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People Ex Rel. Fahner v. Hedrich

OPINION FILED JULY 14, 1982.

THE PEOPLE EX REL. TYRONE C. FAHNER, ATTORNEY GENERAL, PLAINTIFF-APPELLEE,

v.

RAYMOND HEDRICH, INDIV. AND D/B/A OAK GROVE MOBILE HOME VILLAGE, DEFENDANT-APPELLANT.



Appeal from the Circuit Court of Kane County; the Hon. John A. Krause, Judge, presiding.

JUSTICE VAN DEUSEN DELIVERED THE OPINION OF THE COURT:

The defendant, Raymond Hedrich, appeals from a verdict finding him guilty of violating provisions of the Consumer Fraud and Deceptive Business Practices Act (Ill. Rev. Stat. 1979, ch. 121 1/2, par. 261 et seq.) and the Mobile Home Landlord and Tenant Act (Ill. Rev. Stat. 1979, ch. 80, par. 201 et seq.). As a result of these violations, the court imposed an injunction and required the defendant to pay restitution, a fine and attorney fees.

For approximately 30 years, Hedrich has owned and operated the Oak Grove Mobile Home Village (Oak Grove). Through Oak Grove, the defendant rents parking spaces for owners of mobile homes. He also sells new and used mobile homes, as well as, parts and accessories for mobile homes.

Before January 1, 1980, the defendant did not use written leases when renting out a lot. The lots were rented as month-to-month tenancies. Prior to January 1, 1980, when several tenants of Oak Grove wanted to sell their mobile homes, the defendant informed them that if the mobile home was to remain on the Oak Grove lot after the sale, the tenant-seller would be required to pay a fee of approximately $1,500 to the defendant. The tenant-seller was not required to pay the fee if he removed the mobile home from the lot. None of the tenants were notified of this charge until after they had located their mobile home on the lot and were ready to sell the mobile home. The evidence indicated that there was a shortage of mobile home lots in the area and that it would cost hundreds of dollars to relocate a mobile home.

At trial, it was shown that prior to January 1, 1980, 23 tenants-sellers were required to pay $1,500 each to allow their mobile homes to remain on the lot after a sale. One tenant paid $500, and another paid $3,000. The evidence also indicates that the defendant performed little or no services in connection with the transfer.

Because of these fees, some of the Oak Grove tenant-sellers filed consumer complaints against the defendant. As a result of the consumer complaints filed with the Consumer Protection Division of the Illinois Attorney General's Office, a subpoena issued against the defendant in November of 1979. The defendant was unable to resolve the outstanding consumer complaints. On December 13, 1979, the Attorney General's Office filed a complaint alleging that the defendant had violated the Illinois Consumer Fraud and Deceptive Business Practices Act (Ill. Rev. Stat. 1979, ch. 121 1/2, par. 261 et seq.). The complaint was later amended to add a second count which alleged violations of the Mobile Home Landlord and Tenant Act (Ill. Rev. Stat. 1979, ch. 80, par. 201 et seq.). The Attorney General's Office also filed a petition for a temporary restraining order. The trial court granted the order and restrained defendant from imposing a fee on the sale of a mobile home unless the fee was in compliance with the provisions of the Mobile Home Landlord and Tenant Act. This order became a preliminary injunction.

On January 20, 1981, after several contempt proceedings, a trial on the complaint began. On February 10, 1981, after hearing the evidence, the trial court found that the defendant had violated section 2 of the Consumer Fraud and Deceptive Business Practices Act (Ill. Rev. Stat. 1979, ch. 121 1/2, par. 262) and sections 6, 9 and 24 of the Mobile Home Landlord and Tenant Act (Ill. Rev. Stat. 1979, ch. 80, pars. 206, 209, 224). As a result of these violations, the defendant was permanently enjoined from collecting a fee upon the sale of a tenant's mobile home, unless the fee was an amount directly related to services performed by the defendant, and the fee was disclosed to the tenant in a lease or by agreement prior to the sale. The trial court also ordered the defendant to pay $38,000 in restitution to the former tenants who had paid the fee. The defendant also received a $200 fine and was ordered to pay attorney fees.

• 1 Initially, the defendant contends that the trial court erred in that the Consumer Fraud and Deceptive Business Practices Act (Act) is not applicable to transactions between a mobile home park landlord and tenant. We note, however, that the applicability of the Act was never clearly raised before the trial court; therefore, it may be considered waived. (Kravis v. Smith Marine, Inc. (1975), 60 Ill.2d 141, 147.) However, because the issue is one of public importance concerning a matter of statutory interpretation and because all of the facts necessary for a determination of the issue are before the court, this court of review may rule on the issue. Cronin v. Lindberg (1976), 66 Ill.2d 47, 61.

