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Farns Associates Inc. v. Sternback

OPINION FILED SEPTEMBER 28, 1979.

FARNS ASSOCIATES INC., PLAINTIFF-APPELLANT,

v.

VIVIAN STERNBACK, DEFENDANT-APPELLEE.



APPEAL from the Circuit Court of Cook County; the Hon. WAYNE OLSON, Judge, presiding.

MR. JUSTICE WILSON DELIVERED THE OPINION OF THE COURT:

Plaintiff brought an action against defendant to recover damages for the alleged conversion of certain checks. Defendant moved to dismiss the complaint for failure to state a cause of action apparently pursuant to section 45 of the Civil Practice Act (Ill. Rev. Stat. 1975, ch. 110, par. 45) and for attorneys' fees and costs pursuant to section 41 of the Civil Practice Act (Ill. Rev. Stat. 1975, ch. 110, par. 41). The court granted defendant's motion to dismiss and plaintiff appeals. The sole issue presented for review is whether the trial court erred in dismissing plaintiff's complaint for failure to state a cause of action. We affirm the judgment of the trial court. The facts relevant to this issue follow.

Plaintiff, Farns Associates, Inc., is an Illinois corporation in the business of making loans to medical and paramedical providers. Defendant, Vivian Sternback, is the widow of a Dr. Martin Sternback. Plaintiff and Dr. Sternback entered into a "Loan and Security Agreement" which granted plaintiff a security interest in Dr. Sternback's welfare and medicare accounts, investment securities, bank accounts and all other accounts in which he had an interest, as collateral for the loan. The agreement was dated December 23, 1972, however, plaintiff alleged in its complaint and brief that the agreement was entered into on December 22, 1973. Upon recognizing the discrepancy, plaintiff alleged in its reply brief that an error had occurred and that the correct date was in fact December 23, 1972. In accordance with the loan agreement, plaintiff filed a financing statement dated January 1, 1973.

Count I of the complaint alleged that Dr. Sternback had ceased doing business with plaintiff on or about July 24, 1974, and that the agreement was terminated by operation of law on or about December 29, as a result of Dr. Sternback's death. At that time, Dr. Sternback owed plaintiff $1,424.76, which was due on October 24. It further alleged that defendant received certain checks representing payments on the accounts that were secured by plaintiff and that instead of turning the proceeds of the checks over to plaintiff in repayment of the doctor's loan, defendant negotiated the checks and appropriated them for her own use. On or about September 10, 1975, plaintiff made demand on defendant to repay the money, but she refused to do so.

Plaintiff then alleged that pursuant to paragraph 4 of the agreement defendant owed $490.84 in interest, which was calculated according to a schedule of interest from November 1, 1974, to June 15, 1977, the date of filing suit. In addition to the foregoing allegations, count II alleged that defendant's negotiation of the checks and subsequent refusal to repay constituted a conversion of plaintiff's collateral. The complaint prayed for $1,915.60 in compensatory damages, $10,000 in punitive damages, and the costs of suit.

Thereafter, defendant filed a motion to strike and dismiss the complaint and for attorneys' fees and costs pursuant to section 41 of the Civil Practice Act. (Ill. Rev. Stat. 1975, ch. 110, par. 41.) The motion set forth that defendant was not the proper party to pursue in this action since a wife is not responsible for the debts of her husband; that plaintiff had, in effect, released its claim against Dr. Sternback and any alleged security interest based on the fact that from July of 1974 until the date of service, plaintiff failed to prosecute this action; additionally, there were no allegations that plaintiff foreclosed its purported security interest, or commenced any legal proceedings against the doctor prior to his death, or that proper proceedings were commenced in the probate division. The motion specifically pointed out the legal deficiencies of paragraphs 5, 6, and 7 of count I in that they were conclusory and unsupported by facts. It stated that plaintiff failed to allege a valid security agreement as the agreement herein was vague and could not be the basis of a lien because it failed to identify the specific checks in question and it failed to specify a sum or a payment term. It specifically pointed out the conclusions recited in paragraph 8 in that Exhibit D, the checks allegedly negotiated by defendant, were in fact credited to the account of the named payee, Capitol Bank of Chicago; that plaintiff made no allegations as to the disposition of the account or that certain creditors with priority were not paid, such as the State of Illinois, the funeral home, etc. Furthermore, it specifically pointed out that in paragraphs 10 and 11, plaintiff assessed an interest rate in excess of the statutory rate against a person not in privity and who had received no benefit from the transaction; and that such an interest rate was usurious and violative of section 41 of the Civil Practice Act. The remaining portions of the motion were addressed to the legal deficiencies in count II which alleged conversion and the proper procedure and party plaintiff should have pursued in this action. The prayer for relief requested $10,000 in punitive damages in violation of section 41 of the Civil Practice Act.

Plaintiff's complaint was subsequently dismissed by the trial court, however, there was no ruling on the section 41 damages contained in the court's order. Plaintiff now appeals that judgment.

OPINION

Plaintiff argues that defendant's motion to strike and dismiss was improperly granted because on the facts alleged, its complaint states a cause of action for conversion. In support of this argument, plaintiff maintains that the motion was not specific and was unsupported by affidavit and, therefore, must fail whether brought under section 45 or section 48 of the Civil Practice Act. (Ill. Rev. Stat. 1975, ch. 110, pars. 45 and 48.) We cannot agree.

Section 45(1) of the Civil Practice Act provides in pertinent part:

"(1) All objections to pleadings shall be raised by motion. The motion shall point out specifically the defects complained of, and shall ask for appropriate relief such as: that a pleading or portion thereof be stricken because substantially insufficient in law, or that the action be dismissed * * *."

Likewise, section 48 provides in pertinent part:

"(1) Defendant may, within the time of pleading, file a motion for dismissal of the action or for other appropriate relief upon any of the following grounds. If the grounds do not appear on the face of the pleading attacked the motion shall be supported by affidavit:

(i) That the claim or demand asserted against defendant is barred by other affirmative matter avoiding the legal effect of ...


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