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Mgt Recruiters v. Proc. & Env. Equipment

OPINION FILED OCTOBER 8, 1985.

MANAGEMENT RECRUITERS OF O'HARE, INC., PLAINTIFF-APPELLANT,

v.

PROCESS AND ENVIRONMENTAL EQUIPMENT UNLIMITED, INC., DEFENDANT-APPELLEE.



Appeal from the Circuit Court of Winnebago County; the Hon. John C. Layng, Judge, presiding.

JUSTICE SCHNAKE DELIVERED THE OPINION OF THE COURT:

Plaintiff, Management Recruiters of O'Hare, Inc. (Management Recruiters), brought this action against defendant, Process and Environmental Equipment Unlimited, Inc. (Equipment Unlimited), to recover a fee for its services in finding a salesman who ultimately became associated with Equipment Unlimited. The complaint alleged that Equipment Unlimited owed the fee pursuant to an oral agreement with Management Recruiters. In its answer Equipment Unlimited denied the allegations regarding breach of contract. It also alleged, as an affirmative defense, that Management Recruiters was barred from recovering its fee because it was not licensed under "An Act to revise the law in relation to private employment agencies * * *" (the Private Employment Agencies Act) (Ill. Rev. Stat. 1983, ch. 111, par. 901 et seq.). The matter proceeded to a bench trial. Following presentation of all the evidence, the court found that under the Act Management Recruiters was not required to be licensed, but that Equipment Unlimited had not entered into a contract with Management Recruiters. Accordingly, judgment was entered in favor of defendant Equipment Unlimited.

Management Recruiters appeals, contending that the trial court's finding that there was no contract was against the manifest weight of the evidence. In defense of the judgment, Equipment Unlimited again raises its contention that Management Recruiters is barred from recovering its fee because it was not licensed under the Act. Equipment Unlimited maintains that the trial court's finding on this issue was contrary to the manifest weight of the evidence.

Before reviewing the facts of this case, it will be helpful to set out the provisions of the Private Employment Agencies Act which were the basis of the affirmative defense. Section 1 of the Act requires employment agencies to procure a license to operate from the Department of Labor. It requires them to file a schedule of fees with the department, and provides that "[i]t shall be unlawful for any employment agency to collect or attempt to collect any compensation for any service not specified in the schedule of fees filed with the department." (Ill. Rev. Stat. 1983, ch. 111, par. 901.) The term "employment agency" is defined in section 11 of the Act as follows:

"[A]ny person engaged for gain or profit in the business of securing or attempting to secure employment for persons seeking employment or employees for employers. However, the term `employment agency' shall not include any person engaged in the business of management consulting or management executive recruiting, and who in the course of such business is retained by, acts solely on behalf of, and is compensated solely by, an employer to identify, appraise or recommend an individual or individuals for consideration for an executive or professional position, provided that: (a) the compensation for each such position is at the rate of not less than $15,000 per year; and (b) in no instance is the individual who is identified, appraised or recommended for consideration for such position charged a fee directly or indirectly in connection with such identification, appraisal or recommendation, or for preparation of any resume, or on account of any other personal service performed by the person engaged in the business of management consulting or management executive recruiting." (Emphasis added.) Ill. Rev. Stat. 1983, ch. 111, par. 914.

At the bench trial plaintiff Management Recruiters called three witnesses on its behalf: Richard Kurz, the president of Management Recruiters, and George Crull and Richard Stafford, former account executives of the firm. Plaintiff also called Richard Ryan, the president of Equipment Unlimited, under section 2-1102 of the Code of Civil Procedure. Ill. Rev. Stat. 1983, ch. 110, par. 2-1102.

Kurz testified that Management Recruiters was an executive search firm located in Des Plaines. It was in the business of finding key people for client companies. In all cases the fee for such service was paid by the client companies. Kurz stated that Management Recruiters always worked on behalf of the employer, not the prospective employee. When asked whether there were any type of jobs in which Management Recruiters did not place people, Kurz replied, "We don't deal below [$]25,000." He acknowledged that the firm was not licensed as an employment agency "pursuant to Illinois state statute," and that it had not filed a fee schedule with the State of Illinois.

Kurz testified that as a placement fee, Management Recruiters charged from 25% of the estimated annual compensation of the employee if such compensation was $25,000, up to 30% if the compensation was $30,000 or above. The fee was payable if the employee was hired.

Crull testified that on March 20, 1980, he placed a telephone call to Ryan, the president of Equipment Unlimited, and asked him whether he needed anyone for a sales position. Ryan told Crull that he did have an opening for a salesman. Crull filled out a job order regarding the sales position with Equipment Unlimited which listed the salary as $25,000 to $30,000. The job order was admitted into evidence. Crull testified that he discussed payment of the placement fee with Ryan and told him that Equipment Unlimited would be responsible for payment. Crull said that it was his practice "to cover the fee schedule [with the client company], to quote the figures based on the * * * anticipated compensation package." He acknowledged that he did not send Ryan a copy of the fee schedule, and that he had no subsequent contact with Ryan and did not know whether the sales position was ever filled.

Stafford testified that when he worked for Management Recruiters, he looked for personnel primarily in the sales field. After finding the job order which Crull had filled out, Stafford telephoned Ryan on June 1, 1982. He told Ryan that he knew someone who had a background that Ryan might be interested in. Ryan indicated that he was interested. Stafford testified that he apprised Ryan of the fee schedule, and that when he outlined the prospective employee's requirements, Ryan stated that there would be no problem paying the fee. When Stafford was asked whether Ryan and he reached a definite agreement as to the amount of the fee, Stafford testified that they reached an agreement as to the percentage of the anticipated compensation. When asked whether Ryan and he reached an agreement regarding anticipated compensation, Stafford replied, "[H]e would not give me an exact amount. It varied."

Following his conversation with Ryan, Stafford telephoned James Stanton, the prospective employee, and apprised him of the possibility of a job with Equipment Unlimited. Because Stanton had question about the equipment he would be selling, Stafford instructed him to call Ryan, and then to let him (Stafford) know what had occurred.

Stafford testified that later that same day he sent a letter to Ryan, along with a copy of the fee schedule. Stafford stated that he believed he sent a copy of Stanton's resume along with the letter. A copy of the letter was admitted into evidence. In the letter Stafford thanked Ryan for taking the time to discuss Stanton, and informed Ryan that Stanton would be contacting him. The letter also provided, "Our fee schedule is attached, which will confirm our phone conversation."

Stafford testified that sometime later he contacted Ryan to see if Stanton had been in touch with him. Stafford subsequently sent Ryan a letter dated June 22, 1982, which was admitted into evidence. That letter purported to summarize what had occurred between Stafford and Ryan up to that point. It stated that in the initial telephone conversation Ryan had told Stafford that "the person in the job should earn $35,000 annually." The letter further stated, "The billing on $35,000 realistic first year earnings is 30% or a total of $10,500 payable within 10 days after he [Stanton] begins employment. If you cannot see your way clear to paying our fee, I would suggest you break off discussions with Mr. Stanton."

Stafford received a letter from Ryan in response, dated June 29, 1982, which was admitted into evidence. In this letter Ryan gave his version of what had occurred up to that point. In the course of that summary, Ryan acknowledged that on the day he was to meet with Stanton, Stafford telephoned him (Ryan) and attempted to explain the fee schedule, "stating something to the effect that your fee would be approximately $10,000 if Jim's salary was approximately $30,000/year — a figure you thought he ...


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