc. (1st Cir. 1975), 778 F.2d 53, 56-57, where the reviewing court reversed the trial court’s grant of summary judgment in favor of the carrier on the grounds that the carrier’s exercise of due care was a genuine issue of material fact and therefore summary judgment was inappropriate. Similarly in American Airlines, Inc. v. Swest Inc. (Texas 1986), 707 S.W.2d 545, the Texas Supreme Court followed Littleton and held that the carrier has the duty to exercise reasonable care when collecting payment for the shipper, and whether reasonable care has been exercised is a question of fact to be determined by the fact finder.

Defendant responds that the sole issue here is whether it was proper for the carrier to accept this check from the consignee. Defendant argues that the duty to collect payment on plaintiff’s behalf is contractual and acknowledges that defendant as its agent has a duty to exercise reasonable care in making collection according to shipper’s directions. Defendant submits that this question requires interpretation of the contract, which is within the province of the court and therefore is appropriate for determination by summary judgment, since the only issue for the court to determine was whether as a matter of law it was proper for the carrier to accept the “check stamped certified” as payment by “certified check” in accordance with plaintiff-shipper’s instructions. The defendant concludes that the trial court found that, once the defendant-carrier accepted the check from Gunay and delivered it to plaintiff-shipper, its duty under their agreement ended and that this finding is well supported by law.

The defendant relies on a decision by the Kentucky Court of Appeals (Shockley v. United Parcel Service, Inc. (Ky. App. 1984), 664 S.W.2d 523) which affirmed the trial court’s entry of summary judgment in favor of UPS. In Shockley, plaintiff argued that the carrier failed to accept “cash or company check” in accordance with shipper’s instructions when it accepted a check without a company name imprinted but with a handwritten company name appearing on the face of the check. The shipper took the check to his bank to determine its validity, and although upon inquiry he was told the account on which the check was drawn had been closed, he deposited the check anyway. The Shockley court defined the two-prong test for summary judgment determination to be: (1) whether there exists any genuine issue of material fact, and (2) whether the movant is entitled to judgment as a matter of law, after all inferences are construed in favor of the non-moving party. The court held that under these facts UPS was given no directions to provide a means of identifying an acceptable check under the general term “company check” and concluded that “placing responsibility upon UPS to ascertain the sufficiency of the checks received to satisfy the requirements of the order, in light of the directions given to UPS, creates an undue burden upon UPS in performing its duties. UPS is not involved in the banking business and is not in a position to credit or discredit negotiable instruments beyond their duty of examining the face of the check to determine whether it comports to instructions given to UPS.” Shockley, 664 S.W.2d at 524-25.

The defendant argued before the trial court that the question here is not whether the carrier breached its duty as a banker in accepting the nonconforming check, but rather whether it breached its duty as a reasonable carrier. We believe that the clearly reasonable view is that the carrier who agrees to accept a certified check on shipper’s behalf in payment of COD charges has a duty to inform himself as to the legal characteristics of a certified check in order to comply with the shipper’s express instructions to which he has agreed. He must then take the next step to educate his employees as to its characteristics and legal requirements, since they carry out the carrier’s contractual obligations to follow shipper’s instructions consistent with the shipper-carrier contract.

While the Shockley case dealt with specific authorization to accept a company check, defendant cites The Only Guitar Shop case, a New York trial court decision, wherein UPS was granted summary judgment on facts which defendant argues are nearly identical to the case before us, and on which the trial court relied. Two COD deliveries were involved: for the first, the carrier was to collect cash, or bank or certified funds, for the second, he was to collect cash. In both deliveries the carrier accepted checks “apparently stamped ‘certified’ apparently by the drawer of the check” which proved to be worthless when deposited unconditionally for collection by the shipper. The court refers to UPS’s tariff Rule 480, concluding that it is binding on the parties as part of the agreement between them, that carrier’s acceptance of all checks tendered in payment of COD’s are accepted at shipper’s risk and that the tariff clearly exempts the carrier from liability for taking a check which proved to be worthless. The court concluded that although the shipper waived its objection to the carrier’s action by depositing these checks, even if the shipper had attempted to protect its rights against the carrier by conditionally accepting the checks, the “tariff would seem to protect the carrier.”

