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06/28/96 STANLEY RACLAW AND FLORENCE RACLAW v. FAY

June 28, 1996

STANLEY RACLAW AND FLORENCE RACLAW, A. CLAUDE BROZE AND ALICE BROZE, SOPHIE KARWATKA, EDMUND KARWATKA, AND MARTHA WALTON, PLAINTIFFS-APPELLEES,
v.
FAY, CONMY AND COMPANY, LTD., AN ILLINOIS CORPORATION, HTO REAL ESTATE SERVICES, INC., AN ILLINOIS CORPORATION; AND JAMES F. GRIFFIN, DEFENDANTS-APPELLANTS.



Appeal from the Circuit Court of Cook County. Honorable Martin C. Ashman, Judge Presiding.

As Corrected June 28, 1996. Rehearing Denied August 8, 1996. Released for Publication August 13, 1996.

The Honorable Justice Braden delivered the opinion of the court: Campbell, P.j., and Buckley, J., concur.

The opinion of the court was delivered by: Braden

The Honorable Justice BRADEN delivered the opinion of the court:

Defendant, Fay, Conmy and Company, Ltd. (Fay, Conmy), appeals from an April 4, 1994, order by the circuit court of Cook County, awarding judgment in favor of plaintiffs, Stanley Raclaw, and Florence Raclaw (the Raclaws), as well as A. Claude Broze and Alice Broze (the Brozes). Fay, Conmy argues that the trial court erroneously held that (1) it was liable for the acts of James Griffin (Griffin) under the theory that it cloaked Griffin with the apparent authority to act on its behalf, and (2) through its acts it provided Griffin with the opportunity to act as an imposter to defraud plaintiffs. Fay, Conmy also argues that the trial court also erroneously awarded attorney fees to the Raclaws and the Brozes under section 10a(c) of the Illinois Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/10a(c) (West 1994)).

We reverse.

The facts disclosed by the record are as follows. Fay, Conmy, a certified public accounting firm, gratuitously allowed Griffin, an attorney, to use its address, offices, and telephones between September 1985 and September 1986. Specifically, Fay, Conmy granted Griffin permission to (1) use vacant office space, as available; (2) utilize the office library; (3) receive telephone calls via its receptionist; (4) make telephone calls; and, (4) receive mail. Griffin was neither employed by Fay, Conmy nor expressly authorized to act as its agent. Nor did Fay, Conmy and Griffin ever enter into any agreement for the lease of any specific office space. The record indicates that sometime during this period Griffin obtained an unknown quantity of Fay, Conmy's business stationery and envelopes.

In October and November 1985, Griffin approached the Raclaws as well as the Brozes, respectively, regarding an investment opportunity. Griffin, brother-in-law of all four individuals, expressly stated to them that he was affiliated with Fay, Conmy, a company which he stated was engaged in the business of marketing financial investments. Specifically, Griffin indicated that Fay, Conmy marketed an interest-bearing mortgage money account offering an attractive return on investment. The record reveals that Griffin expressly instructed the Raclaws and the Brozes to telephone him at his office at Fay, Conmy if they had further interest in such an investment. Griffin then gave both couples Fay, Conmy's main telephone number. Both the Raclaws and the Brozes subsequently telephoned Griffin at the aforementioned telephone number. In each case, these telephone calls were answered by a receptionist with the greeting, "Fay, Conmy and Company." Both the Raclaws and the Brozes asked the receptionist for "James F. Griffin" and were connected with him directly.

The Raclaws and the Brozes ultimately invested money with Griffin and, per his instruction, mailed their checks payable to "James F. Griffin, trustee" directly to his attention at Fay, Conmy, 10 South Riverside Plaza, Suite 1560, Chicago, Illinois. Griffin acknowledged receipt of the monies by sending both the Raclaws and the Brozes a confirmation letter on Fay, Conmy's letterhead. Both the Raclaws and Brozes called Griffin several times at Fay, Conmy's offices, via telephone, to discuss various matters related to their investment. The record indicates that the Raclaws as well as the Brozes also received a subsequent letter reporting the status of their investment, signed by Griffin and printed on Fay, Conmy's business letterhead. The record indicates that instead of investing the money as promised, Griffin deposited the checks into his personal checking account or otherwise converted the monies for his benefit.

The Raclaws and the Brozes subsequently brought an action based on alleged violations of the Illinois Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/2, 10a(a) (West 1994)) to recover damages occasioned by Fay, Conmy's actions, which plaintiffs alleged had cloaked Griffin with apparent authority to act on its behalf.

The first issue raised on appeal is whether the trial court properly concluded that Fay, Conmy's actions cloaked Griffin with apparent authority to act on its behalf in soliciting deposits for an interest-bearing mortgage money account or other financial investment.

The standard of review to apply when a challenge is made to the trial court's ruling, following a bench trial, is whether the trial court's judgment is against the manifest weight of the evidence. Bruss v. Klein, 210 Ill. App. 3d 72, 78, 568 N.E.2d 904, 908, 154 Ill. Dec. 683 (1991). For a judgment to be against the manifest weight of the evidence, the appellant must present evidence that is so strong and convincing as to overcome, completely, the evidence and presumptions, if any, existing in the appellee's favor. Ruggio v. Ditkowsky, 147 Ill. App. 3d 638, 642, 498 N.E.2d 747, 101 Ill. Dec. 423 (1986). The trial court's finding must be given great deference because the trial court has the opportunity to view and evaluate witnesses' testimony and is, therefore, in the best position to evaluate their credibility. De L ong v. Cabinet Wholesalers, Inc., 196 Ill. App. 3d 974, 977, 554 N.E.2d 574, 576, 143 Ill. Dec. 639 (1990).

The existence of an agency relationship is a question of fact ( Matthews Roofing Co. v. Community Bank & Trust Co., 194 Ill. App. 3d 200, 206, 550 N.E.2d 1189, 1193, 141 Ill. Dec. 143 (1990)), and the party asserting the agency has the burden of proving the agency's existence by a preponderance of the evidence ( In re Estate of Maslowski, 204 Ill. App. 3d 379, 383, 561 N.E.2d 1183, 1186, 149 Ill. Dec. 487 (1990)).

An agency relationship created by apparent authority flows from the acts of the principal ( Devers v. Prudential Property &Casualty Insurance Co., 86 Ill. App. 3d 542, 545-46, 408 N.E.2d 462, 465, 42 Ill. Dec. 84 (1980)) and arises when a principal creates, by its words or conduct, the reasonable impression in a third party that the agent has the authority to perform certain acts on its behalf. The principal, having placed the agent in a situation where he may be presumed to have the authority to act is estopped, as against the third persons, from denying the agent's apparent authority. Crawford Savings & Loan v. Dvorak, 40 Ill. App. 3d 288, 292-93, 352 N.E.2d 261, 264 (1976). To prove apparent agency, one must establish (1) that the principal held the agent out as having authority or knowingly acquiesced to the agent's exercise of authority; (2) the third person's knowledge of the facts and his or her good faith belief that the agent possessed such authority; and (3) the third person's reliance on the agent's apparent authority to his or her detriment. Northern Trust Co. v. St. Francis Hospital, 168 Ill. App. 3d 270, 278, 522 N.E.2d 699, 704, 119 Ill. Dec. 37 (1988). In order to establish liability of a principal, the plaintiff must ...


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