{ "id": 1596829, "name": "Faber, Coe & Gregg, Inc., Plaintiff-Appellee, v. The First National Bank of Chicago, Defendant-Appellant", "name_abbreviation": "Faber, Coe & Gregg, Inc. v. First National Bank", "decision_date": "1969-03-14", "docket_number": "Gen. No. 52,561", "first_page": "204", "last_page": "212", "citations": [ { "type": "official", "cite": "107 Ill. App. 2d 204" } ], "court": { "name_abbreviation": "Ill. App. Ct.", "id": 8837, "name": "Illinois Appellate Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "153 So2d 726", "category": "reporters:state_regional", "reporter": "So. 2d", "case_ids": [ 9856914 ], "opinion_index": 0, "case_paths": [ "/so2d/153/0726-01" ] }, { "cite": "168 So 644", "category": "reporters:state_regional", "reporter": "So.", "opinion_index": 0 }, { "cite": "392 F2d 906", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 2106263 ], "opinion_index": 0, "case_paths": [ "/f2d/392/0906-01" ] }, { "cite": "101 F2d 576", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 1072277 ], "opinion_index": 0, "case_paths": [ "/f2d/101/0576-01" ] }, { "cite": "45 F2d 127", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 1841841 ], "opinion_index": 0, "case_paths": [ "/f2d/45/0127-01" ] }, { "cite": "180 Ill App 711", "category": "reporters:state", "reporter": "Ill. App.", "case_ids": [ 2824006 ], "opinion_index": 0, "case_paths": [ "/ill-app/180/0711-01" ] }, { "cite": "34 NE 2d 552", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "310 Ill App 395", "category": "reporters:state", "reporter": "Ill. App.", "case_ids": [ 3378679 ], "opinion_index": 0, "case_paths": [ "/ill-app/310/0395-01" ] }, { "cite": "166 NE2d 98", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "25 Ill App 2d 114", "category": "reporters:state", "reporter": "Ill. App. 2d", "case_ids": [ 5784637 ], "opinion_index": 0, "case_paths": [ "/ill-app-2d/25/0114-01" ] } ], "analysis": { "cardinality": 657, "char_count": 12958, "ocr_confidence": 0.549, "pagerank": { "raw": 4.213723236301079e-07, "percentile": 0.9137239275339991 }, "sha256": "f3e5b1f7b53b1e6dc613f8100e11d0d59bb43d2f5c8420708810907b98e993f2", "simhash": "1:f6aade37644b2256", "word_count": 2081 }, "last_updated": "2023-07-14T19:02:12.152736+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "MORAN and EBERSPACHER, JJ., concur." ], "parties": [ "Faber, Coe & Gregg, Inc., Plaintiff-Appellee, v. The First National Bank of Chicago, Defendant-Appellant." ], "opinions": [ { "text": "GOLDENHERSH, P. J.\nDefendant, the First National Bank of Chicago, appeals from the judgment of the Circuit Court of Cook County entered upon allowance of plaintiff\u2019s motion for summary judgment.\nIn its complaint plaintiff alleges that it is a New York corporation authorized to do business in Illinois, defendant is a national banking institution, plaintiff was a depositor in defendant\u2019s bank, defendant improperly charged plaintiff\u2019s account in the amount of $20,350, credited it with $1,882.57 collected from a third party, and plaintiff prays judgment in the amount of $18,467.43 plus interest and costs. Defendant filed a motion to dismiss, the motion was denied, and defendant answered. Attached to the motion was an exhibit which will be later described along with the exhibits attached to defendant\u2019s motion for summary judgment.\nIn its answer defendant admitted it had charged plaintiff\u2019s account as alleged, and stated it was based upon the return to defendant of three checks drawn by Charles R. Ashmann, totalling $20,350, which were unpaid by the drawee banks because of \u201cnot sufficient funds\u201d; it credited plaintiffs account with $1,882.57 \u201cwhich was collected for plaintiff from Charles R. Ashmann\u201d and that \u201cthis collection was authorized and accepted by plaintiff.\u201d\nAs separate defenses, defendant alleged that it had been induced to cash checks for Ashmann by various representations of plaintiffs secretary-treasurer who had actual or apparent authority to act for plaintiff, who made such representations in reckless disregard of whether they were true or false, and with the intention that they be relied upon by defendant; that by institution of an action against Ashmann in the United States District Court for the Southern District of Florida based on the same facts here complained of, plaintiff had made an election of remedies which barred recovery here; that the complaint filed in the action in Florida expressly states plaintiff ratified the transaction here complained of.\nIn the affidavit of Donald Gregg, plaintiffs president, filed in support of its motion for summary judgment, he states that corporate resolutions on file with defendant provide that checks, drafts or other orders for the payment of money drawn in plaintiffs name against funds on deposit with defendant must be signed by any two of three designated corporate officers, and no loans could be made without presenting to defendant certified copies of corporate resolutions authorizing such borrowings; plaintiffs corporate records contain no authorization confirming any responsibility for Ashmann\u2019s acts, and no written authorization was given defendant to charge plaintiff\u2019s account \u201cwith the financial responsibilities incurred by Charles Ashmann.