As we earlier observed, the decisions of reviewing courts of foreign jurisdictions are not binding on Illinois courts, and it necessarily follows that the decisions of the trial courts of foreign jurisdictions have no precedential value in Illinois disputes on appeal or at the trial level. We therefore decline to consider as precedential authority here the court’s findings in The Only Guitar Shop case, since it clearly is an opinion of the trial judge in New York which has not been tested on appeal.

We also note that in both the Shockley and The Only Guitar Shop cases, while the nonconforming nature of the check was discussed in each case, the shipper accepted the questionable check, depositing it with his own bank, and therefore was held to have ratified the carrier’s acceptance of the nonconforming check. Defendant also distinguishes the Littleton and American Airlines cases from the factual scenario before us by pointing out that in each of those cases the shipper’s instructions specifically imposed the duty on the carrier to determine the validity of the checks offered in payment prior to delivering the parcel to the consignee.

Plaintiff relies on Video Station v. Frey’s Motor Express, Inc. (1983), 188 N.J. Super. 494, 457 A. 2d 1217, where the appellate court affirmed the trial court’s judgment in favor of the shipper and against the carrier, holding that the carrier in accepting a check stamped “certified” but not signed by the drawee bank had failed to conform to reasonable commercial standards in carrying out its contractual undertaking. The appellate court reasoned that, under a COD shipment, the carrier acts in two capacities: (1) as a bailee to transport the shipper’s goods to the consignee, and (2) as shipper's agent to collect the price of the goods in accordance with their agreement. As a common carrier and bailee, he has the common law duties to receive, transport, care for and deliver the goods. As the agent of the shipper to collect payment for the goods upon delivery, he assumes an additional duty which is a matter of private contract and not a common law duty. The court defined the standard of care applicable to an agent as follows: an agent to collect a debt must exercise ordinary care, skill and diligence in the performance of the duties incident to the undertaking. The court found in that case that the carrier breached its contractual duty to exercise ordinary care, skill and diligence by accepting as certified a check not bearing the written signature of a bank officer which certification of a check requires. The reviewing court adopted the trial court’s observation that “a defendant which is in the business of accepting COD shipments for delivery should reasonably be required to educate its agents and employees as to the identifying characteristics of a certified check.” (Video Station, 188 N.J. Super, at 499, 457 A.2d at 1220.) Earlier in this opinion we held that the carrier who agrees to be bound by shipper’s instructions authorizing him to accept a certified check in payment of COD charges has the duty to familiarize himself as to the legal characteristics of a certified check. Clearly, we also agree with the reasoning of the court in Video Station that the carrier is required to educate its agents and employees of the identifying characteristics of a certified check.

Plaintiff also cites the Littleton and American Airlines cases for their discussions of the carrier’s duty to the shipper under the terms of its COD contract agreement. In Littleton the court agreed that the COD contract established an agency in the carrier to collect a debt for the shipper and that the carrier had a duty of using reasonable care and skill in making such collections in accordance with the directions of the shipper. (Littleton, 778 E2d at 55.) The court discussed a number of cases similar on facts which reached conflicting results on the liability of a carrier who accepts a forged or nonconforming check. That court concluded that the issue of due care in light of the facts of the case was a question for the fact finder and was inappropriate for summary judgment.

The court in American Airlines, in discussing the reasonable care standard imposed on the carrier in COD shipments, stated that the question of whether carrier’s actions met the standard was to be determined by the fact finder. In that case the carrier appealed the reversal by the appellate court of the trial court’s judgment in favor of carrier and against the shipper for carrier’s acceptance of checks where nothing apparent on the face of the check would alert anyone that certification was forged. The shipper accepted and deposited the check. The case went to trial before a jury, and judgment then was entered by the court. No summary judgment was requested. The Texas Supreme Court reversed the appellate court and affirmed the trial court judgment, holding that while the carrier had the duty to exercise reasonable care when collecting payments for the shipper, it did not have the absolute duty to verify certified checks and that the question of the method of payment contemplated was a disputed fact issue which had been resolved by the jury.

