author: JUSTICE McNAMARA

text:
    SIGNAL DELIVERY SERVICE COMPANY, Appellant, v. THE INDUSTRIAL COMMISSION et al. (Malachi Sabree, Appellee).
    Second District (Industrial Commission Division)
    No. 2—84—124 WC
    Opinion filed December 17, 1984.
    Rehearing denied February 11, 1985.

      John H. Guill, of Roddy, Power & Leahy, Ltd., of Chicago, for appellant.
    Kenneth L. Kaergard, of Neri & Hoch, Ltd., and Carl E Safanda, both of St. Charles, for appellee.
   JUSTICE McNAMARA

delivered the opinion of the court:

The claimant, Malachi Sabree, filed an application for adjustment of claim under the Workers’ Compensation Act (Ill. Rev. Stat. 1981, ch. 48, par. 138.1 et seq.) for an injury allegedly occurring on September 2, 1980, while in the course of his employment with respondent, Signal Delivery Service Company. An arbitrator found that claimant’s condition of ill-being did not relate to September 2, 1980, but rather to an accident of August 1, 1978, for which claimant had already received compensation from the employer. The arbitrator denied claimant’s claim for compensation and dismissed his application. On review, the Industrial Commission reversed the decision of the arbitrator and found that, on September 2, 1980, claimant sustained accidental injuries in the course of his employment and awarded him medical and temporary total benefits. The circuit court of DuPage County confirmed the decision of the Commission, and the employer appeals.

On appeal, the employer contends that the Commission improperly received additional evidence on review because claimant failed to give notice to the employer that additional evidence would be offered and because the evidence was available on arbitration. The employer also contends that the finding of the Commission that certain medical evidence was unrebutted is contrary to the manifest weight of the evidence.

Claimant, a 39-year-old truck driver, testified that on September 2, 1980, he was driving a truck from Massachusetts to New Jersey, a 41/2-hour trip. The roads were rough and in very poor condition. Claimant began to experience a burning sensation in his back from bouncing around in the tractor. When he returned to the employer’s terminal on September 4, 1980, claimant informed the dispatcher about his low back pain. Claimant was directed to a hospital, where he was referred to Dr. Richard Dominguez, who had treated claimant for the work-related injury of August 1, 1978. In that earlier accident, claimant had sustained a fracture of the coccyx and had settled with the employer for that injury at 15% permanent partial disability.

Dr. Dominguez testified by evidence deposition that on September 5, 1980, he examined claimant and had X rays taken. He also referred claimant to Dr. Broido, an expert on cysts and other malignancies. Dr. Broido ruled out the possibility that claimant had a cyst or rectal abscess. Dr. Dominguez compared the new X rays with those taken in 1978 and noticed definite changes. The 1978 X rays showed a minimal displacement of the coccyx, while now there was a subluxation of the sacrococcygeal joint and a lesion. The significant traumatic change caused the need for surgery and, on October 16, 1980, Dr. Dominguez performed a coccygectomy on claimant. Dr. Dominguez testified that there was a causal connection between the repetitive bouncing on the truck which aggravated a preexisting condition and claimant’s condition of swelling and bony prominence between the buttocks.

Dr. Hyman Hirschfield testified by evidence deposition that, at the request of claimant’s counsel, in connection with the accident of August 1, 1978, he examined claimant on September 28, 1978, and May 29, 1979. He also examined X rays of claimant taken during this period. Dr. Hirschfield diagnosed claimant as having a fractured coccyx and stated that when he last examined claimant in 1979 the only feasible treatment for the stress from a fractured coccyx would be surgical resection of the coccyx. Dr. Hirschfield never examined claimant after 1979 and did not see the X rays taken in 1980.

The employer initially contends that the Commission improperly permitted claimant to offer additional evidence before it on review. The employer argues that the claimant, in violation of Commission rule, failed to give a five-day notice to the employer that he would offer additional evidence. The record before the Commission does not contain such a notice. In the circuit court, however, the claimant attached a copy of a notice which had been served on the employer’s attorney and on the Commission five days prior to the Commission hearing that claimant intended to offer additional evidence to the Commission. Moreover, we find that the issue has been waived, since the employer did not make a failure-of-notice objection to the Commission. (See Johns-Manville Products Corp. v. Industrial Com. (1980), 78 Ill. 2d 171, 399 N.E.2d 606.) The only objection made by the employer to the Commission about the additional evidence was that the testimony could have been presented at the hearing before the arbitrator. Thus, the employer has waived any issue about the failure to give notice. And we reject any suggestion that the five-day notice requirement is jurisdictional, thus barring the Commission from hearing additional evidence even absent an objection.

The employer also contends that the additional evidence offered by the claimant to the Commission on review should have been barred under the Commission rule, since it was testimony which could have been presented at the arbitration proceedings.

On review, claimant’s counsel presented only claimant as an additional witness and confined his questions principally to matters which had been excluded by the arbitrator during the arbitration proceedings, along with the introduction of Dr. Dominguez’ medical bill. Claimant’s additional evidence was limited to testimony about the condition of the road, the construction of the truck seat and truck which claimant was operating, and the effect of these conditions on claimant. This limited additional evidence did not prejudice the employer, and the Commission did not abuse its discretion in receiving the additional evidence.

The employer finally contends that the Commission’s finding that Dr. Dominguez’ testimony was unrebutted is contrary to the manifest weight of the evidence. The Commission based its finding on the fact that Dr. Hirschfield did not examine claimant after the occurrence of September 2, 1980, and had not seen the September 1980 X rays showing the changes in claimant’s condition. Since there was such a gap in Dr. Hirschfield’s examination of claimant and X rays, the Commission was justified in characterizing Dr. Dominguez’ testimony as unrebutted. Dr. Hirschfield’s testimony was entitled to be considered, but Dr. Dominguez’ credible testimony fully supports the Commission’s decision that claimant sustained accidental injuries arising out of and in the course of his employment on September 2,1980.

For the reasons stated, the judgment of the circuit court of Du Page County confirming the decision of the Industrial Commission is affirmed.

Judgment affirmed.

WEBBER, P.J., and LINDBERG, BARRY, and KASSERMAN, JJ., concur.


source: Caselaw Access Project

author: JUSTICE ROMITI

license: Public Domain

text:
    MILDRED EAKINS, Plaintiff-Appellant, v. NEW ENGLAND MUTUAL LIFE INSURANCE COMPANY, Defendant-Appellee.
    First District (4th Division)
    No. 83—2418
    Opinion filed December 27, 1984.

      Robert A. Armstrong, Jr., of Chicago, for appellant.
    Peterson, Ross, Schloerb & Seidel, of Chicago (J. Robert Geiman and Robert A. Seidel, of counsel), for appellee.
   JUSTICE ROMITI

delivered the opinion of the court:

Plaintiff Mildred Eakins (Mildred) appeals from the order of the circuit court of Cook County which entered summary judgment in favor of defendant New England Mutual Life Insurance Co. (New England Life) upon her petition for a declaratory judgment that the life insurance policy of Mildred’s late husband, Miles, was still in full force and effect and had not terminated for nonpayment of premiums. The sole issue presented for our review is the propriety of the trial court’s judgment.

We affirm.

The documents of record reflect the following facts: Mildred was the designated beneficiary of a policy issued by New England Life on the life of her husband. The policy had an issuance date of October 1, 1976. Miles’ application had been solicited by Ira Goldstein, who had been licensed as a soliciting agent of New England Life since 1963 and was the individual to whom Miles sent his premium payments.

On October 1, 1980, when the premium on the policy came due, Miles was unable to make the payment. Pursuant to the terms of the policy, full coverage was extended to December 31, 1980, whereupon this coverage terminated for nonpayment of premiums. Under the terms of the policy, extended-term insurance coverage was provided from January 1, 1981, to February 11, 1981. The policy terminated and was of no value as of February 11, 1981. Under its terms and provisions, reinstatement could be obtained only during the lifetime of the insured, and only upon satisfaction of the following conditions: (1) current evidence of insurability satisfactory to New England Life; (2) payment of all overdue premiums with interest at 6% per annum compounded annually; and (3) repayment of any policy loans outstanding at the time of default, with loan interest compounded annually to date of reinstatement. New England Life and Goldstein each sent Miles separate notices of policy lapse in March 1981. All correspondence was sent to Miles’ office address.

On October 29, 1981, Miles began hospitalization for a heart attack and stroke. Mildred discovered the insurance correspondence while going through his papers at his office. She had no prior knowledge of any such policy. Mildred found, in addition to the correspondence regarding policy lapse, two letters from Goldstein to Miles dated October 9, 1981, and October 15, 1981, respectively. Each letter contained the heading “minimum deposit worksheet” and advised Miles of the premium amount “due now” on the policy. The October 15 letter was a revised worksheet and advised that the figures shown on the October 9 letter were “in error” and stated the “correct” figures. The minimum required cash premium payment shown on the October 15 letter was $1,048.90. Neither letter referred to the policy’s termination or to procedures to be followed in order to reinstate the policy.

Mildred telephoned Goldstein shortly after she discovered this correspondence, asking what she could do about payment of the premiums. According to Goldstein, he told her that he did not know to what policy premium notices she was referring and that he believed the policy had already terminated for nonpayment of premiums. He advised her, however, to do as instructed in the letters and stated that he would check into the matter. According to Goldstein, at no time during the conversation did he represent that the policy would be reinstated upon payment or that the policy was in force or would be placed in force upon payment, nor did he make any offers for coverage or reinstatement of the policy or propose any alteration or modification of the terms and conditions of the policy. He further stated that the minimum deposit worksheets were sent in error by a temporary secretary during a period when Goldstein was absent from the office and undergoing hospitalization and convalescence because of an automobile accident.

