APPEAL from the Circuit Court of Cook County; the Hon. DONALD
J. O'BRIEN, Judge, presiding.
MR. JUSTICE GOLDBERG DELIVERED THE OPINION OF THE COURT:
Billy F. Janes and Marie Janes (plaintiffs) appeal from an order dismissing their amended complaint filed by them, individually and in a representative capacity on behalf of all persons similarly situated, and entering summary judgment against them in their suit against First Federal Savings & Loan Association of Berwyn (Berwyn), Irving Federal Savings & Loan Association (Irving) and Chicago Title & Trust Company (Chicago Title). Before stating the contentions of the parties, we will summarize the facts which appear from the amended complaint and from the affidavits filed by defendants in support of their respective motions.
Count I of the amended complaint alleged that plaintiffs entered into a contract for the purchase of real estate which was to be financed by Berwyn. Berwyn required that a preliminary report of title, as well as a title insurance policy, be obtained from Chicago Title. Berwyn ordered these items from Chicago Title "* * * on behalf of [p]laintiffs." In due course, an invoice for these services was issued by Chicago Title directed to Berwyn. These charges were apportioned between plaintiffs and the sellers of the real estate. Items pertaining to plaintiffs were paid by Berwyn from proceeds of the loan as reflected in the loan statement issued by Berwyn.
It was further alleged that neither the invoice from Chicago Title nor Berwyn's loan statement reflected a rebate of 10% given to Berwyn. This rebate was given although Chicago Title knew that plaintiffs were the purchasers of the real estate. Instead, Berwyn charged plaintiffs the full price for the services rendered by Chicago Title and retained the rebate. This created a trust for plaintiffs; or, alternatively, was a wrongful conversion of plaintiffs' funds or an unjust enrichment of defendants. This practice violated certain Federal regulations. 12 C.F.R. 545.6-10.
Count I also alleged that Berwyn had conspired with Chicago Title to deprive plaintiffs and other persons similarly situated of the funds in question and that there were large numbers of persons similarly situated who had purchased real estate which was financed through Berwyn. These persons constituted a class which had a common interest in obtaining a refund and an accounting. The class was large in number and permitting the action in a representative capacity would avoid a multiplicity of suits. The amended complaint prayed an accounting, injunctional relief against Berwyn from receiving discounts or rebates without returning same to sellers or buyers of property and other relief including reasonable fees to plaintiffs' attorneys.
The second count of the amended complaint repeated virtually the same allegations against Irving and prayed the same relief. It alleged, however, that plaintiffs were sellers of real estate which was to be financed by Irving. The third count contained virtually the same allegations with reference to Chicago Title. It also alleged that this defendant knew that Berwyn and Irving did not pay the discount or rebate to the respective purchasers or sellers but that it still continued to make payment thereof to them. It alleged that Chicago Title conspired with Berwyn and Irving and with other savings and loan associations to enrich themselves unjustly and to deprive other persons of funds rightfully theirs.
Berwyn filed a motion to strike and dismiss the amended complaint and for summary judgment. The motion averred that no facts were alleged which set forth any basis for requiring the lending institution to pass on to the borrower, or to account for, a prompt payment allowance. The motion also cited the applicable Federal regulations and stated that the reference thereto in the amended complaint was not actionable.
Berwyn also filed an affidavit by its president. This set forth that prior to making any loan, Berwyn required a report on title. Berwyn ordered this report for its own use and through its own account. Many times such report was utilized by the parties to real estate transactions and paid for by them as they agreed. The affidavit then itemized various methods of ordering and paying for this preliminary report; listing nine separate methods of payment such as by the lender, attorneys, etc. In some cases, no title report was obtained but a Torrens Certificate was used.