Finally, we consider defendant’s argument that even if the check accepted from Gunay was not a certified check, UPS is protected by Rule 480 of its tariffs filed with the Interstate Commerce Commission, quoted earlier in this opinion. That rule provides that the carrier reserves the right to accept cash, cashier’s check, certified check, money order or similar instrument issued by consignee and that all such checks and money orders tendered in payment of COD’s will be accepted by the carrier at shipper’s risk, including, but not limited to, risk of nonpayment and forgery. Defendant cites the reference to the Rule 480 tariff by the trial court in The Only Guitar Shop case in support of its argument that the tariff protects UPS here and also notes that the trial judge inquired as to its application in this case and then entered judgment for defendant after being told that it applied. We have stated that we consider the trial court’s decision in The Only Guitar Shop case not precedent for us here, but we also note that the court’s reference to the tariff was clearly dicta in the cited case and not the basis of its ultimate judgment in favor of UPS.

A closer scrutiny of the Rule 480 tariff discloses that it provides in summary:

(1) That the carrier will accept consignee’s check in payment of COD charges unless the shipper’s tag instructs carrier to collect cash only.

(2) Carrier reserves to itself the right to accept cash, cashier’s check, certified check, money order “or other similar instrument” issued by consignee, when instructions to collect cash are written on the COD tag.

(3) All checks, cashier’s checks, certified checks and money orders will be accepted by carrier at shipper’s risk including but not limited to risk of nonpayment and forgery.

(4) Carrier shall not be liable upon any such instrument.

In plain language, while the carrier here accepted the fee from shipper for COD delivery and was to accept in payment of COD charges from consignee payment in the forms of cash, money order, certified check or cashier’s check, the carrier under its tariff contends that it can accept any form of payment even though the express language of the shipper-carrier contract restricts payment to only four acceptable forms. The defendant concludes that, under the disclaimer provision of its tariff rule, it can accept any form of check in payment regardless of the shipper’s specific instruction and infers that, even though the “check stamped certified” does not meet the legal and commercial requirements of a “certified check,” the shipper is bound to accept it in payment and absolve the carrier of any further duty under their agreement.

We do not agree and are of the opinion that the defendant can find no comfort in its tariff provisions as support for its position here. Where the parties have expressly agreed to the precise terms of their contract, the specifics of their bargained agreement must take precedence over the general exculpatory language of the filed tariffs under which the carrier does business. To hold otherwise would render any instruction given by the shipper meaningless if the carrier on its own whim could disregard the shipper’s express direction by accepting any form of payment offered by the consignee. Such a view makes no sense and would render contract terms unenforceable at best and meaningless at worst. Basic to any contract is the rule that the general provisions must give way to the specific.

The check accepted by the defendant earner here bore no bank certification stamp or authorized bank signature either on the face of the check or its reverse side. The stamped word “certified” on the reverse side bearing no bank designation or signature did not comply with the legal requirements to constitute a certified check and therefore was an unauthorized form of payment which plaintiff-shipper properly rejected. The plaintiff did not deposit the check or in any way ratify the defendant’s actions but instead demanded compliance with its shipping instructions, and when defendant refused to comply, plaintiff filed suit.

We conclude that defendant-carrier accepted a “check stamped certified,” that the acceptance of that check did not conform to the COD shipping instructions of the agreement between the parties because it did not meet the requirements of a certified check and that plaintiff’s rejection of the nonconforming check was clearly not a waiver of the contract requirements or a ratification of defendant’s action in accepting such a check in payment of the COD charges.

Because the question before the court is whether the defendant exercised reasonable care in following plaintiff’s instruction by accepting the “check stamped certified” and clearly is a question of material fact which precludes summary judgment determination of the controversy, and because we have found that based on the facts of this case the defendant would not be entitled to judgment even if there were no question of material fact remaining to be determined, we find that the judgment of the trial court must be reversed.

For all of the foregoing reasons, we reverse the judgment of the trial court and remand this cause for further proceedings consistent with this opinion.

Judgment reversed and remanded for further proceedings.

RAKOWSKI, P.J., and McNAMARA, J., concur.


author: PRESIDING JUSTICE RAKOWSKI

text:
    VERA OBERG, Indiv. and as Special Adm’r of the Estate of Frederick W. Oberg, Deceased, Plaintiff-Appellant, v. ADVANCE TRANSFORMER COMPANY, INC., Defendant-Appellee.
    First District (6th Division)
    No. 1 — 89—2836
    Opinion filed February 15, 1991.

