{ "id": 3715521, "name": "NEW RANDOLPH HALSTED CURRENCY EXCHANGE, INC., Plaintiff-Appellant and Cross-Appellee, v. REGENT TITLE INSURANCE AGENCY, LLC, Defendant-Appellee and Cross-Appellant", "name_abbreviation": "New Randolph Halsted Currency Exchange, Inc. v. Regent Title Insurance Agency, LLC", "decision_date": "2010-11-24", "docket_number": "No. 1\u201409\u20141292", "first_page": "923", "last_page": "932", "citations": [ { "type": "official", "cite": "405 Ill. App. 3d 923" } ], "court": { "name_abbreviation": "Ill. App. Ct.", "id": 8837, "name": "Illinois Appellate Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "110 Ill. App. 3d 145", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 2996044 ], "weight": 2, "year": 1982, "pin_cites": [ { "page": "161" }, { "page": "162" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/110/0145-01" ] }, { "cite": "375 Ill. App. 3d 181", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 4271581 ], "year": 2007, "pin_cites": [ { "page": "218" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/375/0181-01" ] }, { "cite": "401 Ill. App. 3d 158", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 4302729 ], "year": 2010, "pin_cites": [ { "page": "169" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/401/0158-01" ] }, { "cite": "664 F. Supp. 1169", "category": "reporters:federal", "reporter": "F. Supp.", "case_ids": [ 3949146 ], "year": 1987, "pin_cites": [ { "page": "1172", "parenthetical": "irregularities on check imposed on bank a duty to call payor before cashing check" } ], "opinion_index": 0, "case_paths": [ "/f-supp/664/1169-01" ] }, { "cite": "558 F.2d 871", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 946771 ], "weight": 3, "year": 1977, "pin_cites": [ { "page": "873" }, { "page": "877" } ], "opinion_index": 0, "case_paths": [ "/f2d/558/0871-01" ] }, { "cite": "163 Ill. App. 3d 51", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 3547373 ], "year": 1987, "pin_cites": [ { "page": "56", "parenthetical": "holder acted in a commercially reasonable manner and became holder in due course when it had successfully cashed several checks for payee and it called to verify that check's signer had authority to sign the check" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/163/0051-01" ] }, { "cite": "17 A.2d 377", "category": "reporters:state_regional", "reporter": "A.2d", "year": 1941, "pin_cites": [ { "page": "378-79" } ], "opinion_index": 0 }, { "cite": "340 Pa. 337", "category": "reporters:state", "reporter": "Pa.", "case_ids": [ 1203401 ], "year": 1941, "pin_cites": [ { "page": "340" } ], "opinion_index": 0, "case_paths": [ "/pa/340/0337-01" ] }, { "cite": "415 F. Supp. 298", "category": "reporters:federal", "reporter": "F. Supp.", "case_ids": [ 7860094 ], "year": 1976, "pin_cites": [ { "page": "301-02" } ], "opinion_index": 0, "case_paths": [ "/f-supp/415/0298-01" ] }, { "cite": "81 Ill. 2d 461", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 5481024 ], "weight": 2, "year": 1980, "pin_cites": [ { "page": "471" }, { "page": "471" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/81/0461-01" ] }, { "cite": "327 Ill. 455", "category": "reporters:state", "reporter": "Ill.", "case_ids": [ 5192225 ], "year": 1927, "pin_cites": [ { "page": "462" } ], "opinion_index": 0, "case_paths": [ "/ill/327/0455-01" ] }, { "cite": "130 Ill. App. 2d 793", "category": "reporters:state", "reporter": "Ill. App. 2d", "case_ids": [ 2825788 ], "year": 1971, "pin_cites": [ { "page": "796", "parenthetical": "question of whether a party is a holder in due course is an issue of fact" } ], "opinion_index": 0, "case_paths": [ "/ill-app-2d/130/0793-01" ] }, { "cite": "342 Ill. App. 3d 382", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 3472534 ], "year": 2003, "pin_cites": [ { "page": "391" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/342/0382-01" ] }, { "cite": "245 Ill. App. 3d 495", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 5385141 ], "year": 1993, "pin_cites": [ { "page": "499" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/245/0495-01" ] } ], "analysis": { "cardinality": 811, "char_count": 19864, "ocr_confidence": 0.78, "pagerank": { "raw": 4.03580807328026e-08, "percentile": 