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Am. Buyers Club of Mt. Vernon v. Honecker

OPINION FILED MARCH 10, 1977.

AMERICAN BUYERS CLUB OF MT. VERNON, ILLINOIS, INC., PLAINTIFF-APPELLANT,

v.

RONNIE L. HONECKER ET AL., DEFENDANTS-APPELLEES.



APPEAL from the Circuit Court of Jefferson County; the Hon. WILLIAM A. ALEXANDER, Judge, presiding.

MR. PRESIDING JUSTICE CARTER DELIVERED THE OPINION OF THE COURT:

This case comes on appeal from the Circuit Court of Jefferson County. The suit was brought by plaintiff-appellant, American Buyers Club of Mt. Vernon, Illinois, Inc., to recover a balance owed on a promissory note executed by the defendants-appellees, Ronnie and Judy Honecker. The court, sitting without a jury, found for the defendants and plaintiff was ordered to pay defendants the sum of $39.

The plaintiff (hereinafter sometimes referred to as "American" or "the Club") sells memberships in a club, whose members receive a service furnished by the plaintiff. That service consists of the ability of the club to place orders for merchandise with certain manufacturers and obtain this merchandise for members at a substantial savings over the normal retail price of such merchandise. Exemplifying its services, plaintiff claims a member of the club may save 50% of the retail price on items of furniture and from 10%-20% on carpets. The plaintiff has catalogs from manufacturers at its place of business that members may examine and from which they may place orders for merchandise.

Defendants testified that they own and operate a furniture upholstering business. A meeting was arranged by Joe Ross, a salesman for American, with the defendants on November 14, 1974. The salesman explained the benefits of the Club and showed the defendants a picture of a Singer sewing machine which retailed for about $400 but could be obtained through the Club for $114. The salesman also indicated that members could purchase a car or truck from a local Ford dealership in Centralia, Ill. at a price of just $200 above cost. The defendants paid the required $39.50 down payment, signed the contract presented by the salesman and signed a promissory note obliging them to 24 monthly installments at $19 per month.

Sometime after entering the contract with the club, Ronnie Honecker, a co-defendant testified that he inquired from a Ford dealer about buying a new panel truck for his business. Although he informed the salesman of the Ford Co. that he was a member of the Club, Mr. Honecker was unable to purchase a truck at the expected price. In similar manner, the Honeckers tried to purchase a Singer sewing machine from a Singer dealer whom the Honeckers knew personally. Again they found they could not purchase a Singer for $114, even though they were club members. On two occasions Ronnie Honecker wrote to the home office of the Club asking for a list of dealers from which purchases could be made. The list had been promised by the agent Ross at the time the Honeckers had entered the membership contract. The first letter was unanswered and in response to the second letter the home office sent the Honeckers two Club membership cards.

After making four monthly installments on the promissory note, Ronnie Honecker discontinued further payments. The Club brought action to enforce payment on the contract. The Honeckers raised the affirmative defenses of material breach of promise, fraud in the inducement and failure of consideration, and alleged that plaintiff violated various provisions of the Consumer Fraud and Deceptive Business Practices Act. Ill. Rev. Stat., ch. 121 1/2, par. 261 et seq.

At the trial, Everett Watts, president of the Club, testified that his corporation had no purchasing arrangement with the Singer sewing machine company but that a member of the club could purchase a Morris sewing machine for the same price.

• 1 Plaintiff's counsel argues in his brief that the trial judge erred in allowing as evidence the prior statements and representations made by plaintiff's agent to the defendants. We believe that this testimony attempting to show that the salesman led the defendants to believe that they could purchase a Singer sewing machine from the Club was properly admitted at trial. First, it is well settled law that where fraud has been alleged, competent evidence as to the fraudulent representations which procured the execution of a contract is admissible to prove the invalidity of the contract. (12 Ill. L. & Prac. Contracts § 134 (1955); Corbin on Contracts § 580 (1960); Air Conditioning Training Co. v. Hildebrand, 330 Ill. App. 134, 69 N.E.2d 700; Jason v. Drane, 95 Ill. App.2d 244, 237 N.E.2d 862.) In the present case, the defendants had properly raised the issue of fraudulent inducement in their pleadings, consequently it was proper for the court to consider prior or contemporaneous evidence to determine the merits of that claim.

• 2 Having concluded that no error was committed by the trial court in admitting the parol evidence in question, we must accept the finding of the trial court that such representations were in fact made. That finding is not against the manifest weight of the evidence.

• 3 The defendants call attention to the Illinois Consumer Fraud and Deceptive Business Practices Act (Ill. Rev. Stat. 1975, ch. 121 1/2, pars. 261-272) and the Uniform Deceptive Trade Practices Act (Ill. Rev. Stat. 1975, ch. 121 1/2, pars. 311-318). The purpose of this legislation, as stated in the preamble of the Consumer Fraud Act is:

"[T]o protect consumers and borrowers and businessmen against fraud, unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce and to give the Attorney General certain powers and duties for the enforcement thereof."

Taken together, these two Acts indicate a decisive move on the part of the Illinois legislature to enact broad protective coverage of consumers from the many types of deceptive or unfair selling and advertising techniques used by businesses.

Defendants contend that the conduct of plaintiff and its agent in soliciting their membership in the Club falls within the range of practices proscribed by this legislation. After a thorough study of these two acts, we agree with defendants' contention.

Section 2 of the Consumer Fraud Act states:

"Unfair methods of competition and unfair or deceptive acts or practices, including but not limited to the use or employment of any deception, fraud, false pretense, false promise, misrepresentation or the concealment, suppression or omission of any material fact, with intent that others rely upon the concealment, suppression or omission of such material fact, or the use or employment of any practice described in Section 2 of the "Uniform Deceptive Trade Practices Act", approved August 5, 1965, in the conduct of any trade or commerce are hereby declared unlawful whether any person has in fact been misled, deceived or damaged thereby. In construing this section consideration shall be given to the interpretations of the Federal Trade Commission and the federal courts> relating to Section 5(a) of the Federal Trade Commission Act." Ill. Rev. Stat., ch. 121 1/2, par. 262.

Section 2 of the Uniform Deceptive Trade Practices Act stated:

"A person engages in a deceptive trade practice when, in the course of his business, ...


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