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03/14/97 HADDAD'S ILLINOIS v. CREDIT UNION 1 CREDIT

March 14, 1997

HADDAD'S OF ILLINOIS, INC., AN ILLINOIS CORPORATION, PLAINTIFF-APPELLANT,
v.
CREDIT UNION 1 CREDIT UNION, AN ILLINOIS CHARTERED FINANCIAL INSTITUTION, DEFENDANT-APPELLEE.



Appeal from Circuit Court of Sangamon County. No. 93L323. Honorable Jeanne E. Scott, Judge Presiding.

Rule 23 Order Redesignated Opinion and Ordered Published April 11, 1997. As Corrected September 16, 1997.

Honorable James A. Knecht, J., Honorable John T. McCullough, J., - Concur, Honorable Rita B. Garman, J. - Concur. Justice Knecht delivered the opinion of the court.

The opinion of the court was delivered by: Knecht

JUSTICE KNECHT delivered the opinion of the court:

Plaintiff, Haddad's of Illinois, Inc., filed a conversion action against defendant, Credit Union 1 Credit Union, alleging Raja Raychouni, an employee of plaintiff, forged endorsements on checks payable to plaintiff and defendant deposited them into the account Raychouni opened with defendant. Defendant filed a motion for summary judgment, alleging plaintiff's cause of action was barred by the applicable statute of limitations and plaintiff did not have standing to sue defendant because it had no interest in the allegedly converted checks. The trial court granted defendant's motion, finding plaintiff's action barred by the statute of limitations. Plaintiff appeals. We affirm.

Plaintiff is a wholly owned subsidiary of the CATS Company (CATS), a Michigan corporation. CATS supplies computer equipment and supplies to its customers. In 1987, CATS contracted with the State of Illinois (State) to supply computer equipment and services to various state agencies. At that time CATS opened an office in Springfield in order to service the various state agencies.

Plaintiff incorporated in Illinois in 1989. On December 6, 1989, the board of directors of CATS executed a "Consent Resolution" making plaintiff a "joint owner" of any check payable to CATS regarding business operations in the State. Pursuant to the resolution, CATS gave plaintiff the right to "accept, endorse, deposit, and otherwise make use of" any check tendered for services performed by either plaintiff or CATS in connection with business in the State.

Under the terms of the State's contract with CATS, all payments were to be sent to CATS' office in Michigan. In addition, the invoices sent by CATS to the State gave the same instructions. Neither CATS nor plaintiff conducted any banking in Illinois and neither opened an account at any bank or credit union within the State.

On March 7, 1988, CATS hired Raychouni as branch manager of its Springfield office. Raychouni served in that capacity until July 2, 1990. Raychouni received purchase orders from the State and forwarded them to CATS in Michigan. CATS would then ship the products to its Springfield office for delivery.

During the period of time between March 1988 and May 1990, the State mailed checks in payment for its orders from CATS to its Springfield office instead of sending the payments to Michigan. Raychouni failed to forward the checks to CATS' home office and apparently forged the endorsement of CATS on the checks and deposited them into his personal account with defendant.

Jacques Haddad, president of CATS, was aware of every purchase made by the State. Albert Haddad, vice president of CATS, was in charge of making sure CATS got paid for products it sold. He checked to make sure invoices were paid, and he knew if they were not paid. As early as October 1988, he knew there were invoices to the State for which CATS had not received payment.

Raychouni maintained banking accounts with defendant. Plaintiff contends on July 3, 1990, Raychouni admitted to Jacques he had deposited a $14,000 check issued by the State and payable to CATS into an account with defendant. Plaintiff's complaint alleges this happened a number of times during Raychouni's employment.

Plaintiff contends Raychouni continued to deposit checks into his account with defendant until May 1991, based upon the transaction stamp on the back of three of the checks. The checks were issued by the State in April and May 1990, but the stamp on the back of each is blurry and could read either 1990 or 1991. Albert stated in discovery, however, he believed Raychouni left the United States in 1990.

The three checks show they were deposited into account No. 425671. Defendant's records for that account show deposits in the same amounts as the subject checks were made in May 1990. Further, account No. 425671 was closed in August 1990 due to a negative balance and was cleared from ...


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