0.10855130936205161 }, "sha256": "8826529a29a92a77bfb90f92a6093d9fcb4c0f208e2ef34438807095114d67d4", "simhash": "1:9b0fc94a06061504", "word_count": 3332 }, "last_updated": "2023-07-14T15:12:02.087067+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "NEW RANDOLPH HALSTED CURRENCY EXCHANGE, INC., Plaintiff-Appellant and Cross-Appellee, v. REGENT TITLE INSURANCE AGENCY, LLC, Defendant-Appellee and Cross-Appellant." ], "opinions": [ { "text": "JUSTICE NEVILLE\ndelivered the opinion of the court:\nNew Randolph Halsted Currency Exchange (New Randolph) cashed a check drawn on a bank account of Regent Title Insurance Agency (Regent). Regent stopped payment on the check. New Randolph sued Regent for payment, claiming that New Randolph qualified as a holder in due course of the check. Following a bench trial, the trial court held that New Randolph was not a holder in due course because the check-cashing transaction raised several warning signals that should have alerted New Randolph to the possibility of fraud. The court entered judgment in favor of Regent.\nNew Randolph also sought sanctions against Regent for its responses to requests to admit. The court imposed sanctions for one of the responses but not for others.\nOn New Randolph\u2019s appeal, we find that New Randolph took commercially reasonable precautions before cashing the check, and therefore it qualifies as a holder in due course, and we reverse the trial court. We also find that the trial court did not abuse its discretion by denying part of New Randolph\u2019s motion for sanctions, and we affirm the trial court. On Regent\u2019s cross-appeal, we find that the trial court did not abuse its discretion by imposing the sanction against Regent, and we affirm the trial court. Thus, we affirm in part, reverse in part, and remand this case to the trial court.\nBACKGROUND\nRegent served as a settlement agent for closing real estate transactions. Regent cut checks to distribute funds to all the parties to such transactions.\nOn December 23, 2005, New Randolph cashed a check from Regent, made out to Charae Pearson, for $1,945.99. Four days later, New Randolph cashed another check for Pearson, again from Regent, this time for $2,500. On January 11, 2006, Pearson brought to New Randolph Regent\u2019s check number 22221, for $29,588.31. Unlike the prior checks, which spelled Pearson\u2019s name correctly, this check showed the payee as \u201cCHAREA PAERSON.\u201d The check indicated that Pearson received it as a \u201cLOAN PAYOFF.\u201d Pearson presented the check to Patrice Keys, manager of New Randolph. Pearson showed Keys her state identification card, which had been issued on December 30, 2005. Pearson told Keys that Regent issued the check to her to pay her a commission she earned from the sale of property.\nPLS Check Cashers, which owned New Randolph, did not authorize Keys to cash checks in excess of $5,000 without approval from her supervisor. Keys contacted Sandra Arizaga of PLS. Arizaga authorized Keys to cash the check.\nPolice arrested Pearson on January 23, 2006, charging her with check fraud. Two days later, police arrested Tatiana Auson, an employee of Regent, on the same charge. Regent had hired Auson to work as a funder, meaning that Regent authorized Auson to cut checks for the parties to real estate transactions. According to Regent\u2019s investigator, Auson cancelled checks intended for parties to real estate transactions, then issued new checks to different payees for the amounts of the original checks. Pearson admitted that Auson gave her the three checks New Randolph cashed for Pearson. Pearson kept about $5,000 of the proceeds from the checks, and she gave the remainder to Auson. All three checks appeared to bear the signature of Karen Hendricks, who had authority to sign checks on behalf of Regent.\nRegent told its bank to stop payment on the check. New Randolph sued Regent for payment of the check, claiming that its status as a holder in due course entitled it to payment, despite the evidence that Auson and Pearson conspired to defraud Regent. See 810 ILCS 5/3\u2014 302 (West 2006); First of America Bank-Northeast Illinois, N.A. v. Bocian, 245 Ill. App. 3d 495, 499 (1993).