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Steinberg v. Chicago Medical School

OPINION FILED DECEMBER 12, 1977.

ROBERT I. STEINBERG, APPELLEE,

v.

CHICAGO MEDICAL SCHOOL, APPELLANT.



Appeal from the Appellate Court for the First District; heard in that court on appeal from the Circuit Court of Cook County, the Hon. L. Sheldon Brown, Judge, presiding.

MR. JUSTICE DOOLEY DELIVERED THE OPINION OF THE COURT:

Robert Steinberg received a catalog, applied for admission to defendant, Chicago Medical School, for the academic year 1974-75, and paid a $15 fee. He was rejected. Steinberg filed a class action against the school claiming it had failed to evaluate his application and those of other applicants according to the academic criteria in the school's bulletin. According to the complaint, defendant used nonacademic criteria, primarily the ability of the applicant or his family to pledge or make payment of large sums of money to the school.

The 1974-75 bulletin distributed to prospective students contained this statement of standards by which applicants were to be evaluated:

"Students are selected on the basis of scholarship, character, and motivation without regard to race, creed, or sex. The student's potential for the study and practice of medicine will be evaluated on the basis of academic achievement, Medical College Admission Test results, personal appraisals by a pre-professional advisory committee or individual instructors, and the personal interview, if requested by the Committee on Admissions."

Count I of the complaint alleged breach of contract; count II was predicated on the Consumer Fraud and Deceptive Business Practices Act (Ill. Rev. Stat. 1973, ch. 121 1/2, par. 261 et seq.) and the Uniform Deceptive Trade Practices Act (Ill. Rev. Stat. 1973, ch. 121 1/2, par. 311 et seq.); count III charged fraud; and count IV alleged unjust enrichment. This was sought to be brought as a class action. Accordingly, there were the customary allegations common to such an action.

The trial court dismissed the complaint for failure to state a cause of action. The appellate court reversed as to count I, the contract action, and permitted it to be maintained as a limited class action. It affirmed the circuit court's dismissal of the remaining counts II, III, and IV. 41 Ill. App.3d 804.

That the Consumer Fraud and Deceptive Business Practices Act (Ill. Rev. Stat. 1973, ch. 121 1/2, par. 261 et seq.) is inapplicable is patent from the title of the Act: "An Act to 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 * * *." A "consumer" is "any person who purchases or contracts for the purchase of merchandise * * *." (Ill. Rev. Stat. 1973, ch. 121 1/2, par. 261(e).) Obviously, plaintiff and those whom he represents were not consumers. The Uniform Deceptive Trade Practices Act (Ill. Rev. Stat. 1973, ch. 121 1/2, par. 311 et seq.) is limited to goods or services. It is not relevant.

In equity a constructive trust may be imposed to redress unjust enrichment where there is either actual fraud or implied fraud resulting from a fiduciary relationship. (Hofert v. Latorri (1961), 22 Ill.2d 126, 130; Carroll v. Caldwell (1957), 12 Ill.2d 487, 494.) Here there is no fiduciary relationship to support a constructive trust and the fraud charges are subsumed in count III. Accordingly, we affirm the appellate court's dismissal of counts II and IV.

The real questions on this appeal are: Can the facts support a charge of breach of contract? Is an action predicated on fraud maintainable? Is this a proper class-action situation?

On motion to dismiss we accept as true all well-pleaded facts. (Acorn Auto Driving School, Inc. v. Board of Education (1963), 27 Ill.2d 93, 96.) Count I alleges Steinberg and members of the class to which he belongs applied to defendant and paid the $15 fee, and that defendant, through its brochure, described the criteria to be employed in evaluating applications, but failed to appraise the applications on the stated criteria. On the contrary, defendant evaluated such applications according to monetary contributions made on behalf of those seeking admission.

A contract, by ancient definition, is "an agreement between competent parties, upon a consideration sufficient in law, to do or not to do a particular thing." People v. Dummer (1916), 274 Ill. 637, 640.

