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03/31/87 Lambert Abell Et Al., v. First National Bank In

March 31, 1987





506 N.E.2d 684, 153 Ill. App. 3d 946, 106 Ill. Dec. 884 1987.IL.401

Appeal from the Circuit Court of Gallatin County; the Hon. Henry Lewis, Judge, presiding.


Justice Kasserman delivered the opinion of the court. Karns, P.J., and Welch, J., concur.


On June 5, 1981, over 100 individual and partnership plaintiffs filed a complaint in the circuit court of Gallatin County, alleging a conspiracy to defraud on the part of the defendants, First National Bank in Shawneetown (Shawneetown) and Bank of Harrisburg (Harrisburg). It was alleged that defendants, together with Bobby Gene Williams (Williams), conspired to defraud plaintiffs. Williams, who was the owner and operator of a grain business in Junction, Illinois, known as Bob Williams Grain Company, was not made a party defendant, however. Each plaintiff's cause of action was alleged in a separate count. Practically all of the plaintiffs alleged separate but virtually identical counts against each bank; however, a few plaintiffs sued only one or the other of the banks. Each count requested compensatory and punitive damages in excess of $15,000. Twenty-one plaintiffs ultimately were dismissed from the suit for failure to comply with discovery as required by Supreme Court Rule 219(c)(v) (103 Ill. 2d R. 219(c)(v)) or on their own motion for voluntary dismissal (Ill. Rev. Stat. 1983, ch. 110, par. 2-1009).

The plaintiffs' unverified complaint alleges that prior to April 6, 1978, plaintiffs sold grain to Williams but had not been paid for the grain. The complaint alleges that Williams had been insolvent for two years prior to April 6, 1978, that Williams knew he was unable to pay for the grain sold to him by plaintiffs during that time, and that Williams intended to defraud plaintiffs. The complaint also alleges that defendants knew of Williams' insolvency for one year prior to April 6, 1978, that Williams was involved in a "check-kiting scheme" at both banks and that both banks knew of the check-kiting scheme. The complaint further alleged that both banks, in agreement with Williams, intended to defraud plaintiffs by: (1) agreeing in August 1977 to allow Williams to continue the check-kiting scheme; (2) failing to report the check-kiting scheme to the appropriate banking authorities in breach of a statutory duty to do so; (3) paying checks on the Bob Williams Grain Company account on occasions in spite of the fact that the account was overdrawn; and (4) loaning money to Williams to continue his fraudulent scheme despite knowledge that Williams was not creditworthy. In addition, the counts against Shawneetown alleged that Shawneetown agreed to allow Williams to use the Shawneetown account in the check-kiting scheme only if Williams did not pay any farmers from that account. Finally, the complaint alleged that Williams was adJudged a bankrupt on April 6, 1978, and that defendants' wrongful conduct was a proximate cause of the plaintiffs' losses.

Defendants' motion to dismiss the complaint was denied; however, on defendants' motions, the circuit court granted summary judgment in favor of both defendants on May 23, 1985. The remaining plaintiffs have perfected the instant appeal.

In order to establish a cause of action for conspiracy to defraud, a plaintiff must allege and prove: (1) a conspiracy; (2) an overt act in furtherance of the conspiracy, in the case at bar a fraud; and (3) damages to the plaintiff as a result of such fraud. See Commercial Products Corp. v. Briegel (1968), 101 Ill. App. 2d 156, 164, 242 N.E.2d 317, 321-22; Cibis v. Hunt (1964), 48 Ill. App. 2d 487, 494, 199 N.E.2d 246, 249.

"A conspiracy is a combination of two or more persons to accomplish by concerted action an unlawful purpose or a lawful purpose by unlawful means." (Celano v. Frederick (1964), 54 Ill. App. 2d 393, 400 n.3, 203 N.E.2d 774, 779 n.3.) The gist of a conspiracy is the overt act committed in furtherance of the conspiracy (Commercial Products Corp. v. Briegel (1968), 101 Ill. App. 2d 156, 164, 242 N.E.2d 317, 321), in the case at bar, a conspiratorial act committed with the intent to defraud.

While there is no general rule for determining what facts will constitute fraud, the concept of fraud includes wrongful intent, i.e., conduct "calculated to deceive." (See Majewski v. Gallina (1959), 17 Ill. 2d 92, 99, 160 N.E.2d 783, 788.) Generally, evidence of concealment, misrepresentation, and wrongful inducement are necessary to prove a conspiracy to defraud. (Commercial Products Corp. v. Briegel (1968), 101 Ill. App. 2d 156, 165, 242 N.E.2d 317, 322.) Because a conspiracy is difficult to prove with direct evidence, it may be established by circumstantial evidence and legitimate inferences therefrom. (Majewski v. Gallina (1959), 17 Ill. 2d 92, 99, 160 N.E.2d 783, 788.) However, proof of civil conspiracy must be clear and convincing if made solely by circumstantial evidence. Tribune Co. v. Thompson (1930), 342 Ill. 503, 529, 174 N.E. 561, 571.

A motion for summary judgment should be granted when the pleadings, depositions, admissions, and affidavits establish that there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law. (Ill. Rev. Stat. 1985, ch. 110, par. 2-1005(c).) Despite almost four years of discovery and a voluminous record, we conclude, as did the circuit court, that plaintiffs have not presented sufficient evidence on the issue of defendants' intent to defraud or the question of proximate cause to withstand defendants' motions for summary judgment.

The relevant and material facts are as follows: There is no dispute that Williams had been engaged in the grain business since 1969 and that he maintained accounts at both defendant banks during this period. Williams used "price later" contracts in his business transactions with some of the grain producers. These contracts allowed Williams to purchase grain from the farmers on credit during harvest season and immediately sell it for cash. The farmers were allowed to price their grain later during the off-season, if they chose, when the market was not glutted, with the prospect that they might receive a better price. Williams and the banks all realized that Williams' cash flow fluctuated accordingly.

The documentary evidence reveals the following about Williams' banking activity at the two banks:

as to Harrisburg:

Bank of Harrisburg (in thousands)

Savings Deposits Checks

Acct. Checking from to

Balance Acct. Monthly Shawnee- Monthly Shawnee-

Date (CDs) Balance Deposits town Checks town

10-01-76 -0- 193 4000 600 4000 177

11-01-76 2300 22 3480 900 3500 435

12-01-76 4300 24 2760 605 2800 210

01-01-77 4100 (2) 6700 1680 6700 1750

02-01-77 2200 -0- 4250 1360 4180 1485

03-01-77 500 73 2100 ...

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