{ "id": 12130308, "name": "THE PEOPLE ex rel. WILLIAM J. SCOTT, Attorney General, Plaintiff-Appellee, v. PATRICK J. GORMAN et al., Defendants-Appellants", "name_abbreviation": "People ex rel. Scott v. Gorman", "decision_date": "1981-05-06", "docket_number": "No. 79-1392", "first_page": "289", "last_page": "293", "citations": [ { "type": "official", "cite": "96 Ill. App. 3d 289" } ], "court": { "name_abbreviation": "Ill. App. Ct.", "id": 8837, "name": "Illinois Appellate Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "187 N.E.2d 217", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "26 Ill. 2d 434", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 5354533 ], "opinion_index": 0, "case_paths": [ "/ill-2d/26/0434-01" ] }, { "cite": "278 N.E.2d 252", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "3 Ill. App. 3d 22", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 2839694 ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/3/0022-01" ] }, { "cite": "107 N.E. 158", "category": "reporters:state_regional", "reporter": "N.E.", "year": 1971, "opinion_index": 0 }, { "cite": "266 Ill. 60", "category": "reporters:state", "reporter": "Ill.", "case_ids": [ 4784491 ], "year": 1971, "opinion_index": 0, "case_paths": [ "/ill/266/0060-01" ] }, { "cite": "208 N.E.2d 625", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "60 Ill. App. 2d 357", "category": "reporters:state", "reporter": "Ill. App. 2d", "case_ids": [ 2604978 ], "opinion_index": 0, "case_paths": [ "/ill-app-2d/60/0357-01" ] }, { "cite": "140 N.E.2d 725", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1965, "opinion_index": 0 }, { "cite": "10 Ill. 2d 326", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 2725643 ], "year": 1965, "opinion_index": 0, "case_paths": [ "/ill-2d/10/0326-01" ] }, { "cite": "100 S. Ct. 260", "category": "reporters:federal", "reporter": "S. Ct.", "opinion_index": 0 }, { "cite": "62 L. Ed. 2d 179", "category": "reporters:federal", "reporter": "L. Ed. 2d", "opinion_index": 0 }, { "cite": "444 U.S. 620", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 11307684 ], "opinion_index": 0, "case_paths": [ "/us/444/0620-01" ] }, { "cite": "376 N.E.2d 665", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "60 Ill. App. 3d 331", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 3352002 ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/60/0331-01" ] } ], "analysis": { "cardinality": 518, "char_count": 9473, "ocr_confidence": 0.911, "pagerank": { "raw": 8.396754286599831e-08, "percentile": 0.4824190522304582 }, "sha256": "c029c5634257424c0a87ef7da51d84f12fc2c11c1e0e2521073f6d6d9f57696d", "simhash": "1:cd8b4615074e87b0", "word_count": 1538 }, "last_updated": "2023-07-14T16:31:40.709125+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "RIZZI, P. J., and McGILLICUDDY, J., concur." ], "parties": [ "THE PEOPLE ex rel. WILLIAM J. SCOTT, Attorney General, Plaintiff-Appellee, v. PATRICK J. GORMAN et al., Defendants-Appellants." ], "opinions": [ { "text": "Mr. JUSTICE McNAMARA\ndelivered the opinion of the court:\nThis cause is back before this court on the appeal of the defendant fund raisers, who argue that the trial court did not comply with this court\u2019s mandate. In the original action brought by the Attorney General, the trial court found that defendants Patrick J. Gorman, Martin D. Gorman, Helix, Inc., and Washington Information Services violated the Illinois solicitation of funds for charitable purposes act (the Act) (Ill. Rev. Stat. 1973, ch. 23, par. 5109) in soliciting and distributing charitable contributions pursuant to contracts with the charity entitled Police Hall of Fame, Inc. In that action the trial court found that the acts of the fund raisers violated the statute in that they constituted a fraud on the public. The court enjoined defendants from further solicitation and in a modified judgment assessed compensatory damages under the statute at $417,928. The court also imposed punitive damages in the amount of $150,000.