An offer, an acceptance (Milanko v. Jensen (1949), 404 Ill. 261, 266; Geary v. Great Atlantic & Pacific Tea Co. (1937), 366 Ill. 625, 627; Dick v. Halun (1931), 344 Ill. 163, 165-66; Restatement (Second) of Contracts secs. 19, 22 (Tent. Draft No. 1, 1964)), and consideration (Moehling v. W.E. O'Neil Construction Co. (1960), 20 Ill.2d 255, 265; Green v. Ashland Sixty-Third State Bank (1931), 346 Ill. 174, 178) are basic ingredients of a contract. Steinberg alleges that he and others similarly situated received a brochure describing the criteria that defendant would employ in evaluating applications. He urges that such constituted an invitation for an offer to apply, that the filing of the applications constituted an offer to have their credentials appraised under the terms described by defendant, and that defendant's voluntary reception of the application and fee constituted an acceptance, the final act necessary for the creation of a binding contract.

This situation is similar to that wherein a merchant advertises goods for sale at a fixed price. While the advertisement itself is not an offer to contract, it constitutes an invitation to deal on the terms described in the advertisement. (1 A. Corbin, Contracts sec. 25 (1950); Restatement (Second) of Contracts sec. 25, comment b, illustration 1, and comment f (Tent. Draft No. 1, 1964); O'Keefe v. Lee Calan Imports, Inc. (1970), 128 Ill. App.2d 410; Montgomery Ward & Co. v. Johnson (1911), 209 Mass. 89, 95 N.E. 290; Lovett v. Frederick Loeser & Co. (1924), 124 Misc. 81, 207 N.Y.S. 753; Ehrlich v. Willis Music Co. (1952), 93 Ohio App. 246, 113 N.E.2d 252, 51 Ohio Op. 8.) Although in some cases the advertisement itself may be an offer (see Lefkowitz v. Great Minneapolis Surplus Store, Inc. (1957), 251 Minn. 188, 86 N.W.2d 689), usually it constitutes only an invitation to deal on the advertised terms. Only when the merchant takes the money is there an acceptance of the offer to purchase.

Here the description in the brochure containing the terms under which an application will be appraised constituted an invitation for an offer. The tender of the application, as well as the payment of the fee pursuant to the terms of the brochure, was an offer to apply. Acceptance of the application and fee constituted acceptance of an offer to apply under the criteria defendant had established.

Consideration is a basic element for the existence of a contract. (Moehling v. W.E. O'Neil Construction Co. (1960), 20 Ill.2d 255, 265; Green v. Ashland Sixty-Third State Bank (1931), 346 Ill. 174, 178.) Any act or promise which is of benefit to one party or disadvantage to the other is a sufficient consideration to support a contract. (Green v. Ashland Sixty-Third State Bank (1931), 346 Ill. 174, 178.) The application fee was sufficient consideration to support the agreement between the applicant and the school.

Defendant contends that a further requisite for contract formation is a meeting of the minds. But a subjective understanding is not requisite. It suffices that the conduct of the contracting parties indicates an agreement to the terms of the alleged contract. (Restatement (Second) of Contracts sec. 19, comment c, sec. 21 (Tent. Draft No. 1, 1964).) Williston, in his work on contracts, states:

"In the formation of contracts it was long ago settled that secret intent was immaterial, only overt acts being considered in the determination of such mutual assent as that branch of the law requires. During the first half of the nineteenth century there were many expressions which seemed to indicate the contrary. Chief of these was the familiar cliche, still reechoing in judicial dicta, that a contract requires the `meeting of the minds' of the parties." (1 Williston, Contracts sec. 22, at 46-48 (3d ed. 1957).)

Here it would appear from the complaint that the conduct of the parties amounted to an agreement that the application would be evaluated according to the criteria described by defendant in its literature.

Defendant urges People ex rel. Tinkoff v. Northwestern University (1947), 333 Ill. App. 224, controls. There the plaintiff alleged that since he met the stated requirement for admission, it was the obligation of the university to accept him. Plaintiff was first rejected because he was 14 years of age. He then filed a mandamus action, and subsequently the university denied his admission, apparently because of the court action. That decision turned on the fact that Northwestern University, a private educational institution, had reserved in its charter the right to reject any applicant for any reason it saw fit. Here, of course, defendant had no such provision in its charter or in the brochure in question. But, more important, Steinberg does not seek to compel the school to admit him. The substance of his action is that under the circumstances it was defendant's duty to appraise his application and those of the others on the terms defendant represented.

A medical school is an institution so important to life in society that its conduct cannot be justified by merely stating that one who does not wish to deal with it on its own terms ...


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