\nBefore the trial, New Randolph sent to Regent a request to admit certain facts, including the following:\n\u201c1. On or about January 11, 2006, Regent Title drew its check number 22221 in the amount of $29,588.31 on American Chartered Bank of Downers Grove, Illinois payable to Charea Paerson (the \u2018Check\u2019).\n***\n3. The Check bears an authorized signature of Regent Title.\u201d Regent answered:\n\u201c[1.] Regent denies it drew check number 22221 on American Chartered Bank or that anyone was authorized to cut such a check to Charea Paerson. Regent admits Charea Paerson was listed as payee on such numbered check. Regent denies the remaining allegations in this request to admit.\n***\nRegent denies Request 3 and further states that no Regent employee was authorized to cut such a check to Ms. Paerson.\u201d\nAt the trial, Keys testified that she looked up Pearson in PLS\u2019s database and found that she had recently cashed two other checks from Regent for lesser amounts. Keys called Regent, using a phone number she found in PLS\u2019s database. The person who answered the call for Regent confirmed that Regent issued the check to Pearson for the dollar amount shown, as payment of a commission. According to the person who answered the call for Regent, Pearson earned the commission from her work as an employee of Regent.\nArizaga, who worked as director of operations for PLS, testified that she approved about three checks each week for amounts exceeding the amount of Regent\u2019s check number 22221. She spoke with Keys about the check, and then she looked up the phone number for Regent at Regent\u2019s Web site. Arizaga testified that she called the number and asked to speak with someone about verifying a check. The woman with whom she spoke confirmed that Regent issued the check to Pearson in the amount shown. Arizaga then contacted American Chartered Bank, which confirmed that the check came from a valid account with sufficient funds to cover the check, and Regent had not stopped payment on the check.\nOn cross-examination, Arizaga admitted that according to PLS\u2019s manual, the misspelling of Pearson\u2019s name could signal fraud. Pearson\u2019s recent identification card should also raise suspicion. Arizaga did not remember whether she noticed that the check indicated its purpose as \u201cLOAN PAYOFF,\u201d instead of listing the payment as a commission.\nRegent introduced PLS\u2019s manual into evidence. The manual emphasizes that PLS earns its fees by cashing checks, so the employee should \u201c[sjpend *** time proving that the check can be cashed and not looking for excuses not to cash it.\u201d (Emphasis omitted.) The manual identifies several signs that a check might not be valid, including several of the factors present in this case. According to the manual, the employee should \u201cverify that the check is good\u201d by \u201cphoning the maker.\u201d (Emphasis omitted.)\nWilliam Andrews, the president of Regent\u2019s commercial division, testified that Pearson never worked for Regent, and no woman working at Regent would have fielded a call about who worked at Regent. Andrews admitted that the check appears to bear Hendricks\u2019s authorized signature. Andrews did not know whether Hendricks actually signed the fraudulently issued check.\nThe trial court summarized its findings of fact. It found that Arizaga and Keys called Regent to verify the check. When they called, they failed to ask about the discrepancy between the purpose shown on the check and the purpose Pearson stated. According to the court, that discrepancy \u201cwas enough to cause the currency exchange to pause and think twice about cashing the check. And then when *** they decided to go ahead with negotiating the check *** they did it at their own risk.\u201d The court added:\n\u201c[IJt\u2019s not a question of anybody being dishonest or anything of that nature. ***\nSo I\u2019m not talking about any kind of dishonesty or illegality. I\u2019m just simply saying perhaps a mistake was made.\u201d\nThe trial court entered an order on December 18, 2008, finding in favor of Regent on New Randolph\u2019s complaint.