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SPRAYING SYS. CO. v. WILLIAM G. SMART CO.

February 22, 1993

SPRAYING SYSTEMS CO., Plaintiff,
v.
WILLIAM G. SMART COMPANY, INC., Defendant.



The opinion of the court was delivered by: MILTON I. SHADUR

 This action has already reached the final pretrial order ("FPTO") stage, which is the necessary prerequisite to setting the case for trial. Since then the parties have submitted motions in limine that require resolution by this Court so that they may complete their planning for conduct of the trial.

 This Court has now reviewed those motions in detail. They pose some questions that have required a review of all that has gone before in this action. And as a result of that review this Court has become convinced that one critical facet of its earlier analysis was mistaken and therefore requires correction.

 This Court's January 3, 1992 oral ruling denied a motion that plaintiff Spraying Systems Co. ("Spraying Systems") had somewhat inaccurately characterized as one for summary judgment. That oral ruling was then followed a few months later by a written opinion (the "Opinion," 789 F. Supp. 257 (N.D. Ill. 1992)) *fn1" dealing with another aspect of the case. Those two decisions shared a common focus: the operation of certain provisions of the Illinois Dead Man's Act (the "Act," Ill. Rev. Stat. ch. 110, P 8-201 and id. P 8-301), *fn2" and the impact of those provisions on the identity of potential witnesses and on the permitted scope of their testimony. It is essential that this Court deal with those questions because what is at issue in this case is the content of an oral agreement entered into a full quarter century ago in a meeting between William Smart ("Smart"), who is now the principal in defendant William G. Smart Company, Inc. ("Smart Company"), and the now-deceased founder of Spraying Systems, Svend Bramsen ("Bramsen").

 This Court had thus stated in its oral ruling, and had then reconfirmed in the Opinion (en route to its discussion there of whether two prospective witnesses other than Smart would be silenced by provisions of the Act), that Section 8-301 literally barred Smart from testifying as to the content of his 1967 face-to-face negotiation with Bramsen. But some further reflection, triggered by this Court's going back to the point of beginning for purposes of the current motions in limine, has persuaded this Court that the case law in Illinois (which provides the rules of decision in this diversity case) really calls for a different conclusion here. To see why that is so, a brief rehearsal of the gravamen of this case is in order.

 Spraying Systems originally brought this declaratory judgment action in the Circuit Court for the Eighteenth Judicial District, DuPage County, Illinois (from which court Smart removed it to this District Court), seeking this relief:

 
The entry of a binding declaration, having the force of a final judgment, that under the terminated oral contract, Spraying Systems does not have the obligation to pay Smart, and Smart does not have the right to receive, any further commissions, including commissions on shipments into the State of Louisiana of Spraying Systems products purchased after the termination of the parties' oral contract.

 From the very nature of Spraying Systems' Complaint, in which it expressly alleged the existence of an oral agreement and placed the terms of that agreement in issue, Spraying Systems necessarily undertook to establish what the terms of that oral agreement were from its own perspective.

 Under Illinois law there is no question that the burden of proof in a declaratory judgment action in a case such as this rests squarely on the plaintiff. In Board of Trade v. Dow Jones & Co., 98 Ill.2d 109, 115, 456 N.E.2d 84, 87, 74 Ill. Dec. 582 (1983) the Illinois Supreme Court addressed this argument, which was said by the declaratory judgment action plaintiff in that case to be supported by several earlier Illinois Appellate Court decisions:

 
Settled law states the proper rule--the party asserting rights has the burden of proof, and the party alleged to violate those rights who files a declaratory judgment action, is not required to prove a negative.

 After it had characterized that issue as one of first impression on its docket, the Supreme Court responded flatly "We do not agree with plaintiff's contention" (id.). It then went on to explain (id.):

 
Although this court has not considered the specific question, the rule is well stated in International Hotel Co. v. Libbey (7th Cir. 1946), 158 F.2d 717, 721:
 
When an issue of fact is tendered by the complaint and denied by the answer, the plaintiff must prove its complaint, even though it is a complaint for a declaratory judgment. *fn3"

 In this case the issue of fact that is directly tendered by Spraying Systems' Complaint and is denied by Smart Company's Answer is the question whether the oral agreement that was reached by Smart and Bramsen back in 1967 did or did not include a provision for Smart to continue to receive commissions after the termination of his sales representative relationship with Spraying Systems. Thus this action centers around, and its result will be controlled by, what was or was not agreed upon in the key conversation between Smart and Bramsen. *fn4"

 
3. William G. Smart, Jr. and Spraying Systems entered into an oral agreement in 1967 for Mr. Smart to perform duties as a manufacturer's representative for Spraying Systems. Mr. Smart subsequently incorporated William G. Smart Company, Inc. ("Smart"), and continued to perform duties as a ...

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