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Zaborowski v. Hoffman Rosner Corp.

OPINION FILED OCTOBER 21, 1976.

MICHAEL E. ZABOROWSKI ET AL., PLAINTIFFS-APPELLANTS,

v.

HOFFMAN ROSNER CORPORATION, DEFENDANT-APPELLEE.



APPEAL from the Circuit Court of Du Page County; the Hon. EDWIN L. DOUGLAS, Judge, presiding.

MR. JUSTICE SEIDENFELD DELIVERED THE OPINION OF THE COURT:

Plaintiffs, who are various owners of residences purchased from the defendant land developer corporation in the Village of Bloomingdale, filed suit based on alleged fraud and deceit to enjoin defendant from developing its remaining property across the street for other than single-family purposes. Alternatively they sought damages from any other zoning classification.

Plaintiffs' complaint is based upon a claim that defendant fraudulently represented to them that the property west of Bloomingdale Road would be developed as a single-family subdivision but that subsequently defendant petitioned the village board of Glendale Heights for annexation and reclassification of zoning for the property west of Bloomingdale Road. They allege that the zoning sought would damage the existing single-family character of the area and affect the quality of light and air presently enjoyed by the plaintiffs. Upon defendant's motion the complaint was dismissed for failure to state a cause of action. Plaintiffs appeal from the order of dismissal which was made final by the trial court.

Defendant's motion to dismiss alleges that the complaint fails to state a cause of action because it refers to inquiries made prior to the execution of the contracts of purchase, states a representation of future intention, does not describe the property west of Bloomingdale Road referred to; and that the purchase agreements provide that the contract constitutes the entire agreement with no representations, warranties, undertakings or promises, implied or otherwise having been made either by the seller or purchaser unless stated in the contract.

The homeowners contend that they have properly pleaded all of the elements necessary to state a cause of action for fraud and deceit based upon a false representation of future conduct which they argue was part of the scheme used to accomplish the fraud; and that in any event since it does not clearly appear that no set of facts could be proved under the pleading which would entitle them to relief, the court erred in dismissing the complaint.

• 1, 2 It has been clearly established that the elements of an action for fraud and deceit include a statement of a material fact, made for the purpose of inducing the other party to act; known to be false by the maker, not known to be false by the other party but reasonably believed to be true, and upon which he relies and acts to his damage. (Roda v. Berko, 401 Ill. 335, 340 (1948); see also Davis v. Nehf, 14 Ill. App.3d 318, 325 (1973); Welch v. Brunswick Corp., 10 Ill. App.3d 693, 698 (1973); Broberg v. Mann, 66 Ill. App.2d 134, 139 (1965); Polivka v. Worth Dairy, Inc., 26 Ill. App.3d 961, 966 (1974).) It also has been well established in Illinois that a promise to perform an act even though the party intends at the time he makes the promise not to perform is an insufficient false representation to constitute fraud. (Roda v. Berko, 401 Ill. 335, 340 (1948).) A rationale of the rule is that in order to constitute fraud the representation must be an affirmance of fact and not a mere promise or expression of opinion or intention; or in other words "the fraud must be in the original contract or transaction and not in its non-fulfillment." (Luttrell v. Wyatt, 305 Ill. 274, 281 (1922); Hayes v. Disque, 401 Ill. 479, 488 (1948).) However, an exception is stated in Roda v. Berko, at page 340:

"* * * in cases where the false promise or representation of intention or of future conduct is the scheme or device to accomplish the fraud and thereby cheat and defraud another of his property, equity will right the wrong by restoring the parties to the positions they occupied before the fraud was committed. * * *"

See also Willis v. Atkins, 412 Ill. 245, 260 (1952); Carroll v. First National Bank, 413 F.2d 353, 358 (7th Cir. 1969).

The alleged misrepresentation of fact pleaded in the complaint before us is:

"5. That to induce plaintiffs to enter into said contract, defendant falsely and fraudulently represented to plaintiffs that the property west of Bloomingdale Road would be developed into a 200 home single family subdivision."

Defendant argues that the complaint fails to allege that the representation that the property west of Bloomingdale Road "would be developed" into a single-family subdivision was false when made or that the defendant salesman who made the statement knew or believed it to be false when made. Defendant also argues that the plaintiffs have not pleaded any facts which show that they had a right to rely on the representation since it could only amount to an oral covenant to develop land, unenforceable under the statute of frauds and relating to the legislative function of zoning.

Neither a "prophecy of future developments" nor a representation "merely boosting the property" relating to what will happen in the future amount to actionable fraud. (Cf. Owens v. Union Bank of Chicago, 260 Ill. App. 595, 602 (1931).) Plaintiffs contend, however, that the representation of a matter of future intention as to which the party making the promise has "special knowledge, expertise, and inside information" is actionable as fraud. Owens v. Union Bank of Chicago has been cited by plaintiffs as illustrative of this exception to the general rule that promises of future intentions are not actionable as fraud. The case does not stand for the proposition that every promise as to future intention as to which the promisor has such special knowledge is actionable. Owens relates rather to the rule that the misrepresentation that the real estate would be in a particular place or city by one who has special knowledge and which has induced the purchaser to enter into a contract is a present representation of the location of property not a prophecy of future developments and is "generally recognized by the courts as ground for voiding the contract." Owens v. Union Bank of Chicago, 260 Ill. App. 595, 600 (1931). See also Lickus v. O'Donnell, 321 Ill. App. 144, 147 (1943).

Moreover, here the complaint does not allege that defendant's salesman representing the defendant corporation did in fact possess special knowledge of particular plans.

Plaintiffs have also placed considerable reliance upon Roda v. Berko, 401 Ill. 335 (1948), as illustrating that the false promise of future conduct is actionable when it is the "scheme used to accomplish the fraud." Roda v. Berko, however is distinguishable on its facts. Under the pleadings it appeared Berko induced Roda to sell her property by falsely representing that he would construct ...


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