Mildred could recall little of her telephone conversation with Gold-stein. She could not recall any discussion regarding the status of the policy or whether the policy was in force.or could be reinstated. Mildred’s son, Kevin, stated that he telephoned Goldstein regarding the minimum deposit worksheet correspondence on October 29 and was told by Goldstein “to get it [the premium payment] as soon as possible.”

On November 5, following the telephone conversations, Mildred tendered a check in the amount of $1,048.90 to Goldstein. On or about November 11, Mildred informed Goldstein that Miles had died on November 9. Goldstein met with his general agent on November 11 or 12, at which time the status of the Eakins policy was reviewed. Because it was determined that the policy had terminated more than eight months previously, Mildred’s check was not negotiated but was returned to her by the general agent as enclosure to a letter to her dated November 12 stating that the check could not be accepted because the policy had terminated.

The parties filed cross-motions for summary judgment based upon the pleadings; depositions and affidavits of Mildred and Goldstein; the affidavit of Pauline Belisle, assistant vice president of New England Life; the affidavit of Kevin and Mildred’s answers to interrogatories. The trial court granted New England Life’s motion for summary judgment on September 16, 1983. Mildred’s notice of appeal was timely filed.

Mildred argues first that the trial court should have denied summary judgment because there was a genuine dispute between the parties regarding the circumstances under which Goldstein instructed Mildred to deliver the premium payment in late October and under which he received that payment from her in early November. Mildred contends that this disputed factual issue would have a bearing on whether her tender of the premiums and Goldstein’s receipt thereof reinstated the policy. We disagree.

Summary judgment is appropriate where “the pleadings, depositions and admissions on file, together with the 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. 1981, ch. 110, par. 2—1005(c).) These documents must be strictly construed against the moving party (McCarthy v. Johnson (1983), 122 Ill. App. 3d 104, 107, 460 N.E.2d 762), and the reasonable inferences therefrom construed in favor of the party who opposes summary judgment. (Susmano v. Associated Internists of Chicago, Ltd. (1981), 97 Ill. App. 3d 215, 218-19, 422 N.E.2d 879.) The remedy is appropriate only when the right of the movant thereto is clear and free from doubt. (Duffy v. Midlothian Country Club (1980), 92 Ill. App. 3d 193, 197, 415 N.E.2d 1099.) Only facts related to material issues are relevant; facts unrelated to essential issues are “immaterial,” and no matter how sharply controverted, their presence in the record will not warrant denial of a motion for summary judgment. (Equity General Insurance Co. v. Patis (1983), 119 Ill. App. 3d 232, 236, 456 N.E.2d 348.) A court of review may affirm the summary judgment of a trial court whenever the facts in the record support the lower court’s decision (Sentry Insurance Co. v. S & L Home Heating Co. (1980), 91 Ill. App. 3d 687, 691, 414 N.E.2d 1218); the court need not strain to adduce some remote factual possibility that will defeat the motion. Erasmus v. Chicago Housing Authority (1980), 86 Ill. App. 3d 142, 145, 407 N.E.2d 1031.

Here, Mildred claims that she presented sufficient evidence to draw into dispute the circumstances under which Goldstein told her to deliver the premium payment in late October and under which he received that payment from her in early November. Mildred contends that the facts controvert whether Goldstein “offered” in late October to reinstate Miles’ policy and whether he “accepted” Mildred’s premium payment in early November, thereby reinstating the policy. Mildred also argues that the facts controvert whether Goldstein consequently waived the reinstatement requirements stated in the policy.

Even were we to assume for purposes of analysis the version of facts as advanced by Mildred, summary judgment was nevertheless appropriate. The record affirmatively establishes that Goldstein was only a soliciting agent of New England Life and this fact is undisputed between the parties. The policy itself stated in pertinent part that “[ojnly the President, Vice-President or the Secretary of [New England Life] has authority on behalf of [New England Life] to waive or change provisions or conditions of the Policy ***.” it has been uniformly held that a soliciting agent generally does not have the authority to waive or enlarge the terms, conditions or exclusions of an insurance policy or application. (Wallace v. Prudential Insurance Co. (1973), 12 Ill. App. 3d 623, 628-29, 299 N.E.2d 344; Spence v. Washington National Insurance Co. (1943), 320 Ill. App. 149, 156, 50 N.E.2d 128; Sommerio v. Prudential Insurance Co. (1937), 289 Ill. App. 520, 7 N.E.2d 631; Rozgis v. Missouri State Life Insurance Co. (1933), 271 Ill. App. 155, 157.) “A mere soliciting life insurance agent does not have authority to revive a life policy which has lapsed for failure to pay premiums or assessments thereon.” 4 Couch on Insurance sec. 26A:39, at 84 (2d ed. 1984); see also 16 Appleman, Insurance Law & Practice sec. 8699, at 289 (1981); accord, Mid-Century Insurance Co. v. Norgaard (S.D. 1979), 273 N.W.2d 191, 193 (“If there is a general rule, it is that an agent cannot revive a properly cancelled policy through mere representations that the policy is still in effect.”).

Consequently, even assuming arguendo that Goldstein’s letters of October 9 and 15 and his telephone communications to Mildred could be construed as “offers” to reinstate the policy and assuming further that his receipt of Mildred’s tendered premium payment was performed pursuant to these “offers,” this of itself was insufficient to reinstate the policy without evidence of insurability of Miles. Goldstein was without the authority to waive or alter the express terms of the policy’s reinstatement requirements which called for such insurability evidence. As a result, Mildred’s tendered premium payment did not satisfy the policy’s explicit terms, and her offered payment did not effectuate a reinstatement. Thus, the trial court’s judgment was proper.

Moreover, the remaining factual issues, all of which were undisputed between the parties as to their factual veracity, support the trial court’s determination that New England Life was entitled to judgment in its favor as a matter of law.

First, Mildred argues that Goldstein’s letters of October 9 and 15 could be reasonably construed as “offers” to reinstate the policy. We disagree. An offer has been defined as an act on the part of one person whereby he gives to another the legal power of creating the obligation called contract. (See McCarty v. Verson Allsteel Press Co. (1980), 89 Ill. App. 3d 498, 507-08, 411 N.E.2d 936.) The letters of minimum deposit worksheets on which Mildred’s argument depends made no reference to reinstatement of the policy; consequently, we are unable to perceive how these documents could be reasonably interpreted as offers of reinstatement even though no reference is made to reinstatement, much less to reinstatement without evidence of insurability on the part of Miles.

We are not persuaded by Mildred’s claim that Goldstein’s receipt of her tendered premium payment amounted to an “acceptance” which reinstated the policy. Section 357.5 of the Illinois Insurance Code (Ill. Rev. Stat. 1981, ch. 73, par. 969.5), which is applicable to the Eakins policy as a matter of law pursuant to section 357.1 of the Code (Ill. Rev. Stat. 1981, ch. 73, par. 969.1), provides for reinstatement of a lapsed life insurance policy by operation .of law where the insurer has accepted a late premium payment. Under this section, an insurer will be held to have waived lapse because of acceptance of a late premium payment when the insurer negotiates or disposes of the insured’s check and either holds the check for much longer than five working days or otherwise manifests its intention to reinstate the policy. (McMillon v. Old Republic Life Insurance Co. (1975), 33 Ill. App. 3d 658, 661-62, 342 N.E.2d 246, and cases cited therein.) The facts here demonstrate that New England Life did not accept Mildred’s check. New England Life never negotiated her check, but merely held it for only five working days. Moreover, section 357.5 of the Code specifically states that a policy reinstated by virtue of an insurer’s acceptance of a late premium payment “shall cover only *** loss due to *** sickness as may begin more than 10 days after [reinstatement] ***.” (Ill. Rev. Stat. 1981, ch. 73, par. 969.5.) Thus, even assuming arguendo that Mildred’s tendered premium payment effectively reinstated the policy, this reinstatement would not have included coverage of loss resulting from Miles’ illness here since his sickness began more than 10 days prior to any such reinstatement. As a result, summary judgment in favor of New England Life was appropriate.

For the reasons stated, the judgment of the trial court is affirmed.

Affirmed.

LINN, P.J., and JOHNSON, J., concur.

      (We note parenthetically that this claim is inconsistent with Mildred’s contention that Goldstein’s letters constituted “offers” of reinstatement, since the same party to a contract cannot logically both “offer” and “accept” the terms of an agreement.)

      The Illinois Insurance Code (Ill. Rev. Stat. 1981, ch. 73, pars. 613 to 1065.315), has been repealed prospectively by the Regulatory Agency Sunset Act (Pub. Act 81— 999 sec. 4.4, at 3800), effective December 31, 1989 (Pub. Act 83—230 sec. 4.5, at 1858), unless prior to the effective date of repeal the General Assembly enacts legislation providing for the continuation of any agency affected by the repealer. Pub. Act 81—999. sec. 4. at 3798.


text:
    R. W. SAWANT & COMPANY, Plaintiff-Appellee, v. ALLIED PROGRAMS CORPORATION, Defendant-Appellant (Ben Kozloff, Inc., Counterplaintiff-Appellee, v. Allied Programs Corporation, Counterdefendant-Appellant).
    First District (3rd Division)
    Nos. 83—2470, 83—2743 cons.
    Opinion filed December 28, 1984.

      Wildman, Harrold, Allen & Dixon, of Chicago (Howard T. Brinton and Richard J. Hickey, of counsel), for appellant.
    Myron M. Cherry and Peter Flynn, both of Cherry & Flynn, and J. Samuel Tenenbaum and David J. Eckert, both of Becker & Tenenbaum, both of Chicago, for appellees.
   JUSTICE McNAMARA

delivered the opinion of the court:

Plaintiff, R. W. Sawant & Company, and counterplaintiff, Ben Kozloff, Inc., brought this action in the circuit court of Cook County against defendant Allied Programs Corporation, a New York corporation, for breach of contract and fraudulent misrepresentation for failure to pay claims under a “rejection risk” insurance policy. After a default judgment was entered against Allied in favor of Sawant and an order of default was entered against Allied in favor of Kozloff, Allied filed a special appearance to contest the court’s jurisdiction. The trial court denied Allied’s motion to quash the service of summons. We granted Allied’s petition for leave to appeal the interlocutory order denying the motion to quash Kozloff’s service and consolidated the case with Allied’s appeal of the order denying its motion to quash the service by Sawant.

