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February 14, 1995



Rehearing Denied June 20, 1995. Released for Publication July 10, 1995.

Presiding Justice Campbell delivered the opinion of the court: Buckley, J., concurs. Hartman, J., dissents.

The opinion of the court was delivered by: Campbell

PRESIDING JUSTICE CAMPBELL delivered the opinion of the court:

Plaintiff J.D. Marshall International, Inc., ("JDMI") appeals orders of the circuit court of Cook County dismissing its amended complaint against defendant First National Bank of Chicago ("Bank") with prejudice and twice denying JDMI leave to file a second amended complaint.

The record on appeal indicates the following facts. Prior to February 1984, JDMI was a subsidiary of the Marshall International Trading Company ("MITCO"), which in turn was a subsidiary of a corporation named Inchscape, Inc. JDMI maintained account number 5103975 at the Bank. In February 1984, JDMI sold substantial assets, including the goodwill of the JDMI name, to the J.D.M. Acquisition Corporation. The selling corporation (the original JDMI) changed its name to Redstart, Inc. and agreed to cease active business under the JDMI name. After the sale, the J.D.M. Acquisition Corporation assumed the JDMI name. As early as February 10, 1984, the Bank was notified of this transaction.

On February 6, 1984, plaintiff sent a letter to the Bank directing the Bank to pay the proceeds of a Venezuelan letter of credit, issued in the name of MITCO, being paid by Insanova, one of plaintiff's customers in Venezuela. Insanova had requested that MITCO be the beneficiary of the letters of credit because MITCO's name had already been submitted to the Venezuelan government agency regulating foreign currency transfers; a change in the named beneficiary would have delayed the transaction for months. Plaintiff agreed toInsanova's request. The letter directed the Bank to wire transfer the proceeds to plaintiff's account at the American National Bank of Chicago ("ANBC"). The Bank was aware that the proceeds were plaintiff's property and paid the proceeds to plaintiff. Redstart had completed similar transactions with Insanova before selling the JDMI name to plaintiff.

On July 27 and August 23, 1984, plaintiff shipped goods to Insanova and were delivered against letters of credit confirmed by the Bank. As with the February 6, 1984, transaction, MITCO was to be the named beneficiary and the funds were be transferred to plaintiff's account at ANBC.

Plaintiff maintains that on July 27 and August 23, 1984, it also submitted drafts for the proceeds of the letters of credit. On October 4, 1984, John Ewing, the president of Redstart, sent a letter to the Bank directing the Bank to transfer the proceeds of the letters of credit to plaintiff's account at ANBC. Plaintiff maintains that John Ewing sent a second letter to the same effect the same day in his capacity as president of MITCO. The Bank then received the documents required to pay the drafts presented under the letters of credit from plaintiff, not MITCO. The Bank accepted these documents on October 5, 1984.

Upon receiving the documents from plaintiff, the Bank notified the Banco Provincial of Caracas, Venezuela, to request authorization to make payment of $154,633.84 and $85,326.72 under the letters of credit. On October 8, 1984, John Ewing sent a letter to the Bank directing that the proceeds should be transferred to Redstart's account at the Northern Trust Bank. Plaintiff did not receive a copy of this letter.

Plaintiff maintains that during October, November and December 1984, no less than twice weekly, plaintiff telephoned the Bank, seeking to trace the proceeds of the letters of credit. The Bank consistently advised plaintiff that there were defects in documentation, delays in presentation, and that the proceeds would be delivered to plaintiff once the drafts were received from Venezuela. In November 1984, the proceeds of the letters of credit, totalling $239,960.56, were deposited in the account maintained by Redstart at the Bank under the JDMI name.

On May 5, 1985, plaintiff filed a complaint against defendant in the circuit court of Cook County, seeking to enjoin defendant from accepting further deposits in plaintiff's name. The trial court entered a preliminary injunction on June 7, 1985. Plaintiff amended the initial complaint to seek money damages for alleged negligence on July 22, 1985.

The case then proceeded until April 7, 1987, when the trial court stayed the matter pending the resolution of a related dispute between plaintiff and Redstart, Inc. On December 20, 1984, plaintiff had filed a demand for arbitration before the American Arbitration Association pursuant to the agreement to sell the JDMI name and export business to plaintiff. (See J.D. Marshall International, Inc. v. Redstart, Inc. (7th Cir. 1991), 935 F.2d 815, 817-18.) The events giving rise to the arbitration and related federal litigation *fn1 are largely those alleged by plaintiff in this action as described above. The arbitration resulted in a net recovery of $38,740.36 for plaintiff, after offsets of amounts owed Redstart. (See J.D. Marshall International, 935 F.2d at 818.) The trial court vacated the stay on January 18, 1989, on plaintiff's motion.

Plaintiff filed the amended complaint at issue on January 9, 1990, in response to the Bank's motion for summary judgment, which was filed on October 30, 1989. The Bank subsequently amended its motion for summary judgment; the motion was stricken by the trial court on May 16, 1991.

The amended complaint contained two counts. The first count contained allegations regarding the Insanova letters of credit. Plaintiff alleged that the Bank had a duty to: (1) inquire into the ownership of the proceeds: (2) refrain from allowing Redstart to maintain an account in the JDMI name after that name was sold to plaintiff; and (3) only honor instructions from JDMI personnel, rather than Redstart personnel, regarding an account with the JDMI name.

Count II of the amended complaint contained additional allegations regarding a wire transfer from another of plaintiff's customers, Alfred Kaut & Co. of Wuppertal-Elberfield, West Germany ("Kaut"). Plaintiff alleged that on April 3, 1985, Kaut notified plaintiff that it had paid $19,734.64 to the Bank, which had been credited to account number 5103975. This account was the one maintained by Redstart under the JDMI name. Plaintiff alleged that the Bank's conduct amounted to willful, wanton and gross negligence, entitling plaintiff to compensatory and punitive damages.

On July 13, 1992, the Bank filed and presented to the trial court seven motions in limine and memoranda in support thereof. On July 17, 1992, the trial court entered an order memorializing rulings the trial court apparently made on July 13, 1992. The trial court did not consider the Bank's first motion in limine on the ground that it was made moot by the trial court's other conclusions. The trial court denied the Bank's second and fourth motion's in limine, which were based on the concepts of estoppel, satisfaction and double recovery, but indicated that the trial court would, if required, give a jury ...

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