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12/09/87 Coupon Redemption, Inc., v. Abdel C. Ramadan

December 9, 1987





518 N.E.2d 285, 164 Ill. App. 3d 749, 115 Ill. Dec. 760 1987.IL.1806

Appeal from the Circuit Court of Cook County; the Hon. Thomas E. Flanagan, Judge, presiding.


JUSTICE FREEMAN delivered the opinion of the court. WHITE, J., concurs. PRESIDING JUSTICE McNAMARA, Dissenting.


Plaintiff, Coupon Redemption, Inc., brought suit in the circuit court of Cook County to recover advances to defendant for store coupons sent to plaintiff for forwarding to the redeeming manufacturers but which were rejected by them. After a bench trial, the court entered judgment for defendant. On appeal, plaintiff contends the judgment is against the manifest weight of the evidence and that its evidence was sufficient to establish a prima facie case of unjust enrichment.

Plaintiff's case in chief consisted of the testimony of its collections inventory supervisor, Rebecca Pharr; defendant, called as an adverse witness; and various exhibits. Plaintiff operates a manufacturers' coupon clearinghouse in El Paso, Texas. It sorts, counts, invoices and submits the coupons to the redeeming manufacturers for its clients, grocery stores whose customers apply the coupons to retail purchases. On May 2, 1983, plaintiff received a "Retailer Service Agreement for Manufacturer Coupons" from Ramadan Food Market, located at 535 W. 120th Street in Chicago. The form contract stated the annual sales of that and another store located at 7000 S. Racine in Chicago at $1,500,000. The contract requested participation in plaintiff's "Instant Money Plan" under which it issues a check for coupons one working day after their receipt. On spaces provided, the name "Abdel C. Ramadan" was printed and the name "Charles Ramadan" was signed.

Under the contract, plaintiff was, inter alia, to use its best efforts to collect on the coupons submitted to the manufacturers and to return or otherwise account for all unredeemed coupons. The contracting grocery store was to submit only coupons received by it in accordance with the terms specified by the manufacturers and, in the event of a manufacturer's rejection of any coupons for any reason other than loss or mishandling by plaintiff, to pay plaintiff the full amount of such coupons plus a $ .05-per-coupon service charge. The contract also authorized plaintiff to deduct the amount of rejected coupons from subsequent payments due the store and to withhold and maintain a security deposit to offset the amount of such coupons.

After receipt of defendant's first shipment of coupons on May 25, 1983, plaintiff requested, by letter, and defendant granted, permission to withhold 50% of the value of subsequent shipments until a deposit of $2,500 was reached. The letter was signed "Abdel Ramadan." On September 22, 1983, plaintiff was notified by various manufacturers that $1,419.38 in defendant's coupons were being rejected because they were auditing defendant's business. Pharr testified an audit meant that the manufacturers were investigating the volume of defendant's sales to protect against fraudulent or excessive submission of coupons. Plaintiff advised defendant of his obligation to repay plaintiff for the rejected coupons and also to deal directly with the manufacturers to obtain payment for the rejected coupons. On October 4, 1983, defendant sent plaintiff a check for $798 in partial repayment of the advances for the rejected coupons but never paid the balance due. On October 14, 1983, defendant sent plaintiff his last shipment of coupons and plaintiff sent defendant its last advance payment. In the following months, plaintiff received additional notices of manufacturers' rejections of defendant's coupons. Plaintiff was unsuccessful in obtaining repayment from defendant for the advances on these coupons and thus began offsetting them from defendant's security deposit, which ultimately totaled $6,000. The total amount of the rejected coupons exceeded defendant's security deposit by $4,485.27 plus a service charge of $575.20. Defendant's failure to repay these amounts resulted in this litigation.

Pharr also testified to the following. Manufacturers take four months to two years to pay for coupons submitted to them. All of defendant's coupons were rejected because of an audit of defendant's business by manufacturers, not because of loss or mishandling by plaintiff. All of the records in defendant's account file, introduced as a group exhibit, were created and maintained in the ordinary course of plaintiff's business. This group exhibit included computer-generated chargeback sheets representing the amounts and invoice numbers of defendant's coupons rejected by various manufacturers. These chargeback sheets are recognized in the industry as evidence of rejected coupons. She had not brought the manufacturers' debit memos, by which they advised plaintiff of rejected coupons, from Texas because there was not enough time and because there were 13,504 of such coupons submitted by defendant listed on several pages of hundreds of items each.

