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05/12/95 REGINALD O'BANNER v. MCDONALD'S

May 12, 1995

REGINALD O'BANNER, PLAINTIFF-APPELLANT,
v.
MCDONALD'S CORPORATION, DEFENDANT-APPELLEE, AND UNKNOWN OWNERS, DEFENDANTS.



Appeal from the Circuit Court of Cook County. Honorable Kathy M. Flanagan, Judge, Presiding.

Rehearing Denied July 5, 1995.

The Honorable Justice Zwick delivered the opinion of the court: McNAMARA, P.j., concurs. Justice Rakowski, dissenting.

The opinion of the court was delivered by: Zwick

JUSTICE ZWICK delivered the opinion of the court:

This is an appeal from the trial court's grant of summary judgment in favor of defendant, McDonald's Corporation (hereinafter "McDonald's Corporation" or "the franchisor"). Plaintiff, Reginald O'Banner, alleged in a single-count complaint that he slipped and fell in a McDonald's restaurant located at 29 East 87th Street in Chicago and that McDonald's Corporation was vicariously liable for the negligence of the restaurant's owners who operated the restaurant through a franchise agreement. The owners of the restaurant ("the franchisees") have never been served and are not parties to this appeal. We are asked to determine whether a franchisor can be liable for the negligence of its franchisees under either an agency or apparent agency theory of liability notwithstanding the existence of agreements between the franchisor and franchisee which expressly disavows an agency relationship.

Plaintiff's complaint alleged that he was injured in a the franchisee's bathroom on February 1, 1990, after he slipped on what he believed to be ice or water. He filed his complaint alleging negligence on January 9, 1992. He claimed that McDonald's Corporation owned or leased, maintained, operated and controlled the franchisee's premises and, as a result of the franchisee's negligence, caused plaintiff's injuries. The trial judge granted McDonald's Corporation's summary judgment motion on March 18, 1993, after a previous judge denied summary judgment on August 20, 1992 and again on November 16, 1992.

Initially, there is some confusion as to the authority upon which plaintiff brings this appeal. On March 18, 1993, the trial court entered an order granting summary judgment in favor of McDonald's Corporation and denied plaintiff's subsequent motion to reconsider on April 23, 1993. These motions ended the litigation and were final and appealable orders pursuant to Supreme Court Rules 301 and 303. In both orders, however, the trial court, for reasons not explained in the record, made Supreme Court Rule 304(a) findings (134 Ill. 2d R. 304(a)). While the plaintiff has stated in his brief that this appeal is brought pursuant to Supreme Court Rule 304(a), we conclude that this appeal is proper only under Supreme Court Rules 301 and 303 (134 Ill. 2d R. 310, 303). Plaintiff referenced these rules in his Notice of Appeal. We proceed accordingly.

Plaintiff claims that the trial court improperly granted summary judgment because there is sufficient evidence in the record to indicate that the relationship between McDonald's Corporation and its franchisee was such that the franchisee was the McDonald's Corporation's actual agents. At the very least, plaintiff claims, there is a genuine issue of fact as to whether the franchisees were McDonald's Corporation's apparent agents.

In Illinois, summary judgment is governed by the provisions of section 2-1005 of the Code of Civil Procedure. (735 ILCS 5/2-1005 (West 1992).) Summary judgment is recognized to be a drastic remedy which is properly granted only where the movant's right to it is clear and free from doubt. ( Vicorp Restaurants v. Corinco Insulating Co. (1991), 222 Ill. App. 3d 518, 584 N.E.2d 229, 165 Ill. Dec. 50.) The purpose of the summary judgment procedure is to determine whether there are any genuine issues of material facts between the parties. ( Vallejo v. Mercado (1991), 220 Ill. App. 3d 1, 580 N.E.2d 655, 162 Ill. Dec. 692.) Summary judgment should be granted only if the pleading, depositions, admissions and affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. ( Dash Messenger Service, Inc. v. Hartford Insurance Co. (1991), 221 Ill. App. 3d 1007, 582 N.E.2d 1257, 164 Ill. Dec. 313.) Review in the appellate court of a grant of summary judgment is de novo. Outboard Marine Corp. v. Liberty Mutual Insurance Co. (1992), 154 Ill. 2d 90, 102, 607 N.E.2d 1204, 180 Ill. Dec. 691.