Sawant is an Indian exporter of seafood, and Kozloff is an Illinois corporation which imports seafood. When Kozloff contracted to buy seafood from Sawant, the parties discussed the acquisition of rejection risk insurance. The Food and Drug Administration inspects all seafood entering this country, and the rejection risk policy would insure against losses from FDA rejection of any or all of the shipments.

Kozloff contacted the Chicago office of Bayly, Martin & Fay, Inc. (BMF), to procure the insurance. BMF’s principal office is in New York. Because BMF could not place the insurance with approved domestic insurers, under New York law it was required to deal with an excess line broker. BMF contacted Allied, a New York corporation licensed as an excess line broker, to arrange for foreign insurers to underwrite the risk for members of the National Fisheries Industry. Allied did not deal directly with any of the members.

After assembling a group of European insurers, Allied sent its binder to BMF in New York. The binder listed Ben Kozloff, Inc., Chicago, Illinois, as the assured. BMF sent the binder to its Chicago office, which sent it to Kozloff. Allied had no knowledge that BMF did not issue a new binder, but referred to Allied’s binder as its own. The policy and policy conditions were similarly forwarded by Allied to BMF in New York. BMF then sent the policy to Kozloff. BMF in Chicago billed Kozloff for the premiums, forwarded its payment to New York, and then BMF in New York issued its check to Allied.

Kozloff made several claims for rejected seafood to BMF in Chicago and New York. When the European underwriters paid the claims, Allied, pursuant to BMF’s request, issued its checks payable to Kozloff. Allied sent its checks to BMF in New York. BMF sent the checks to its Chicago office, which would send them to Kozloff.

On April 16, 1981, Sawant, as a third-party beneficiary of the insurance agreement, filed this action against Kozloff, BMF and all of the European insurers when they failed to pay several claims. On December 21, 1981, Sawant filed an amended complaint naming Allied as a defendant. Allied was served with summons in June 1982, and when it took no action, Sawant obtained an order of default and on October 13, 1982, a default judgment. Kozloff also filed a counterclaim against Allied and obtained an order of default against it on October 21, 1982. Kozloff also served Allied in New York.

On December 1, 1982, Allied filed a special and limited appearance and a motion to quash to contest the court’s jurisdiction. The trial court found that Allied had been properly served with summons and had knowledge of the proceedings. Because Allied did not diligently present its defense and because Allied had minimum contacts with Illinois, the trial court denied the motion to quash and struck Allied’s special appearance.

Allied initially contends that filing a special appearance under section 2—301 of the Code of Civil Procedure was an appropriate procedure to contest jurisdiction and that the trial court erred in imposing a standard of due diligence.

The courts of Illinois may acquire jurisdiction over a foreign corporation if it is properly served with summons and has minimum contacts with the State. (World-Wide Volkswagen Corp. v. Woodson (1980), 444 U.S. 286, 62 L. Ed. 2d 490, 100 S. Ct. 559; International Shoe Co. v. Washington (1945), 326 U.S. 310, 90 L. Ed. 95, 66 S. Ct. 154.) Lack of jurisdiction, for the failure of either of these two elements, may be raised at any time, and the party raising the issue is not restricted by time limitations or the diligence requirements of section 2—1401. (Home State Savings Association v. Powell (1979), 73 Ill. App. 3d 915, 392 N.E.2d 598; Lebanon Trust & Savings Bank v. Ray (1973), 10 Ill. App. 3d 345, 293 N.E.2d 623.) To attack the in personam jurisdiction of the court, a. party must file a special appearance with a motion to quash the service of summons. (Farley v. Blackwood (1978), 56 Ill. App. 3d 1040, 372 N.E.2d 921; Mason v. Freeman National Printing Equipment Co., Ltd. (1977), 51 Ill. App. 3d 581, 366 N.E.2d 1015.) Allied followed these procedures and the trial court erred when it considered Allied’s diligence in deciding the motions.

Sawant and Kozloff maintain that a different standard is applicable here because Allied admits it received service of process. They argue that Allied has ignored the Illinois courts and to condone such action would invite chaos. (Johnson-Olson Floor Coverings, Inc. v. Branthaver (1968), 94 Ill. App. 2d 394, 236 N.E.2d 903.) However, section 2—1401, which provides relief from default judgments, and which Sawant and Kozloff maintain should be applicable here, does not affect a party’s right to seek relief from a void order or judgment by any other method. See Ill. Rev. Stat. 1983, ch. 110, par. 2— 1401(f).

Having determined that Allied followed the proper procedure to contest jurisdiction, we turn to the merits of Allied’s appeal. Allied contends that it neither resides, transacts nor does business in Illinois and is therefore not subject to the jurisdiction of the Illinois courts. Since Sawant and Kozloff do not dispute that Allied is a foreign corporation which was not “doing business” in Illinois, we need only consider jurisdiction under the long-arm statute.

Section 2—209 of the Illinois Code of Civil Procedure provides, in relevant part:

“(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;
(c) Only causes of action arising from acts enumerated herein may be asserted against a defendant in an action in which jurisdiction over him or her is based upon this Section.” (Ill. Rev. Stat. 1983, ch. 110, par. 2—209.)

The long-arm statute was adopted to provide jurisdiction over nonresident defendants to the extent permitted by the due process clause. (Nelson v. Miller (1957), 11 Ill. 2d 378, 143 N.E.2d 673; Aetna Casualty & Surety Co. v. Looney (1981), 98 Ill. App. 3d 1057, 424 N.E.2d 1347.) Due process requires certain “minimum contacts” between the defendant and the forum state such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice. (International Shoe Co. v. Washington (1945), 326 U.S. 310, 90 L. Ed. 95, 66 S. Ct. 154; Clements v. Barney’s Sporting Goods Store (1980), 84 Ill. App. 3d 600, 406 N.E.2d 43.) In order to exercise jurisdiction, the defendant must have purposely availed itself of the privilege of conducting business in this State, thus invoking the benefits and protection of the laws of this State. Hanson v. Denckla (1958), 357 U.S. 235, 2 L. Ed. 2d 1283, 78 S. Ct. 1228.

Allied urges that it did not have minimum contacts with Illinois nor had it availed itself of the privilege of conducting business in this State. We agree. Allied was never present in Illinois, physically or indirectly by mail or telephone. Nor did Allied initiate the transaction in question. Allied was approached in New York to participate by another New York corporation. Allied’s activities were conducted entirely within the State of New York with the foreign insurers and BMF’s New York office.

Sawant and Kozloff maintain that Allied voluntarily entered into a transaction with an entity it knew was located in Illinois because Allied sent its binder to an Illinois resident and paid claims with its checks to an Illinois resident. (Empress International, Ltd. v. Riverside Seafoods, Inc. (1983), 112 Ill. App. 3d 149, 445 N.E.2d 371; see McGee v. International Life Insurance Co. (1957), 355 U.S. 220, 2 L. Ed. 2d 223, 78 S. Ct. 199.) However, this argument ignores the fact that all of Allied’s activities were with BMF in New York, and that it was BMF in Chicago which sent the binder, collected the premiurns and forwarded the checks for claims.

Sawant and Kozloff also argue that Allied invoked the jurisdiction of Illinois courts by injecting an insurance policy into the stream of commerce which it knew was destined for an Illinois resident. Although, in Gray v. American Radiator & Standard Sanitary Corp. (1961), 22 Ill. 2d 432, 176 N.E.2d 761, the court recognized that personal jurisdiction may be asserted over a corporation that delivers its product into the stream of commerce, here we are not dealing with a product. Allied merely performed a service for BMF and the European insurers.

We likewise reject Sawant’s and Kozloff’s contention that Allied committed a tortious act within this State. They claim that they were injured in Illinois by Allied’s refusal to pay insurance claims. A similar argument was considered and rejected in Green v. Advance Ross Electronics Corp. (1981), 86 Ill. 2d 431, 427 N.E.2d 1203. There, Advance Ross maintained that it had suffered an economic injury as a result of Green’s tortious acts. The court held that the tortious acts were committed at the site of the last act on which liability is predicated. Here, as in Advance Ross, the ultimate economic loss is too attenuated a contact to justify jurisdiction over Allied.

Finally, Sawant and Kozloff point to sections 121—3 and 123 of the Illinois Insurance Code (Ill. Rev. Stat. 1983, ch. 73, pars. 733—3, 735), to support jurisdiction over Allied. Section 121—3 defines the transaction of insurance business as specified acts performed “in this State.” Allied did not act in this State and the Illinois Insurance Code will not provide a basis for jurisdiction where the long-arm statute does not. Section 123 is similarly inapplicable, since it merely provides a method for substituted service of process.

For the foregoing reasons, the order of the circuit court of Cook County denying Allied’s motion to quash service of process and striking Allied’s special and limited appearance is reversed.

Order reversed.

RIZZI, P.J., and WHITE, J., concur.


author: JUSTICE SCOTT JUSTICE STOUDER,

text:
      In re APPLICATION OF TAZEWELL COUNTY COLLECTOR (The People ex rel. Russell Strauman, Tazewell County Treasurer and Ex Officio Collector of Taxes, Appellant, v. Robert Wagner, Appellee).
    Third District
    No. 3—83—0620
    Opinion filed January 23, 1985.
    G. Edward Orr, Assistant State’s Attorney, of Pekin, for appellant.
    J. M. Mathis, of Peoria, for appellee.
   JUSTICE SCOTT

delivered the opinion of the court;

This appeal was brought on behalf of the People of the State of Illinois by Russell Strauman, county treasurer and ex officio collector of taxes of Tazewell County, following an order of the circuit court of Tazewell County providing for a refund of $1,174.40 to Robert Wagner, the purchaser of a tax sale certificate.

