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08/22/94 RIVERDALE BANK v. HARRIET PAPASTRATAKOS

August 22, 1994

RIVERDALE BANK, AN ILLINOIS BANKING CORPORATION AND RIVERDALE BANK CORPORATION, INC., AN ILLINOIS CORPORATION, PLAINTIFFS-APPELLANTS,
v.
HARRIET PAPASTRATAKOS, NICK PAPASTRATAKOS, ANDREW NANOS, SOTIRIOS GEORGOPOULOS, AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, A NATIONAL BANKING CORPORATION, AND THE FREEHLING DIVISION OF COWEN & CO., AN ILLINOIS PARTNERSHIP, DEFENDANTS-APPELLEES.



APPEAL FROM THE CIRCUIT COURT OF COOK COUNTY. HONORABLE MONICA D. REYNOLDS, JUDGE PRESIDING.

Released for Publication September 27, 1994.

Campbell, Buckley, Manning

The opinion of the court was delivered by: Campbell

PRESIDING JUSTICE CAMPBELL delivered the opinion of the court:

Plaintiffs-counterdefendants, Riverdale Bank and Riverdale Bank Corporation, Inc., (Bank), appeal four orders of the trial court in connection with their claims against defendant, Nick Papastratakos, (Nick), and defendant-counterplaintiff, Sotirios (Steve) Georgopoulos (Georgopoulos). We affirm.

A. STIPULATED FACTS

The record includes the following stipulated facts. In July 1987, Georgopoulos owned a number of shares of stock in Emerson Radio Corporation. On Friday, July 17, 1987, Georgopoulos gave Andrew Nanos (Nanos) the Emerson stock, endorsed in blank. Nanos delivered the stock to Bernard Newman, an account representative at the Freehling Division of Cowen & Co., (Freehling), a stock brokerage firm. Freehling issued two checks totalling $84,024, each payable to the order of Georgopoulos, each post-dated July 20, 1987.

That same day, Nanos signed Georgopoulos' name on the two checks, and delivered them to Harriet Papastratakos (Harriet). Harriet presented the two checks for payment at Riverdale Bank, and received two cashiers checks, each in the amount of $42,012, and each payable to Pat Striglos and Angie Angelacos.

On or about September 2, 1987, Georgopoulos executed two forgery affidavits, concerning the checks.

B. PROCEDURAL FACTS

The record shows that on or about September 9, 1987, Riverdale Bank received the forgery affidavits. Carrie Broughton, Cashier and Senior Vice President of Riverdale Bank, undertook an investigation of the matter, and subsequently executed a Criminal Referral Form, typing the word "forgery" as the crime committed. Broughton sent the Criminal Referral Form to the Federal Bureau of Investigation, the Office of the United States Attorney, and the Federal Reserve Board.

The Bank then filed a five count complaint for declaratory judgment and other relief against Georgopoulos, Nanos, Harriet, Nick, American National Bank and Trust Company of Chicago, The First National Bank of Chicago, and Freehling. The Bank alleged that Nanos had forged Georgopoulos signatures on the checks, and that Harriet had breached her warranty that the endorsements on the checks were genuine. In addition, the Bank alleged that Nanos was Georgopoulos' agent; that Georgopoulos, Nanos, and Harriet had engaged in a fraudulent conspiracy to defraud the Bank; and thatFreehling and Georgopoulos had acted negligently, pursuant to section 3-406 of the Uniform Commercial Code (UCC). (Ill. Rev. Stat. 1985, ch. 26, par. 3-406.) The Bank sought to enjoin all defendants from collecting money from the Bank.

On April 28, 1988, Georgopoulos moved for summary judgment and requested sanctions against the Bank. On August 15, 1988, the trial court, Judge Roger Kiley presiding, granted Georgopoulos' motion for summary judgment. On August 30, 1988, the trial court entered a default judgment against Nanos and in favor of the Bank for failure to answer its complaint.

Meanwhile, on August 9, 1988, Nick filed a motion to dismiss under Section 2-619 of the Code of Civil Procedure, (Ill. Rev. Stat. 1987, ch. 110, par. 2-619), declaiming any responsibility for the actions of his mother, Harriet. Following a hearing on October 27, 1988, Judge Kiley entered an order dismissing the Bank's claim against Nick. On November 14, 1988, Nick filed a petition for an award of fees and costs pursuant to section 2-611 of the Code of Civil Procedure. Ill. Rev. Stat. 1987, ch. 110, par. 2-611.

Subsequently, Georgopoulos filed a counterclaim against the Bank for conversion. In response, the Bank filed an answer along with affirmative defenses, alleging that Georgopoulos and Nanos were joint venturers, and therefore Nanos had full authority to negotiate on behalf of Georgopoulos and sign Georgopoulos' name to the checks. Georgopoulos filed a motion for summary judgment on the counterclaim which was denied by Judge Kiley's successor, Judge Monica D. Reynolds. Judge Reynolds set Georgopoulos' counterclaim for trial.

C. TRIAL ON GEORGOPOULOS' COUNTERCLAIM

A trial on Georgopoulos' counterclaim commenced on October 19, 1989. Carrie Broughton testified on behalf of Georgopoulos, that she knew Harriet as a customer of the Bank, and had dealt with her individually for several years prior to 1987. In 1986, Broughton personally investigated a $30,000 overdraft on Harriet's account, concluding that it was a "kite," or overdraft. Subsequently, Broughton met with Harriet and informed her that for a specific time forward, the Bank would not honor any checks on her account except on a collected funds basis.

Broughton further stated that on July 13, 1987, Harriet attempted to negotiate a check from Freehling for $19,799.38. Bank records revealed that at that time, Harriet's account privileges were suspended, having been frozen from June 16 through July 15, 1987.

On July 17, 1987, Harriet endorsed as a third party, two checks, each in the amount of $42,012, each payable to Georgopoulos. The Bank did not collect any funds prior to honoring the checks. The Bank honored the two checks, post-dated July 20, 1987, in contravention of Bank policy of not honoring post-dated checks.

Broughton investigated each of the two $42,012 checks when she received a correction to return the money from American National Bank. At the Conclusion of her investigation, Broughton executed a criminal referral report, by typing in the word "forgery" as the description of the incident. Broughton then sent copies of the report to the FBI, the U.S. Attorney, and the Federal Reserve Bank. Broughton stated that she believed that Nanos had forged Georgopoulos signatures on the two checks.

Broughton further stated that during the course of her investigation, she had a conversation with Harriet, which led her to conclude that Georgopoulos and Nanos had entered into a joint venture. However, she admitted that she did not know the legal elements of a joint venture. From that same conversation she further concluded that Nanos had forged Georgopoulos' name on the checks. Broughton took notes of her interview with Harriet, which she attached on continuation pages to the criminal referral form. Broughton had no independent knowledge whether what Harriet told her was the truth. Broughton stated that she knew that the signatures were forgeries because of Georgopoulos' affidavits of forgery she received from American National Bank.

On cross-examination, Broughton stated that under Federal Deposit Insurance Corporation (FDIC) procedures, when the Bank receives affidavits of forgery, it is required to turn the money over to the bank requesting payment. In this case, the Bank did not do that; instead, Broughton contacted legal counsel and the Bank entered into lawsuits.

Georgopoulos testified on his own behalf that he is the manager of the Beef and Brandy restaurant (restaurant) in Countryside, Illinois. ...


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