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06/22/87 Bill Bockos Et Al., v. Bill Bockos Et Al.

June 22, 1987

APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, FIRST DIVISION INTERNATIONAL MEAT COMPANY, INC., PLAINTIFF-APPELLEE

v.

BILL BOCKOS ET AL., DEFENDANTS-APPELLANTS (KEY WEST RESTAURANT & LOUNGE, INC., DEFENDANT)



510 N.E.2d 1013, 157 Ill. App. 3d 810, 109 Ill. Dec. 945 1987.IL.863

Appeal from the Circuit Court of Cook County; the Hon. Louis J. Giliberto, Judge, presiding.

APPELLATE Judges:

JUSTICE CAMPBELL delivered the opinion of the court. QUINLAN, P.J., and O'CONNOR, J., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE CAMPBELL

Following a jury trial, defendants, Bill and Harry Bockos, owners of Key West Restaurant & Lounge, Inc. (Key West), were found liable for damages for common law fraud against plaintiff, International Meat Company, Inc., and assessed actual damages in the amount of $42,331.95 and punitive damages in the amount of $43,000. Following the jury's verdict, plaintiff was granted leave to amend its complaint to include a claim for prejudgment interest, which the court awarded in the amount of $8,350. Judgment was then entered on the jury's verdict and the award of prejudgment interest. Thereafter, the trial court denied defendants' post-trial motion seeking the entry of a judgment notwithstanding the verdict (judgment n.o.v.) or, in the alternative, a new trial. On appeal, defendants contend that: (1) the jury's verdict finding them liable for common law fraud was contrary to the manifest weight of the evidence; (2) the trial court erred in refusing to admit into evidence several post-dated checks issued to plaintiff by defendants as payment for meat deliveries which had been honored and paid in September 1981; (3) the cumulative effect of the trial court's errors during the reopening of evidence severely prejudiced defendants; (4) the award of punitive damages was not warranted by the evidence and, in the alternative, was grossly excessive and unreasonable; (5) the award of compensatory damages was not warranted by the evidence and, in the alternative, was grossly excessive and unreasonable; (6) the trial court erred in giving prejudicial and erroneous jury instructions; and (7) the trial court erred in awarding prejudgment interest in favor of plaintiff. For the following reasons, we reverse the judgments of the trial court and remand the cause with directions to enter a judgment n.o.v. with respect to the common law fraud count.

The record sets forth the following facts pertinent to this appeal. Plaintiff, a meat purveyor, had been supplying fresh meat to restaurants owned and operated by defendants for over 20 years. The most recent restaurant owned by defendants was the Key West, incorporated in 1979. Bill Bockos was president of the corporation, and Harry Bockos was the secretary-treasurer.

It is undisputed that defendants had a personal, as well as a business, relationship with Al LaValle, plaintiff's president, for over 25 years. Over the years, a business practice developed between the parties whereby defendants would pay for the meat deliveries to Key West with post-dated checks. If the post-dated checks were returned for insufficient funds, plaintiff would redeposit them. If the post-dated checks were returned a second time, plaintiff would notify defendants and they would issue a replacement check. As a result, defendants were regularly several months behind in their payments to plaintiff. However, because all invoices were eventually paid, plaintiff continued to deliver meat to Key West until mid-October 1981, at which time plaintiff decided that the arrearages were excessive. At the time of trial, plaintiff had been paid in full for all deliveries made up to June 1981. However, Key West owed plaintiff $42,331.95 for meat deliveries which had been made during the period from June 1981 through mid-October 1981.

In late August 1981, plaintiff received three checks from Key West; one was post-dated to October 26, 1981, and two were post-dated to October 30, 1981. These checks were allegedly in payment for deliveries made in June and July. Approximately 5 a.m. on Monday, October 26, 1981, Key West was destroyed by fire. At the time of the fire, receipts from the preceding weekend were in Key West's safe to be deposited the following Tuesday because the bank was closed on Mondays. As a result of the extensive fire damage to Key West, defendants did not gain access to the safe until Thursday, October 29, 1981. When plaintiff attempted to cash the three post-dated October checks, the checks were returned for insufficient funds. Defendants explained to plaintiff that the receipts from the weekend preceding the fire had had to be used to refund deposits which had been made by customers for upcoming holiday parties and weddings. However, defendants assured plaintiff that everyone would be paid. Despite the assurances, plaintiff received no further payments from defendants.

As a result of the nonpayment, on November 24, 1981, plaintiff filed a one-count complaint against Bill and Harry Bockos, individually, alleging that they owed plaintiff $42,331.95 on account. Defendants moved to dismiss the complaint on the grounds that they had not entered into any transactions in a personal capacity with plaintiff. Instead, all transactions had been made by them on behalf of Key West. Plaintiff then amended its complaint to add Key West as a party defendant and to add several counts. The amended five-count complaint alleged the following: count I -- personal liability of Bill and Harry Bockos for $42,331.95 on account; count II -- liability of Key West for $42,331.95; count III -- common law fraud against Bill and Harry Bockos, predicated on the three post-dated October checks which had been returned for insufficient funds; count IV -- common law fraud against Key West; *fn1 and count V -- fraudulent conspiracy of Bill and Harry Bockos and Key West to defraud plaintiff, predicated on an alter ego theory.

At trial, defendants admitted that Key West owed plaintiff for the deliveries made during the period from June 1981 through mid-October 1981, but denied personal liability for those debts and further denied that they had had any intent to defraud plaintiff. Following plaintiff's case in chief, the trial court granted defendants' motion for a directed verdict as to counts III (common law fraud) and V (alter ego), and denied a directed verdict as to count I (personal liability of defendants).

Defendants then proceeded with their defense as to count I, arguing that they had never conducted business with plaintiff in a personal capacity. Following the close of defendants' case, plaintiff moved for reconsideration and vacation of the order which had entered a directed verdict as to count III (common law fraud). The court granted the motion on the ground that the court had improperly intruded upon the function of the jury by determining that custom and usage between the parties negated the claim of fraud.

Following the court's decision to reinstate count III (common law fraud), defendants requested leave to reopen their case so as to present their defense as to fraud. The court limited testimony to matters regarding the fire on October 26, 1981, and prohibited any further testimony as to what the common practice had been between the parties. Thereafter, an October 11, 1985, following closing arguments, the jury rendered a verdict in favor of defendants and against plaintiff as to count I (personal liability of defendants), and in favor of plaintiff and against defendants as to count III (common law fraud), and assessed actual and punitive damages against defendants predicated on count III.

On October 23, 1985, plaintiff requested leave to amend count III of its amended complaint to request statutory interest. Defendant objected on the grounds that the request was beyond anything the jury had considered and had not been sought in the pleadings. Plaintiff responded that the concept of "vexatious and unreasonable delay," the statutory grounds for an award of prejudgment interest, is implicit in an action for fraud. The trial court entered a judgment on the jury verdict and granted the request for prejudgment interest in the amount of $8,350, nunc pro tunc to October 11, 1985. Defendants' post-trial motion seeking entry of a judgment n.o.v. or, in the alternative, a new trial was subsequently denied and defendants' timely appeal followed. No cross-appeal was taken by plaintiff with respect to count I.

Defendants first contend that the trial court erred in denying their post-trial motion seeking judgment n.o.v. or, in the alternative, a new trial on the grounds that the jury's verdict as to count III for common law fraud was contrary to the law and against the manifest weight of the evidence. Defendants argue that their failure to have sufficient funds in the corporate account to cover the post-dated checks was nothing more than a broken promise and that the post-dated checks themselves acted as extensions of credit to defendants from plaintiff. Plaintiff responds that the practice of executing ...


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