\nNew Randolph filed a motion and requested the entry of sanctions against Regent for its responses to two of its requests to admit. In an order dated April 22, 2009, the trial court imposed sanctions against Regent totaling $2,203.86 for the response to request number 1, but the court denied the motion for sanctions with respect to request number 3. In the same order, the court entered judgment in favor of Regent on the complaint.\nNew Randolph appealed from \u201cthe trial court\u2019s Order of December 18, 2008 and the final judgment entered on April 22, 2009.\u201d Regent cross-appealed from the award of sanctions against it for its answer to the request to admit.\nANALYSIS\nHolder in Due Course\nThe trial court entered judgment for Regent following a trial. We defer to the trial court\u2019s findings of fact, reversing only if the court committed clear error, but we review rulings of law de nova. Johnson v. Thomas, 342 Ill. App. 3d 382, 391 (2003).\nThe trial court awarded the judgment based on its finding of fact that New Randolph did not qualify as a holder in due course of the check. See Atlanta National Bank v. Johnson Tractor Sales, 130 Ill. App. 2d 793, 796 (1971) (question of whether a party is a holder in due course is an issue of fact), citing Foncannon v. Lewis, 327 Ill. 455, 462 (1927). The Uniform Commercial Code defines a holder in due course as:\n\u201cthe holder of an instrument if:\n(1) the instrument when issued or negotiated to the holder does not bear such apparent evidence of forgery or alteration or is not otherwise so irregular or incomplete as to call into question its authenticity, and\n(2) the holder took the instrument (i) for value, (ii) in good faith, (iii) without notice that the instrument is overdue or has been dishonored or that there is an uncured default with respect to payment of another instrument issued as part of the same series, (iv) without notice that the instrument contains an unauthorized signature or has been altered, (v) without notice of any claim to the instrument ***, and (vi) without notice that any party has a defense or claim in recoupment ***.\u201d 810 ILCS 5/3 \u2014 302 (West 2006).\nThe trial court found that New Randolph did not qualify as a holder in due course because the check at issue was \u201cso irregular *** as to call into question its authenticity.\u201d However, grounds for suspicion about a check will not always prevent one from taking the check as a holder in due course. Peoria Savings & Loan Ass\u2019n v. Jefferson Trust & Savings Bank, 81 Ill. 2d 461, 471 (1980). Where all of the evidence available to the holder shows that it lacked notice of a defense, it becomes a holder in due course. Peoria Savings, 81 Ill. 2d at 471. \u201c \u2018To defeat the rights of one dealing with negotiable securities it is not enough to show that he took them under circumstances which ought to excite the suspicion of a prudent man and cause him to make inquiry, but that he had actual knowledge of an infirmity or defect, or of such facts that his failure to make further inquiry would indicate a deliberate desire on his part to evade knowledge because of a belief or fear that investigation would disclose a vice in the transaction.\u2019 \u201d Valley Bank & Trust Co. v. American Utilities, Inc., 415 F. Supp. 298, 301-02 (E.D. Pa. 1976), quoting First National Bank of Blairstown v. Goldberg, 340 Pa. 337, 340, 17 A.2d 377, 378-79 (1941); see Grand Western Currency Exchange, Inc. v. A:M Sunrise Construction Co., 163 Ill. App. 3d 51, 56 (1987) (holder acted in a commercially reasonable manner and became holder in due course when it had successfully cashed several checks for payee and it called to verify that check\u2019s signer had authority to sign the check).\nA federal case involved a similar issue. In McCook County National Bank v. Compton, 558 F.2d 871 (8th Cir. 1977), McCook cashed a check despite several irregularities, including a discrepancy in the amount of the check. McCook contacted Northwestern, the bank on which the payor drew the check, and Northwestern confirmed the correct amount and assured McCook the check was \u201c \u2018okay to cash.