The doctrine of respondeat superior allows an injured party to hold a principal vicariously liable for the conduct of his or her agent. ( Moy v. County of Cook (1994), 159 Ill. 2d 519, 523, 640 N.E.2d 926, 203 Ill. Dec. 776.) The issue whether one is an agent or an independent contractor is generally a question of fact, unless the relationship is so clear as to be undisputed. ( Gasbarra v. St. James Hospital (1979), 85 Ill. App. 3d 32, 43, 406 N.E.2d 544, 40 Ill. Dec. 538.) Whether an actual agency has in fact been created is determined by the relations of the parties as they exist under their agreements or acts, with the question being ultimately one of intention. 3 Am. Jur. 2d, Agency ยง 21 (1986). *fn1

The record in this case establishes that the franchisees who owned and operated the restaurant located at 29 East 87th Street in Chicago were not McDonald's Corporation's actual agents. An agency relationship is a consensual one between two legal entities whereby: (1) the principal has the right to control the conduct of the agent, and (2) the agent has the power to effect the legal relations of the principal. ( State Security Insurance Co. v. Frank B. Hall & Co. (1994), 258 Ill. App. 3d 588, 595, 630 N.E.2d 940, 196 Ill. Dec. 775.) The legal relationships between the defendants in this case are delineated by the written agreements which exist between them. Their relationship is that of lessor/lessee, licensor/licensee and franchisor/franchisee, but not principal/agent. While plaintiff has alleged otherwise, the affidavits and supporting documents contained in the record establish that McDonald's Corporation was not the owner or operator of the subject restaurant. The operator's lease, the license agreement and the franchise agreement for the restaurant which were in place at the time of plaintiff's accident clearly and undisputedly establish the lack of an actual agency relationship between McDonald's and its franchisee. Both the license agreement and operator's lease specifically and unequivocally state that the owners of the restaurant are not given authority to act as an agent for McDonald's Corporation and that the owners of the restaurant would alone be liable for any injuries occurring on the premises. There are no facts in the record which would indicate that this agreement was not followed, despite the extensive obligations placed upon the restaurant's operations by and in favor of McDonald's Corporation through its various agreements with the franchisee.

In contrast, the question of whether the franchisees were McDonald's apparent agents is not nearly so clear. An apparent agent is a person who, whether authorized or not, reasonably appears to third persons to be authorized to act as an agent. ( Mitchell Buick & Oldsmobile Sales, Inc. v. National Dealer Services, Inc. (1985), 138 Ill. App. 3d 574, 485 N.E.2d 1281, 93 Ill. Dec. 71.) The doctrine of apparent agency is based on the doctrine of equitable estoppel. ( Northern Trust Co. v. St. Francis Hospital (1988), 168 Ill. App. 3d 270, 522 N.E.2d 699, 119 Ill. Dec. 37.) An apparent principal that places an apparent agent in a situation where that "agent" may be presumed to have authority to act is estopped as against a third party from denying the authority. ( Crawford Savings & Loan Association v. Dvorak (1976), 40 Ill. App. 3d 288, 292-93, 352 N.E.2d 261.) The elements of apparent agency are most often set out in Illinois as being: (1) the principal's consent to or knowing acquiescence in the agent's exercise of authority, (2) the third party's knowledge of the facts and good-faith belief that the agent possessed authority, and (3) the third party's detrimental reliance on the agent's authority. Weil, Freiburg & Thomas, P.C. v. Sara Lee Corp. (1991), 218 Ill. App. 3d 383, 390, 577 N.E.2d 1344, 160 Ill. Dec. 773; Northern Trust Co., 168 Ill. App. 3d at 278.

The three elements listed above are not easily applied to the tort situation such as the one presented by this case. They appear to have evolved from contract cases. (See Gilbert v. Sycamore Municipal Hospital (1993), 156 Ill. 2d 511, 524, 622 N.E.2d 788, 190 Ill. Dec. 758 ("It is true that the doctrine of apparent authority is more commonly applied in contract cases").) Recently, however, the supreme court set out the elements of apparent agency which govern the tort situation which arises when a hospital patient is harmed by the tortious conduct of the hospital's independent contractor. ( Gilbert, 156 Ill. 2d at 525.) In order to hold the hospital vicariously liable for the contractor's actions, the court determined the plaintiff must show: (1) the hospital, or its agent, acted in a manner that would lead a reasonable person to conclude that the individual who was alleged to be negligent was an employee or agent of the hospital; (2) where it is the acts of the alleged apparent agent that create the appearance of authority, that the hospital had knowledge of and acquiesced in those actions; and (3) that the plaintiff acted in reliance upon the conduct of the hospital or its alleged agent, consistent with ordinary care and prudence. Gilbert, 156 Ill. 2d at 525.

We see no reason to limit the apparent agency theory of vicarious liability as set out in Gilbert to a hospital setting. Just as patients naturally depend upon their chosen hospital to supervise and take responsibility for the conduct of those who work within the facility, it is logical to conclude that many members of the public have come to believe that franchisors such as McDonald's Corporation are ultimately responsible not only for the quality of the food, but also for the condition of the premises in which it is served. McDonald's Corporation's extensive and visible reach into every aspect of its franchisee's businesses makes such a belief natural. The license agreement included in the record ...


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