Irving also filed a motion to strike and dismiss the amended complaint and for summary judgment based upon virtually the same grounds. An affidavit by the president of Irving was filed. It alleged that Irving requires a report of title or other evidence relative to the lien of its mortgage. In this regard, Irving, upon its own credit, deals with various title insurance companies in obtaining preliminary reports which are utilized for Irving's benefit as well as for the benefit of the borrower. The cost of these reports is billed to Irving which pays these bills promptly when due and receives "whatever prompt payment allowance is customarily allowed." Irving has no agreement with Chicago Title or any other title insurance company except to pay the customary prevailing charge for services rendered. Ultimately, this cost is charged to the buyer of the real estate who applied for the mortgage loan or is handled in accordance with such directions as the buyer may give.
Chicago Title filed a motion to strike and dismiss the amended complaint or alternatively for summary judgment. It averred that it does not control or restrict disbursement of prompt payment allowances which it makes to savings and loan associations. It alleged that the amended complaint fails properly to allege any acts of conspiracy or illegal purpose and fails to allege any conversion or misappropriation by Chicago Title of funds or property belonging to plaintiffs or any contracts with plaintiffs for payment of title charges. It alleged that there was no proper basis for a class action and no basis in law or in equity for injunctional relief which would prevent it from offering discounts to preferred customers without offering the sane to all customers.
An affidavit was filed by the senior vice president of Chicago Title. It set forth that Chicago Title has given a monthly prompt payment allowance to savings and loan associations which have opened a credit account with it and have agreed to pay all charges on the account by the 10th day of the month following the date of the invoice. Exceptions to this rule are made only to allow for mailing or processing delays, in the case of items billed during the last three days of a month or for delay by a good customer with a reasonable explanation. This allowance is 10% of the net charges after eliminating recording or escrow fees and cash advances.
The affidavit also set forth in detail that this allowance was an inducement to the customer for prompt payment and also a recognition by Chicago Title of benefits received by it, such as personal liability of the lending institution to pay the charges regardless of their ultimate compensation from the principals; completion by the lender of applications for title policies and obtaining by it of necessary documents such as waivers, tax receipts or judgment affidavits; and reduction in cost and labor in accounting and billing procedures; all of which are of considerable benefit to Chicago Title. The affidavit further averred that Chicago Title imposes no agreement or understanding that the lending association will not deal with any competing title company and that no such condition was imposed in connection with Berwyn or Irving. Finally, the affidavit alleged that Chicago Title does not restrict or control in any manner the disbursement of allowances by any lending institution and did not do so or attempt to do so with regard to the transactions here involved.
Plaintiffs contend that Counts I and II of their amended complaint state a good cause of action against Berwyn and Irving upon a theory of resulting or constructive trust; or, alternatively on theories of conversion or unjust enrichment resulting from a quasi contractual relationship. Plaintiffs also contend that the lending institutions have violated applicable Federal regulations. Plaintiffs further contend that they have alleged a good cause of action against Chicago Title predicated upon conspiracy and also upon misrepresentation. Defendants Berwyn and Irving urge that the amended complaint sets forth no cause of action upon any trust basis, for wrongful conversion or for unjust enrichment and no cause of action for conspiracy. They further contend that they have not violated Federal regulations so that the suit was properly dismissed and summary judgment in their favor was properly entered. Chicago Title contends that Count III of the amended complaint fails to show any legal duty owed by Chicago Title to plaintiffs; fails to state a cause of action for misrepresentation or conspiracy; and, further, that the injunctional relief prayed in connection with the granting of prompt payment allowances would be improper.
Rather than unduly extending this opinion with analysis of many cases, we will simply state that none of the briefs cite any decisive authority which is completely germane to the situation at bar. However, we will note the recent decision of this court in De Phillips v. Mortgage Associates, Inc., 8 Ill. App.3d 759, 291 N.E.2d 329, leave to appeal denied March 27, 1973. There, plaintiffs were the buyers of a piece of real estate being financed by a mortgage in the amount of $16,800. It developed that the lender had disbursed a total of $15,792 but had retained $1008 which had been charged against the sellers as a mortgage discount. The real estate contract executed by the parties specified that this discount was to be paid by the sellers. The trial court denied plaintiffs' claim that they were entitled to receive this sum from the lender. This court affirmed the decree in that regard holding that plaintiffs had not been damaged by a payment of the discount to the lender by the sellers. In other words, plaintiffs ...