187 N.E.2d 274 (Ill.App. 1 Dist. 1962), 48604, Home Indem. Co. v. Reynolds & Co.

Docket Nº:Gen. No. 48604.
Citation:187 N.E.2d 274, 38 Ill.App.2d 358
Party Name:The HOME INDEMNITY COMPANY, a corporation, Plaintiff-Appellant, v. REYNOLDS & CO., a partnership, Defendant-Appellee.
Case Date:November 28, 1962
Court:Court of Appeals of Illinois

Page 274

187 N.E.2d 274 (Ill.App. 1 Dist. 1962)

38 Ill.App.2d 358

The HOME INDEMNITY COMPANY, a corporation, Plaintiff-Appellant,


REYNOLDS & CO., a partnership, Defendant-Appellee.

Gen. No. 48604.

Court of Appeals of Illinois, First District, Third Division.

November 28, 1962.

Rehearing Denied Jan. 31, 1963.

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[Copyrighted Material Omitted]

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[Copyrighted Material Omitted]

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[38 Ill.App.2d 364] Clausen, Hirsh, Miller & Gorman, Chicago, for appellant.

Winston, Strawn, Smith & Patterson, Chicago, for appellee.

DEMPSEY, Presiding Justice.

The Home Indemnity Company issued brokers blanket bonds and a liability policy to Reynolds & Co., a partnership, brokers and dealers in stocks and commodities. The bonds contained a fidelity provision which insured Reynolds against loss incurred through any dishonest, fraudulent or criminal acts of its employees. It excluded losses resulting from similar acts of partners. The liability policy indemnified Reynolds for judgments obtained against it by customers who sustained damages through the acts of either employees or partners arising from the ordinary course of business.

The controversy arose because certain salesmen in Reynolds' Chicago office sold securities in violation of the Illinois Securities Act, Ill.Rev.Stat. (1955), ch. 121 1/2, sec. 137.1 et seq. Reynolds made good the losses suffered by its customers and turned to Home Indemnity for reimbursement. The company took the position that the illegal sales were made with the knowledge and approval of supervisory officials and partners in both the Chicago office and the main office in New York, and that the sales came under the exclusion of the fidelity provision of the blanket bonds because the partners participated in them. As to the liability policy, its position was that the repayments made by Reynolds to its customers were rescissions [38 Ill.App.2d 365] of the security transactions and were not covered by the policy.

The litigation started as an action for declaratory judgment by Home Indemnity. It sought a finding that it was not obligated under the bonds or the policy. Reynolds filed a two-count counterclaim which asked judgment under the $500,000.00 and $1,500,00.00 fidelity bonds and judgment under the $50,000.00 liability policy.

Later Home Indemnity moved for summary judgment. Counter-affidavits were filed and the motion was denied. Before the case went to trial Home Indemnity renewed its motion for summary judgment on the further ground that there were discrepancies between the counter-affidavits and the pre-trial depositions of certain Reynolds offcials. The motion was again denied.

A jury trial resulted in a verdict in favor of Reynolds with damages assessed at $199,351.91. The court entered judgment on the counterclaim and dismissed the complaint for declaratory judgment. This appeal followed. The principal points are that the court erred in not granting Home Indemnity's motions for summary judgment and in not directing a verdict in its favor. Subordinate points concern instructions, rulings on evidence and the construction given the word 'damages' in the liability policy.

The contention that the trial court erred in denying the motions for summary judgment poses an unusual question. Does a party, whose motion for summary judgment is denied, have the right to have the denial of its motion reviewed after the case goes to trial and a verdict is returned against it? Neither side supports its position with authority; both argue what the law should be.

Rather than determining if Home Indemnity was entitled to summary judgment we will, for the purpose [38 Ill.App.2d 366] of reaching the substance of the issue presented, make two assumptions: (a) that one or both of its motions should have been granted and (b) that the verdict in favor of Reynolds was not against the weight of the evidence. Obviously, under these assumptions the evidence must have differed at the time of the motions and at the time of the trial. Obviously,

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a greater quantity or a better quality of evidence was produced by Reynolds at the trial than on the motions.

An incorrect ruling deprived the moving party of a judgment it should have had. It could not immediately appeal from the orders denying its motions because the orders were not final and appealable. Kern v. Chicago & E. I. R. Co., 31 Ill.App.2d 300, 175 N.E.2d 408; McGrath v. Hunt, Hill & Betts, 194 F.2d 529 (C.A.2). If it cannot appeal after judgment, if it does not come under the rule that an Appellate Court may review interlocutory orders (where a separate appeal did not lie from such orders, 2 I.L.P. Appeal and Error § 651), what remedy does it have? To deny a review seems to be unjust. But to grant it would necessarily result, under our first assumption, in the finding that the judgment entered upon the verdict should be set aside and that judgment should be awarded upon one of the motions. This would be unjust to the party that was victorious at the trial, which won judgment after the evidence was more completely presented, where cross-examination played its part and where witnesses were seen and appraised.

The greater injustice would be to the party which would be deprived of the jury verdict. Otherwise, a decision based on less evidence would prevail over a verdict reached on more evidence and judgment would be taken away from the victor and given to the loser despited the victor having the greater weight of evidence. This would defeat the fundamental purpose of judicial inquiry.

[38 Ill.App.2d 367] We hold that if a motion for summary judgment is improperly denied the error is not reversible for the result becomes merged in the subsequent trial. Therefore, even if an examination of the affidavits, counter-affidavits, depositions and exhibits were to lead to the conclusion that either one or both of Home Indemnity's motions should have been granted it would avail nothing, for the error cannot be reviewed.

The second point raised on this appeal is the denial of the motion for a directed verdict. The test to be applied to a motion for a directed verdict is whether there is in the record any evidence or reasonable inferences arising therefrom which tend to prove the case of the party against whom the motion is directed. Hughes v. Bandy, 404 Ill. 74, 87 N.E.2d 855; Lindroth v. Walgreen Co., 407 Ill. 121, 94 N.E.2d 847. In a jury trial, the court cannot weigh the evidence or the inferences but must resolve all controverted questions of fact in favor of the person who opposes the motion. The credibility of the witnesses and the weight of their testimony are questions for the jury. Molloy v. Chicago Rapid Transit Co., 335 Ill. 164, 166 N.E. 530. The court must decide if the evidence fails as a matter of law to establish the claim or defense. This becomes a question of law only where the evidence is such that reasonable men would reach the same conclusion or where there is a total failure to prove one or more of the elements necessary to establish the claim or defense. Lutz v. Chicago Transit Authority, 36 Ill.App.2d 79, 183 N.E.2d 579.

The evidence in this case showed that three securities were involved, all unlisted on stock exchanges of the United States, all low-priced and all selling in the over-the-counter market in New York. The far greater sales were of Rare Earth Mining stock. Almost all of these sales in Reynolds' Chicago office were made by two salesmen (also known as 'account [38 Ill.App.2d 368] executives' and 'registered representatives') William Rothbart and his son Jordan, and were made during March, April, May and June, 1956. Our discussion will be limited to Rare Earth Mining and what is said about it...

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