• 2 Section 2 of the Act provides that the use of any one of a variety of deceptive or unfair practices in the conduct of any "trade or commerce" is unlawful. (Ill. Rev. Stat. 1979, ch. 121 1/2, par. 262.) The defendant contends that the trial court erred in finding that the business of leasing lots and providing services for mobile homes is a "`trade' or `commerce'" as defined in section 1(f) of the Act. (Ill. Rev. Stat. 1979, ch. 121 1/2, par. 261(f).) Under section 1(f), the phrase "trade or commerce" means the "advertising, offering for sale, sale or distribution of any services and any property, tangible or intangible, real, personal or mixed and any other article, commodity or thing of value wherever situated * * *." (Ill. Rev. Stat. 1979, ch. 121 1/2, par. 261(f).) In Scott v. Association for Childbirth at Home, International (1981), 88 Ill.2d 279, 284, the Illinois Supreme Court held that the broad language of this definition "evidences an intent that the Act have correspondingly broad applicability." Additionally, section 11a (Ill. Rev. Stat. 1979, ch. 121 1/2, par. 271a) of the Act mandates a liberal construction of the Act to effect its purposes. Under a liberal construction of the broad language of section 1(f), the defendant's leasing of lots and providing utilities to his tenants are a "distribution of services" and, therefore, a "trade or commerce" as defined by the Act.

In Commonwealth v. DeCotis (1974), 366 Mass. 234, 316 N.E.2d 748, the Massachusetts Supreme Court was faced with the exact same question. In DeCotis the defendant, an owner of a mobile home park, was charged with committing an unfair and deceptive trade practice by charging a resale fee similar to the fee charged in the case at bar. Interpreting a definition of "trade or commerce" substantially identical to the definition in the Illinois statutes, the court held that "[c]learly the leasing of lots for mobile homes is a `trade' or `commerce.'" 366 Mass. 234, 239, 316 N.E.2d 748, 752.

The defendant cites Steinberg v. Chicago Medical School (1977), 69 Ill.2d 320, for the proposition that the Act is inapplicable because the former tenants are not "consumers" as defined in section 1(e) (Ill. Rev. Stat. 1979, ch. 121 1/2, par. 261(e)). The Steinberg court held that because Steinberg was only an applicant to the school and not a purchaser of its educational services, he was not a consumer. (See Scott v. Association for Childbirth at Home, International (1981), 88 Ill.2d 279, 285.) We note, however, that in Steinberg, the issue was whether a rejected applicant was a "consumer" with standing to bring a cause of action. Thus, it appears that while the definition of consumer as set out in section 1(e) may be pertinent for determining whether a plaintiff has standing, it is not a question of importance in a case, like the present case, which has been brought by the Attorney General's Office. Scott v. Association for Childbirth at Home, International (1981), 88 Ill.2d 279, 285; see also Beard v. Gress (1980), 90 Ill. App.3d 622.

• 3 Furthermore, the tenants who were required to pay the $1,500 service fee are consumers under the Act. Section 1(e) of the Act defines a consumer as "any person who purchases or contracts for the purchase of merchandise not for resale in the ordinary course of his trade or business but for his use or that of a member of his household." (Ill. Rev. Stat. 1979, ch. 121 1/2, par. 261(e).) Section 1(b) defines "merchandise" to include "any objects, ware, goods, commodities, intangibles, real estate situated outside of the State of Illinois, or services; * * *." (Ill. Rev. Stat. 1979, ch. 121 1/2, par. 261(b).) From the evidence at trial it is clear that under the leasing agreement, the tenants contracted for various services to be supplied by the defendant, i.e., maintaining the utilities and road within the complex, providing snow and garbage removal, and allowing for the use of the lot. Therefore, the tenant contracted for the purchase of "merchandise" as defined in section 1(b) and, under section 1(e), is a "consumer." (See Love v. Pressley (1977), 34 N.C. App. 503, 239 S.E.2d 574; Commonwealth v. Monumental Properties, Inc. (1974), 459 Pa. 450, 329 A.2d 812.) We, therefore, conclude that the trial court did not err in determining that the consumer fraud statute is applicable in the present case.

• 4 The defendant next contends that the charging of the transfer fee was not an unfair or deceptive practice under section 2 of the Act. Section 2 states that when determining whether a practice violates this section of the Act, consideration is to be given to the interpretations of the Federal Trade Commission and the Federal courts> relating to section 5(a) of the Federal Trade Commission Act (15 U.S.C. § 45(a)(1) (1976)), which provides in pertinent part:

"Unfair methods of competition in or affecting commerce and unfair or deceptive acts or practices in or affecting commerce, are declared unlawful." 15 U.S.C. § 45(a)(1) (1976).

In Federal Trade Commission v. Sperry & Hutchinson Co. (1972), 405 U.S. 233, 244-45 n. 5, 31 L.Ed.2d 170, 179 n. 5, 92 S.Ct. 898, 905 n. 5, citing 29 Fed. Reg. 8355 (1964), the court set out the standards employed by the FTC in ...


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