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Petty v. Cadwallader





Appeal from the Circuit Court of Coles County; the Hon. Ashton C. Waller, Judge, presiding.


Plaintiff, Thomas O. Petty, a loan broker, filed suit in the circuit court of Coles county on August 22, 1984, against defendants, Dale Cadwallader and Judy Cadwallader, alleging breach of contract for failure to pay the entire fee due to plaintiff for the work he did in procuring a farm loan for them. Defendants, residents of Indiana, filed a special and limited appearance pursuant to section 2-301 of the Code of Civil Procedure (Ill. Rev. Stat. 1983, ch. 110, par. 2-301) claiming that the Illinois courts lacked jurisdiction over them as the complaint failed to allege that they were ever in Illinois or transacted business here. The circuit court granted the motion and quashed the summons served on each of the defendants. Plaintiff appeals and we reverse.

Plaintiff, in his complaint, alleges that he received a telephone call from defendant, Dale Cadwallader, at his office in Oakland, Coles County, Illinois, requesting him to travel to the defendants' residence to discuss a loan application with them. The complaint does not indicate the location of the residence. Although it is not mentioned in the complaint, it is undisputed that defendants resided in Cass County, Indiana.

The complaint further alleges that plaintiff and defendants then entered into an agreement whereby plaintiff would procure a loan commitment for defendants secured by farmland and defendants would pay plaintiff $8,250 for his efforts.

Plaintiff alleges that subsequent to entering into the agreement with defendants, he performed his obligations under the contract by preparing various applications, reports, appraisals and financial statements and making telephone calls and sending letters from his office in Coles County, Illinois, and "as a result" secured a commitment by Travelers Insurance Company for a loan which was made to the defendants. Finally the complaint alleged that defendants have only paid plaintiff $3,000 and have refused to pay more despite the fact that he has performed all of his obligations under the contract.

Plaintiff contends that the circuit court of Coles County obtained jurisdiction of the persons of defendants by the terms of the "long-arm" provisions found in section 2-209(a) of the Code of Civil Procedure, which states in part:

"(a) Any person, whether or not a citizen or resident of this State, who in person or through an agent does any of the acts hereinafter enumerated, thereby submits such person, * * * to the jurisdiction of the courts of this State as to any cause of action arising from the doing of any of such acts:

(1) The transaction of any business within this State." (Emphasis added.) Ill. Rev. Stat. 1983, ch. 110, par. 2-209(a).

The determination of long-arm jurisdiction in Illinois is not limited to the mere inquiry as to whether the "minimum contacts" test of International Shoe Co. v. Washington (1945), 326 U.S. 310, 90 L.Ed. 95, 66 S.Ct. 154, has been met. Our supreme court has held that the standards under the Illinois long-arm statute are more stringent than Federal due process standards (Green v. Advance Ross Electronics Corp. (1981), 86 Ill.2d 431, 436, 427 N.E.2d 1203, 1206). Rather, the due process standard represents only an outer limit beyond which a State may not go in obtaining personal jurisdiction over a nonresident, and a State is free to set narrower standards within these limits. (Cook Associates, Inc. v. Lexington United Corp. (1981), 87 Ill.2d 190, 197, 429 N.E.2d 847.) Therefore, even though a defendant may have engaged in conduct giving rise to "minimum contacts" with this State, personal jurisdiction of the defendant is not obtained unless the statutory standards are met.

Two cases cited by the plaintiff, in which long-arm jurisdiction was found where the defendants never entered Illinois and merely initiated contact with the plaintiff either via telephone or letter, were decided prior to Green and Cook Associates; thus, their decisions were based solely on minimum contacts analysis.

In AAAA Creative, Inc. v. Sovereign Holidays, Ltd. (1979), 76 Ill. App.3d 514, 395 N.E.2d 66, the president of defendant corporation telephoned from New York the plaintiff's corporate president who happened to be in Europe at the time. A contract was entered into at that time in which plaintiff Illinois corporation agreed to accept a photographic assignment to be performed in France providing receipt in its corporate office in Chicago of an advance fee and a written shooting assignment. The court held that minimum contacts were established with Illinois in that: (1) The defendant entered into a contract with an Illinois corporation; (2) the formation of the contract occurred in Chicago upon the receipt of payment and written assignment there; and (3) the fee was to be paid in Illinois. Thus, the defendant voluntarily invoked the protections of the State of Illinois.

The other case was First Professional Leasing Co. v. Rappold (1974), 23 Ill. App.3d 420, 319 N.E.2d 324. Rappold was a California resident who contacted plaintiff corporation in Illinois for the purpose of leasing equipment. The lease contract was executed in Illinois when it was signed in plaintiff's offices; the contract was pledged to an Illinois bank; payments were remitted to plaintiff in Illinois; and defendant signed an Illinois security agreement. Again, minimum contacts with the State were found.

In the instant case, there are no allegations that (1) the contract between the parties was formed in Illinois; (2) the fees were to be paid in Illinois; (3) the ultimate loan transaction took place in Illinois or involved an Illinois resident or Illinois land, or (4) the protection of the State of Illinois was intended to be invoked by defendants as they invited plaintiff to Indiana to negotiate and form their contract. Clearly, the conduct of defendants in merely making a telephone call to plaintiff in Illinois asking plaintiff to come to Indiana to discuss defendants engaging him to procure a loan did not constitute the transaction of business in Illinois by defendants.

However, once the contract between plaintiff and defendants became effective, plaintiff became the agent of defendants for some purposes. The complaint alleged that plaintiff was a "broker" and after performing certain tasks he secured a commitment for a loan which was later made to defendants. The tenor of the complaint is that plaintiff, as a "loan broker," negotiated the offer of the loan for defendants' acceptance. By doing so, he became more than a "finder." (Business Development Services, Inc. v. Field Container Corp. (1981), 96 Ill. App.3d 834, 842, 422 N.E.2d 86, 93.) As broker for defendants, plaintiff became an agent of defendants for the purposes of obtaining the loan commitment. City ...

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