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January 10, 1995


Appeal from the Circuit Court of Du Page County. No. 90-L-1218. Honorable Edward R. Duncan, Jr., Judge, Presiding.

The Honorable Justice Inglis delivered the opinion of the court: McLAREN, P.j., and Geiger, J., concur.

The opinion of the court was delivered by: Inglis

JUSTICE INGLIS delivered the opinion of the court:

Plaintiff, the Law Offices of William J. Stogsdill, P.C., sued defendant, Cragin Federal Bank for Savings (the bank), for losses incurred when the bank allegedly paid unauthorized checks drawn by plaintiff's bookkeeper for her own use. Plaintiff's fifth amended complaint included count III, which alleged that the bank violated the Consumer Fraud and Deceptive Business Practices Act (the Act) (815 ILCS 505/1 (West 1992)). The trial court dismissed count III for failure to state a cause of action. Plaintiff appeals, contending that the court erred in implicitly finding that the Act does not apply to banking practices. We reverse and remand.

Plaintiff's fifth amended complaint alleged that the parties entered into an agreement whereby plaintiff opened two checking accounts at the bank. Defendant represented that it would keep the funds deposited by plaintiff secure, would pay checks drawn on these accounts to the person designated as the payee, and would act according to general banking usage in consideration for plaintiff depositing funds in these accounts. Plaintiff used these two accounts as client trust accounts.

Plaintiff further alleged that from May 1986 through July 1989 its employee, Peggy Abel, negotiated numerous checks drawn on the client trust accounts, which were made payable to plaintiff, and made numerous cash withdrawals from the accounts. In all, Abel obtained more than $115,000 for her own benefit from the accounts. Several of the bank's employees knew Abel personally and knew that she often deposited and withdrew large amounts of cash during a single transaction, often on Saturdays. Abel told the employees that the money was needed for petty cash. Finally, sometime prior to August 1989, Abel persuaded the bank to mail the statements for the accounts to her home address.

In August 1989, plaintiff discovered Abel's unauthorized transactions and notified the bank. Plaintiff demanded that the bank replenish its accounts or reimburse plaintiff for the funds, but the bank refused. Plaintiff then commenced this action.

After numerous pleadings and motions, plaintiff filed its fifth amended complaint. Count I alleged a breach of contract. Count II alleged a breach of the bank's duty pursuant to the Fiduciary Obligations Act (760 ILCS 65/1 (West 1992)). Count III alleged that the bank's conduct violated the Act.

The bank filed a motion to dismiss. It contended that the Actdoes not apply to "banking practices." Alternatively, the bank argued that the Act did not apply to disputes between businessmen who were not consumers of each other's services and did not cover a simple breach of a private contract. Without stating its reasons, the court dismissed count III. Later, the court found that there was no just reason to delay enforcement or appeal of its order dismissing that count. (See Official Reports Advance Sheet No. 26 (December 22, 1993), R. 304(a), eff. February 1, 1994.) Plaintiff perfected this appeal.

The purpose of the Act is to protect consumers, borrowers, and businessmen from fraud and unfair methods of competition. ( Kennedy v. First National Bank (1990), 194 Ill. App. 3d 1004, 1010, 141 Ill. Dec. 659, 551 N.E.2d 1002.) It is to be liberally construed. Kennedy, 194 Ill. App. 3d at 1010.

Plaintiff contends that the court erred in dismissing count III and holding that the Act has no potential application to this situation. Defendant first responds that the court correctly held that the Act does not apply to banking practices.

Defendant does not define "banking practices." The only Illinois case defendant cites in support of its contention is In re Estate of Szorek (1990), 194 Ill. App. 3d 750, 141 Ill. Dec. 510, 551 N.E.2d 697, where the court stated, "The Act, however, does not apply to banking practices, but rather protects a consumer who purchases merchandise or home improvement services for his own use." ( Szorek, 194 Ill. App. 3d at 755.) In Szorek, the plaintiff appealed an award of attorney fees to the defendant bank in an action to recover deposited funds under a right of survivorship. ( Szorek, 194 Ill. App. 3d at 753.) We note that the Appellate Court, First District, neither cited authority in support of this restrictive reading of the Act, nor engaged in any extended analysis of the issue.

Furthermore, the statement appears to be dictum. Scrutinizing the complaint, the court found that it did not state a cause of action, because the signature card involved set forth the terms of the parties' agreement, including the disputed attorney fee provision. ( Szorek, 194 Ill. App. ...

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