      Coleman & O’Halloran, Ltd., of Chicago (John M. O’Halloran, of counsel), for appellant.
    Johnson & Bell, Ltd., of Chicago (Thomas H. Fegan, of counsel), for appellee.
   PRESIDING JUSTICE RAKOWSKI

delivered the opinion of the court:

Plaintiff, as administrator of the estate of her deceased husband, brought an action sounding in strict liability in tort against several defendants, including defendant-appellee Advance Transformer Company, Inc. Plaintiff alleged that the ballast which plaintiff’s decedent was installing at the time of his death was an unreasonably dangerous product due to insufficient warnings and instructions. The ballast was manufactured by defendant. The trial court granted defendant’s motion for summary judgment, holding that there was no duty to warn plaintiff’s decedent of the obvious electrical danger in this case. The trial court’s order is appealable pursuant to Supreme Court Rule 304(a) (107 Ill. 2d R. 304(a)), and the case remains pending as to the other defendants. Plaintiff appeals, alleging that there existed genuine issues of material fact which precluded the entry of summary judgment.

The evidence before the trial court revealed that the decedent, Frederick Oberg, was employed by Tech Plastics, Inc., as the supervisor of the employer’s finishing paintings department at the time of the occurrence. At the time of the occurrence, the decedent was at work and in the process of installing a ballast into a fluorescent light fixture.

Ballasts for fluorescent light fixtures can either increase or decrease the electrical voltage to the fixture. Fred Abrahms, defendant’s manager of product service engineering, testified that a fluorescent lamp has no resistance, so that if power were applied to the lamp without a current limiting device, the lamp would bum out. Thus, one of the functions of a ballast is to limit the current to the lamp. Additionally, the ballast serves to increase the voltage which is necessary for starting the lamp. The majority of ballasts increase the voltage.

The ballast in question increased the electrical charge to 525 volts, from the 277-volt level of the conduit which is the standard level of voltage in an industrial building. The wires which bring power to the ballast were properly connected and the ballast was designated: “Output Voltage 525 volts.” The red wires which carried the current from the ballast were not connected to the fixture, and there was no extraneous voltage coming from the ballast itself. Therefore, the only source of the electrical shock decedent allegedly received was from the increased voltage which travelled through the red wires of the ballast. Plaintiff does not allege that the shock itself caused the death of her decedent, but rather that the shock caused her decedent to fall from the ladder (some 20 feet) and that the fall caused the decedent’s death.

Defendant placed the ballast in the stream of commerce without installation instructions or warnings, including warning of the danger of increased voltage. Fred Abrahms stated that he expected licensed electricians or electrical maintenance personnel to install these ballasts. Sometime after this incident, instructions and warnings were added to similar ballasts which defendant manufactured. Abrahms testified that the normal procedure in replacing a ballast is to assemble the ballast in the fixture, close up the fixture, put the lamps in and turn on the power switch to see if there was light. While he would not expect someone to use a voltage meter to measure the energizing of the wires unless he or she were a highly trained contractor, the installer of a ballast would be expected to have the power source off when installing a ballast. Abrahms was not aware of any installers who did not turn off the power when they are installing ballasts, and in his 30 years of experience with defendant, he was unaware of anyone else that had been injured when installing a ballast. Fred Hoppe, a journeyman electrician, said that it was not proper procedure to replace a ballast with the power on, although he has done so when he felt it was safe to install a ballast with the power on.

Plaintiff testified that her husband had an understanding of electricity and electrical equipment. He had engaged in electrical wiring for a prior employer. He had been taught how to run a wire through a light fixture and how to install an outlet. He was comfortable in dealing with electricity around the house and had previously worked on fluorescent lights. He did the wiring for fluorescent light fixtures at home. Before installing such a fixture, he turned the power off. In fact, plaintiff’s decedent turned the power off before working on anything electrical. Plaintiff’s decedent never called an outside electrician, but did the electrical work himself. The circuit court found that defendant had no duty to warn of electrical danger, holding “it is obvious to anyone who works on an electrical fixture.”

The issue which needs to be resolved is whether the trial court correctly determined as a matter of law that defendant had no duty to warn plaintiff’s decedent of the danger of the increased voltage, or that plaintiff’s decedent should only perform the work with the power off.