The sole issue presented by this appeal is whether the interest acquired by a tax purchaser is “substantially destroyed” within the meaning of section 260 of the Revenue Act of 1939 (Ill. Rev. Stat. 1981, ch. 120, par. 741), when the owner of the residence subsequently removes the house from the property.

On October 27, 1980, Mr. Wagner purchased a number of real estate tax certificates in Tazewell County. Over the past few years, Mr. Wagner has purchased approximately 1,000 such tax certificates and is thoroughly familiar with the process.

One of the tax certificates (No. 815) concerned a lot with improvements located at Lot 12 in Grandview Terrace estates. The parties are in agreement that upon the purchase of the tax sale certificate, Mr. Wagner acquired a lien against not only the land or real estate (Ill. Rev. Stat. 1981, ch. 120, par. 697), but the improvements on the real estate, whether they be “buildings, structures *** permanent fixtures ***.” Ill. Rev. Stat. 1981, ch. 120, par. 482(13); see also Jilek v. Chicago, Wilmington & Franklin Coal Co. (1943), 382 Ill. 241, 47 N.E.2d 96.

Subsequent to the tax sale, on June 30, 1981, the owners of the property removed the residence from Lot 12 to Lot 16 in the same subdivision. Apparently the house which was removed is still in good condition and is occupied. Mr. Wagner did not learn of the removal of the residence until several months later.

Mr. Wagner filed an application for a refund on the basis that the improvements had been “substantially destroyed” by virtue of their removal and that a “sale in error” should be declared pursuant to section 260 of the Revenue Act of 1939 (Ill. Rev. Stat. 1981, ch. 120, par. 741).

The circuit court granted Wagner’s request for a refund on the ground that removal of the residence amounted to destruction of the property. The evidence, however, indicates that the residence was not destroyed by its removal but merely relocated to a different lot nearby.

A lien on property follows the property if moved, unless it is sold to an innocent purchaser, in which case the lien follows the proceeds of the sale. (Marshall Savings & Loan Association v. Chicago National Bank (1965), 56 Ill. App. 2d 372, 206 N.E.2d 117.) Since the improvement to the real estate was not “substantially destroyed,” there was no sale in error, and Mr. Wagner was not entitled to a refund. The lien on the residence continues to exist in Mr. Wagner’s favor, wherever that residence may be located.

For the foregoing reasons, the judgment of the circuit court of Tazewell County is reversed.

Judgment reversed.

BARRY, J., concurs.

JUSTICE STOUDER,

dissenting:

I disagree with the majority because I believe the certificate holder should have been refunded the full amount of his payment after the removal of the house from Lot 12 because to do otherwise would ultimately punish rather than protect the certificate holder. First, I disagree that the removal of the house does not constitute a substantial destruction of the improvements to Lot 12 and, even if it does not, section 260 of the Revenue Act of 1939 (Ill. Rev. Stat. 1981, ch. 120, par. 741), which lists instances in which a “sale in error” shall be declared, is not an exclusive provision for refunds of tax sale proceeds. I believe the failure to refund the amount paid by the certificate holder in this case contravenes the strong public policy in favor of protecting the rights of certificate holders.

My reasons for believing that the removal of the house to a nearby lot “substantially destroyed” the improvements on Lot 12 are largely practical. Contrary to the assertion of the majority, the “lien” in favor of the certificate holder does not arise from section 216 of the Revenue Act of 1939 (Ill. Rev. Stat. 1981, ch. 120, par. 697), but is one of judicial determination. (See City of Chicago v. City Realty Exchange, Inc. (1970), 127 Ill. App. 2d 185, 262 N.E.2d 230.) Not only is this so-called lien nonstatutory, but in the context in which it was discussed in City of Chicago, it merely provided a means of establishing the priority of the obligation when considered in light of a later demolition lien. In no case has this “lien” been used as the majority suggests it must in this case, nor is there any suggestion that the “lien” follows a building or other improvement removed from a real estate parcel which has been sold for delinquent taxes.

Relying upon this so-called “lien” on a house now located on another lot destroys any incentive for the title holder to redeem the real estate, which will ultimately discourage bidders from participating in tax sales whose objective most frequently is to earn interest and await redemption. Furthermore, the certificate holder is forced to postpone indefinitely the time when he/she will realize the full benefit after issuance of the tax deed, at which time he may attempt to replevy the house or recover a portion of the proceeds from the sale of the house, whatever the portion may be. This obviously creates a myriad of problems for the certificate holder and does nothing to further the public policy discussed by the Illinois Supreme Court in Thornton Ltd. v. Rosewell (1978), 72 Ill. 2d 399, 406-07, 381 N.E.2d 249, 253, which protects the rights of tax purchasers in the interest of the effective collection of revenue. Therefore, I would have held that the removal of the house to a nearby lot “substantially destroyed” the improvements on Lot 12.

But even if the removal of the house does not specifically meet a criterion listed in section 216 for a declaration of a “sale in error” as the Illinois Supreme Court stated in Thornton, the instances listed in section 216 are not exclusive, and other situations not listed in the section may warrant the refund of the tax sale proceeds. In Thornton, the bidder had paid less than the amount of tax owed due to a clerical error. The supreme court held that the bidder was entitled to a refund despite the fact that section 216 does not pertain to this situation. I believe that, like Thornton, this is a situation where the successful bidder should receive a full refund, and to do otherwise would contravene public policy. I, therefore, would have affirmed the decision of the trial court ordering a refund.


author: JUSTICE MILLS

text:
    BELLFLOWER AG SERVICE, INC., Plaintiff-Appellant, v. FIRST NATIONAL BANK & TRUST COMPANY IN GIBSON CITY, Defendant-Appellee.
    Fourth District
    No. 4—84—0317
    Opinion filed January 17, 1985.
    Rehearing denied February 22, 1985.

      William S. Bach, of Bach & Laudeman, Ltd., of Bloomington, for appellant.
    James T. Foley, of Livingston, Barger, Brandt & Schroeder, of Blooming-ton, for appellee.
   JUSTICE MILLS

delivered the opinion of the court:

Alan Schultze took his employer for $133,525.11 by conversion of company checks.

The court below found his endorsement of the checks was authorized.

We cannot agree that the evidence supports this finding.

We reverse and remand.

Bellflower Ag Service, Inc., commenced this action against First National Bank & Trust Company in Gibson City (bank) for the alleged conversion of certain bank checks belonging to the corporation. The complaint charged that the bank had paid checks written to the order of Bellflower Ag Service, Inc.,’ to Alan Schultze on unauthorized endorsements. The checks totaled $133,525.11. Following a bench trial, the court entered judgment for the defendant bank, finding that the endorsements in issue were authorized and effective.

On appeal, plaintiff challenges the sufficiency of the evidence supporting the judgment, and the admissibility of certain documents allowed in evidence at trial. Due to our disposition of the first issue, we do not address the evidentiary question.

Facts

The facts of the case are largely undisputed. Bellflower Ag Service, Inc., is a corporation engaged in retail sales of farm chemicals and fertilizers. Gene Jannusch, his wife Martha, and Alan Schultze were the sole shareholders of the corporation and also served as the company’s board of directors and executive officers. Schultze was employed as the operating manager of the corporation’s plant. Jannusch and Schultze had originally purchased the company together, but they incorporated soon thereafter.

Gene Jannusch testified that the corporation had accounts with the National Bank of Bloomington and with the Corn.Belt Bank in Bloomington. He stated that he, his wife, and Schultze were all authorized to sign checks on those accounts, and all three were authorized to endorse checks for deposit in the accounts. Jannusch said that the corporation never had an account at the defendant bank and never had any prior contact with that bank.

In the summer of 1982, Jannusch discovered irregularities in the corporation’s invoices. When confronted with the irregularities, Schultze admitted that he had appropriated corporate- funds for his private use. According to Jannusch, Schultze said that he deposited checks written to the order of the corporation in his personal account. From the personal account, Schultze paid both business expenses and personal expenses.

On cross-examination, Jannusch testified that although Schultze was authorized to write checks on corporate accounts, and to collect accounts receivable, his authority to endorse checks was limited to deposits in the corporate accounts. He specifically stated that Schultze had no authority to endorse checks for deposit in accounts at the defendant bank. Jannusch testified that he had never indicated that Schultze possessed such authority.

Joel Martins, a CPA, testified that he was engaged by the plaintiff to determine the extent of the shortages. The accounting firm found that over $133,000 had been diverted from the corporate accounts to Schultze’s private account at the defendant bank.

Robert Knapp, who served as executive vice-president, trust officer and chief executive officer of the defendant bank in 1982, verified that the plaintiff did not have an account with the bank. With reference to a particular check for $44,613.57 which was written to the order of the plaintiff, Knapp admitted that the bank deposited the amount in Schultze’s personal account on Schultze’s endorsement. Knapp testified that the bank did nothing to verify the endorsement, but accepted it “as he knew he was associated with [plaintiff].” He stated that the bank had no corporate resolution to establish Schultze’s authority to endorse checks written to the corporation, but that bank records indicated Schultze was in partnership with Jannusch. These records were never produced at trial.

Alan Schultze appeared but declined to testify on the advice of his attorney.

Defendant called Claudia Chase, and Gene Jannusch as an adverse witness. Chase, the installment loan officer at the bank, testified that Schultze had applied for a loan at the bank in 1981. She laid the foundation for the admission of Schultze’s loan file. The file included a handwritten note which indicated that Schultze was a 15% shareholder of the plaintiff corporation and that he was a salaried employee. Jannusch, testifying as an adverse witness, presented his accounting of the corporate obligations which Schultze had personally paid. Those payments amounted to $28,052.81.

