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09/27/89 the People of the State of v. Jerald Davis

September 27, 1989





545 N.E.2d 774, 189 Ill. App. 3d 815, 137 Ill. Dec. 121 1989.IL.1504

Appeal from the Circuit Court of McDonough County; the Hon. Stephen G. Evans, Judge, presiding.


JUSTICE SCOTT delivered the opinion of the court. HEIPLE and STOUDER, JJ., concur.


Defendant Jerald Davis appeals from the judgment entered by the circuit court of McDonough County following jury verdicts of guilty on four counts of theft as defined in section 16-1(a)(1) of the Criminal Code of 1961 (Ill. Rev. Stat. 1987, ch. 38, par. 16-1(a)(1)). Davis was sentenced to 30 months' probation, 30 days' periodic imprisonment in the McDonough County jail, and ordered to pay restitution in the amount of $3,088.16.

Davis, a licensed insurance producer, was engaged in the practice of writing credit life and/or disability insurance policies insuring loan customers of the First National Bank of Macomb. The bank was primary beneficiary of the policies, and the policies were financed by adding the premium to the sum borrowed. Commissions were paid either to the bank when it initiated the sale of the policies, or to other entities, e.g., a retailer whose installment contracts were sold to the bank and provided for purchase of a policy, when they initiated the sale.

The record reveals if a borrower agreed to purchase a policy at the bank's initiation, the bank calculated the premium and added it to the loan balance. The premium, minus the bank's commission, then would be deposited into Davis' escrow accounts when the loan proceeds were disbursed. Davis' escrow accounts were maintained at the bank, and its officers would deposit the premium directly into his account. Information needed to issue the policy, e.g., borrower's name, address, age, and terms of the loan, would be provided by Davis and he would forward the net premium and policy application to the insurance company for policy issuance.

If another entity initiated the sale of a policy through its retail installment contract, the bank would issue a money order payable to the entity for the premium at the time the bank purchased the contract. The entity then would pay Davis the premium minus its commission. In the latter instance, the record is unclear as to whether the entity or the bank assumed responsibility for providing Davis with information concerning the borrower and loan required to obtain issuance of a policy.

In an effort to collect an indebtedness Davis owed the bank on a delinquent real estate loan, the bank applied a set off against his insurance escrow accounts closing the accounts in their entirety in the late summer of 1985. Following discovery, in May of 1985, that certain borrowers' credit insurance policies had not been issued, the bank reported the matter to the McDonough County State's Attorney's office for criminal prosecution. The bank, however, did not demand that Davis cover the losses it incurred, e.g., refund of unearned premium, cost of obtaining new policies, payment of death claim, etc., following its discovery of the non-issuance of certain policies.

On August 5, 1986, Davis was charged with 13 counts of theft in violation of section 16-1(a)(1) of the Criminal Code of 1961-"Theft" (Ill. Rev. Stat. 1987, ch. 38, par. 16-1(a)(1))-and 13 counts of breach of fiduciary duty in violation of section 508.1 of the Illinois Insurance Code-"Fiduciary Duties" (Ill. Rev. Stat. 1987, ch. 73, par. 1065.55-1) from his failure to procure insurance policies for certain loan customers after premium deposits were made either directly to his escrow account by the bank, or deposited by him from funds received from other entities. All counts of breach of fiduciary duty and all but five counts of theft were dismissed prior to trial.

At Davis' arraignment and in response to his motion for disclosure pursuant to Supreme Court Rule 412, "Disclosure to Accused" (107 Ill. 2d R. 412), a pretrial discovery order was entered for both Davis and the prosecution. Davis objected to the order granting discovery to the prosecution on grounds the People's oral motion for discovery did not comply with Supreme Court Rule 413(d), "Disclosure to Prosecution-Defenses" (107 Ill. 2d R. 413(d)), requiring a written motion. During a protracted motion practice wherein the People continuously moved for compliance with the entered order and with Davis objecting to the same, Davis supplemented his refusal to comply on grounds the order granting the People discovery violated his rights under the fifth, sixth, and fourteenth amendments of the United State Constitution (U.S. Const., amends. V, VI, XIV), article I, sections 2, 8, and 10, of the Illinois Constitution of 1970 (Ill. Const. 1970, art. I, §§ 2, 8, 10), and section 3-1 of the Criminal Code of

On January 22, 1988, the trial court ordered Davis to comply on or before January 25 with the order entered at the arraignment or suffer exclusion of any evidence subject to disclosure under the terms of the order. He thereafter filed a motion for reconsideration or continuance and set the motion for hearing on January 28. Upon learning of the decision entered in Taylor v. Illinois (1988), 484 U.S. 400, 98 L. Ed. 2d 798, 108 S. Ct. 646, permitting exclusion of defense witnesses for violation of discovery orders, Davis informed the People on January 27 he would comply with the discovery order. In response thereto, the People filed a motion in limine requesting, inter alia, that Davis be precluded from presenting testimony from witnesses not disclosed by January 25.

At hearing on both motions, Davis submitted a list of character witnesses and advised the trial court the witnesses would testify only as to his reputation and honesty in business affairs. The trial court denied Davis' motion for reconsideration or continuance and granted the People's motion in limine. No showing of prejudice resulting from Davis' failure to comply was made by the People and the ...

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