\u2019 \u201d McCook, 558 F.2d at 873. The trial court held that McCook did not qualify as a holder in due course. The McCook court said:\n\u201cMcCook bank was presented with a check that had an obvious $10,000 discrepancy on its face. As any prudent bank would, McCook contacted the Northwestern bank to ascertain the correct amount and whether adequate funds existed to cover the check. Assured by the bank and indirectly by Compton, who issued the check, that the check was \u2018okay\u2019, McCook proceeded to cash the check and issue money orders. There were no remaining irregularities in the instrument itself. Since this court has found no actual notice and insufficient constructive notice from the reporting service, and no other notice at the time the check was cashed, we can find no bad faith or dishonesty on the part of McCook bank in cashing the check.\nIn sum, while a better judgment concerning the negotiability of the check might have been made we can not find the requisite notice or bad faith that would deprive McCook bank of its status as holder in due course.\u201d McCook, 558 F.2d at 877.\nSee also First National Bank of Cicero v. United States, 664 F. Supp. 1169, 1172 (N.D. Ill. 1987) (irregularities on check imposed on bank a duty to call payor before cashing check).\nHere, New Randolph had some grounds for suspecting that the check could be invalid. Regent misspelled Pearson\u2019s name, the purpose stated on the check did not match the purpose Pearson described, the check greatly exceeded the amount of prior checks made out to Pearson, and Pearson had only recently renewed her state identification card. However, when it cashed the check, New Randolph also knew that Regent had issued two other checks to Pearson, and those checks had cleared. Most significantly, Arizaga and Keys called Regent and Regent directly confirmed that it issued the check to Pearson for the stated amount.\nWe agree with the trial court\u2019s finding that irregularities involving the check called its authenticity into question. But New Randolph investigated those irregularities in a commercially reasonable manner by calling Regent to verify the check. In this case, unlike McCook, the holder did not rely on an indirect verification from the payor. New Randolph contacted Regent directly, as well as American Chartered Bank. New Randolph might have acted more cautiously and asked more questions of the person who spoke to them when they called Regent. But that person\u2019s verification of the check made the decision to cash the check commercially reasonable. We find that the trial court committed clear error when it found that New Randolph was not a holder in due course of check number 22221. Therefore, we reverse the judgment entered in favor of Regent and remand for entry of judgment in favor of New Randolph for payment of the check.\nSanctions\nNext, New Randolph asks us to reverse the denial of sanctions for Regent\u2019s response to number 3 of New Randolph\u2019s requests to admit. Regent argues that New Randolph\u2019s notice of appeal does not permit this court to decide the issue. The notice of appeal lists the judgment order dated April 22, 2009, as the order from which New Randolph appealed. In that order the trial court entered judgment in favor of Regent on the complaint, and it also granted in part and denied in part New Randolph\u2019s motion for sanctions against Regent for its responses to requests to admit. Supreme Court Rule 303 (210 Ill. 2d R. 303(b)(2)) \u201cgives the appellant the option of naming *** the entire judgment *** as the subject of his or her appeal.\u201d Bank of America, N.A. v. 108 N. State Retail LLC, 401 Ill. App. 3d 158, 169 (2010). We find that New Randolph\u2019s notice of appeal complies with Rule 303. 210 Ill. 2d R. 303(b)(2). Therefore, it gives this court jurisdiction to review the propriety of the judgment of April 22, 2009, including the denial of sanctions for the response to number 3 of the requests to admit.\nSupreme Court Rule 219 permits the court to impose sanctions for denial of a request to admit, \u201c[ujnless the court finds that there were good reasons for the denial.\u201d 210 Ill. 2d R. 219(b). We will not reverse the trial court\u2019s decision on a motion for sanctions absent an abuse of discretion. First National Bank of LaGrange v. Lowrey, 375 Ill. App. 3d 181, 218 (2007).