On April 6, 1984, the circuit court entered judgment for the defendant. He found that Schultze had possessed apparent and actual authority to endorse checks written to the order of the plaintiff in a manner which permitted their deposit in Schultze’s personal account. The court characterized the issue as one not involving unauthorized endorsements, but rather an unauthorized use of funds subsequent to lawful negotiation of the checks. The trial judge found that the defendant bank was absolved of liability under section 9 of “An Act concerning liability for participation in breaches of fiduciary obligations” (Uniform Fiduciaries Act) (Ill. Rev. Stat. 1983, ch. 17, par. 2009), because the bank had no actual knowledge that Schultze breached his obligation to the plaintiff.

Opinion

Plaintiff argues on appeal that the trial court erred in finding that Schultze had authority to endorse the checks in the manner he endorsed them. As a consequence, plaintiff contends, the protections of section 9 of the Uniform Fiduciaries Act are not available to defendant because the statute presupposes a fiduciary’s lawful authority to endorse. We agree.

I

The trial judge found that Schultze had both actual and apparent authority to make the endorsements which permitted the deposit of the checks in Schultze’s personal account. The evidence relating to actual authority is scant. The subject was raised only in the testimony of Gene Jannusch. That testimony appeared as follows:

Direct Examination
“[Plaintiff’s Counsel]: Can you tell me where those bank accounts were?
[Jannusch]: The National Bank in Bloomington and the Corn-belt Bank in Bloomington.
Q. Okay, and these were company accounts? And who was authorized to sign checks on those accounts?
A. The three of us. Myself, my wife and Alan Schultze.
Q. And were they also the three persons who were entitled to endorse checks for deposit in those accounts?
A. Yes.”
Cross-Examination
“[Defense Counsel]: Now, I believe it was your testimony that Mr. Schultze was authorized to sign checks for the company?
[Jannusch]: Yes.
Q. Endorse checks for the company?
A. Yes.”
Redirect Examination
“[Plaintiff’s Counsel]: All right. Now, Mr. Foley asked you about his authority to endorse checks. Was that limited to checks for deposit at certain banks?
[Jannusch]: Yes.
Q. All right. And which were those banks?
A. The National Bank and then the Cornbelt Bank of Bloomington.
Q. The National Bank where?
A. In Bloomington.
Q. The National Bank of Bloomington, not the First National Bank of Gibson City?
A. That’s correct.
Q. Did he ever have any authority to endorse any checks or to deal with any funds as far as any accounts at the First National Bank of Gibson City was concerned?
A. No.”

Plaintiff asserts that Schultze’s authority with regard to the checks was limited to endorsement for deposit in the bank accounts maintained by the corporation. Defendant contends that Schultze was empowered to endorse the checks without restriction, and that Schultze’s illegal conduct began with his negotiation of properly endorsed checks. Plaintiff’s characterization of Schultze’s actual authority suggests that Schultze was empowered to make only special, restrictive endorsements. (See Ill. Rev. Stat. 1983, ch. 26, pars. 3—204(1), 3—206.) Defendant’s interpretation, on the other hand, suggests that Schultze had the authority to endorse in blank checks written to the plaintiff. (See Ill. Rev. Stat. 1983, ch. 26, par. 3—204(2).) The evidence showed that Schultze in fact endorsed the checks in blank, and that the trial judge found that Schultze had actual authority to make such endorsements.

We conclude that the testimony does not support the trial court’s finding that Schultze had actual authority to endorse in blank checks written to the plaintiff. As quoted above, the only evidence of Schultze’s actual authority to endorse indicated a very limited power on Schultze’s part. Gene Jannusch testified clearly and consistently that Schultze had power to endorse the checks only for deposit in the plaintiff’s accounts. Nothing in the record indicates that Schultze had any broader actual authority. We find that the trial court’s finding on this point was in error.

II

The trial judge also found that Schultze had apparent authority to endorse the checks in the manner he endorsed them. Plaintiff maintains that this cannot be so, because apparent authority is based upon words or acts of the principal which convey the impression to third parties that a particular person is acting as his agent. We agree.

The record is clear and uncontradicted that there was no contact between plaintiff and defendant before the conversion of the checks was discovered. Both Jannusch and the bank’s chief executive officer so testified. Plaintiff is correct that apparent agency arises from acts or words of the putative principal. (Barraia v. Donoghue (1977), 49 Ill. App. 3d 280, 364 N.E.2d 952; Lawcock v. United States Trotting Association (1965), 55 Ill. App. 2d 211, 204 N.E.2d 802.) Since it is undisputed that there was never any contact between plaintiff and defendant, the trial court’s finding of apparent authority is necessarily in error.

Ill

Although neither the parties nor the trial judge considered implied authority in relation to Schultze, that analysis would not change the result here. The rule is:

“ ‘[A]n agent having general authority to manage his principal’s business, has, by virtue of his employment, no implied authority to bind his principal by making, accepting or endorsing negotiable paper.’ ” (Jackson Paper Manufacturing Co. v. Commercial National Bank (1902), 199 Ill. 151, 157, 65 N.E. 136, 138.)

There is nothing in the record to suggest that the power to endorse in blank checks written to the plaintiff was a proper or necessary part of Schultze’s job as manager. This will not be implied absent proof. Brady on Bank Checks sec. 23.17 (5th ed. 1979).

As plaintiff notes, section 9 of the Uniform Fiduciaries Act presupposes a lawful power to endorse on the part of the fiduciary. Section 9 provides as follows:

“If a fiduciary makes a deposit in a bank to his personal credit *** of checks payable to his principal and indorsed by him, if he is empowered to indorse such checks *** the bank receiving such deposit is not bound to inquire whether the fiduciary is committing thereby a breach of his obligation as fiduciary.” (Ill. Rev. Stat. 1983, ch. 17, par. 2009.)

The purpose of the Act is to facilitate the fiduciary’s performance of his responsibilities by limiting the liability of those who deal with him (Go-Tane Service Stations, Inc. v. Sharp (1979), 78 Ill. App. 3d 785, 397 N.E.2d 249); it does not purport to absolve a bank from liability when it pays a check on an unauthorized endorsement. The Act provides no protection for the defendant bank under these circumstances, because there was no proof that Schultze was in fact empowered to endorse the checks except for deposit in the corporate accounts. The trial court’s finding that section 9 of the Act absolved the bank from liability was erroneous.

Conclusion

The fact that the checks were made payable to the plaintiff corporation should have put the bank on inquiry as to Schultze’s authority to deal with the checks. The bank, by receiving the checks without investigating the matter further, assumed the risk of Schultze’s authority. See Ill. Rev. Stat. 1983, ch. 26, par. 3—419(3).

Since the record contains no evidence that Schultze had authority to endorse the checks in the manner he endorsed them, we reverse the judgment of the trial court and remand for consideration of the plaintiff’s damages.

Reversed and remanded.

GREEN, P.J., and TRAPP, J., concur.


author: JUSTICE LINDBERG

text:
    GARY-WHEATON BANK, Plaintiff-Appellant, v. EDWARD MEYER, SR., Defendant-Appellee.
    Second District
    No. 83—1062
    Opinion filed December 31, 1984.
    Rehearing denied February 11, 1985.

      Craig C. Westfall, of Nigro & Westfall, of Glendale Heights, for appellant.

      Robert R. Verchota, Rodney W. Equi, and Keith E. Roberts, Sr., all of Donovan & Roberts, of Wheaton, for appellee.
   JUSTICE LINDBERG

delivered the opinion of the court:

Plaintiff, Gary-Wheaton Bank, appeals from the denial by the circuit court of DuPage County of its motion for a turnover order. Plaintiff contended that a conveyance of a one-third beneficial interest in a trust consisting of a single-family residence from defendant Edward Meyer, Sr., to Edward Meyer, Jr., was fraudulent.

On appeal, the plaintiff contends: (1) the trial court’s finding of a resulting trust was against the manifest weight of the evidence; (2) the trial court’s finding that the conveyance from Edward Meyer, Sr., to Edward Meyer, Jr., was not fraudulent was against the manifest weight of the evidence; (3) the trial court’s finding that estoppel does not operate to deny Gertrude Wagemann’s ownership of the property was against the manifest weight of the evidence. Because we hold the court’s findings were against the manifest weight of the evidence, we reverse and remand.

In August 1982 defendant Edward Meyer, Sr. (Meyer, Sr.), was delinquent on unsecured loans from plaintiff Gary-Wheaton Bank (bank). The bank proposed to Meyer, Sr., that the loans be rewritten with Meyer, Sr.’s residence as collateral on the loans. Meyer, Sr., rejected this proposal, and the bank filed suit.

Summons and complaint were served. Meyer, Sr., did not appear, and a default judgment was entered on January 10, 1983, in the amount of $15,243.02. On October 25, 1983, the judgment was increased an additional $6,207.08 because of a second loan judgment.

The bank issued a citation to discover assets, citing Chicago Title and Trust Company, whereupon documents relating to a trust agreement were discovered. The trust agreement was dated January 17, 1961, and listed Meyer, Sr., Meyer, Sr.’s wife (Mary Meyer), and Gertrude W. Wagemann (Wagemann), Mary Meyer’s mother, as beneficiaries of the trust to be held as joint tenants.

The corpus of the trust is a single-family residence at 26 W 110 Embden Lane, Wheaton. Wagemann, Meyer, Sr., Mary Meyer, and Meyer, Sr.’s son, Edward Meyer, Jr. (Meyer, Jr.), presently live there.