\nOn appeal, we affirmed the finding of liability under the Act. (People ex rel. Scott v. Police Hall of Fame, Inc. (1978), 60 Ill. App. 3d 331, 376 N.E.2d 665.) We also affirmed the injunction prohibiting the fund raisers from further solicitation of funds in Illinois. We held, however, that in refusing to allow the deduction of any reasonable and legitimate expenses from the campaign proceeds, the trial court erred in its interpretation of section 9 of the Act. Consequently, we vacated the award of compensatory damages and remanded the matter for further proceedings on the issue of compensatory damages. We reversed the assessment of punitive damages.\nOn remand, the trial court stated that our directive required an evidentiary hearing on the legitimacy of expenses. The Attorney General urged, instead, that damages be assessed under the alternate common law fraud count in the complaint. The trial court acquiesced and decided that an evidentiary hearing was unnecessary. The court proceeded to assess damages in the sum of $496,362, which represented a portion of the $614,452 in \u201cinvoiced costs\u201d actually paid to the fund raisers. The court reasoned that because the program was wrought with fraud, any expenses received by the fund raisers were an unjust enrichment.\nWe initially turn to section 9 of the Act, under which the trial court held the fund raisers liable, and which we interpreted when reversing and remanding the trial court\u2019s compensatory damage award. Section 9 seeks to prevent frauds on the public in the solicitation and use of charitable contributions. (See, e.g., Village of Schaumburg v. Citizens for a Better Environment (1980), 444 U.S. 620, 62 L. Ed. 2d 179, 100 S. Ct. 260.) Bearing on this latter purpose, the Attorney General may seek redress when a noncharitable entity, or a charitable entity using funds for noncharitable purposes, profits in an amount greater than 25% of the gross receipts of a contribution campaign. To make such a determination of profit, section 9 provides that legitimate and reasonable expenses of conducting the campaign are first to be deducted from campaign proceeds, to yield gross receipts.\nThe fund raisers contend that the trial court erred on remand by recomputing damages under the alternate theory of common law fraud in count VI of the complaint. They contend that in so doing the trial court exceeded the scope of our mandate. Additionally, the fund raisers assert that although common law fraud was pleaded, this theory was never proved at trial; nor was the original trial court damage award based on that theory. In the alternative, the fund raisers contend that the trial court utilized an improper standard for computing damages for common law fraud.\nThe trial court is required on remand to follow strictly the appellate court\u2019s mandate and may not exceed the directions of the appellate court. (Ptaszek v. Konczal (1957), 10 Ill. 2d 326, 140 N.E.2d 725; Podbielniak v. Podbielniak (1965), 60 Ill. App. 2d 357, 208 N.E.2d 625.) In the trial court\u2019s original judgment, damages were computed based on the statutory requirement that 75% of the gross receipts be used for charitable purposes. On appeal, we stated that the trial court misapplied the strictures of the statute in that it failed to examine expenses incurred and to deduct from the proceeds those expenses which were legitimate and reasonable. Accordingly, we remanded for a hearing on the legitimacy of expenses and a recomputation of damages consistent with our opinion. On remand, the trial court\u2019s order stated in part: \u201cThe Court further finds that an evidentiary hearing is unnecessary to determine \u2018unreasonable and illegitimate\u2019 expenses under the Illinois Solicitation Act.\u201d In light of our explicit directive to the trial court that it conduct a hearing on the legitimacy of expenses, we hold that the court\u2019s failure on remand to examine the legitimacy of expenses constituted an evasion of our mandate.\nWe express no opinion as to the propriety of assessing damages under common law fraud where a complaint charges both a common law and statutory violation of the Act and where the trial court finds defendants liable under both counts. In the present case, however, the trial court assessed damages under the statute, and on appeal we directed the trial court to reassess damages under the statute. Accordingly, we are restricting ourselves to the propriety of the trial court\u2019s evading our mandate, as evidenced by its utilizing a different theory on damages for the first time on remand. The issue of damages for common law fraud, however, not having been passed on by the trial court, was foreclosed to that court on remand by the doctrine of res judicata. Village of Oak Park v. Swigart (1914), 266 Ill. 60, 107 N.E. 158; People v. Knox (1971), 3 Ill. App. 3d 22, 278 N.E.2d 252.