Summary judgment should be granted only when the pleadings, depositions and admissions, together with any affidavits, show that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law. (Ill. Rev. Stat. 1985, ch. 110, par. 2 — 1005(c); see Fooden v. Board of Governors of State Colleges & Universities (1971), 48 Ill. 2d 580, 272 N.E.2d 497.) The question of whether a duty exists is an issue of law to be determined by the court. Bonder v. Commonwealth Edison Co. (1988), 168 Ill. App. 3d 80, 82, 522 N.E.2d 227.

A failure to warn of a product’s dangerous propensities can be characterized as a defective condition which causes injury and may serve as the basis for holding a manufacturer or seller strictly liable in tort. (Woodill v. Parke Davis & Co. (1980), 79 Ill. 2d 26, 402 N.E.2d 194.) A manufacturer must give both adequate directions for use and adequate warnings against potential dangers in the use of its product. (McCormick v. Bucyrus-Erie Co. (1980), 81 Ill. App. 3d 154, 162, 400 N.E.2d 1009.) A duty to warn is also imposed “where there is unequal knowledge, actual or constructive, and the defendant possessed of such knowledge, knows or should know that harm might or could occur if no warning is given.” Fuller v. Fend-All Co. (1979), 70 Ill. App. 3d 634, 638, 388 N.E.2d 964.

It is plaintiffs position that defendant had a duty to warn her decedent that the ballast had a dangerous propensity to increase voltage, which caused shock to her decedent, causing him to fall off the ladder. The principles articulated by the court in Genaust v. Illinois Power Co. (1976), 62 Ill. 2d 456, 343 N.E.2d 465, control this case. In Genaust, the plaintiff brought an action for injuries which he sustained when power from nearby lines arced to an antenna which he was installing. The plaintiff alleged that the landowner negligently failed to warn of the danger of the uninsulated condition of the power lines, ordered construction of the antenna too close to the power lines and generally failed to provide the plaintiff a safe place to work. The court declined to impose a duty on the landowner, observing that the dangerous nature of electricity was common knowledge, as was the fact that any wire carrying electricity was dangerous. The court concluded that an invitee “must be held to be equally aware of all the obvious and normal hazards incident to the premises as the possessor of the land.” (Genaust, 62 Ill. 2d at 469.) The Genaust court also observed that in a strict liability case, “a duty to warn is not required where the product is not defectively designed or manufactured, and where the possibility of injury results from a common propensity of the product which is open and obvious.” Genaust, 62 Ill. 2d at 467.

The rationale of Genaust has been followed in quite a number of cases where the courts have denied recovery against defendants where plaintiffs alleged that there was a duty to warn of electrical danger. See Fliszar v. Commonwealth Edison Co. (1988), 173 Ill. App. 3d 770, 527 N.E.2d 1016; Bonder v. Commonwealth Edison Co. (1988), 168 Ill. App. 3d 80, 522 N.E.2d 227; Icenogle v. Myers (1988), 167 Ill. App. 3d 239, 521 N.E.2d 163; In re Estate of Dickens (1987), 161 Ill. App. 3d 565, 515 N.E.2d 208; Carroll v. Commonwealth Edison Co. (1986), 147 Ill. App. 3d 909, 498 N.E.2d 645; Holecek v. E-Z Just (1984), 124 Ill. App. 3d 251, 464 N.E 2d 696.

In Holecek, while the court observed that whether there is a duty to warn of the danger of electrical hazard will depend on the facts of the case (124 Ill. App. 3d at 256), the court affirmed summary judgment for the defendant-manufacturer of a product (a flying model airplane) which came into contact with power lines. The court observed that the plaintiff, a 40-year-old man with experience in welding was “of ‘ordinary intelligence and experience’ to whom the danger of electrical energy present under the facts here was a matter of common knowledge for him.” (Holecek, 124 Ill. App. 3d at 255-56.) In Miscevich v. Commonwealth Edison Co. (1982), 110 Ill. App. 3d 400, 404, 442 N.E.2d 338, the court held that the Genaust rationale was not applicable only to “plaintiffs who are knowledgeable in electrical work.” In Peterson v. B/W Controls, Inc. (1977), 50 Ill. App. 3d 1026, 366 N.E.2d 144, the court was faced with a claim by an electrician against the manufacturer of a relay switch where the plaintiff, an electrician, was injured when he touched an insufficiently insulated wire which was near the switch. In affirming summary judgment, the court observed:

“In the instant case the plaintiff is an experienced electrician who is well aware of the danger of electricity. He stated in his deposition that he had had a hot glove with him which he planned to use in shutting off the circuit breaker. He planned to use the glove as a safety precaution. *** [TJhe trial court *** was justified in finding that the injuries to plaintiff were not reasonably foreseeable by the manufacturer.” Peterson, 50 Ill. App. 3d at 1032.