On November 11, 1982, Meyer, Sr., conveyed his one-third interest to Meyer, Jr. The assignment was predated October 25, 1982, Meyer, Jr.’s birthday. At trial both Wagemann and Meyer, Sr., testified this conveyance was in response to a request by Wagemann. The assignment was accepted by Chicago Title and Trust on December 7, 1982.

In seeking to declare the conveyance void, the bank claimed it was fraudulent to avoid creditors. Meyer, Jr., appeared to defend the action. He is one of the citees. The other citee is Chicago Title and Trust Company. After hearing the evidence, the trial court denied the bank’s motion to set aside the conveyance. The trial court held:

“1) That the real estate in question which is requested to be transferred under the motion for a turnover order was purchased with funds wholly from the estate of Gertrude Wagemann.
2) That the property was placed in trust and the defendant in this cause named as a beneficiary of that trust without any consideration paid by the defendant.
3) That although the defendant resided in the property throughout the period of ownership and may have on occasion contributed to the maintenance of the property, his contributions toward said maintenance could not and will not be considered by me as evidence of a contribution to the purchase or evidence of ownership.
4) It is a further finding that although Gertrude W. Wagemann allowed the defendant, Edward B. Meyer, to be a beneficiary of a trust, it was not such an act as would estop her from claiming the ownership by reason of the creditors allegedly relying upon his undisclosed interest in the real estate. I further find that although one time eleven years previously the plaintiff may have relied to some degree on the defendant’s disclosure of his interest to lend him money, it would be difficult for me to believe that the loans which are the subject of the underlying action herein were made on the basis of this undisclosed interest eleven years previously and not on the basis of the relationship which arose between Mr. Meyer and Mr. Monson over the period of years.
Therefore, I find no estoppel on the respondent, Gertrude W. Wagemann, to deny her ownership in the property or to deny Mr. Meyer’s ownership in the property, and I do not find as a matter of law that the Gary-Wheaton Bank relied on the disclosed, undivided interest of Mr. Meyer as the basis for making the loans the subject of this underlying action. Inasmuch as all the funds used for the purchase of this home and the great majority of maintenance of this home were supplied by Gertrude W. Wagemann, there should be and is clearly a resulting trust, and transfer or conveyance by Edward B. Meyer, Sr., to his son Edward B. Meyer, Jr., at the request of Gertrude W. Wagemann was not a fraudulent conveyance as against the GaryWheaton Bank, and therefore the motion of the Gary-Wheaton Bank will be denied.”

Resulting Trust

The bank contends the trial court’s finding of a resulting trust in favor of Wagemann was against the manifest weight of the evidence. The bank argues: (1) necessary requirements for a resulting trust are not present; and (2) where an express trust exists there can be no resulting trust.

A resulting trust arises by operation of law where one person furnishes consideration for property and conveys title to another. Whether or not such a resulting trust arises depends upon the intention of the person who furnishes the purchase price at the time of the conveyance. A resulting trust arises at the instant legal title is taken. The theory of a resulting trust is founded upon a natural equity that one who pays for the property should enjoy it, unless he intended by the vesting of title to confer a beneficial interest upon the grantee. (Prassa v. Corcoran (1962), 24 Ill. 2d 288, 291.) He alone shall enjoy that which he has purchased. (Cadena v. Cadena (1983), 116 Ill. App. 3d 153, 155, 452 N.E.2d 71, 72.) The burden of proof is upon the party seeking to establish a resulting trust, and the evidence must be clear, convincing and unmistakable. In re Estate of Wilson (1980), 81 Ill. 2d 349, 356.

A resulting trust will not be sustained where the transaction can be construed in any other reasonable fashion. A resulting trust may be rebutted where evidence establishes the grantor intended to confer a beneficial interest in the property upon the grantee. A fact considered indicative of the grantor’s intent to make a gift exists where the grantor takes title to the property in the name of himself and another person jointly. Such conveyance, in the absence of evidence of a different intention, has been held to be demonstrative of the grantor’s intention to convey a gift of an undivided interest in the property of a joint tenant. Cadena v. Cadena (1983), 116 Ill. App. 3d 153, 155, 452 N.E.2d 71, 72.

When property is transferred from one family member to another, a presumption arises in favor of a gift, which will negate a resulting trust. It is immaterial that the child-recipient is an adult. Moore v. Moore (1956), 9 Ill. 2d 556, 557.

Where a deed, absolute in terms and without condition, conveys real estate to two persons as joint tenants, the language of the deed is sufficient to show an expressed intent to convey both legal title and beneficial interest to the two grantees as joint tenants, but if the purchase price was paid by only one of such grantees, this indicates an intent that the grantee is the only one beneficially interested in the property, and under such facts the expressed intent as shown by the deed must give way to the rule of equity which protects the party paying the purchase price by raising a resulting trust in his favor. Prassa v. Corcoran (1962), 24 Ill. 2d 288, 292.

Finally, if an express trust exists, there can be no resulting trust. (Baker v. LeMire (1934), 355 Ill. 626, 631.) In order to have a valid express trust, the following conditions must be present:

“(1) intent of the parties to create a trust, which may be shown by a declaration of trust by the settlor or by circumstances which show that the settlor intended to create a trust;
(2) a definite subject matter or trust property;
(3) ascertainable beneficiaries;
(4) a trustee;
(5) specifications of a trust purpose and how the trust is to be performed; and
(6) delivery of the trust property to the trustee.” In re Estate of Wilkening (1982), 109 Ill. App. 3d 934, 940-41, 441 N.E.2d 158, 163.

In the case at bar, the trial court held a resulting trust arose in favor of Wagemann by her having paid the full purchase price of the house and putting it in trust with her daughter, herself, and Meyer, Sr. There are three reasons why the trust must fail: (1) Meyer, Sr., had a beneficial interest, (2) an express trust already existed, and (3) evidence that a resulting trust was intended was not unmistakable, clear or convincing.

First, in a resulting trust, the grantee must not acquire a beneficial interest in the property. (Prassa v. Corcoran (1962), 24 Ill. 2d 288.) In the case at bar, Meyer, Sr., did acquire a beneficial interest. He was listed as a joint tenant with a one-third undivided beneficial interest in the trust. Under the law of joint tenancy, “four unities” must be present at the time of the tenancy’s creation. One of these unities is interest. (Harms v. Sprague (1983), 119 Ill. App. 3d 503, 505, 456 N.E.2d 976, 978.) Meyer, Sr., must have had a one-third beneficial interest in order to be a joint tenant at the time of its creation.

A family relationship exists in the case at bar, indicating an intended gift. In Moore v. Moore (1956), 9 Ill. 2d 556, a mother bought a piece of property and placed it in trust with a one-third joint tenancy interest to herself, a son and daughter. When the mother died, another son, not a joint tenant, brought an action to declare a resulting trust in favor of the deceased mother. The court found no resulting trust because the presumption of a gift exists when the grantee is the natural object of bounty of the grantor. In the case at bar, Meyer, Sr., was the son-in-law of Wagemann. As in Moore, a presumption of a gift arises. In Moore a gift arose between the mother, her son and daughter. We hold the same policy considerations dictate that the conveyance from Wagemann to Meyer, Sr., and Mary Meyer was a gift. While Meyer was not a natural object of Wagemann’s bounty, he was related by marriage and, as in Moore, an intent to keep the property within the grantor’s family can be inferred.

Wagemann’s designation of Meyer, Sr., as a joint tenant is indicative of her intent that he retain a beneficial interest. In Cadena v. Cadena (1983), 116 Ill. App. 3d 153, 452 N.E.2d 71, a man and his ex-wife bought a piece of property as joint tenants after their divorce. He paid a majority of the consideration for the property. After separation, when the man claimed a resulting trust, the court found a gift did exist based on the stipulated evidence that title to the property was taken in joint tenancy. No resulting trust was found. (See also Johnson v. La Grange State Bank (1978), 73 Ill. 2d 342.) In the case at bar, Wagemann testified that she did not intend for Meyer, Sr., to have any interest in the property. She testified he was only listed as a joint tenant in case anything should happen to her or Mary Meyer. However, if both Wagemann and Mary Meyer had died anytime prior to Meyer, Sr.’s assignment to Meyer, Jr., the property would have devolved upon Meyer, Sr. There were no provisions for Meyer, Jr., in the original trust deed.

While Prassa v. Corcoran (1962), 24 Ill. 2d 288, holds if one joint tenant supplies all funds, a resulting trust is created for that tenant, Prassa is distinguishable from Cadena and Moore. In Prassa, a man about to be married bought a piece of property. The title to the property was placed in the name of the man and his fiancee as joint tenants. When the engagement terminated, the fiancee requested the man convey her share of property to her. The man refused, claiming a resulting trust arose in his favor. The court held a resulting trust arose because no gift to the fiancee was intended until the wedding. In Prassa, the marital relationship never materialized from the parties’ engagement. In the case at bar, a long-standing family relationship existed and Meyer, Sr., did retain a beneficial interest.

Second, when an express trust exists, there can be no resulting trust. (Baker v. LeMire (1934), 355 Ill. 626.) In the case at bar, the trust fulfills the six requirements of an express trust: (1) there must be an intent to create a trust: evidenced by a declaration of a trust; (2) a definite subject matter of trust property: 26 W 110 Embden Lane, Wheaton; (3) ascertainable beneficiaries: Meyer, Sr., Mary Meyer, and Wagemann; (4) a trustee: Chicago Title and Trust Company; (5) specification of a trust purpose and how the trust is to be performed: delineated in the trust agreement; (6) delivery of the trust property to the trustee: the deed into trust was discovered at Chicago Title and Trust Company, thus there was constructive delivery.

