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Allabastro v. Cummins





APPEAL from the Circuit Court of Cook County; the Hon. FRANK J. GOLLINGS, Judge, presiding.


Warren Allabastro and Elmer A. Anderson (plaintiffs) brought this action against William E. Cummins, David L. Weissman, Equity Financial Corporation and Surety Mortgage Corporation (defendants) for breach of contract. After trial, the court awarded plaintiffs $1500 actual and $10,000 punitive damages. Defendants appeal.

The written contract was entered into by plaintiffs and Equity Financial Corporation (Equity). Equity, a Delaware corporation, subsequently changed its name to Surety Mortgage Corporation. The contract was signed by both plaintiffs and by defendant Cummins as vice president of Equity. The contract provided Equity would act as plaintiffs' exclusive agent in obtaining a $225,000 loan for plaintiffs. The rate of interest was to be "2 1/2% to 3% above the current prime rate, floating," and there was to be a premium of 3 1/3% annually for a (3) three year guarantee, or 10% payable at closing." The contract further stipulated:

"APPLICANT [plaintiffs] has this date paid to AGENT [Equity] the sum of $1,500, said sum to be deposited into AGENT'S escrow account pursuant to the terms of this agreement, and said sum shall be considered as earned fees by AGENT upon issuance by AGENT of the commitment hereinbefore referred to, with the balance of the premium being due and payable out of the proceeds at the closing of the loan. In the event a commitment upon the terms and conditions hereinbefore referred to is not provided by term date, the escrow funds shall be immediately refunded to the APPLICANT."

The record shows a letter from South Shore National Bank to the defendant Surety Mortgage Corporation indicating the bank was willing to extend a loan to plaintiffs but the terms in dicated in the letter are different from those contemplated in the contract between the parties.

Pursuant to Supreme Court Rule 323 (Ill. Rev. Stat. 1979, ch. 110A, par. 323), the parties by stipulation agreed to a bystander's report of proceedings.

Plaintiff Allabastro testified he had personal conversations with defendant Cummins and telephone conversations with defendant Weissman. Allabastro testified the loan was not closed because his wife was required to sign all the loan documents and the points and interest rates quoted in the letter were not the same as set forth in the contract between the parties. Allabastro demanded return of his $1500 deposit. Payment of this refund was continually delayed. "These delaying tactics were pursued by both of the individual defendants." Allabastro further testified he relied on the representations in the loan agreement he signed, "the money was being segregated in a separate escrow account and would be returned if there was a failure to obtain the required financing."

David Weissman testified he is president of defendant Surety Mortgage Corporation. He stated the loan transaction was submitted to South Shore National Bank which agreed to make a loan to plaintiffs. The defendant corporation had also obtained financial reports on plaintiffs and had arranged for a surety bond for the loan. On direct examination, Weissman stated the corporation refused to refund the $1500 deposit because it had obtained the loan plaintiffs had sought. Furthermore, the bank had agreed not to require signature of Allabastro's wife on the loan documents. However, on cross-examination, Weissman admitted the loan that was described in the agreement and was being sought by plaintiffs was not the same as the loan commitment which South Shore National Bank had made in its letter. He further admitted Allabastro demanded refund of the deposit pursuant to the agreement between the parties. Finally, Weissman admitted no funds were deposited in a segregated escrow account. Instead, the deposit made by plaintiffs was commingled with other corporate funds.

The trial judge found the terms in the loan commitment obtained from the South Shore National Bank differed substantially from the terms required by the contract between the parties. He further found there was no deposit of plaintiffs' funds into an escrow account as required by the contract. The trial judge concluded the contract was tainted by fraud in the inducement by the defendants and although defendant Cummins "was the direct liason with the plaintiffs, defendant Weissman at all times understood and knew the nature of the transaction and the way business was being conducted." The trial judge held plaintiffs were entitled to recover the $1500 deposit and awarded $10,000 punitive damages against all the defendants.

In this court, defendants contend it was error to hold the individual defendants personally liable, no damages were proven from the failure to place the $1500 deposit in escrow, and it was error to award punitive damages against the individual and corporate defendants.


• 1, 2 Defendants first argue the record is lacking "as to anything that would cause the individual defendants acting as corporate officers to be individually liable. Any liability would be the corporation's alone." This is the extent of defendants' argument on this point in their initial brief. Defendants' reply brief does attempt to raise some points in support of this argument. However, "[A] point not argued in the briefs may not be raised in the reply brief, in oral argument, or on petition for rehearing." (Village of Crainville v. Argonaut Insurance co. (1980), 81 Ill.2d 399, 405, and authorities there cited.) Also, because defendants did not support their contention with adequate argument, including references to the record, it would be within our discretion to refuse to consider this contention. (Little Rock Missionary Baptist Church v. Olex (1979), 73 Ill. App.3d 402, 404, 392 N.E.2d 130; In re Estate of Kunz (1972), 7 Ill. App.3d 760, 288 N.E.2d 520.) However, we have considered this argument, and we have concluded the trial court was correct in finding the individual defendants personally liable.

• 3 The agreement between the parties established a relationship of principal and agent. The agreement itself referred to Equity as "agent." Equity, acting through its corporate officers (the individual defendants), had an exclusive agency to obtain a loan commitment for plaintiffs. "A person who undertakes to manage some affair for another, on the authority and for the account of the latter, who is called the principal, is an agent." (In re Estate of Morys (1973), 17 Ill. App.3d 6, 9, 307 N.E.2d 669.) "Where * * * one voluntarily acts as an agent for another, a fiduciary relationship exists as a matter of law." (Ray v. Winter (1977), 67 Ill.2d 296, 304, 367 N.E.2d 678.) It is ...

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