United States District Court, Northern District of Illinois, E.D
March 6, 1984
WINFIELD DESIGN ASSOCIATES, INC., PLAINTIFF,
QUINCY JEFFERSON VENTURE, ETC., AND REES W. CANDEE, ETC., DEFENDANTS.
The opinion of the court was delivered by: Shadur, District Judge.
MEMORANDUM OPINION AND ORDER
Winfield Design Associates, Inc. ("Winfield") initially sued
its fellow-tenant Rees Candee ("Candee") and its landlord
Quincy Jefferson Venture ("Quincy"), alleging Winfield's
business inventory and other property were damaged as a result
1. negligent acts by Candee (Complaint Count I)
and Quincy (Complaint Count III) and
2. Candee's breach of provisions of a
Candee-Quincy lease that operated for the benefit
of Winfield (Complaint Count II).*fn1
Quincy then crossclaimed against Candee for its own alleged
damages (Crossclaim Count I) and (should Quincy be found
liable to Winfield) for indemnity (Crossclaim Count II)*fn2
and contribution (Crossclaim Count III).
At this point the parties have filed and this Court has
entered its Final Pretrial Order, so that this action has been
added to the list of cases awaiting trial. At the pretrial
conference leading to entry of that order, the parties
requested this Court to decide as a matter of law the proper
measure of Winfield's damages to its inventory.*fn3 For the
reasons stated in this memorandum opinion and order, the
proper measure of Winfield's damages to its inventory is the
fair market value of the goods immediately before their
destruction, minus any salvage value — not the cost of
replacing the goods at wholesale.*fn4
Winfield relies on Tozzi v. Testa, 97 Ill. App.3d 832, 837,
53 Ill.Dec. 279, 282-83, 423 N.E.2d 948, 951-52 (3d Dist.
1981), where the court determined the fair market value of
goods before their destruction is the proper measure of
damages. That is the rule in other Illinois Appellate Courts as
well, Williams v. Board of Education of Clinton Community Unit
School District No. 15, 52 Ill. App.3d 328, 333, 10 Ill.Dec.
161, 165, 367 N.E.2d 549, 553 (4th Dist. 1977); Trailmobile
Division of Pullman, Inc. v. Higgs, 12 Ill. App.3d 323, 325,
297 N.E.2d 598, 600 (5th Dist. 1973); 15 I.L.P. Damages § 144, at
454. Against that array defendants point to one Second District
case (never cited by another Illinois court on this score) that
holds replacement cost of the goods is the proper measure of
damages. Chicago Title & Trust Co. v. W.T. Grant Co.,
2 Ill. App.3d 483, 488-89, 275 N.E.2d 670, 674 (2d Dist. 1971).
Most significant for this Court's purposes, however, is the
rule followed by the Illinois Appellate Court for the First
District. Under Erie v. Tompkins principles this Court is bound
by the decisions of that Appellate Court when the Illinois
Supreme Court has not spoken and the Appellate Courts differ.
Abbott Laboratories v. Granite State Insurance Co., 573 F. Supp. 193,
196-200 (N.D.Ill. 1983); Commercial Discount Corp. v.
King, 552 F. Supp. 841, 848 (N.D.Ill. 1982).
On that basis the result is clear: The First District has
aligned itself with the majority position of the other
Appellate Courts. Gannon v. Freeman, 103 Ill. App.3d 917, 919,
59 Ill.Dec. 546, 548, 431 N.E.2d 1303, 1305 (1st Dist. 1982);
Aetna Insurance Co. v. 3 Oaks Wrecking and Lumber Co.,
65 Ill. App.3d 618, 627-28, 21 Ill.Dec. 919, 926-27,
382 N.E.2d 283, 290-91 (1st Dist. 1978). Both those cases relied on
Behrens v. W.S. Bills and Sons, Inc., 5 Ill. App.3d 567, 576-78,
283 N.E.2d 1, 7-8 (3d Dist. 1972), which stated the damages are
the "reasonable" value of the goods prior to their destruction.
Behrens in turn relied on H.K. Porter Co. v. Halperin,
297 F.2d 442, 445 (7th Cir. 1961) (a case startlingly similar to this
one on the facts), which established fair market value as the
"reasonable" value of the goods. Aetna explicitly accepted
testimony regarding the goods' fair market value as proper on
the damages issue. 65 Ill. App.3d at 627-28, 21 Ill.Dec. at
926-27, 382 N.E.2d at 290-91.
Thus the issue is readily resolved. Winfield's damages must
be measured by the fair market value of its goods immediately
before their destruction.
Candee raises an issue as to Winfield's ability to recover
for damages to goods held on consignment. Illinois law allows
a bailee to recover for the full amount of injury to the goods
(here their fair market value), with the bailee then holding
the amount in excess of the bailee's interest in trust for the
bailor. Montgomery Ward & Co. v. Peter J. McBreen & Associates,
40 Ill. App.3d 69, 73-74, 351 N.E.2d 324, 328 (1st Dist. 1976);
Ebel v. Collins, 47 Ill. App.2d 327, 332, 198 N.E.2d 552, 554
(1st Dist. 1964); 4A I.L.P. Bailments § 37, at 549.
Candee contends Winfield's status as a bailee has not yet
been established. This opinion does not purport to resolve
that or any other controverted fact issue. But if Winfield is
in fact a bailee, the proper measure of damages to the
inventory held on consignment is the fair market value of
those goods as well.
As a matter of law, Winfield's damages are to be measured by
the fair market value of the goods immediately before their
destruction, less any salvage value. All factual issues remain