Meyer, Jr., contends the express trust with Chicago Title relates to the title to the property, whereas the resulting trust is imposed upon the beneficial interest held in the name of the defendant. This argument is without merit. Under Baker, where there is an express trust there can be no resulting trust. Meyer, Jr.’s reliance on Sweesy v. Hoy (1933), 272 Ill. App. 346, is misplaced. In Sweesy, a man set up an express trust using his wife’s funds and mistakenly placed the trust in his name. The court held this invalid express trust to be a valid resulting trust. In the case at bar, the express trust was valid, and under Baker and Sweesy no resulting trust can exist.

Third, under Wilson, the burden of proof is upon the party seeking to establish a resulting trust and the evidence must be clear, convincing and unmistakable. As pointed out above, the evidence of a resulting trust in the case at bar is not clear, convincing or unmistakable. Defendant’s theory that a resulting trust existed in favor of Gertrude Wagemann must fail. See Anderson v. Ferris (1984), 128 Ill. App. 3d 149, 470 N.E.2d 518.

Fraudulent Conveyance

The bank contends the conveyance from Meyer, Sr., to Meyer, Jr., was fraudulent in law and should be voided. When fraud is established and no consideration for the fraudulent transfer is present, it is fraud in law. When there is consideration, it is fraud in fact. In fraud in fact, there must be actual fraud and specific intent to defraud. In fraud in law, fraud is presumed from the circumstances. (Wilkey v. Wax (1967), 82 Ill. App. 2d 67, 70, 225 N.E.2d 813, 814.) In the case at bar, the record indicates no consideration was given for the conveyance from Meyer, Sr., to Meyer, Jr. Thus, if the conveyance was fraudulent, it was fraud in law. In order to establish a cause of action of fraud in law, three requirements must be met: (1) a voluntary gift, (2) an existing or contemplated indebtedness against the donor, and (3) it must appear that the donor did not retain sufficient property to pay his indebtedness. First Security Bank v. Bawoll (1983), 120 Ill. App. 3d 787, 791, 458 N.E.2d 193, 197.

The three requirements for a fraudulent conveyance have been met in the case at bar. First, the gift must have been voluntary. (First Security Bank v. Bawoll (1983), 120 Ill. App. 3d 787, 458 N.E.2d 193.) In Till v. Till (1967), 87 Ill. App. 2d 358, 231 N.E.2d 641, the court held that in cases of fraud in law where no consideration or grossly inadequate consideration is given, the transfer is deemed to be voluntary. In the case at bar, the parties testified there was no consideration for the conveyance from Meyer, Sr., to Meyer, Jr., and thus, the transfer was voluntary. Second, there must be an existing or contemplated indebtedness against the donor (Meyer, Sr.) at the time of the transfer. (First Security Bank v. Bawoll (1983), 120 Ill. App. 3d 787, 458 N.E.2d 193.) Meyer, Sr., admitted at trial that he had three loan obligations unpaid at the time of his assignment to Meyer, Jr. One was past due when he made the assignment. Thus, there was an existing indebtedness at the time of the assignment, October 25, 1982. Third, it must appear the donor did not retain sufficient resources to pay the indebtedness. (First Security Bank v. Bawoll (1983), 120 Ill. App. 3d 787, 458 N.E.2d 193.) Meyer, Sr., admitted at trial that at the time of the conveyance to Meyer, Jr., the only asset he owned was a 1979 Mustang. He did not allege the value of the car was sufficient to satisfy his indebtedness. The three elements of fraud in law are fulfilled in the instant case.

The bank relies on the case of Magner v. Muslin (1951), 344 Ill. App. 475, 100 N.E.2d 344. In Magner, title to a piece of property was held by a husband and wife as joint tenants. The husband transferred his interest to his wife. Plaintiff creditors brought an action to overturn the conveyance as fraudulent. The court overturned the conveyance because the husband had an interest in the property by virtue of the joint tenancy. The parties admitted the husband had such an interest. In the case at bar, Meyer, Sr., did own a beneficial interest for the reasons stated in section 1. He did not only take a nominal title. Meyer, Jr.’s contentions that Magner is inapposite therefore must be rejected. The conveyance from Meyer, Sr., to Meyer, Jr., was fraudulent in law.

Estoppel

The bank contends even if a resulting trust arises in favor of Wagemann, she is estopped from claiming such trust in her favor because she placed Meyer, Sr., in a position where he could make representations of ownership. The trial court held that while the bank may have at one time relied on Meyer, Sr.’s ownership of the house to give him a loan, the bank did not rely on his interest to grant him the loans which are the subject of the underlying action.

Estoppel refers to reliance by one party on the word or conduct of another so that the party changes his position and subsequently suffers harm. It arises whenever one by his conduct, affirmative or negative, intentionally or through culpable negligence, induces another to believe and have confidence in certain material facts, and the latter, having the right to do so, relies and acts thereon and is, as a reasonable and inevitable consequence, misled to his injury. Estoppel must be proved by clear, unequivocal evidence. Although an intent to mislead is not required, the reliance must be reasonable. Furthermore, to claim reliance on the conduct of another, the party must have acted without knowledge of the truth of the matter relied upon. Finally, the conduct of the person seeking the benefit of the doctrine may be scrutinized. Wilson v. Illinois Benedictine College (1983), 112 Ill. App. 3d 932, 939, 445 N.E.2d 901, 908.

The bank relies on Hummel v. Villmow (1931), 347 Ill. 58, and Springfield Lumber Co. v. Shaughnessy (1922), 225 Ill. App. 422. In Hummel and Shaughnessy, courts held the actual owner of property will be estopped from claiming a resulting trust in the property where the record owner obtained credit upon the strength of ownership. Meyer, Jr., admits these cases would control but claims there was no reliance by the bank on the 1972 loan application and Meyer, Sr.’s verbal representations. Thus, the issue is whether the bank actually relied upon Meyer, Sr.’s written and oral representations. At trial, Walter Monson, a bank loan officer, testified Meyer, Sr.’s 1972 car loan application was used in making a determination of Meyer, Sr.’s credit-worthiness for the three loans that are in question. The dates of these loans are January 3, 1975, April 4, 1981, and May 27, 1981. Meyer, Sr.’s 1972 loan application listed his one-third interest in the house in Wheaton. In addition, Meyer, Sr., reiterated these representations verbally to Monson. Monson testified the bank’s regular practice was to use earlier loan applications when making new loans to the same customer. Monson’s testimony on this issue is unrebutted by Meyer, Sr.

In order to reverse the finding of a trial court, the finding must be against the manifest weight of the evidence. For a finding to be against the manifest weight of the evidence, it must appear that the conclusions opposite to those reached by the trier of fact are clearly evident. J.R. Sinnott Carpentry, Inc. v. Phillips (1982), 110 Ill. App. 3d 632, 636, 443 N.E.2d 597, 601.

In the case at bar, the finding that Wagemann was not estopped from raising her ownership of the property was against the manifest weight of the evidence. The bank’s testimony of reliance was unrebutted. While it may have been difficult for the trial court to believe the bank relied on a 10-year-old loan application, the only evidence adduced on the question was that of the bank. It was unrebutted and the trial court was not entitled to discard the evidence. Bucktown Partners v. Johnson (1983), 119 Ill. App. 3d 346, 351, 456 N.E.2d 703, 706.

In sum, we find that (1) a resulting trust did not arise in favor of Gertrude Wagemann, (2) the conveyance from Edward Meyer, Sr., to Edward Meyer, Jr., was fraudulent in law, and (3) Gertrude Wagemann is estopped from claiming a resulting trust in the property. The judgment of the circuit court of Du Page County is reversed and the cause is remanded.

Reversed and remanded.

UNVERZAGT and SCHNAKE, JJ., concur.


author: PRESIDING JUSTICE HEIPLE JUSTICE STOUDER,

text:
    CHRISTIAN C. McCARTER, Plaintiff-Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant-Appellee.
    Third District
    No. 3—83—0765
    Opinion filed January 23, 1985.

      Roger B. Gomien and Paul E. Root, both of Gomien, Root & Masching, of Morris, for appellant.
    George R. Black, of Black & Black, of Morris, for appellee.
   PRESIDING JUSTICE HEIPLE

delivered the opinion of the court:

On May 5, 1980, an automobile driven by John M. Couch collided with a motorcycle driven by the plaintiff. Both parties were insured by the defendant. This action arises out of the defendant’s conduct in settling the plaintiff’s third-party claim against Couch. The complaint was based on common law fraud, the Illinois Consumer Fraud and Deceptive Business Practices Act (Ill. Rev. Stat. 1981, ch. 12V-k, par. 261 et seq.) and intentional infliction of emotional distress. The complaint was dismissed on defendant’s motion. The following issues are presented by the plaintiff’s appeal: (1) whether the two-year statute of limitations for personal injuries governs the plaintiff’s fraud claim; (2) whether the defendant’s liability is dependent upon first establishing Mr. Couch’s liability; (3) whether the plaintiff was required to rescind the release given to Mr. Couch and return the settlement to the defendant before proceeding with this action; (4) whether the plaintiff’s action is barred as a direct action against an insurer and (5) whether the complaint states a cause of action for fraud, intentional infliction of emotional distress and violation of the Consumer Fraud Act.

The defendant argues that its own liability is dependent upon the liability of Mr. Couch. Therefore, a judgment against Couch is necessary in order to establish the defendant’s liability. Since the two-year statute of limitations for personal injuries has run and no lawsuit has been brought against Mr. Couch, the defendant contends that the statute of limitations also bars the plaintiff’s third-party fraud action. The trial court also referred to the limitations period in dismissing the complaint.

In support of its argument, the defendant cites Kolar v. City of Chicago (1973), 12 Ill. App. 3d 887. In Kolar, a wife’s personal injury action against the city was barred by the statute of limitations. The husband argued that his action for loss of consortium was not covered by the personal injury limitations period because it was an action for property damages. The court of appeals held that the husband’s action was dependent upon proving that the city had negligently injured his wife. Therefore, the two-year personal injury statute barred the husband’s claim despite the fact that it was a separate cause of action.

