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Sexton v. Brach





Appeal from the Circuit Court of La Salle County; the Hon. Fred P. Wagner, Judge, presiding.


This appeal arises from an action for professional services filed in the circuit court of La Salle County by Francis Sexton, d/b/a Sexton Engineering Service. Named as defendants were Kenneth D. Brach, d/b/a Brach Investment Properties, Leonard Kemnetz and Robert Barker. The circuit court awarded judgment for the plaintiff against defendant Barker, who failed to appear and defend. The circuit court dismissed the action against defendants Brach and Kemnetz holding that the statute of limitations (Ill. Rev. Stat. 1981, ch. 83, par. 16) was a bar to recovery. The plaintiff Sexton seeks our review of that determination asserting that the circuit court was in error.

In the summer of 1972, defendant Kemnetz and defendant Barker entered into a joint venture agreement to purchase and then develop a tract of land in excess of 300 acres in La Salle County to be known as the "Glenwood Farm" subdivision. In furtherance of that joint venture, in August 1972, defendant Barker orally contracted with Francis Sexton to prepare an annexation plat of the "Glenwood Farm" subdivision. The surveying work for the plat was completed by Sexton in December of 1972. At that time, Sexton presented Barker with the completed plat and a statement for services in the amount of $9,223.52.

Early the following year, in February, defendant Kemnetz contracted to sell the "Glenwood Farm" property to defendant Brach. Kemnetz' first joint venture partner, Barker, was not a party to this contract to sell. Indeed, when Barker learned of the contract to sell, he brought suit against Kemnetz and Brach alleging that his partner was defrauding him of his rights in the original joint venture agreement. That suit was fully tried and resulted in a judgment of the circuit court of La Salle County dated April 14, 1974. The circuit court's judgment found the fraud alleged by Barker in his complaint against Kemnetz. It ordered Kemnetz to hold his one-half interest in the "Glenwood Farm" venture in a constructive trust for the benefit of Barker, subject to certain provisions relating to the payment of money by Barker to Kemnetz which were to be paid so as to compensate Kemnetz for the monies invested by him in the "Glenwood Farm" venture. Barker failed to comply with the circuit court judgment, and a supplemental order was entered denying Barker any right to participate in the "Glenwood Farm" purchase contract. A new joint venture thus arose between Kemnetz and Brach to purchase and develop the subdivision.

After the February 1973 contract between Kemnetz and Brach, Brach approached Sexton for the first time seeking additional survey work to be done on the subdivision project. Sexton was reluctant to undertake additional work, as he had not been paid for the annexation plat completed in December of 1972. Upon receiving Brach's assurance that this bill would be paid, Sexton performed the supplementary survey work at a cost of $180. The revised survey was presented to Brach, and on May 25, 1973, Brach paid $3,000 to Sexton.

No further amounts were paid on the account with Sexton, and in an effort to collect the balance of the account, Sexton brought suit as previously recounted on April 8, 1978. That suit resulted in a judgment against the first joint venture partner, Barker, but the action against Kemnetz and Brach was dismissed by the circuit court by reason of the five-year bar of the statute of limitations. The issue presented for our review is whether the statute of limitations was correctly applied by the circuit court to bar the action against Kemnetz and Brach.

• 1 Although the initial work on the annexation plat was completed in December of 1972, more than five years from the date suit was filed, the plaintiff urges that the partial payment on the account owed to the plaintiff on May 25, 1973, constitutes both a recognition by the defendants of the correctness of the account and an implied promise to pay the balance due so as to render the defendants liable to the plaintiff on the theory of account stated. Since an account stated is in the nature of a new undertaking, the plaintiff Sexton asserts that the five-year statute of limitations did not expire until May 25, 1978, or just less than two months after the complaint was filed.

We believe the plaintiff's argument overlooks one necessary requirement to have a valid action for account stated. Specifically,

"[a]n account stated cannot be made the instrument to create an original liability; it merely determines the amount of the debt where liability previously existed. [Citations.] An account stated only determines the amount of the debt where a liability exists, and cannot be made to create a liability per se where none before existed. [Citation.] An action at law on an account stated lies only where there have been transactions previous to the statement of the account which created the relation of debtor and creditor. [Citation.]" (Pope County State Bank v. U.G.I. Contracting Co. (1932), 265 Ill. App. 420, 423-24; Accord: Motive Parts Co. of America, Inc. v. Robinson (1977), 53 Ill. App.3d 935, 369 N.E.2d 119; Conley v. National House Furnishing Co. (1937), 292 Ill. App. 558, 11 N.E.2d 840.)

