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Associated Mills, Inc. v. Drake Hotel

AUGUST 5, 1975.

ASSOCIATED MILLS, INC., PLAINTIFF-APPELLEE,

v.

DRAKE HOTEL, INC., DEFENDANT-APPELLANT.



APPEAL from the Circuit Court of Cook County; the Hon. NICHOLAS J. BUA, Judge, presiding.

MR. JUSTICE HAYES DELIVERED THE OPINION OF THE COURT:

The present action, sounding in negligence, was brought on 1 March 1972 by Associated Mills, Inc. (hereinafter plaintiff), against Drake Hotel, Inc. (hereinafter defendant), to recover damages allegedly sustained when a certain prototype working model manufactured by plaintiff, and the only such model then in existence, disappeared overnight from a conference room in defendant's Drake Oakbrook Hotel. Plaintiff's complaint alleges the following: On or about 12 and 13 June 1970, plaintiff held business meetings of its personnel at the Drake Oakbrook Hotel and exhibited to them the only existing working model of the Pollenex Orbital Massager, a product manufactured by plaintiff. At the conclusion of the meetings of 12 June 1970, the model was located in Conference Room 2 of the hotel. In order to prevent overnight entry into the room and removal of property left in the room overnight, plaintiff requested that the management of the hotel plug and seal the room overnight and order its hotel personnel not to enter and clean the room during the night; management stated that it would do so. On the morning of 13 June 1970, plaintiff discovered that the room was not and had not been plugged, sealed, or locked; that it had been cleaned; and that the model was missing. The complaint alleges further that plaintiff is free from contributory negligence in the loss of the model, and that plaintiff has suffered damages in the sum of $87,122.80 plus interest from 13 June 1970 and costs of legal proceedings. Of this sum, $4,946.27 is compensation for the original cost of developing and manufacturing the model. The remaining amount is compensation for consequential damages resulting from subsequent increased costs of manufacturing the product without the model, loss of sales because of an inability to fill orders that had been placed by those who saw the model before it was lost, and loss of sales that were expected to be made at a future convention but which were not made because of the lack of the demonstration model.

On 23 May 1972, defendant filed a motion to dismiss plaintiff's complaint or, in the alternative, to strike so much of said complaint as demanded judgment for an amount in excess of $250. Defendant's motion as to the damage clause in plaintiff's complaint was based on certain provisions of "An Act for the protection of inn keepers" (Ill. Rev. Stat. 1969, ch. 71, par. 1 et seq.); more specifically, the motion was based on the contention that, since plaintiff had not given written notice of the bringing of a merchandise sample into the hotel nor had plaintiff received from defendant written acknowledgment of the receipt of such notice, all as provided by section 3.1 of the Innkeepers Act (Ill. Rev. Stat. 1969, ch. 71, par. 3.1), defendant, according to the terms of that statutory section, was not liable in any amount for plaintiff's loss, despite defendant's fault or negligence; or, alternatively, if proper written notice had been given and proper written acknowledgment of receipt of notice had been received, the section limits defendant's maximum liability to $250 regardless of whether the loss was occasioned by theft or by the fault or negligence of the hotel, absent a separate written contract to assume a greater liability. On 24 October 1972, the court denied defendant's motion on the ground that section 3 of the Act (Ill. Rev. Stat. 1969, ch. 71, par. 3) was applicable to this case, rather than section 3.1, because the prototype working model was neither a merchandise sample nor merchandise for sale. On 10 November 1972, defendant moved for a rehearing on his earlier motion or, in the alternative, for a reduction of the ad damnum clause of the complaint to the sum of $250 or $75, pursuant to the maximum limitation of liability expressed in section 3. With respect to defendant's alternative motion, plaintiff advanced two contentions:

1) Properly construed, the provisions of section 3 limiting defendant's maximum liability are inapplicable for failure of defendant to comply with alleged express statutory conditions precedent to their applicability;

2) Even if the provisions of section 3 limiting defendant's maximum liability were applicable, defendant by its conduct in this case has either waived the protection of the said provisions or has estopped itself from claiming the said protection.

Defendant's alternative motions were denied on 29 January 1973.

On 5 April 1973 the court reaffirmed its orders of 24 October 1972 and 29 January 1973 for the purpose of permitting an interlocutory appeal pursuant to Supreme Court Rule 308 (Ill. Rev. Stat. 1969, ch. 110A, par. 308). The court certified that the question of the application and enforceability of sections 3 or 3.1 of the Innkeepers Act to the factual situation disclosed by plaintiff's complaint, involved a question of law as to which there is a substantial ground for difference of opinion and that an interlocutory appeal may materially advance the ultimate determination of the litigation, in that it will determine whether the defendant is exposed to liability in the amount of $87,122.80, as contended by plaintiff, or $250 or some lesser sum, as contended by defendant. We then granted defendant leave to file this appeal.

As heretofore noted, the statute involved is entitled "An Act for the protection of inn keepers." In section 1, provision is made for various types of valuable property and personal effects of small compass belonging to, or brought into a hotel by, guests of that hotel. This section provides certain limitations on the liability of an innkeeper for the articles covered by the section, where various conditions are met, and provides for additional liability where the proprietor or manager of a hotel has entered into a special agreement in writing with the guest agreeing to assume the said additional liability. Plaintiff and defendant agree that the nature of the lost article in this case does not fall within the type of property covered by section 1.

Section 3 and section 3.1 purport to cover all other types of property brought into a hotel and not covered by section 1. Hence, if any section of the Act is applicable to the instant facts, it must be one or the other of these two sections.

Section 3.1 provides as follows:

"No hotel or the proprietor or manager thereof is liable for the loss of or damage to any merchandise samples or merchandise for sale brought into a hotel by a guest or other owner thereof, regardless of whether such loss or damage is occasioned by theft, the fault or negligence of such proprietor or manager or his agents or employees, or otherwise, unless the guest or other owner has given written notice of the bringing of such merchandise into the hotel and of the value thereof, and the receipt of such notice has been acknowledged in writing by the proprietor or manager prior to or at the time such merchandise is brought into the hotel by such guest or other owner. Where such notice is given and acknowledged as provided in this Section, neither the hotel nor the proprietor nor manager thereof is liable for loss of or damage to any such merchandise samples or merchandise for sale in any sum exceeding $250, regardless of whether such loss or damage is occasioned by theft, the fault or negligence of such proprietor or manager or his agents or employees, or otherwise, unless the manager or proprietor or such hotel has contracted by a separate agreement in writing to assume a greater liability."

Section 3 provides as follows:

"As to any and all property and effects not provided for in Section 1 of this Act, other than merchandise samples or merchandise for sale, brought into a hotel by any guest thereof, the liability of such hotel or the proprietor or manager thereof for any and all loss thereof or damage thereto is limited to such loss or damage as may result from the fault or negligence of such proprietor or manager or of his agents or employees, but in no event is such hotel, the proprietor or manager thereof, liable for loss or damage in an amount exceeding $250; provided, that where such property and other effects of the type covered by this section are delivered to the proprietor or manager of such hotel, or to his servants or agents, for safekeeping, and the guest receives a check or receipt therefor, such hotel or the proprietor or manager thereof is not liable for any loss or damage to such property and effects in excess of the following amounts respectively:

Trunks and contents ..................................... $250 Valises and traveling cases and contents ................ $ 75 Boxes, parcels and packages and contents ................ $ 25 All other miscellaneous property and effects, including wearing apparel and ...


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