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Berlinger's, Inc. v. Beef's Finest

OPINION FILED JANUARY 26, 1978.

BERLINGER'S, INC., PLAINTIFF-APPELLEE,

v.

BEEF'S FINEST, INC., ET AL., DEFENDANTS-APPELLANTS.



APPEAL from the Circuit Court of Cook County; the Hon. JAMES D. CROSSON, Judge, presiding.

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

Rehearing denied February 23, 1978.

Plaintiff, Berlinger's, Inc., brought an action against Beef's Finest, Inc., David Mizaur, its president and sole shareholder, and Linda Mizaur, its secretary, to recover monies due plaintiff for various meat products that were sold and delivered to the defendants. The trial court, sitting without a jury, dismissed the cause as to Linda Mizaur and entered judgment against Beef's Finest, Inc., and David Mizaur in the amount of $67,825.57. Defendant David Mizaur appeals.

We affirm.

The issues presented for review are (1) whether the evidence warranted piercing the corporate veil and imposing personal liability upon the defendant David Mizaur for the corporation's obligation; (2) whether the trial court erred in denying the motion by defendant David Mizaur for a finding and judgment in his favor at the close of plaintiff's case; (3) whether the amended complaint states a cause of action against David Mizaur; and (4) whether the court erred in admitting the application for credit as a business record.

Plaintiff, Berlinger's, Inc., is primarily engaged in the wholesale meat business. Plaintiff's president, Kenneth Berlinger, testified that in October 1974 he received a telephone call from David Mizaur inquiring about the purchase of meats. Plaintiff's president orally agreed to sell various meat products to the corporate defendant subject to a credit check, and David Mizaur agreed to pay for the deliveries on a weekly basis and instructed plaintiff's president to deliver the meats to two locations, 9401 South Ashland and 1240 East 47th Street, Chicago, Illinois. Prior to filling the order, Mr. Berlinger mailed a credit application to the customer and upon its return, checked the references therein. Berlinger testified that he relied on the personal credit of David Mizaur as well as Beef's Finest's credit in making his decision to deliver substantial amounts of meat on credit. The credit application was admitted into evidence as a business record, pursuant to Supreme Court Rule 236 (Ill. Rev. Stat. 1975, ch. 110A, par. 236). The application form bears the name of Beef's Finest, Inc., as the credit applicant, and also bears what is purportedly David Mizaur's signature as president of Beef's Finest, Inc.

Plaintiff started making deliveries in November 1974 which were accepted by defendants. When plaintiff did not receive weekly payments for 2 weeks of deliveries in the latter part of November 1974, Berlinger called David Mizaur and advised that unless payments were made, no more meat would be delivered. Berlinger testified that Mizaur advised him that plaintiff would receive a check upon the next delivery of meat to Beef's Finest, Inc. Relying on Mizaur's representations, plaintiff's president again delivered meat to Beef's Finest, Inc., and received a check in the amount of $22,622.54, such check bearing the purported signature of David Mizaur.

The check was deposited in plaintiff's account and, within a short time, the bank notified plaintiff that a stop payment order had been placed on the check. Berlinger contacted Mr. and Mrs. Mizaur, informed them that "we have a bad check," and "[t]hey said that they would make it good." Plaintiff has never received any payment on said account.

On cross-examination, Mr. Berlinger testified that he had never met David Mizaur, did not know his voice, and that the man on the telephone had indicated he was Mr. Mizaur. Mr. Berlinger agreed it was possible that he had spoken with some other employee of Beef's Finest, Inc.

David Mizaur was called as an adverse witness under section 60 of the Civil Practice Act (Ill. Rev. Stat. 1975, ch. 110, par. 60), and testified as follows: He was the president and sole shareholder of Beef's Finest, Inc. Beef's Finest was incorporated in January 1974 with an initial capital investment of $5000 to $10,000. He did not know how much or what type of stock had been issued. He had no recollection of any directors' or shareholder's meetings, and did not know the whereabouts of the corporate minute books. He testified that Beef's Finest had financial difficulty from the day it opened.

Beef's Finest was located at 9401 South Ashland, Chicago, Illinois and Finest Beef of Illinois, Inc., was located on 47th Street. The average monthly expenses of Beef's Finest were approximately $10,000, excluding the cost of credit meat purchases, although the expenses were less when the corporation was first organized. The average weekly or monthly sales do not appear in the record, although Mr. Mizaur testified that the best week in sales was $40,000 to $50,000.

Mizaur had established an internal procedure whereby every sale made by the corporation would be recorded by way of a sales slip, but he was unable to produce any sales slips for the period of November and December 1974, even though he had been ordered by the court to produce these slips. He explained that the corporate ledger, canceled checks, and sales slips for November and December 1974 were "with the Internal Revenue or with somebody." He had no copies of these records, nor did he request the return of the corporate records or request copies of the same from the Internal Revenue Service.

The corporation maintained a bank account at Ashland State Bank. Mr. Mizaur, Don Sheehy, and Donna Sheehy, Mr. Sheehy's daughter (age 18), were authorized signatories. Both Sheehys were employees of Beef's Finest. Donna Sheehy was given carte blanche by David Mizaur to sign his name on any and all corporate checks, even though she was an authorized signatory, but he explained that he allowed this practice because Donna had not been initially listed on the bank signature card. She signed approximately 100 to 200 checks with his name.

Finest Beef of Illinois, Inc., another corporation which Mizaur "owned," had "an intercompany exchange of both purchase and cash" with Beef's Finest, Inc. Mizaur said it was possible, but unlikely, that some of the sales money or checks received by ...


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