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Forms World of Illinois, Inc. v. Magna Bank

October 29, 2002

FORMS WORLD OF ILLINOIS, INC., PLAINTIFF-APPELLANT,
v.
MAGNA BANK, N.A., AND MAGNA GROUP, INC., DEFENDANTS-APPELLEES.



Appeal from the Circuit Court of St. Clair County. No. 96-L-232A Honorable Jan V. Fiss, Judge, presiding.

The opinion of the court was delivered by: Justice Kuehn

UNPUBLISHED

In this sale-of-goods case involving the statute of frauds (Ill. Rev. Stat. 1987, ch. 26, par. 2-201 (now 810 ILCS 5/2-201 (West 2000))), Forms World of Illinois, Inc., appeals from the trial court's June 4, 2001, order granting motions for summary judgment filed on behalf of Magna Bank, N.A., and Magna Group, Inc. We affirm.

The relationship between the parties dates back to December 1988, at which time Forms World of Illinois, Inc. (Forms World), offered to perform a systems management study on behalf of Magna Bank, N.A. (Magna Bank). The purpose of the study was to identify potential costs savings for Magna Bank relative to its forms management, systems management, and purchasing. Over the course of several months, Bud Powers, on behalf of Forms World, conducted this study. At the conclusion of this process, Bud Powers generated a proposal directed to Magna Bank. This proposal was dated May 10, 1989.

It is this proposal letter that is at the core of the controversy between the parties. Forms World argues that this five-page proposal, although labeled a proposal, is in fact the contract to which Magna Bank agreed. In support of this theory, Forms World offers only an undated interoffice memorandum authored by G. Thomas Andes (Tom Andes), the president of Magna Bank on the date of the proposal, and directed to "All Employees," which stated as follows:

"For the past five months, Mr. Bud Powers, owner of Forms World *** out of St. Louis, has been doing an internal study of Magna Bank *** to see if we might improve our forms design, control of flow of paper in our systems, inventory control[,] and inventory delivery system. As a result of this study, we have agreed to use his services over the next two years.

Please bear with him during the ensuing months as he gets into more detailed involvement in various departments. If you have the occasion to spend some time with Bud, I think you will find him astute in the banking area and quite helpful in reducing costs allocated to your department.

Any systems changes that are proposed will be placed into effect only with the appropriate department head approval, but it is important to cooperate with him during his fact-finding missions in order to utilize his services to the greatest degree.

The intent of the program should reduce costs and provide increased efficiency in maintaining and providing supplies to your department."

The memo was then signed "Tom Andes." Forms World acknowledges that Magna Bank did not provide it with any formal written confirmation or acceptance of its proposal.

Either in response to the proposal or otherwise, Magna Bank proceeded to utilize Forms World's services. Magna Bank paid all bills submitted by Forms World. This arrangement lasted longer than the two years referenced in Tom Andes' memorandum. Forms World brought this suit, however, because it contends that Magna Bank did not live up to the terms of the contract and did not purchase the percentage of its forms referenced in the proposal. The proposal contemplated that Magna Bank would purchase "substantially all" of its forms (less 15% to 20% related to previous business relationships) and order "substantially all" of its printing from Forms World. Because Magna Bank did not conduct at least 80% of this type of business with Forms World, Forms World argued that there was a breach of the contract.

The terms set forth in the proposal were based upon Magna Bank's then-asset size of between $540 million and $560 million. By 1990, Magna Bank's assets had grown to between $940 million and $960 million.

Forms World made additional proposals to Magna Bank and to Magna Group, Inc., Magna Bank's holding company. Forms World did not receive a response to any of these proposals, but it argues that in the fall of 1989 additional work related to Magna Bank's size increase was approved and assigned to Forms World. No documentation of this assignment was produced. Forms World contends that in the three years following its 1989 proposal, there were numerous verbal modifications of the contract, but never anything in writing.

Several former employees testified by deposition about the matter. Steve Marsho was the vice president of operations for Magna Bank in 1989. His employment with Magna Bank ended sometime prior to December 1991. Steve Marsho read the above-referenced memorandum authored by Tom Andes and interpreted it to mean that Magna Bank would utilize all of Forms World's services as outlined in the proposal. He also testified that he believed that the term of the contract was for more than the two years referenced in the memorandum. A. Clay Williams testified that he worked for Magna Bank until his September 30, 1993, retirement. In 1989, A. Clay Williams maintained authority over the purchasing department. He testified that he understood that Magna Bank would buy the majority of its forms from Forms World for three to five years, and he stated that once Tom Andes became aware that these forms were being furnished to other banks, the furnishing of forms became an action on the part of Magna Group, Inc. Gary Hemmer was an executive vice president of both Magna Bank and Magna Group, Inc., in 1990. Gary Hemmer testified that there was no written documentation between the companies and that a major problem with the relationship related to the interpretation of the term "benchmark pricing," by which the price of the forms and printing was to be determined. There was never an agreement on pricing. Gary Hemmer testified that Forms World was unable to provide the cost savings originally represented in the proposal. The relationship was fraught with disagreement regarding whether Forms World was supposed to service the newly acquired banks and regarding pricing. Tom Andes is no ...


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