Kolar can be distinguished because the plaintiff’s action against the defendant in the present case is separate and distinct from any cause of action the plaintiff may have had against Mr. Couch. The defendant is being sued for fraudulent conduct in settling the plaintiff’s claim against Couch. Couch’s civil liability for the plaintiff’s injuries is not relevant to the fraud action since the defendant settled the plaintiff’s claim regardless of whether Couch was negligent or not. In order to recover for the defendant’s wrongful conduct in settling the claim, the plaintiff does not have to prove that Couch was negligent. Since the fraud action constitutes a separate claim, it is not subject to the two-year limitations period for personal injuries but is instead governed by a five-year limitations period. (Ill. Rev. Stat. 1981, ch. 110, par. 13—205.) The plaintiff’s action was filed within this period and is not barred.

The defendant also argues that the plaintiff’s action is barred by the equitable defense of laches. Equitable relief is often refused on the basis of laches even though the time fixed by the statute of limitations has not expired. (Beckham v. Tate (1978), 61 Ill. App. 3d 765.) The present case involves an action at law which was filed within the applicable limitations period without undue delay. Therefore, the defense of laches is not available.

The next issue is whether the plaintiff was required to rescind the release given to Couch and return the settlement to the defendant before proceeding with the present action. As we have already stated, the fraud claim against the defendant and the personal injury claim against Couch are independent. The release given to Couch and the settlement received in exchange therefore have nothing to do with the defendant’s separate acts of fraud. Rescission of the release and return of the settlement are unnecessary.

Next, the defendant argues that the plaintiff’s action is barred because of Illinois policy prohibiting direct action lawsuits against the insurance carrier of an adverse party. (Scroggins v. All state Insurance Co. (1979), 74 Ill. App. 3d 1027.) In Scroggins, the court held that an injured third party may not sue the defendant’s insurer for fraud, negligence or bad faith in refusing to settle a case within policy limits. The reason given for this rule is that an insurance company’s duty to negotiate in good faith is owed only to its insured and not to third parties. Therefore, an injured third party has no standing to sue an insurance company for ib conduct in settling a claim on behalf of the insured party. The present case does not fit within this rule.

The defendant allegedly advised the plaintiff that he did not need to be represented during settlement negotiations and that the defendant would settle the plaintiff’s claim against Couch fairly and equitably because both vehicles were insured by the defendant. By promising to represent and protect the interests of the plaintiff and Couch, the defendant owed a duty of good faith to both parties. Therefore, this action is not governed by Scroggins.

The defendant argues that the plaintiff has no standing to sue under the Consumer Fraud and Deceptive Business Practices Act. (Ill. Rev. Stat. 1981, ch. 12172, par. 261 et seq.) The sale of insurance is a service for purposes of the Consumer Fraud Act. (Fox v. Industrial Casualty Insurance Co. (1981), 98 Ill. App. 3d 543.) However, the transaction complained of in the present case does not involve a sale of insurance. In fact, the plaintiff is not even a consumer under these circumstances. Since the Consumer Fraud Act applies only to consumers, (Steinberg v. Chicago Medical School (1977), 69 Ill. 2d 320), we affirm the trial court’s dismissal of count I.

Next, the defendant argues that the complaint fails to state a cause of action for fraud. The elements of a cause of action for fraudulent misrepresentation are: (1) false statement of material fact; (2) known or believed to be false by the party making it; (3) intent to induce the other party to act; (4) action by the other party in reliance on the truth of the statement, and (5) damages. Furthermore, the reliance by the plaintiff must be justified, i.e., he must have had a right to rely. Soules v. General Motors Corp. (1980), 79 Ill. 2d 282, 286.

The trial court dismissed the complaint because the defendant did not owe a duty of good faith to the plaintiff and because there were no damages. In addition, the defendant argues that there was no material misrepresentation.

The question of whether the defendant owed a duty of good faith to the plaintiff has already been answered affirmatively and need not be discussed further.

The false statements complained of by the plaintiff are as follows. The defendant’s adjuster allegedly told the plaintiff that the claims committee had rejected plaintiff’s claim for Couch’s policy limits of $100,000 when the adjuster knew that the committee had authorized full payment. Also, the adjuster told the plaintiff that if he went to court, his claim would be dismissed due to his contributory negligence. The adjuster stated that he was relying on a report describing plaintiff’s negligence when he allegedly knew that no such report existed. Finally, the defendant promised to advance funds to pay plaintiff’s medical bills and then withheld the funds. As a result, the plaintiff settled for $72,500.

The defendant contends that it is not fraudulent to offer a claimant less than the policy limits. (Adduci v. Vigilant Insurance Co. (1981), 98 Ill. App. 3d 472.) This may be true in negotiations between parties of equal sophistication dealing with each other at arm’s length. However, this rule does not excuse knowing misrepresentations made with intent to deceive and is certainly no defense where an insurance company undertakes to represent and protect the interests of both the injured party and its insured during settlement negotiations.

It is also fraudulent to attempt to induce an injured party to accept a false settlement offer based on nonexistent reports of the injured party’s contributory negligence. By alleging that the defendant made the above mentioned representations, the complaint satisfied the requirement of a false statement of material fact.

Furthermore, due to the defendant’s assurances of fair dealing and the suggestion that the plaintiff not retain counsel, the plaintiff was justified in relying on the defendant’s representations regarding the amount of the authorized settlement and the plaintiff’s chances of success should the case have gone to trial.

The measure of damages for fraud is the amount that will compensate the plaintiff for the loss caused by the fraud. The plaintiff’s claim is that the defendant fraudulently induced the plaintiff to relinquish his cause of action against Couch for less than its full value. Therefore, the plaintiff’s loss is the amount by which the value of his claim against Couch exceeds $72,500, which was the amount the plaintiff settled for in reliance on the defendant’s false representations. Assuming the value of the plaintiff’s claim exceeds the $72,500, the plaintiff may not recover as compensatory damages an amount in excess of the $100,000 policy limit. Had there been no false representations by the defendant, plaintiff’s maximum recovery would have been $100,000.

In order for the plaintiff’s claim against Couch to be worth anything, the plaintiff must make a prima facie showing of Couch’s negligence and establish the amount of his damages with a reasonable degree of certainty. Since contributory negligence was a potential bar to liability at the date of the accident, the plaintiff must also demonstrate that he was not at fault in causing the collision.

Assuming the plaintiff is able to meet this burden of proof, damages can be ascertained without speculation. Accordingly, the trial judge erred in finding as a matter of law that there were no damages. Count II adequately alleges a cause of action for fraud and should not have been dismissed.

Finally, the defendant argues that the complaint fails to state a cause of action for intentional infliction of emotional distress. This tort is composed of four elements: (1) extreme and outrageous conduct; (2) intent by the defendant to cause, or a reckless disregard of the probability of causing emotional distress; (3) severe or extreme emotional distress suffered by the plaintiff; and (4) an actual and proximate causation of emotional distress by the defendant’s outrageous conduct. (Debolt v. Mutual of Omaha (1978), 56 Ill. App. 3d 111, 113.) The complaint fails to allege that the defendant’s conduct was reckless or intentional, or that the plaintiff suffered severe or extreme emotional distress. Therefore, count III was properly dismissed.

The judgment of the circuit court of Grundy County dismissing counts I and III of the plaintiff’s complaint is affirmed. The dismissal of count II is reversed and the cause remanded for further proceedings.

Affirmed in part; reversed in part; cause remanded.

SCOTT, J., concurs.

JUSTICE STOUDER,

specially concurring:

I concur in the majority opinion, except that I disagree with the majority’s observation “In order for plaintiff’s claim against Couch to be worth anything the plaintiff must make a prima facie showing of negligence and establish the amount with a reasonable degree of certainty.” A trial on the merits at this stage is both barred by the statute of limitations and would contravene the policy against direct actions against insurance companies.

I have recently expressed my views on this subject in my dissent to Richardson v. Economy Fire & Casualty Co. (1984), 126 Ill. App. 3d 520, 467 N.E.2d 317, appeal allowed (1984), 101 Ill. 2d 582, in which I stated

“[WJhere the election has been made to seek damages for fraud and deceit, the damages so recoverable are necessarily related to and restricted to those caused by the misrepresentation. The damages recoverable are not those which might have been recovered in an action against the tortfeasor, but only those which are proximately caused by the false misrepresentation.” (126 Ill. App. 3d 520, 527, 467 N.E.2d 317, 323.)

Here, plaintiff has obviously elected to seek damages for common law fraud and deceit rather than asking for a rescission of the settlement agreement and proceeding with a trial of the underlying personal injury claim. Count II of plaintiff’s amended complaint alleges a misrepresentation by the State Farm agent which resulted in settlement of the plaintiff’s claim for less than its full value. As damages for fraud and deception, plaintiff asks for $27,500, the difference between the settlement amount, $72,500, and the amount authorized for settlement of plaintiff’s claim, $100,000. No damages prayed for in the plaintiff’s complaint require a determination of liability, nor is the success of the underlying personal injury claim in any way related to the damages sustained in a common law fraud action based upon the fraudulent procurement of a settlement agreement.

I would have held that the plaintiff need only prove the insurance adjuster induced him to accept a lesser settlement by misrepresenting the facts knowing them to be false. The proper measure of damages is, therefore, as plaintiff’s complaint states, the difference between the value of the settlement at the time the fraud was perpetrated and the actual value of the settlement. The plaintiff’s claim was obviously worth at least $72,500 in the eyes of both parties. The only question is was the settlement diminished by the misrepresentation of the insurance agent? Litigating the underlying personal injury claim to establish liability does nothing to answer this question and is, therefore, both unnecessary and costly to all parties.

I, therefore, cannot agree with the reasoning of the majority in this respect, although I do agree that compensatory damages must be limited to $100,000.