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Mcclure Eng'r v. Reuben Donnelley Corp.





APPEAL from the Circuit Court of Rock Island County; the Hon. ROBERT J. HORBERG, Judge, presiding.


Rehearing denied December 18, 1981.

This is an appeal from a judgment of the circuit court of Rock Island County entered upon a motion for directed verdict at the close of plaintiff's case. Plaintiff was awarded the sum of $271.20 and has appealed, claiming that the limitation on defendant's liability contained in the parties' contract is void as against public policy.

Plaintiff, McClure Engineering Associates, Inc. (McClure), is a professional engineering firm. Defendant, Reuben H. Donnelley Corporation (Donnelley), is a publisher of yellow pages for the telephone company. In 1975 and 1976, plaintiff contracted with defendant's agent for the purchase of advertising space in the yellow pages of the succeeding years' telephone directories for Geneseo, Illinois. In addition, in 1976 plaintiff contracted to purchase space in the 1977 telephone directory for Freeport, Illinois. The requested advertisements were omitted from the three directories. Donnelley tendered $271.20, the amount paid by McLure Engineering for the advertisements, pursuant to the following provisions which were contained in the contracts:

"The advertiser is expected to pay the rate as billed. The liability of the Telephone Company in connection with any error or omission in publication of, or failure to publish, any item of advertising in any issue of any directory, shall be limited to the charges for the publication in such issue of the item of advertising involved, excluding charges for cuts, engravings or electrotypes. The term `Telephone Company' shall include any or all Telephone Companies involved in this transaction, the Selling Company, the Publishing Companies, or any representative of said company or companies."

This suit followed. McClure Engineering complained that it suffered losses in excess of $60,000 as a result of Donnelley's negligence in omitting the advertisements. The trial court, upon conclusion of McClure's case, granted Donnelley's motion for a directed verdict and entered judgment in the amount of $271.20. On appeal, plaintiff raises a single issue. That is, is the exculpatory clause contained in the parties' contracts, which insulates defendant from liability for negligence, invalid as being contrary to public policy in Illinois?

Plaintiff urges this court to adopt the view espoused by courts> in two sister jurisdictions wherein exculpatory clauses have been held to be void as a matter of public policy. Plaintiff cites Woodburn v. Northwestern Bell Telephone Co. (Iowa 1979), 275 N.W.2d 403, and Allen v. Michigan Bell Telephone Co. (1969), 18 Mich. App. 632, 171 N.W.2d 689, in support of its argument. Initially, we note, as defendant is quick to point out, that the Iowa court, in Woodburn, specifically ruled against plaintiff on the question presently before the court in this case. The Woodburn court remanded the cause to the trial court solely for resolution of the question of mutuality of assent in the formation of the contract — an issue which has not been raised in the instant case. Furthermore, the precedential value of the Michigan case, Allen, is diminished by the fact that the Michigan appellate court, upon second review, limited its holding concerning the enforceability of the exculpatory clause therein by stating that its earlier ruling on that issue was the law of the case. (Allen v. Michigan Bell Telephone Co. (1975), 61 Mich. App. 62, 65, 232 N.W.2d 302, 304.) Because the holdings of these cases are of, at best, questionable precedential value, we decline to embrace the opinions for the proposition advanced by plaintiff herein.

