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Moore v. Pinkert

NOVEMBER 23, 1960.




Appeal from the Circuit Court of Cook county; the Hon. THOMAS J. COURTNEY, Judge, presiding. Reversed and remanded with directions.


Rehearing denied and opinion modified January 12, 1961.

This appeal is taken from summary judgments entered in the Circuit Court of Cook County against Mary Moore and in favor of Joseph M. Dvorak and George Kotas. Mary Moore, hereinafter referred to as the plaintiff, had brought an action to recover money which she alleges was wrongfully paid to defendant Dvorak in connection with a second mortgage allegedly procured by fraud and deceit. The plaintiff claims additional moneys paid to Kotas by virtue of the same fraud and also asks to have removed as a cloud on title to real estate a separate second mortgage held by Kotas.

The case grew out of a real estate transaction. In the original complaint filed by the plaintiff, Harold Pinkert, Joseph Dvorak, Anthony Broccolo and George Kotas were all named as parties defendant. Motions for summary judgment were filed by Pinkert, Dvorak and Kotas. On the hearing on the motions the court entered an order permitting the plaintiff to file an amended complaint and taking the motions for summary judgment under advisement. Upon the filing of the amended complaint plaintiff dismissed out Pinkert and Broccolo. Defendants Dvorak and Kotas filed petitions asking that summary judgments be entered upon their motions previously filed.

The court entered a summary judgment in favor of defendant Kotas, in which judgment order it stated that the admissions of the plaintiff in her deposition and in the amended complaint negative the existence of a cause of action by the plaintiff against Kotas. In the judgment order in favor of Dvorak the court found that the amended complaint did not state an action against Dvorak and that the deposition of the plaintiff contained admissions negativing the existence of any liability of Dvorak to the plaintiff.

The instant lawsuit is based on an attempt of the plaintiff to recover money from those who allegedly profited by a series of complicated financial transactions in connection with the purchase of a home and who have in their possession money in equity and good conscience belonging to her.

In order for a full understanding of the case it was necessary for us to go to the record. This we are not required to do. However, because of the extraordinary character of the case and the flagrant disregard of the law and the principles of fair dealing should the allegations in the complaint be true, we prefer to determine the propriety of the entry of the summary judgments, disregarding the method in which the case has been presented to this court. McKey v. McKean, 384 Ill. 112, 115, 51 N.E.2d 189; Department of Finance v. Goldberg, 370 Ill. 578, 583, 19 N.E.2d 593; Reiter v. Illinois Nat. Casualty Co., 328 Ill. App. 234, 265, 65 N.E.2d 830.

[2-4] The summary judgments were entered on defendants' motions before the defendants had filed any pleadings. The 1955 amendment to the Civil Practice Act (Ill. Rev. Stat. 1955, chap. 110, par. 57) provided that a defendant might make a motion for summary judgment "at any time." That amendment was modeled on Federal Rule 56. Federal cases interpreting that rule hold that a defendant may file a motion for summary judgment before he files any pleadings. Gifford v. Travelers Protective Ass'n of America, 153 F.2d 209; Lindsey v. Leavy, 149 F.2d 899. The case before us illustrates the danger of the indiscriminate application of such rule. The purpose of summary judgment procedure is to determine whether there is a genuine issue of fact involved in the case. Allen v. Meyer, 14 Ill.2d 284, 152 N.E.2d 576; Diversey Liquidating Corp. v. Neunkirchen, 370 Ill. 523, 19 N.E.2d 363. Ordinarily the issues are made up by the pleadings. From an inspection of the pleadings the court can determine whether or not a factual issue is raised. On summary judgment proceedings the court considers the pleadings, the affidavits and the entire record to determine whether or not it can be said that a material dispute exists as to the facts. People ex rel. Sharp v. City of Chicago, 13 Ill.2d 157, 148 N.E.2d 481. When there is no answer filed and the defendant petitions for a summary judgment, the court must apply the same rule, and among other things which the court can and should consider is whether or not the complaint, standing alone, states a cause of action. It would seem better to first test the validity of the complaint by a motion to strike. No such motion was made in this case and in the Dvorak judgment order the court holds that the complaint failed to state a cause of action. There was no answer filed to the complaint, inartificially drawn as it was. In this proceeding all uncontradicted allegations made by the plaintiff must be taken as true (Roberts v. Sauerman Bros., Inc., 300 Ill. App. 213, 20 N.E.2d 849), unless there is a showing made in the affidavits and other documents in the record that the allegations cannot be proved. Loving v. Allstate Ins. Co., 17 Ill. App.2d 230, 149 N.E.2d 641.