Since defendant Brach was not one of the original joint venture partners that contracted with Sexton for the annexation plat, he was not a party to the transaction which created the relation of debtor and creditor. Thus, he was not originally liable for the surveying work done to complete the annexation plat, and his payment on the account cannot create a liability for the balance.

The cases cited by the plaintiff do not persuade us that the rule set forth in the Pope County State Bank case is not controlling here. In Soft Water Service, Inc. v. M. Suson Enterprises, Inc. (1976), 39 Ill. App.3d 1035, 351 N.E.2d 264, the court expressly found there was an original liability on the part of the defendant to pay the plaintiff the amount due. The case of Whitaker Farmers Grain Co. v. Soucie (1940), 306 Ill. App. 284, 28 N.E.2d 343 (abstract of opinion), is an unpublished opinion and has no binding authority as precedent. (People v. Oetgen (1978), 62 Ill. App.3d 29, 378 N.E.2d 1355.) In Dick v. Zimmerman (1904), 207 Ill. 636, the issue of original liability is not addressed by the court; therefore, the case cannot be said to contradict the rule in the Pope County State Bank case. Likewise, we find the case of Throop v. Sherwood (1847), 9 Ill. (4 Gilm.) 92, unpersuasive. In the Throop case, a committee of four men contracted with Sherwood to build a bridge over the Fox River. A written agreement was executed by three of the four men, but not by the defendant Brink. Although Brink did not sign the written agreement, his name was inserted in the body of the writing and he afterward accepted it and acted with the others under it. The work on the bridge was commenced under the written agreement, but later it was orally modified by all of the parties, including Brink. Subsequently, suit was brought by Sherwood for money due based on an account stated. The account was not based upon the monies due under the written contract, because that contract had been orally modified, but rather was based on monies due for work and labor. Thus, it would appear that while the defendant Brink was not liable under the written contract, he was a party to the oral contract of modification. We must conclude, then, that statements made by the Throop court concerning the requirement of original liability which seemed to contradict the decision in the Pope County State Bank case, are comments not on a point in controversy and therefore lacking the authoritative force of a precedent. Mid-American Lines, Inc. v. Industrial Com. (1980), 82 Ill.2d 47, 411 N.E.2d 254.

• 2-4 Finally, while Brach was not originally liable for the December 1972 statement, the defendant Kemnetz clearly was liable; however, it was not Kemnetz, but rather Brach who made the partial payment on account in May of 1973. An agent can, by payment on account, stop the running of the statute of limitations against his principal. This will not occur unless it appears that the party making the payment was the agent of the principal for that purpose. (Joseph v. Carter (1943), 382 Ill. 461, 47 N.E.2d 471.) The question of authority and agency is a fact question and a trier of fact, in this case the trial judge, apparently found that no agency existed. Indeed, there is no direct evidence in the record that Brach was acting for Kemnetz with authority to state the account with Sexton for the 1972 survey. Concededly, that authority or agency could be inferred from the record, but we cannot say that the trial court abused its discretion in failing to draw that inference from the evidence. Furthermore, we do not believe the question of agency was conclusively established as a result of the 1973-1974 litigation. It is true, the circuit court in that case entered a finding that Leonard Kemnetz and Kenneth Brach were joint venturers. However, this finding fails to establish that either venturer was the agent of the other for a particular purpose. In addition, Brach is not estopped by reason of the prior judgment to deny the very existence of an agency relationship. Although he was originally named as a defendant in the lawsuit, he was dismissed as a party prior to judgment. Estoppel by judgment is not binding on a party put out of a case by a dismissal. Miller v. Miller (1914), 263 Ill. 18, 104 N.E. 1078; Lincolnland Properties, Inc. v. Butterworth Apartments, Inc. (1978), 65 Ill. App.3d 907, 382 N.E.2d 1250.

In reaching the conclusions we have, we are mindful of the objects underlying the statute of limitation.

"The purpose of statutes of limitation is to require the necessary litigation to be brought within such time that the particular circumstances may be proved with the utmost certainty and before adequate proof has become stale or entirely lost. Such statutes are intended to compel settlement within a reasonable time and while the truth presumably may be more easily obtained, and to afford a defendant a fair opportunity ...

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