According to Pharr, as part of plaintiff's processing of coupons, certain information, including the date of receipt, the submitting store's name and account number and the redeeming manufacturer's name, is entered into a computer. The computer produces a store pack with this information which is stapled to the coupons. Plaintiff's computer system is an IBM 3800 main frame. She also testified that: she was familiar with the computer's input storage and retrieval methods and its hardware; the system is extremely reliable; it has a system to prevent output errors which proofreads and verifies information; the computer's tape method of information storage is reliable; the computer's printout method of reproducing information is reliable; the information is fed into the computer by someone with knowledge of it, i.e., someone actually looking at the coupons as they feed the information into the computer; the information is fed into the computer at or near the time the coupons are being counted and reviewed; it is plaintiff's regular business practice to make computer printouts and it keeps them in the regular course of its business.

She further testified that when plaintiff receives a debit memo from a manufacturer for rejected coupons it also enters information on such "chargebacks" into its computer. This information includes the amount and face value of the coupons, the reason for rejection in the form of a digit code, the name of the manufacturer, its invoice number and a batch number exclusive to the coupons. All of the chargeback sheets in defendant's account file were originally prepared by the input and output methods previously related at or near the time of the transactions recorded therein, although some of the sheets were reprints prepared for plaintiff's case. The court admitted all of the documents in plaintiff's group exhibit No. 1 into evidence as business records under Supreme Court Rule 236 (107 Ill. 2d R. 236) stating, inter alia, "There is no indication [of] any fabrication or concoction. These records are kept in the ordinary course of business."

As an adverse witness, defendant testified that he purchased the store at 535 W. 120th St., Chicago, in February 1983 and that he owned it along with his brother. He stated that he sold the store in January 1984. He admitted having signed the letter granting plaintiff permission to establish a security deposit, having sent plaintiff coupons, having received checks from it and having sent it payments for rejected coupons. In his case in chief, he denied having signed the retailer service agreement or having entered any other written agreement with plaintiff. He also denied ever having been audited by anyone regarding his coupon business. While he admitted knowledge of a security deposit with plaintiff, he denied ever having been notified that he owed plaintiff money and that it would be taken out of the deposit. In rebuttal, Pharr testified that a store audit involved examination of its size, not its books and records.

In entering judgment, the trial court first found that, while defendant may not have expressly agreed to all the terms of the contract sued upon, his acceptance of benefits under it and his consistent course of conduct in compliance with it resulted in a ratification of its essential terms, thus binding him to it. However, relying on several factors, it nevertheless found for defendant. These factors were: (1) plaintiff's failure to produce any of the manufacturers' notices of rejection of defendant's coupons; (2) certain entries in plaintiff's group exhibit reflected a transfer of deficit or debit amounts between the account for defendant's store, No. 35988, and another account, No. 30440; (3) other entries in the exhibit reflected that a different operator had taken over defendant's store sometime after October 1983; (4) its finding as "somewhat curious" that all the rejections based on manufacturers' audits of defendant's store were not brought to plaintiff's attention until after defendant's security deposit was depleted by deductions for other rejections and a considerable time after he ceased sending coupons to plaintiff in October 1983.

Plaintiff contends its evidence was sufficient to prove a prima facie case and clearly proved it was more probably true than not that defendant was liable to it. It claims the trial court ignored its undisputed evidence and that defendant admitted all of its material allegations and presented no defense. Plaintiff also argues its evidence was sufficient to establish a prima facie case of unjust enrichment, its alternate theory of recovery at trial.

Defendant contends the trial court's judgment is not against the manifest weight of the evidence because plaintiff's evidence was inadequate and unbelievable. He also asserts the trial court properly relied on plaintiff's delay in notifying him of the depletion of his security deposit and the rejections of his coupons because that delay prevented him from investigating the rejections and thus prejudiced him. He notes that it is improper to reverse a trial court's factual determination where a reviewing court merely disagrees with it or would have reached a different Conclusion if it were the trier of fact. Moreover, he notes that a trial court's findings should not be disturbed on review unless they are so clearly wrong as to induce the belief that they resulted from passion, prejudice, mistake, or some means not apparent in the record. ...

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