We will first consider the judgment entered against defendant Kotas. In her verified amended complaint the plaintiff alleges that on or about June 1, 1953 she, desirous of purchasing real estate, called at the office of the Buchanan Realty Company. She was referred to George Kotas, who held himself out as a real estate broker although he had no license. Kotas called attention of plaintiff to several parcels of real estate, and about June 15, 1953 exhibited to plaintiff the property commonly known as 1836 South Millard Avenue, Chicago. Kotas took the plaintiff to call on the owner of the property to examine the premises. Kotas told the plaintiff that the owner would sell the property for $20,000 and that such price was fair and proper. He also stated to the plaintiff that he would secure for her benefit a first and second mortgage with which to finance the purchase. It was agreed that the plaintiff was to make a down payment of $2,500 and that Kotas would arrange for the execution of a first mortgage of $11,500, which was in favor of General Savings and Loan Association (hereinafter referred to as "General"), of which Harold Pinkert was president and Joseph Dvorak the attorney and general counsel. A second mortgage was procured by Kotas for $6,000 and executed by the plaintiff. As a matter of fact the seller had only asked $14,000 for the property.

In her amended complaint plaintiff further alleges that a substantial portion of the $6,000 mortgage was paid to Dvorak; that sometime in January 1954 Kotas offered to construct for the plaintiff a basement apartment in the premises, for which she paid to Kotas various sums of money; that Kotas induced her to execute a promissory note in favor of General in the amount of $2,874.50, stating to her that she owed him such money; and that this was grossly in excess of the value of work done by Kotas. It is also alleged that she made in addition to her regular mortgage payments, certain payments totaling $1,811, which payments were made to Kotas and accepted by him for the purpose of making payments to General upon the first mortgage, as well as upon the $6,000 second mortgage, but which payments were kept by Kotas in fraud of the plaintiff; that in October 1956 Kotas stated to her he would arrange refinancing of the property and he procured a new first mortgage for $14,000 with the Victory Mutual Life Insurance Company (hereinafter referred to as "Victory"), payable at $136.62 per month, and in connection with the application Kotas stated that the cost of the loan was $900 and demanded that she pay him that money before the loan could be approved; that she paid the money to him; that the property was accordingly refinanced under his direction; and that he refused to deliver to her a statement of the disbursements of the loan from Victory, but retained the sum of $900 as his own profit. The amended complaint further alleges that Kotas had done some plumbing work on the premises and was paid certain sums of money by the plaintiff from time to time, and that on March 15, 1958 Kotas advised plaintiff that she had signed an additional second mortgage in his favor in the amount of $3,500 and demanded payment thereon. The complaint prayed that she may have judgment against Kotas for various sums of money improperly received by him from plaintiff; that the second mortgage for $3,500 may be removed as a cloud on the title of the plaintiff to the premises; and that an accounting be had with Kotas concerning the value of the work which he did on the premises and that the court enter judgment accordingly.

Defendant Kotas filed a motion for a summary judgment and supported the motion by an affidavit in which, among other things, he denies that there was any fiduciary relationship existing between him and the plaintiff, and states that the plaintiff was told that the property could be purchased upon her executing a first and second mortgage and making a down payment, all of which would total the sum of $20,000, to which the plaintiff agreed, as she admitted in her deposition, as well as in open court in response to a question by the court, that she knew the purchase price was $20,000 and the figure at that time was agreeable to her. It is further alleged in the affidavit that the plaintiff, in answer to questions at the time her deposition was taken, admitted that the "second mortgage was pertinent to the full transaction," and it is further alleged in the affidavit that the plaintiff in her verified complaint stated that there was an additional second mortgage in favor of the affiant for $3,500, about the execution of which she knew nothing. In response to this latter statement of the plaintiff, to prove that she did know of the existence of the mortgage, Kotas merely attached to his affidavit, without further explanation, certain exhibits consisting of the second mortgage note in the amount of $3,500 and contractors' bills amounting to $1,937.32. After the amended complaint was filed Kotas filed a petition praying for summary judgment in accordance with his motion and affidavit theretofore filed, and in the petition he sets out that the recitals in the amended complaint that a fiduciary relationship existed between the plaintiff and himself are conclusions and set forth no facts from which these conclusions may be drawn, and he states that the amended complaint fails to correct or overcome the admissions of the plaintiff in her deposition and in open court.

The first question to be determined is whether or not the complaint contains sufficient allegations to show that Kotas was the agent of the plaintiff. The plaintiff relied on Kotas to conduct negotiations with the seller of the property. He stated to her that he would deal honestly and fairly with her and without fraud or overreaching. On oral argument it was admitted that the real estate commission was to be paid by the plaintiff to Kotas. Without such admission, the uncontradicted allegations are sufficient to establish the agency of Kotas. Hyman v. Burmeister, 216 Ill. App. 98, 100; Lerk v. McCabe, 349 Ill. 348, 360, 182 N.E. 388.

[6-8] In our opinion, considering the record as a whole, there is no question that an agency relationship existed between the plaintiff and Kotas. Agents and those acting in a fiduciary capacity are held to the strictest fairness and integrity, and an agent is disabled from dealing in the matter of the agency on his own account and will be compelled to transfer the benefit of his contract to his principal. Stemm v. Gavin, 255 Ill. 480, 99 N.E. 663. "The rule is well established in equity that the relation existing between principal and agent for the purchase or sale of property is a fiduciary one, and the agent in the exercise of good faith is bound to keep his principal informed on all matters that may come to his knowledge pertaining to the subject matter of the agency. (Rieger v. Brandt, 329 Ill. 21.) An agent must not put himself, during the continuance of his agency, in a position adverse to that of his principal. . . . ...

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