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Burks Drywall, Inc. v. Wash. Bk & Tr. Co.

OPINION FILED NOVEMBER 22, 1982.

BURKS DRYWALL, INC., PLAINTIFF-APPELLEE,

v.

WASHINGTON BANK AND TRUST COMPANY, DEFENDANT-APPELLANT. — REDMAN PLUMBING, PLAINTIFF-APPELLEE,

v.

WASHINGTON BANK AND TRUST COMPANY, DEFENDANT-APPELLANT.



Appeal from the Circuit Court of Du Page County; the Hon. Lewis V. Morgan, Judge, presiding.

JUSTICE NASH DELIVERED THE OPINION OF THE COURT:

Defendant, Washington Bank and Trust Company (Bank), appeals from orders of the circuit court of Du Page County, entered in separate actions, which denied the Bank's motions to dismiss plaintiffs' complaints and entered summary judgments in favor of the plaintiffs, Burks Drywall, Inc. (Burks), and Redman Plumbing (Redman), respectively. On the motion of all parties, we consolidated the two causes on appeal.

Burks and Redman each filed a three-count complaint against the Bank seeking damages pursuant to section 3-419 of the Uniform Commercial Code (UCC) (Ill. Rev. Stat. 1979, ch. 26, par. 3-419) for the Bank's alleged conversion of certain checks of which Burks or Redman were co-payees and which were presented and cashed by the Bank over the forged endorsement of plaintiffs. Burks sought recovery for three checks made payable jointly to Burks and McNeely, Inc. (McNeely), a nonparty, having a total face value of $9,334. Similarly, Redman sought recovery for three other checks, two of which were payable jointly to Redman and McNeely, and one payable solely to Redman, having a total face value of $14,000. The Bank answered both complaints; however, upon receipt of plaintiffs' motions for summary judgment, and without withdrawing its answers, the Bank filed motions to dismiss plaintiffs' complaints pursuant to section 45 of the Civil Practice Act (Ill. Rev. Stat. 1979, ch. 110, par. 45) for alleged failure to state a cause of action due to insufficient factual allegations of ownership of the checks by plaintiffs. These motions were heard (apparently without objection) together with plaintiffs' summary judgment motions. The trial court denied the Bank's motions to dismiss and granted summary judgment for each plaintiff.

On appeal the Bank contends: (1) the trial court erred in denying its motions to dismiss the complaints; (2) the affidavits filed in support of plaintiffs' motions for summary judgment do not conform to Supreme Court Rule 191 (73 Ill.2d R. 191); and (3) that the entry of summary judgment was erroneous.

SECTION 45 MOTION

Each count of the two complaints dealt with a single check but contained substantially identical allegations. Each count alleged, inter alia, the identity of plaintiff and defendant; that plaintiff was one of the named payees of a specific check drawn on Reserve Savings & Loan Association of Elmhurst, Illinois (Reserve); that plaintiff was the lawful owner of the check in that the check was to be transferred from Reserve to plaintiff as payment for labor supplied and materials incorporated into certain real estate on behalf of McNeely; that McNeely was a customer and depositor of the Bank; that neither the plaintiff nor its agents endorsed or authorized the endorsement of the check at any time; that McNeely, through its agents, forged the endorsement of plaintiff and deposited the checks in McNeely's account at the Bank; that the plaintiff's purported endorsement on the check is a forgery; and, that defendant has refused to pay plaintiff for the amount of the check. Copies of the checks and their stub receipts were attached as exhibits to the complaints.

The Bank contends that the complaints fail to state a cause of action under section 3-419 of the UCC (Ill. Rev. Stat. 1979, ch. 26, par. 3-419) in that they fail to allege delivery of the checks to plaintiffs; sufficient facts to indicate ownership; and, the existence of any obligation between Reserve and plaintiffs.