\u201d\nThe discovery deposition of Mark H. Baxter, defendant\u2019s Assistant Vice President is attached to Mr. Gregg\u2019s affidavit as an exhibit. Mr. Baxter testified that on July 10,1963, at about 8:00 a. m. he received a telephone call from an individual who identified himself as Thomas Courtney, plaintiff\u2019s treasurer. Mr. Courtney told him Charles Ashmann, an attorney \u201crepresenting them in a number of matters\u201d was in Chicago; Mr. Ashmann had some checks and Courtney had told him to come to defendant and \u201che would arrange to have them cashed for him\u201d; the checks were \u201cin the area of $20,000.00\u201d; Baxter told him he would like to call the bank on which the checks were drawn and Courtney stated that was not necessary, he had arranged similar accommodations for Ashmann before, and did not want to embarrass him. Shortly thereafter Ashmann came in and cashed the three checks in question. The checks were put through as cash items and returned \u201cnot sufficient funds.\u201d There were several telephone conversations with Courtney in one of which \u201cCourtney said they would stand behind the checks.\u201d The witness identified several letters written by defendant, and a letter in which counsel for plaintiff advised defendant that Courtney\u2019s action was \u201ca mere introduction\u201d of Ashmann to defendant.\nDefendant filed a motion for summary judgment supported by the affidavit of Mr. Baxter, which, with some additions contains substantially the same statements as his deposition. Attached as exhibits are a certification of plaintiff\u2019s officers, copies of the resolutions described in Mr. Gregg\u2019s affidavit, and the complaint filed by plaintiff in the United States District Court in Florida.\nAttached to the motion to dismiss above mentioned, is the final judgment order entered in plaintiff\u2019s action in the United States District Court.\nThe complaint filed in the United States District Court of Florida is in two counts. In Count I plaintiff alleged that Ashmann delivered to it five checks drawn by him on the Boulevard National Bank of Miami and payable to plaintiff and Francis J. Gilbride, Jr., its attorney, in payment of an indebtedness due plaintiff, that upon presentment the checks were dishonored and the indebtedness remains unpaid. In Count II, plaintiff alleged, inter alia, that Ashmann had falsely and fraudulently represented to defendant that he represented plaintiff, and that plaintiff was the guarantor of any checks negotiated by plaintiff on defendant, and falsely and fraudulently induced plaintiff to ratify his actions in that regard; that defendant has called on and held plaintiff liable for checks drawn on defendant in the amount of $20,350. In its final order the District Court entered judgment in favor of plaintiff on Count I. As to Count II the order recited:\n\u201cOrdered Judged and Decreed that Count II of the plaintiff\u2019s complaint be and the same is hereby dismissed without prejudice.\u201d\nAs grounds for reversal defendant contends that plaintiff, in the action instituted in Florida has made an election of remedies, Ashmann had apparent authority to act for plaintiff, plaintiff has ratified the transaction, the misrepresentations made to defendant by plaintiff\u2019s secretary-treasurer Courtney were material, Courtney knew they were false, defendant had no duty to conduct an independent investigation, and the transaction \u201camounts to fraud or the tort of misrepresentation in a business transaction.\u201d\nThe pleadings as drawn do not present the issues of whether defendant might recover from plaintiff for a tortious act, or whether by clothing its alleged agent with real or apparent authority it induced defendant to negotiate Ashmann\u2019s checks. The sole issue presented is whether defendant correctly exercised its alleged right of setoff with respect to the funds on deposit. The right of a commercial bank to set off against funds on deposit is not coextensive with its right to recover sums due it. The extent of our review is to determine whether the pleadings, discovery depositions, and exhibits, present a genuine issue of fact material to the question presented. Halloran v. Belt Ry. Co., 25 Ill App 2d 114, 166 NE2d 98.\nIllinois follows the rule that a bank cannot apply the deposits of a debtor to an unmatufed indebtedness in the absence of express authority so to do. Gillette v. Williamsville State Bank, 310 Ill App 395, 34 NE 2d 552; Elzy v. Morrison, 180 Ill App 711. A matured indebtedness to give rise to a right of setoff must be certain, already reduced to precise figures or capable of being liquidated by calculation without the intervention of a court or jury to estimate them, Thornton v. National City Bank of New York, 45 F2d 127; 1 Morse on Banks & Banking (6th Edition, pp 779-80); Michie on Banks and Banking, Permanent Edition, Volume 5A, p 299. Defendant\u2019s claim against plaintiff, as delineated by its answer, does not fall within the definition of a matured indebtedness.\nRelying upon Restatement of the Law of Agency Second, \u00a7 97 (p 250) defendant contends that plaintiff ratified Ashmann\u2019s acts. In further support of its argument defendant reviews plaintiff\u2019s efforts to recover from Ashmann and its delay in filing this action. The effect of plaintiff\u2019s instituting suit in Florida will be considered later, and at this point, we shall dicuss the alleged ratification arising from other actions of the plaintiff.