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01/29/88 Central Blacktop Company, v. the Town of Cicero Et Al.

January 29, 1988

CENTRAL BLACKTOP COMPANY, INC., PLAINTIFF-APPELLANT

v.

THE TOWN OF CICERO ET AL., DEFENDANTS-APPELLEES (THE TOWN OF CICERO EX REL. CENTRAL BLACKTOP COMPANY, INC., PLAINTIFF-APPELLANT,

v.

MUNICIPAL PAVING



Before the close of the trial, Central offered a 15-page summary into evidence, which it contends is a listing by North American Road Builders of all outstanding account balances with Central as of the end of 1981. In rebuttal, Goelitz testified that these summary lists were prepared as internal office summaries and that they were not given to Central at any time. Nevertheless, Central offered these summaries as proof that as of the end of 1981, North American Road Builders records showed that all of the Cicero invoices remained unpaid. Central also referred to two check stubs, which directed payment of two February 1982 checks to Cicero's account.

APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, FIFTH DIVISION

Company et al., Defendants-Appellees)

519 N.E.2d 972, 166 Ill. App. 3d 260, 116 Ill. Dec. 757 1988.IL.104

Appeal from the Circuit Court of Cook County; the Hon. Rosemary Duschene LaPorta, Judge, presiding.

APPELLATE Judges:

JUSTICE LORENZ delivered the opinion of the court. SULLIVAN and MURRAY, JJ., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE LORENZ

This action was brought by Central Blacktop Co., Inc. (Central), against the Town of Cicero, a municipal corporation (Cicero), and Municipal Paving Co. and North American Road Builders, a joint venture (joint venture), and Fidelity & Deposit Company of Maryland (Fidelity). The complaint sought money due on a public road construction project. Central sued the joint venture and Cicero for the sum of $103,614.251 for paving materials and labor. It also sued Fidelity for relief under the bond that had been posted and for bad faith in not settling the claim.

After trial the circuit court entered judgment in favor of defendants, holding that the plaintiff had been paid in full but had misapplied the funds. It also granted Fidelity's motion for summary judgment on the bad-faith count of plaintiff's complaint.

Central appeals from the judgment order entered against it and seeks reversal of that order. On appeal Central raises the following issues: (1) whether the trial court abused its discretion in finding that Central knew of the source of the payment; (2) whether a "special equity" existed between Cicero and Central; and (3) whether there exists a material issue of fact as to surety's conduct of alleged bad faith in investigating Central's claim.

The joint venture was a general contractor hired by Cicero to perform road construction. Central was the subcontractor that provided labor and materials to the road construction project. It is undisputed that Cicero tendered a check to the joint venture for such work. The joint venture contends that such payment was then made to Central with the understanding that the payment was to be applied to the Cicero account. Whereas Cicero contends that it received direction to apply such funds to other outstanding balances owed to Central by the joint venture.

The following facts are pertinent to our Disposition of this cause. Central filed a complaint seeking recovery for paving materials and labors furnished for a road construction project in the Town of Cicero (project). Count I of Central's complaint sought to foreclose a mechanic's lien against public funds pursuant to section 23 of the Illinois Mechanics' Liens Act. (Ill. Rev. Stat. 1985, ch. 82, par. 23.) Count II of the complaint sought recovery on the payment bond written by Fidelity and posted for the project pursuant to the requirements of sections 1 and 2 of "An Act in relation for bonds . . ." (the Illinois Bond Act.) (Ill. Rev. Stat. 1985, ch. 29, pars. 15, 16). Count III of Central's complaint alleged a breach of contract action by the joint venture, which had contracted with Central to furnish the road paving materials and labor.

All defendants filed answers to Central's complaint. In addition, Fidelity filed third-party complaints for indemnification against certain persons who had agreed to indemnify it against loss on the bond. During the pendency of these proceedings and prior to commencement of the trial, the joint venture filed for bankruptcy. Central obtained a modification of the stay order allowing this matter to proceed.

When discovery was completed, Fidelity and Cicero filed amendments to their answers to Central's complaint. These defendants raised the affirmative defenses of application of payments and special equity. It was alleged that Cicero made a payment under its contract with the joint venture on November 18, 1981, in the amount of $145,000. Defendants further alleged this payment was deposited into the checking account of North American Road Builders, Inc., and was the source of the funds that paid a $111,555.67 check of North American dated November 17, 1981, which was allegedly issued and delivered to Central in payment for labor and materials furnished by Central for the project. Fidelity and Cicero maintained they had a special equity in these ...


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