• 1, 2 Initially, plaintiffs contend that the Bank has waived its rights to object to the pleadings since it had answered the complaints. Generally, where a complaint substantially although imperfectly alleges a cause of action, the defendant waives any defect by answering it without objection. (Pathman Construction Co. v. Hi-Way Electric Co. (1978), 65 Ill. App.3d 480, 486, 382 N.E.2d 453, 458; County of Winnebago v. Willsey (1970), 122 Ill. App.2d 149, 153-54, 258 N.E.2d 138, 140.) The only exception to this rule is where the complaint wholly fails to state a cause of action. (Ording v. Springer (1980), 88 Ill. App.3d 243, 245, 410 N.E.2d 428, 430; Pathman Construction Co. v. Hi-Way Electric Co. (1978), 65 Ill. App.3d 480, 486, 382 N.E.2d 453, 458.) While the defendant's objections to the pleadings do not fall within this limited exception, the plaintiffs' failure to raise in the trial court the issue of defendant's waiver of objections to the pleadings precludes them from raising such issue on appeal. (Spencer v. Community Hospital (1980), 87 Ill. App.3d 214, 217-18, 408 N.E.2d 981, 985.) Thus, we will address the merits of defendant's motions to dismiss.

• 3 In considering whether plaintiffs' complaints state a cause of action under section 3-419 of the UCC we note that for the purposes of ruling on a motion to dismiss all well-pleaded facts contained in a complaint must be taken as true and all inferences therefrom must be drawn in favor of the non-movant. (Album Graphics, Inc. v. Beatrice Foods Co. (1980), 87 Ill. App.3d 338, 344, 408 N.E.2d 1041, 1046; McCauley v. Chicago Board of Education (1978), 66 Ill. App.3d 676, 677, 384 N.E.2d 100, 101, appeal denied (1979), 74 Ill.2d 586.) Additionally, as exhibits become part of a complaint for all purposes, a motion to dismiss also admits the facts contained in such exhibits. (Ill. Rev. Stat. 1979, ch. 110, par. 36; Illinois Bell Telephone Co. v. Dynaweld, Inc. (1979), 70 Ill. App.3d 387, 391, 388 N.E.2d 157, 160; Sharkey v. Snow (1973), 13 Ill. App.3d 448, 451, 300 N.E.2d 279, 281.) A complaint should not be dismissed for failure to state a cause of action unless it clearly appears that no set of facts could be proven under the pleadings which would entitle plaintiff to relief. (Felbinger & Co. v. Traiforos (1979), 76 Ill. App.3d 725, 733, 394 N.E.2d 1283, 1289; J.J. Harrington & Co. v. Timmerman (1977), 50 Ill. App.3d 404, 407, 365 N.E.2d 721, 723.) Although Illinois requires fact rather than notice pleading (Ill. Rev. Stat. 1979, ch. 110, pars. 33(3), 42(2); Pelham v. Griesheimer (1982), 92 Ill.2d 13, 17, 440 N.E.2d 96, 98), a complaint will not be dismissed if facts essential to its claim appear by reasonable implication and it reasonably informs the defendants of a valid claim under a general class of cases. Central States, Southeast & Southwest Areas Pension Fund v. Gaylur Products, Inc. (1978), 66 Ill. App.3d 709, 713, 384 N.E.2d 123, 126; Kramer v. McDonald's System, Inc. (1978), 61 Ill. App.3d 947, 956, 378 N.E.2d 522, 531, aff'd (1979), 77 Ill.2d 323, 396 N.E.2d 504.

Section 3-419 of the UCC provides in pertinent part:

"(1) An instrument is converted when

(c) it is paid on a forged endorsement.

(2) In an action against a drawee under subsection (1) the measure of the drawee's liability is the face amount of the instrument. In any other action under subsection (1) the measure of liability is presumed to be the face amount of the instrument." (Ill. Rev. Stat. 1979, ch. 26, par. 3-419.)

Although there are few Illinois cases interpreting this section of the UCC, it has been noted that paragraph (1)(c) of section 3-419 was intended to be a codification of prior Illinois common law under the former Negotiable Instruments Act. See Ill. Ann. Stat., ch. 26, par. 3-419, Illinois Code Comment, at 327 (Smith-Hurd 1963); at 53 ...


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