\nNew Randolph asked Regent to admit that check number 22221 \u201cbears an authorized signature of Regent Title.\u201d Regent denied the request. Andrews admitted that the signature looked like the signature of Karen Hendricks, who had authority to sign checks on Regent\u2019s behalf. However, the witness did not see Hendricks sign the check and he did not know whether Auson and her coconspirators forged the signature. Neither party presented testimony from Hendricks about the check. Hendricks left Regent to take a job with a California-based corporation.\nIn Exchange National Bank of Chicago v. DeGraff, 110 Ill. App. 3d 145, 161 (1982), the defendant asked the bank to admit that the defendant signed the document in January 1973. The bank\u2019s witness testified that he did not recall the date of signing. The trial court imposed no sanction for denial of the request to admit, and the appellate court affirmed, saying, \u201cwe do not find it unreasonable for the Bank not to admit the truth of that which it could not recall.\u201d DeGraff, 110 Ill. App. 3d at 162.\nHere, similarly, Regent did not know whether Hendricks signed the check. We cannot say that the trial court abused its discretion by refusing to impose sanctions against Regent for its response to request number 3.\nCross-Appeal\nRegent cross-appeals from the imposition of sanctions against Regent for its answer to number 1 of the requests to admit. New Randolph asked Regent to admit that \u201cOn or about January 11, 2006, Regent Title drew its check number 22221 in the amount of $29,588.31 on American Chartered Bank of Downers Grove, Illinois payable to Charea Paerson.\u201d Regent answered:\n\u201cRegent denies it drew check number 22221 on American Chartered Bank or that anyone was authorized to cut such a check to Charea Paerson. Regent admits Charea Paerson was listed as payee on such numbered check. Regent denies the remaining allegations in this request to admit.\u201d\nRegent admitted that it authorized Auson to cut checks drawn on Regent\u2019s account. Regent admitted that Auson prepared check number 22221, drawn on Regent\u2019s account with American Chartered Bank, and made it payable to Charea Paerson. To show that it was a holder in due course, New Randolph needed to prove that Regent drew the check on Regent\u2019s account. We find no abuse of discretion in the trial court\u2019s decision to impose sanctions against Regent for its denial of New Randolph\u2019s request to admit that it drew check number 22221 on its account with American Chartered Bank.\nCONCLUSION\nNew Randolph cashed check number 22221 only after calling Regent for verification of the check. Because New Randolph followed commercially reasonable procedures to verify the check before cashing it, New Randolph qualifies as a holder in due course of the check. Accordingly, we reverse the judgment of the trial court and remand for entry of judgment in favor of New Randolph on its claim for payment of the check. The trial court did not abuse its discretion when it sanctioned Regent for one, and only one, of its answers to New Randolph\u2019s requests to admit. Therefore, we affirm the denial of sanctions for one response and we affirm the award of sanctions for another response to the requests to admit.\nAffirmed in part and reversed in part; cause remanded with instructions.\nQUINN, EJ., and MURPHY, J., concur.", "type": "majority", "author": "JUSTICE NEVILLE" } ], "attorneys": [ "Krasnow Saunders Cornblath, LLR of Chicago (Charles A. Valente and Colby M. Green, of counsel), for appellant.", "Law Offices of Peter S. Stamatis, PC., of Chicago (Peter S. Stamatis, of counsel), for appellee." ], "corrections": "", "head_matter": "NEW RANDOLPH HALSTED CURRENCY EXCHANGE, INC., Plaintiff-Appellant and Cross-Appellee, v. REGENT TITLE INSURANCE AGENCY, LLC, Defendant-Appellee and Cross-Appellant.\nFirst District (3rd Division)\nNo. 1\u201409\u20141292\nOpinion filed November 24, 2010.\nKrasnow Saunders Cornblath, LLR of Chicago (Charles A. Valente and Colby M. Green, of counsel), for appellant.\nLaw Offices of Peter S. Stamatis, PC., of Chicago (Peter S. Stamatis, of counsel), for appellee." }, "file_name": "0923-01", "first_page_order": 939, "last_page_order": 948 }