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01/13/87 Linda Christensen Et Al., v. Numeric Micro

January 13, 1987

LINDA CHRISTENSEN ET AL., D/B/A CHREST ENTERPRISES, PLAINTIFFS-APPELLANTS

v.

NUMERIC MICRO, INC., ET AL., DEFENDANTS-APPELLEES



APPELLATE COURT OF ILLINOIS, SECOND DISTRICT

503 N.E.2d 558, 151 Ill. App. 3d 823, 104 Ill. Dec. 843 1987.IL.23

Appeal from the Circuit Court of Kane County; the Hon. John L. Petersen, Judge, presiding.

APPELLATE Judges:

JUSTICE REINHARD delivered the opinion of the court. LINDBERG, P.J., and HOPF, J., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE REINHARD

Plaintiffs, Linda and Charles Christensen, doing business as Chrest Enterprises, appeal from the dismissal for failure to state a cause of action pursuant to section 2-615 of the Code of Civil Procedure (Ill. Rev. Stat. 1985, ch. 110, par. 2-615) of counts III and IV of their first amended complaint against defendant, Master Lease Corporation.

Plaintiffs raise three issues on appeal: (1) whether count III of their first amended complaint states a cause of action against Master Lease, an equipment lessor, under section 2B of the Consumer Fraud and Deceptive Business Practices Act (Ill. Rev. Stat. 1985, ch. 121 1/2, par. 262B) where the equipment lease did not give plaintiffs notice of the right to cancel the transaction; (2) whether count IV of their first amended complaint states a cause of action under a third-party beneficiary theory for breach of contract between Master Lease and the manufacturer of the equipment; and (3) whether the trial court erred in dismissing the complaint with prejudice without permitting plaintiffs to amend the complaint.

Plaintiffs filed their original three-count complaint against defendants Numeric Micro, Inc., a Texas corporation (Numeric Texas), Numeric Micro of Illinois (Numeric Illinois), and Master Lease. The complaint alleged that plaintiffs, who own and operate Chrest Enterprises, a sole proprietorship located in Aurora, Illinois, purchased a numerical control processing system, or computer system, from Numeric Illinois. To finance the transaction, plaintiffs executed an equipment lease with Master Lease on the advice of Numeric Illinois. Plaintiffs alleged that Master Lease purchased the system from Numeric Illinois and Numeric Texas, and that plaintiffs entered into an equipment lease with Master Lease, a copy of which was attached to the complaint.

Plaintiffs alleged that they were not given notice of the opportunity to cancel this transaction in violation of the Consumer Fraud and Deceptive Business Practices Act (Act) (Ill. Rev. Stat. 1985, ch. 121 1/2, par. 262B) and will therefore, as members of the public, become subject to great expense and burden if they are required to continue to pay Master Lease for equipment that does not work. Plaintiffs requested a declaratory judgment pursuant to section 2-701 of the Code of Civil Procedure (Ill. Rev. Stat. 1985, ch. 110, par. 2-701) that the lease agreement is of no force and effect because it is in violation of the Act and that plaintiffs have no further obligation to make payments pursuant to the lease agreement with Master Lease. Plaintiffs also requested that Master Lease be enjoined from collecting any further payments under the lease and that they be awarded attorney fees.

The lease agreement provides, in pertinent part, that the lease commenced January 31, 1984, that it was not intended for home or personal use, and that 61 monthly payments were due from the plaintiffs to Master Lease, a first payment of $4,366.44 and 60 payments of $448.35. The rent payments were to commence on the date of delivery of the described computer system to plaintiffs from Numeric Texas. The lease further stated that Master Lease expressly disclaimed all warranties, expressed or implied, with respect to the leased equipment, that Master Lease "has made no representation or warranty with respect to the suitability or durability of the equipment," and that "[t]his is a non-cancellable lease for the full term shown above."

A copy of a "guaranty" agreement between plaintiffs and Master Lease, signed the same day, was also attached to the complaint. It stated that plaintiffs "absolutely and unconditionally, [guaranty] [ sic ] to the Lessor and any assignee of the Lessor . . . the prompt payment of all rent to be paid and the performance of all terms, conditions, covenants and agreements of the lease, irrespective of any invalidity or unenforceability thereof or the security thereof."

Plaintiffs alleged that, at the time the system was delivered, it would not operate, and, when started, it began smoking. They further alleged that the system does not work and has never worked, and that both Numeric Texas and Numeric Illinois have refused to repair or replace the system.

Counts I and II of the complaint alleged the breach of warranties by Numeric Texas and Numeric Illinois. Count III alleged a violation of section 2B of the Act (Ill. Rev. Stat. 1985, ch. 121 1/2, par. 262B) by both Numeric companies and Master Lease. Numeric Illinois has never appeared in these proceedings, and Numeric Texas' attorneys have withdrawn from the case. Neither Numeric company is a party to this appeal.

Count III of the complaint was dismissed as against Master Lease pursuant to its motion to dismiss under section 2 -- 615, and plaintiffs were granted leave to amend the complaint. They filed a first amended complaint which essentially restated the original count III and added the allegations that Master Lease had contacted plaintiffs and that plaintiffs had telephoned Master Lease on the advice of Numeric Illinois. Plaintiffs ...


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