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American V.p. Co. v. Mcneely Gen.c. & E. Co.

OCTOBER 17, 1962.




Appeal from the Circuit Court of Warren County; the Hon. KEITH F. SCOTT, Judge, presiding. Affirmed in part and reversed in part.


Rehearing denied November 21, 1962.

The plaintiff, American Vitrified Products Company, a foreign corporation, of Cleveland, Ohio, brought suit against the defendant, C.A. McNeely General Contracting & Equipment Company, Inc., a corporation, having its principal office and place of business in Vandalia, Illinois, for $18,266.92 for a balance allegedly due for sewer pipe sold and delivered to the defendant for its use in the construction of a sewer project in the Village of Roseville, Illinois. The Trial Court entered a judgment for the $18,266.92, with interest at 5% per annum from May 8, 1956, and costs. The defendant appeals.

The defendant filed an answer, and a counterclaim against the plaintiff for damages on account of the alleged failure of the plaintiff to deliver vitrified pipe as per sample and as per warranties implied, and sought damages in the sum of $72,451.47. The defendant filed a demand for jury with its answer, and also with the counterclaim. The defendant in its counterclaim alleged that it was required to use its employees for extra work on the job, pay more insurance, and that it suffered damages for extra wages, extra insurance, extra material, loss of equipment stand-by time, loss of good will and good name, and loss of profit. The defendant also filed an Amended Answer. The plaintiff filed a reply to that Amended Answer. The defendant filed a Second Amended Counterclaim and the plaintiff filed an Answer to the Second Amended Counterclaim.

The entire cause was then referred to a Referee on the plaintiff's oral motion and over defendant's oral objections. The order of reference to the Referee, in substance, stated that (1) the above entitled cause, which is one at common law, is at issue, and (2) matters of account are in controversy, and the said Referee shall take testimony in said cause and state an account between the parties and the amount that might be due from either party to the other and report the same in writing. The Referee took evidence and filed a report, over defendant's objection, recommending judgment in the amount of $18,266.92, together with interest at 5% per annum from May 8, 1956, and costs, and recommending that the counterclaim be dismissed. No evidence in defense of the plaintiff's claim or in support of the counterclaim was offered by the defendant before the Referee.

The Trial Court, on hearing objections to the Referee's report, sustained the report in part by finding the plaintiff entitled to recover $18,266.92, and entered judgment with interest from May 8, 1956, but the Court allowed the defendant's objection to that part of the report which recommended the counterclaim be dismissed, and the Court further found "that said judgment shall be without prejudice to defendant's right to pursue its counterclaim filed herein as to all matters contained therein exclusive of those involved in the accounting before the Referee."

The defendant appeals upon the theory that the Trial Court had no authority to make a reference to a Referee in a common law cause, because the reference was not made by agreement of the parties under Ch 90 Ill Rev Stats, 1959, Sec 51, relating to Masters and Referees, or under Ch 117 Ill Rev Stats, 1959, Sec 1, relative to Referees, and that the court had no authority under Ch 110 Ill Rev Stats, 1959, Sec 61, being Section 61 of the Civil Practice Act, to appoint a Referee in that this was not a proceeding in the nature of an account; that the matter should have been heard by the Court instead of by a Referee; and that the matter of interest allowed from May 8, 1956 is illegal and void because the report of the Referee is dated December 23, 1960.

It appears that the defendant, C.A. McNeely General Contracting and Equipment Company, Inc., obtained a contract to build a sewer system in the Village of Roseville, Warren County, Illinois. The defendant company ordered the pipe for this project from the plaintiff, American Vitrified Products Company. Construction was begun on or about August 1, 1955 and completed on or about April 1, 1956. Throughout all that period the plaintiff shipped sewer pipe to the project upon receipt of orders from the defendant. During this period the defendant was billed for pipe delivered and credited for breakage of pipe enroute and for defective pipe. At the conclusion of the project the plaintiff demanded the balance allegedly due and owing in the sum of $18,266.92. The defendant failed and refused to pay. The complaint contained an itemized list of invoices, debits, credits and balances due. There were a total of 40 credit memorandums, all bearing dates from July 29, 1955 to November 21, 1955, and there were a total of 42 invoices bearing dates from July 30, 1955 to July 29, 1957.

It is the theory of the plaintiff that due to the matters of account in controversy, the court had discretion and authority to refer this suit to a Referee to take testimony and report his conclusions; that the only questions which would then remain to be submitted to a jury would be questions of fact raised by the defendant before the Referee or by objections to the report of the Referee which raised questions of fact; that the defendant failed and refused to raise any question of fact before the Referee and failed to file any objections to the report of the Referee that raised a question of fact and thereby the defendant failed to preserve its demand for and right to trial by jury.

At the hearing before the Referee the plaintiff produced evidence as to the material delivered to the defendant at the Roseville sewer project, and as to the correctness of the invoices, credits, and debits introduced into evidence. The defendant offered no evidence before the Referee, cross examined no witnesses, and refused to participate in the hearing other than to renew and repeat its objection to the reference to the Referee.

Subsequent to the filing of the Referee's report the defendant made written objections to the report of the Referee, — namely, (1) objecting to the jurisdiction of the Court to make the reference, and (2) objecting to the time fixed from which interest was to run, claiming, the defendant says, that interest should run from the date of the Referee's report, namely, December 23, 1960, if at all, and not from May 8, 1956.

The Trial Court, in substance, overruled the objections of the defendant to the report, but apparently in effect sustained an objection to the reference to the Referee on the issues of the counterclaim. By sustaining in effect the objection of the defendant to the reference on the issues under the counterclaim, the Trial Court evidently acknowledged its error in this regard in the original general order of reference.

The Trial Court found that there were no fact questions to be presented to a jury as to any of the items of account under the complaint considered by the Referee; that the plaintiff have execution on the judgment; and that there was no just reason for delaying enforcement or appeal. The defendant made a motion to vacate the order approving the Referee's report, and a motion to stay execution. The Trial Court denied those motions.

The defendant has filed a complex and voluminous brief, but, as we view it, the substance of the same involves principally the question of the jurisdiction of the Trial Court to refer this type of action to a Referee for the purpose of stating an account where a demand for a jury trial is on file, and where there is a counterclaim on file on ...

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