A review of the case law on the issue leads to the conclusion that the trial court was correct in granting defendant’s motion for summary judgment. Plaintiff makes the argument that as Hoppe, the electrician who inspected the ballast, was unable to ascertain that the voltage was increased by the ballast, the “dangerous propensity” of the increasing of the voltage could not be discovered by even an expert in the field of electricity. Relatedly, plaintiff makes the argument that Hoppe himself often installed ballasts with the power on, and Hoppe in fact installed the subject ballast with the power on. Thus, according to plaintiff’s second argument, traditional factors which are to be analyzed in determining whether a duty should be imposed, such as the “foreseeable” nature of the occurrence, the magnitude of the risk, and the minimal burden on the defendant, point in this case to the imposition of a duty to warn and instruct.

Plaintiff has not cited to the record in presenting any of the “facts” upon which he bases these arguments. In fact, a review of the record reveals no testimony on the part of Hoppe to the effect that Hoppe was unable to determine that the subject ballast increased the voltage. As indicated, the fact that the voltage output would be increased to 525 volts was designated on the ballast itself. Moreover, plaintiff’s arguments with respect to Hoppe’s commonly installing ballasts with the power on are based upon an inaccurate characterization of Hoppe’s testimony. Hoppe clearly testified that it was not proper procedure to install ballasts with the power on, and that he only did so when it was “safe” to do. When Hoppe installed the subject ballast, he used a voltage meter and a hot glove (which provided him insulation if he should come into contact with the wires). Both of these arguments, therefore, lose their force.

Plaintiff also argues that two fact questions precluded the entry of summary judgment. The first question, plaintiff contends, is whether plaintiff’s decedent’s installing the ballast in the manner in which he did was “foreseeable.” This contention is resolved, however, by the testimony of Hoppe that the ballast should not have been installed in the manner in which the decedent did. The second alleged factual question is whether the decedent had knowledge of the danger. This question, however, is resolved by the extensive electrical experience that the decedent had and because the increased voltage output was designated on the ballast. Moreover, assuming that fact questions remain, plaintiff’s position must fail because “a duty to warn is not required where the product is not defectively designed or manufactured, and where the possibility of injury results from a common propensity of the product which is open and obvious.” (Genaust, 62 III. 2d at 467.) Further, the decedent would have received a shock regardless of whether the ballast increased the voltage.

In sum, it is clear that the very purpose of a ballast is to change the voltage running to the fixture. Hoppe, the journeyman electrician whose testimony plaintiff relies upon, said that it was improper to perform the work the decedent performed while the power was on. Like the court in Miscevich (110 Ill. App. 3d at 404), we conclude that “the danger of electrical-energy present under the facts is a matter of common knowledge” to the decedent. The decedent’s injury was caused only by the common propensity of the product, which, as a matter of law, is open and obvious. Analogously, the court observed in Hubbard v. Chicago Housing Authority (1985), 138 Ill. App. 3d 1013, 1018, 487 N.E.2d 20, when faced with an action involving a burn injury from hot steam, “[w]e do not believe that hot steam pipes are defective merely because they are hot. Being hot is a common propensity and inherent property of steam pipes and is to be reasonably expected in light of their nature and intended function.” Not only was the danger to plaintiff’s decedent open and obvious as a matter of law, but the danger became more obvious in light of the fact that the product designated that the voltage output would increase to 525 volts. Given the obvious nature of the danger, plaintiff’s argument that the duty to warn should be imposed because of unequal knowledge must fail.

It is clear as well that plaintiff’s contention that the ballast was defective due to a lack of instructions is only duplicative of the duty to warn issue. Plaintiff does not argue that her decedent did not know how to install the ballast or that the ballast did not function properly for the lack of instructions. Rather, plaintiff’s theory as to inadequate instructions is only that instructions should have told her decedent not to install the device with the power on. This issue is subsumed in our resolution that defendant had no duty to warn of the open and obvious danger.

Therefore, the judgment of the circuit court of Cook County is affirmed.

Affirmed.

McNAMARA and EGAN, JJ., concur.