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08/31/89 Dennis v. Space

August 31, 1989

DENNIS

v.

SPACE, PLAINTIFF-APPELLANT,

v.

E.F. HUTTON COMPANY, INC., DEFENDANT-APPELLEE



APPELLATE COURT OF ILLINOIS, FOURTH DISTRICT

544 N.E.2d 67, 188 Ill. App. 3d 57, 135 Ill. Dec. 710 1989.IL.1352

Appeal from the Circuit Court of Macon County; the Hon. John L. Davis, Judge, presiding.

APPELLATE Judges:

JUSTICE LUND delivered the opinion of the court. McCULLOUGH, P.J., and GREEN, J., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE LUND

On November 21, 1986, plaintiff Dennis Space filed a complaint against defendant E.F. Hutton, seeking to recover $28,000 he lost on a number of transactions in securities, alleging defendant's agent violated the Illinois Securities Law of 1953 (Securities Law) (Ill. Rev. Stat. 1987, ch. 121 1/2, par. 137.1 et seq.). Pursuant to agreement, the case was submitted to the circuit court of Macon County with plaintiff's discovery deposition and written arguments. On December 6, 1988, the court found for defendant. Plaintiff now appeals.

This action is brought pursuant to the Securities Law, also known as the Blue Sky Law. Section 8 requires every investment advisor and dealer be registered with the Secretary of State. (Ill. Rev. Stat. 1987, ch. 121 1/2, par. 137.8.) Plaintiff began dealing with defendant when plaintiff lived in New Jersey. At the time, defendant's agent, Leonard Bogdan, with whom plaintiff dealt, worked out of the Louisville, Kentucky, office, and was registered in New Jersey. Plaintiff subsequently moved to Illinois and continued dealing with Bogdan, who, as it turns out, was not registered in Illinois. Accordingly, plaintiff is attempting to secure recovery under section 13 of the Securities Law (Ill. Rev. Stat. 1987, ch. 121 1/2, par. 137.13) for all the transactions in which he lost money. Section 13 allows a purchaser of securities, at his election, to void all transactions executed in violation of the law.

The evidence establishes that the majority of questioned transactions involved options transactions on the Standard and Poor's 100 (S&P 100) Index. This is a weighted index of the top 100 stocks on the S&P Index and is traded on the Chicago Board Options Exchange. There were also several stock transactions.

Defendant raised two defenses involved in this appeal. The first was, with regard to the options transactions, that plaintiff was the seller of securities and was not, therefore, entitled to relief. The second was, with regard to the stock transactions, that the Securities Law requires the purchaser to tender the stock in question and, since plaintiff no longer had this stock, he could not complete this requirement. The court agreed with defendant on both counts., Plaintiff first asserts defendant should be foreclosed from asserting these defenses because these are affirmative defenses which defendant did not plead.

Initially, we note plaintiff did not make this argument to the trial court with respect to the allegation of his failure to tender the stock. It is well settled that normally issues raised for the first time on appeal may not be considered by the appellate court or argued on appeal. (Moehle v. Chrysler Motors Corp. (1982), 93 Ill. 2d 299, 303, 443 N.E.2d 575, 577; J.R. Sinnott Carpentry, Inc. v. Phillips (1982), 110 Ill. App. 3d 632, 639, 443 N.E.2d 597, 603.) Thus, this allegation, with respect to defendant's tender argument, is waived.

Section 2-613(d) of the Code of Civil Procedure (Ill. Rev. Stat. 1987, ch. 110, par. 2-613(d)) provides that facts constituting an affirmative defense, which would likely take the opposite party by surprise, must be plainly set forth in the answer. The failure to do so waives the asserted defense. (Spagat v. Schak (1985), 130 Ill. App. 3d 130, 134, 473 N.E.2d 988, 992; Swansea Concrete Products, Inc. v. Distler (1984), 126 Ill. App. 3d 927, 929, 467 N.E.2d 388, 390; Dayan v. McDonald's Corp. (1984), 125 Ill. App. 3d 972, 998, 466 N.E.2d 958, 977.) It cannot be considered even if the evidence suggests the existence of such a defense. Spagat, 130 Ill. App. 3d at 134, 473 N.E.2d at 992; Dayan, 125 Ill. App. 3d at 998, 466 N.E.2d at 977.

The test of whether a defense is an affirmative defense and must be pleaded is whether the defense gives color to the opposing party's claim and then asserts new matter by which the apparent right is defeated. (Worner Agency, Inc. v. Doyle (1984), 121 Ill. App. 3d 219, 222, 459 N.E.2d 633, 635.) The admission of the apparent right is inferable from the affirmative defense. Worner, 121 Ill. App. 3d at 222, 459 N.E.2d at 635; Warren Barr Supply Co. v. Haber Corp. (1973), 12 Ill. App. 3d 147, 148-49, 298 N.E.2d 301, 303.

In Worner, the court addressed whether the failure of consideration and the want of consideration are affirmative defenses. The court explained:

"Under this test the defense of failure of consideration would be an affirmative defense, because the defense impliedly admits the sufficiency of the underlying contract but offers an excuse for the defendant's failure to perform. In contrast, the defense of want of consideration would not constitute an affirmative defense. It does not give color to the plaintiff's claim, but rather ...


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