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Kirkruff v. Wisegarver

August 17, 1998

JO ANN KIRKRUFF AND JAMES L. ARMSTRONG, AS TRUSTEES OF THE HELEN B. ARMSTRONG FAMILY TRUST, PLAINTIFFS-APPELLEES AND CROSS-APPELLANTS,
v.
TAD WISEGARVER, D/B/A TAD WISEGARVER REAL ESTATE, DEFENDANT-APPELLANT AND CROSS-APPELLEE.



The opinion of the court was delivered by: Justice Steigmann

IN THE COURT OF APPEALS OF THE STATE OF ILLINOIS

Appeal from Circuit Court of Champaign County No. 94L1843

Honorable Arnold F. Blockman, Judge Presiding.

In December 1994, plaintiffs, Jo Ann Kirkruff and James L. Armstrong, as trustees of the Helen B. Armstrong Family Trust (the Trust), filed suit against defendant, Tad Wisegarver, alleging, inter alia, that Wisegarver breached his fiduciary duty (count I) and violated the Consumer Fraud and Deceptive Business Practices Act (Act) (815 ILCS 505/1 et seq. (West 1994)) (count III) in his capacity as their real estate broker. (The trial court later granted plaintiffs' motion to voluntarily dismiss the remaining three counts.) In February 1997, the trial court contemporaneously conducted a jury trial as to count I and a bench trial as to count III. A jury subsequently returned a verdict in plaintiffs' favor on count I and awarded $58,200 in damages. In June 1997, the trial court found as a matter of law that damages totaled $90,324.74 (Wisegarver's stipulated net profits) and entered judgment in that amount on count I. The court also entered judgment in Wisegarver's favor on count III.

Wisegarver appeals, arguing that the trial court erred by (1) denying his motions for directed verdict and judgment n.o.v. because the evidence failed to show that (a) a fiduciary relationship existed, (b) Wisegarver breached his fiduciary duty, or (c) Wisegarver's breach of fiduciary duty proximately caused plaintiff's injury; and (2) entering judgment in plaintiffs' favor on count I in an amount exceeding the jury's award. Plaintiffs cross-appeal, arguing that the court's finding that Wisegarver did not violate the Act was against the manifest weight of the evidence. We affirm in part, reverse in part, and remand for further proceedings.

I. BACKGROUND

The material in this section is not to be published pursuant to Supreme Court Rule 23. 166 Ill. 2d R. 23.

Nonpublishable material under Supreme Court Rul23 omitted.

II. ANALYSIS

A. The Trial Court's Denial of Wisegarver's Motions for Directed Verdict and Judgment N.O.V.

Wisegarver first argues that the trial court erred by denying his motions for directed verdict and judgment n.o.v. because the evidence did not show that (1) a fiduciary relationship existed between Wisegarver and plaintiffs; (2) Wisegarver breached his fiduciary duty; or (3) Wisegarver's breach of his fiduciary duty proximately caused plaintiffs' injury. We disagree.

1. Standard of Review

A trial court should not grant a motion for directed verdict or judgment n.o.v. unless "all of the evidence, when viewed in its aspect most favorable to the opponent, so overwhelmingly favors movant that no contrary verdict based on that evidence could ever stand." Pedrick v. Peoria & Eastern R.R. Co., 37 Ill. 2d 494, 510, 229 N.E.2d 504, 513-14 (1967); see Thacker v. U N R Industries, Inc., 151 Ill. 2d 343, 353, 603 N.E.2d 449, 454 (1992).

2. Existence of a Fiduciary Relationship

Specifically, Wisegarver contends that the evidence did not show that a fiduciary relationship existed and, instead, the acts of the parties constituted nothing more than the sharing of information to develop the terms of some possible agreement. We disagree.

A contract to employ a real estate broker need not be in writing. In re Estate of Vallerius, 253 Ill. App. 3d 226, 230, 624 N.E.2d 459, 462 (1993). All that is required is action by the broker and consent by the principal. Such consent may be oral, written, or implied by the conduct of the parties. Letsos v. Century 21-New West Realty, 285 Ill. App. 3d 1056, 1063, 675 N.E.2d 217, 223 (1996). Whether an agency relationship exists may be established by circumstantial evidence, including the situation of the parties, their acts, and other relevant circumstances. The existence of an agency relationship constitutes a question of fact for the trier of fact. Matthews Roofing Co. v. Community Bank & Trust Co., 194 Ill. App. 3d 200, 206, 550 N.E.2d 1189, 1193 (1990). A plaintiff must prove the existence of an agency relationship by clear and convincing evidence. See State Security Insurance Co. v. Frank B. Hall & Co., 258 Ill. App. 3d 588, 595, 630 N.E.2d 940, 945 (1994).

A real estate broker serves as an agent of a property owner, and an agency relationship engenders a type of fiduciary affiliation in which the principal has the right to control the agent's conduct, and the agent has the power to act on the principal's behalf. Once an agency relationship is found, a fiduciary relationship arises as a matter of law. Letsos, 285 Ill. App. 3d at 1064, 675 N.E.2d at 223-24.

Initially, we note that Wisegarver correctly points out that the supreme court in Martin v. Heinold Commodities, Inc., 163 Ill. 2d 33, 44-45, 643 N.E.2d 734, 740 (1994) (Martin II), quoting Martin v. Heinold Commodities, Inc., 117 Ill. 2d 67, 78, 510 N.E.2d 840, 844-45 (1987) (Martin I), quoting Restatement (Second) of Agency §389, comment b (1958), adopted the general rule that "an `agent is subject to no fiduciary duty in making the agreement by which he becomes [an] agent.'" However, he fails to point out that the supreme court also adopted the following exception to the general rule:

"`[W]e are unwilling to conclude, as a matter of law, that a fiduciary duty can never be imposed upon a prospective agent prior to the formal creation of an agency relationship. Thus, while the general rule governing preagency [contacts] does not require disclosure of the terms of a prospective agent's compensation, we believe that facts could be established which would support imposition of a fiduciary duty upon a prospective agent applicable to preagency [contacts].'" Martin II, 163 Ill. 2d at 45, 643 N.E.2d at ...


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