• 1 While the precise issue before this court has not received prior attention in the reviewing courts> of Illinois, we believe that the general rules of law which guide the outcome of this case are fairly well established. Generally, Illinois adheres to the rule, in keeping with the principle of freedom of contract, that contractual limitations are valid and enforceable. (First Financial Insurance Co. v. Purolator Security, Inc. (1979), 69 Ill. App.3d 413, 417, 388 N.E.2d 17, 20 (citing Schumann-Heink v. Folsom (1927), 328 Ill. 321, 159 N.E. 250); Pick Fisheries, Inc. v. Burns Electronic Security Services, Inc. (1976), 35 Ill. App.3d 467, 342 N.E.2d 105; see also cases in Annot., 92 A.L.R.2d 917, 935-45 (1963), and A.L.R.2d Later Case Service 40-42 (1976).) In the absence of legislative directive to the contrary, an exculpatory clause generally will be held valid. The exception to this rule, thereby permitting the court to invalidate an exculpatory clause, obtains "only if a special social relationship of a semi-public nature is found to permeate the transaction between the parties." (First Financial Insurance Co. (1979), 69 Ill. App.3d 413, 418, 388 N.E.2d 17, 21.) Relationships such as employer-employee (Campbell v. Chicago, Rock Island & Pacific Ry. Co. (1910), 243 Ill. 620, 90 N.E. 1106) and public carrier-passenger (Checkley v. Illinois Central R.R. Co. (1913), 257 Ill. 491, 100 N.E. 942) are examples of these special social relationships.

Plaintiff attempts to place his relationship with defendant Donnelley into the category of special social relationships covered by the exception to the general rule based on several factors which, plaintiff contends, render defendant's business activities a "public service." Plaintiff's argument necessarily proceeds from the premise that providers of public services may not escape liability for their own negligence through exculpatory provisions in their contracts. (57 Am.Jur.2d Negligence § 27 (1971).) As will be shown, we do not believe that the facts of the present case lend themselves to the conclusion that plaintiff urges us to reach.

Firstly, plaintiff contends that defendant's business is largely a government-regulated monopoly. While the telephone business itself is subject to governmental regulation, defendant, as a private corporation engaged by the telephone company to publish its yellow pages, is not a government-regulated monopoly.

• 2 Secondly, plaintiff argues that McClure, as a professional association and subject to advertising limitations imposed by its code of professional ethics, requires defendant's services as a "practical necessity." We are unconvinced of the practical necessity of plaintiff's yellow pages advertisements in the instant case, particularly when plaintiff was not even a resident of either of the communities in which the advertisements were omitted. It is apparent that plaintiff elected to advertise its services in neighboring communities so as to expand the reach of its offices located in East Moline and Rockford, Illinois. (Plaintiff does not complain that it was omitted from the directories of either of these cities. Therefore, we assume that the yellow pages properly included plaintiff's advertisements for the cities where its offices operated.) The opportunity to procure advertising outside of the community serviced by any particular directory for which a business number has been assigned is a luxury offered by the telephone company for those who desire such advertising. Sound business judgment — not "practical necessity" — dictates whether or not any particular customer should take advantage of the additional advertising opportunity.

Plaintiff's third argument is that defendant is a public service because of the "extent to which defendant holds itself out to the public." As we have stated earlier, we do not believe that the quasi-public character of the telephone company itself is properly attributable to the defendant publishing company.

• 3 Finally, plaintiff argues that the relative bargaining power of the parties is so imbalanced as to render the standardized contracts adhesive and unenforceable. Disparity in bargaining positions is one factor to consider in determining whether an exculpatory provision is unconscionable. (First Financial Insurance Co., 69 Ill. App.3d 413, 419, 388 N.E.2d 17, 21-22 (citing Cerny Pickas & Co. v. C.R. Jahn Co. (1952), 347 Ill. App. 379, 106 N.E.2d 828).) Standing alone, however, disparity in bargaining power will not render the provision unenforceable. In the present case, plaintiff does not allege that he attempted to negotiate the contracts in question. In fact, plaintiff denied having even read the terms of his contracts with defendant's agent. On these facts, it is difficult to conclude that the alleged disparity in bargaining positions has been demonstrated to have been unconscionable.

• 4 Not having found that a special relationship of a semi-public nature existed between the parties, we hold that the agreement between plaintiff engineering firm and defendant publisher of yellow pages, whereby the publisher's liability for negligence is limited to the amount paid for its services, is not void as against the public policy of this State. ...

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