\nThe relationship between plaintiff and defendant as depositor and bank was contractual, and plaintiff\u2019s funds on deposit could be paid out only upon the signatures of two of the officers designated in its corporate resolutions on file with defendant. The formal requirements of ratification are stated in 3 American Jurisprudence Second Edition at page 551 as follows:\n\u201cSince it is the equivalent of prior authority, the ratification of an unauthorized act must be of the particular mode or form necessary to confer authority to perform it in the first place. A ratification cannot stand on higher ground than an original authorization, and where, therefore, the adoption of any particular form or mode is necessary to confer the authority in the first instance, there can be no valid ratification except in the same manner.\u201d\nThe record leaves no question that plaintiff did not, by corporate resolution, ratify Ashmann\u2019s acts. Neither the allegation of ratification in the complaint filed in the District Court in Florida nor any other action of plaintiff reflected by the record is a ratification of Ashmann\u2019s transaction sufficient to entitle defendant to setoff against plaintiff\u2019s funds.\nThere remains for consideration the question of whether plaintiff, in seeking to recover from Ashmann in Count II of its Florida complaint, made an election of remedies which bars this action. It is plaintiff\u2019s position that the law of Florida is applicable, while defendant contends that the issue must be determined under the law of Illinois.\nWe shall not attempt to discuss, distinguish or reconcile the cases in Illinois. In 6 ALR2d, in discussing the holdings of the various jurisdictions as to whether commencement of a suit, not prosecuted to judgment, is of itself a conclusive election precluding a litigant from thereafter pursuing an inconsistent remedy, the annotator, at page 70 states:\n\u201cIn Illinois no case stating a general rule on the subject of this annotation has been found; and none can safely be deduced from the cases involving particular remedies, since, if tested by a general rule, some of these cases would support an inference that the commencement of a suit is, of itself, a conclusive election, and other cases would support an opposite inference.\u201d\nFrom our review of the authorities we believe the Illinois cases to be in agreement with the United States Court of Appeals for the Seventh Circuit, who said in National Lock Co. v. Hogland, 101 F2d 576, at page 587, and in Federal Savings & Loan Ins. Co. v. American Nat. Bank & Trust Co. of Chicago, 392 F2d 906 at page 912:\n\u201cThe formal doctrine of election of remedies by judicial decision has been confined gradually to its true remedial purpose as a doctrine of substance; and as stated by an eminent authority on trusts and trustees, should be confined to cases \u2018where (1) double compensation of the plaintiff is threatened or (2) the defendant has actually been misled by the plaintiff\u2019s conduct or (3) res adjudicata can be applied.\u2019 Bogert, Trusts and Trustees, 1935 Vol IV, \u00a7 946.\u201d\nThe record reveals no threat of double recovery by plaintiff, no evidence that defendant was in any manner misled by plaintiff\u2019s conduct in filing Count II in its Florida suit, and no basis for application of res judicata. We hold, therefore, that under Illinois law there was no election of remedies which would bar plaintiff\u2019s recovery in this action.\nThe Florida rule appears to be that the mere filing of an action which is dismissed before judgment does not effect an election of remedies, and to be conclusive the rights of the parties must have been materially affected to the advantage of one and the disadvantage of the other. Williams v. Robineau (Supreme Court of Florida), 168 So 644; Williams v. Duggan (Supreme Court of Florida), 153 So2d 726. Under Florida law there was here no election of remedies which would bar this action.\nBecause of the conclusions reached with respect to the law of Illinois and Florida, it is not necessary to decide which law governs in this instance.\nWhat we have said does not indicate any opinion with respect to defendant\u2019s right to recover from plaintiff in tort, or upon any other theory. We hold only that the record shows no genuine issue of fact material to the question presented, i. e. did defendant improperly set off its claim against plaintiff\u2019s funds on deposit?\nFor the reasons set forth the judgment of the Circuit Court of Cook County is affirmed.\nJudgment affirmed.\nMORAN and EBERSPACHER, JJ., concur.", "type": "majority", "author": "GOLDENHERSH, P. J." } ], "attorneys": [ "Paul, Cordell and Hansen, of Chicago (Kenneth G. Arnesen and Frederick W. Damour, of counsel), for appellant.", "Slater and Kahan, of Chicago, for appellee." ], "corrections": "", "head_matter": "Faber, Coe & Gregg, Inc., Plaintiff-Appellee, v. The First National Bank of Chicago, Defendant-Appellant.\nGen. No. 52,561.\nFirst District.\nMarch 14, 1969.\nPaul, Cordell and Hansen, of Chicago (Kenneth G. Arnesen and Frederick W. Damour, of counsel), for appellant.\nSlater and Kahan, of Chicago, for appellee." }, "file_name": "0204-01", "first_page_order": 210, "last_page_order": 218 }