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Caspers v. Chicago Real Estate Board

APRIL 12, 1965.

PAUL CASPERS, PLAINTIFF-APPELLANT,

v.

CHICAGO REAL ESTATE BOARD, AN ILLINOIS NOT-FOR-PROFIT CORPORATION, AND VICTOR H.E. HOKANSON, DEFENDANTS-APPELLEES.



Appeal from the Circuit Court of Cook County; the Hon. EDWARD G. SCHULTZ, Judge, presiding. Affirmed.

MR. JUSTICE MURPHY DELIVERED THE OPINION OF THE COURT.

This is a malicious prosecution action, in which the court struck the complaint, denied leave to file an amended complaint, and dismissed the action with prejudice. Plaintiff appeals on the theory that his four count complaint states a cause of action against both defendants "on the grounds of malicious prosecution, abuse of process, and intentional infliction of mental suffering."

Plaintiff, Paul Caspers, is a licensed real estate broker. He is also president and principal shareholder of Paul Caspers & Co., Inc., an Illinois corporation. The defendants are the Chicago Real Estate Board, an Illinois not-for-profit corporation, and Victor H.E. Hokanson, who was general chairman of the Appraisal Committee of the Board for its fiscal year 1957 to 1958. Plaintiff has been a member of the Board since about 1932.

On September 26, 1957, plaintiff, on behalf of Paul Caspers & Co., Inc., requested the Board to make an appraisal of a Chicago leasehold. On October 9, 1957, defendants forwarded to plaintiff the appraisal requested by him and an invoice for $630. Subsequently, plaintiff refused to pay the invoice because of "the false, fraudulent, misleading and worthless character of said purported appraisal."

On November 24, 1958, the defendant Board sued Paul Caspers & Co., Inc., to collect the $630. In March, 1961, a jury returned a verdict in favor of the Board for the $630. Judgment was entered on the verdict against Paul Caspers & Co., Inc., but subsequently the court vacated the judgment and entered judgment notwithstanding the verdict in favor of Paul Caspers & Co., Inc. An Appellate Court appeal by the Board was dismissed on motion of the Board in January, 1962.

In August, 1963, the instant suit was filed by plaintiff against the defendant Board and Hokanson. Counts I, II and III, against both defendants, are for malicious prosecution, abuse of process, and intentional infliction of mental suffering. Count IV, in the alternative, alleges the existence of a cause of action against Hokanson because Hokanson "induced defendant Chicago Real Estate Board to institute said action No. 58 Mont. 128906 against plaintiff by means of the false and fraudulent misrepresentation that said purported appraisal was a sound, honest and fair appraisal . . . when in fact defendant Hokanson well knew that said purported appraisal was false, fraudulent, misleading and worthless," and as a proximate result "plaintiff's real estate business was injured, plaintiff was required to expend $2,171.95 in defending said action No. 58 Mont. 128906, and plaintiff sustained severe humiliation, grievous mental anguish and suffering."

The complaint, in substance, alleges all of the foregoing in detail. Included are the allegations that the "charter" of the defendant Board and its "Code of Ethics" require that the adjustment of disputes between said Board and any of its members be made through an arbitration procedure specified in said charter, or through administrative action taken by the defendant's Board of Directors rather than by litigation, and that "on information and belief, said action against Paul Caspers & Co., Inc. is the only occasion on which the Chicago Real Estate Board has ever filed suit against any of its members to recover appraisal charges. All other such disputes between Chicago Real Estate Board and its members have been resolved by administrative action of the Board of Directors of the Chicago Real Estate Board or by the arbitration procedure proscribed [sic] by the charter of said Board." Plaintiff prays for $250,000 in damages, plus costs. In the order of dismissal, the trial court found that "the complaint fails to state a cause of action and fails to state actionable damages."

The essential elements of a cause of action for malicious prosecution are the institution or continuation of original judicial proceedings by or at the instance of defendant with malice and without probable cause, termination of the proceedings in plaintiff's favor, and damage sustained by plaintiff. (25 ILP, Malicious Prosecution, § 11; Carbaugh v. Peat, 40 Ill. App.2d 37, 47, 189 N.E.2d 14 (1963).) All of these elements must be sufficiently alleged in order to sustain the action. Schwartz v. Schwartz, 366 Ill. 247, 252, 8 N.E.2d 668 (1937).

Initially, defendants assert "plaintiff was not a party to the Municipal Court suit upon which he bases his claim. Thus, there was no termination of the prior litigation in his favor and he has no cause of action." Carbaugh v. Peat, 40 Ill. App.2d 37, 47, 189 N.E.2d 14.

For the purposes of this case, we consider plaintiff as the "alter ego" of his corporation. "It has been frequently held that the owner of all of the stock of a corporation will be treated as its alter ego, and these cases have refuted the fiction of separate legal entities in cases where used as a protection to fraud or other illegal transactions. '. . . the courts will not permit themselves to be blinded nor deceived by mere forms of law, but, regardless of the fictions, will deal with the substance of the transaction involved as if the corporate agency did not exist and as the justice of the case may require.'" Chicago-Crawford Currency Exchange, Inc. v. Thillens, Inc., 48 Ill. App.2d 366, 373, 199 N.E.2d 295 (1964).

We do not believe our rejection of the concept of separate legal entities as to malicious prosecution should be extended to the alleged requirement of defendants to pursue arbitration procedures. The many facets of membership in a professional organization such as the Chicago Real Estate Board, and the complexity of the mutual responsibilities owed by members to the organization and by the organization to its members, require the observance of separate legal entities. Therefore, as the arbitration procedures apply only to members of the Board, and Paul Caspers & Co., Inc., was not a member of the Board, we are not persuaded that it was malicious for the Board to disregard its "reference and arbitration procedures" in its controversy with plaintiff's corporation over the appraisal charges.

We consider the determinative question as to the count for malicious prosecution to be, whether "the allegations of the complaint satisfy the requirement of `special injury' under Illinois law."

As stated in Schwartz v. Schwartz, 366 Ill. 247, at p 250, 8 N.E.2d 668:

"[An action] for malicious prosecution of a civil suit without probable cause cannot be maintained where the action upon which it is grounded is an ordinary civil action, begun by summons and not accompanied by arrest of the person or seizure of his property, or by special injury not necessarily ...


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