\nWe note, as an aid to the trial court on remand, that the existence of a scheme to defraud is explicitly relevant to an evaluation of a statutory violation. The Act authorizes the Attorney General to bring an action where \u201cthere is employed \u00b0 * * in any solicitation or collection of contributions for a charitble organization of any device, scheme, or artifice to defraud or for obtaining money or property by means of any false pretense 6 \u00b0 Accordingly, a determination that an expense was fraudulently incurred is certainly probative of the illegitimacy of unreasonableness of the expense. (See People ex rel. Scott v. Police Hall of Fame, Inc.) Yet only those expenses incurred relative to the fraud are pertinent in such an analysis. Hence, on remand, a finding that the program was generally fraudulent would not necessarily support a determination that all expenses incurred were illegitimate. With these principles in mind, it will be incumbent on the trial court on remand to ascertain the legitimacy of the particular expenses.\nAdditionally, we believe the assessment of \u201cexpenses incurred\u201d involves more than an examination of \u201cinvoiced costs\u201d as depicted in one of the exhibits offered by the fund raisers. We believe it elementary that all fruits of the campaign retained by the fund raisers constitute \u201cexpenses\u201d as to the charity because but for such retention the charity would be the recipient of those fruits. Accordingly, the trial court must assess the legitimacy of the fund raisers\u2019 retention of the donor list worth $78,343 containing 49,000 names obtained as a result of the campaign, as well as the legitimacy of the rental charges of $35,951.36 to the chairity for use of its own lists.\nBecause we are vacating the trial court\u2019s award of damages for common law fraud, we will not address the fund raisers\u2019 alternative assertion that such damages must be measured by injury to plaintiff, as opposed to benefit to defendant.\nWe briefly address and reject the fund raisers\u2019 contention that the trial court\u2019s failure to hold an evidentiary hearing ultimately precluded a reviewing court from assessing the res judicata effect of the arbitration proceedings and federal litigation. In our earlier opinion, we rejected the argument that the arbitration proceedings and the Federal litigation had any res judicata effect on the issues in that appeal. Accordingly, that argument was foreclosed to the trial court on remand by the doctrine of res judicata. (See Smith v. Bishop (1962), 26 Ill. 2d 434, 187 N.E.2d 217.) The fund raisers cannot now claim as error the application of that doctrine against them.\nIn light of the posture of the present case, a consideration of the fund raisers\u2019 remaining contention that the trial court improperly denied their petitions for a change of venue and for substitution of counsel seems unnecessary. The change of venue issue has become moot and, of course, counsel may now substitute and appear for the fund raisers.\nFor the foregoing reasons, the judgment of the circuit court of Cook County is vacated, and the cause is remanded for further proceedings as to the assessment of damages consistent with the holdings of this court.\nVacated and remanded.\nRIZZI, P. J., and McGILLICUDDY, J., concur.", "type": "majority", "author": "Mr. JUSTICE McNAMARA" } ], "attorneys": [ "Shelly Waxman & Associates, of Chicago, for appellants.", "William J. Scott, Attorney General, of Chicago (Russell C. Grimes, Jr., Assistant Attorney General, of counsel), for appellee." ], "corrections": "", "head_matter": "THE PEOPLE ex rel. WILLIAM J. SCOTT, Attorney General, Plaintiff-Appellee, v. PATRICK J. GORMAN et al., Defendants-Appellants.\nFirst District (3rd Division)\nNo. 79-1392\nOpinion filed May 6, 1981.\nShelly Waxman & Associates, of Chicago, for appellants.\nWilliam J. Scott, Attorney General, of Chicago (Russell C. Grimes, Jr., Assistant Attorney General, of counsel), for appellee." }, "file_name": "0289-01", "first_page_order": 311, "last_page_order": 315 }