Midland Hotel Corp. v. Reuben H. Donnelley Corp.

• Decision Date: 05 October 1987
• Docket Number: 64557,Nos. 64301,s. 64301
• Parties: , 113 Ill.Dec. 252 MIDLAND HOTEL CORPORATION, Appellee and Cross-Appellant, v. The REUBEN H. DONNELLEY CORPORATION, Appellant and Cross-Appellee.
• Court: Illinois Supreme Court

Page 61

515 N.E.2d 61

118 Ill.2d 306, 113 Ill.Dec. 252

MIDLAND HOTEL CORPORATION, Appellee and Cross-Appellant, v. The REUBEN H. DONNELLEY CORPORATION, Appellant and Cross-Appellee.

Nos. 64301, 64557.

Supreme Court of Illinois.

Oct. 5, 1987.

Rehearing Denied Dec. 1, 1987.

Byron L. Gregory, Steven H. Hoeft, Richard L. Sandler, Chicago, for appellant and cross-appellee; McDermott, Will & Emery, Chicago, of counsel.

Barbara B. Hirsch, Chicago, for Midland Hotel Corp.

Justice THOMAS J. MORAN delivered the opinion of the court:

Plaintiff, Midland Hotel Corporation, brought suit in the circuit court of Cook County against defendant, The Reuben H. Donnelley Corporation, seeking lost profits arising from the breach of an oral contract to include plaintiff in the first issue of a newly published telephone directory. Following a jury trial, the plaintiff was awarded damages of $500,000. Defendant appealed and the appellate court affirmed as to liability but remanded on the issue of damages, finding that a jury instruction, tendered by the defendant as to damages, was improperly refused. (149 Ill.App.3d 53, 103 Ill.Dec. 742, 501 N.E.2d 1280.) Appeal is taken to this court pursuant to Rule 315. 107 Ill.2d R. 315.

The plaintiff raises a number of issues on appeal which from our review of the record we find to be without merit; it is therefore necessary to consider only the following issues: (1) whether there was an enforceable contract to list the plaintiff under the "Hotels" heading in the new directory; (2) whether plaintiff's proof of lost profits was speculative; and (3) whether the trial court properly refused a jury instruction that lost profits must have been within the reasonable contemplation of the defendant when the contract was formed.

The defendant publishes telephone directories which list telephone numbers and display advertisements of businesses under descriptive headings. In July of 1981, defendant issued its first Chicago Visitors Guide and Downtown Directory (the Guide). The 1981 edition of the Guide ran until July of 1982, when a new edition was released. The Guide was intended to serve as a reference material for tourists and business travelers as well as a directory for downtown businesses. It was divided into two sections, the first section contained numerous maps and photos of points of interest in the city of Chicago while the second section consisted of an ordinary Yellow Pages directory for the downtown area. All downtown businesses were to receive one free regular listing in the Yellow Pages section of the Guide. Defendant earned revenue by selling bold-faced listings and display advertisements with rates proportional to the breadth of distribution. Distribution was accomplished by delivering copies to downtown businesses and residents, providing copies to the Chicago Convention and Tourism Bureau and entering into contracts with downtown hotels for lobby distribution and in-room placement by their maid services. Defendant estimated that a total of 160,000 copies of the 1981 Guide had been distributed, with hotel distribution accounting for about half of the total.

In February of 1981, Myron Levy, the plaintiff's general manager, met with Earl Polisky, a representative of the defendant, to discuss distribution of the Guide at the Midland. Levy testified that he agreed to defendant's distribution program and in return Polisky promised that the hotel would receive an outside back-cover ad on all of the Guides which were distributed in the hotel in addition to the "appropriate listings" under the "appropriate" headings in the Guide. Polisky, however, testified that he only offered an outside back-cover ad on all Guides distributed in the hotel in exchange for the distribution service; he denied promising Levy any listings in exchange for distribution. Robert Hughes, defendant's vice president of sales and marketing, testified that it was defendant's corporate policy to offer only a free back-page ad in exchange for hotel distribution.

When the 1981 Guide was released, the plaintiff was not listed under the "Hotels" heading in the Yellow Pages section; instead, it was listed under "Banquet Rooms." The plaintiff also received the back-page advertisement for the Guides to be distributed in the hotel. In the 1982 and 1983 editions of the Guide, the plaintiff was listed under the "Hotels" heading, "Banquet Rooms" heading and had two listings under the "Restaurant" heading.

The plaintiff sought $1,359,857 in lost net profits from July of 1981 to July of 1984. Net profits from July of 1982 to July of 1984 were sought as the consequence of the residual effect of being omitted from the 1981 Guide. John Jaeger, an accountant and plaintiff's expert witness, testified that the damages figure was arrived at by measuring the variance between the plaintiff's occupancy percentage and the average occupancy percentage of other downtown Chicago hotels as derived from a trade publication entitled, Trends In The Hotel Industry (Trends). Jaeger's calculation of lost occupancy assumed that plaintiff's occupancy percentage would have equalled the downtown Trends average for the three-year period. Jaeger then added the lost revenue from food and beverage sales as well as lost telephone revenue and deducted from this the plaintiff's variable expenses to arrive at the total lost net profits. Defendant's expert witness, James Adler, an accountant, testified that Jaeger's calculation of damages was invalid since it incorrectly assumed that plaintiff's occupancy percentage would have otherwise equalled the downtown Trends average. Adler noted that for numerous months prior to July of 1981, plaintiff's occupancy percentage was trailing the Trends average and that therefore there was no basis for the assumption that the plaintiff would have otherwise equalled the Trends average after July of 1981.

Defendant argues that there was no enforceable contract to list the plaintiff as a hotel. In support of this argument, defendant asserts that there was no credible evidence that defendant promised "appropriate listings," that there was no meeting of the minds between the parties and that the contract was too ambiguous to be enforced.

Defendant argues that there was no credible evidence as to the existence of a contract for "appropriate listings" since the only evidence of such a contract was Levy's testimony and Levy testified that he never discussed the number or placement of the listings in his meeting with Polisky. Defendant reasons that "[i]f the Midland had been offered Yellow Pages listings worth more than $1 million to the Midland, then Mr. Levy certainly would have discussed with Mr. Polisky the Midland's business, services and the available headings and reached an agreement on the number of listings and headings under which the Midland's telephone number would be listed." Moreover, defendant notes Levy's poor recall of the meeting with Polisky and characterizes Levy's testimony as "equivocal" since he first testified that he was promised an "appropriate listing" and then later testified that he was promised "appropriate listings."

It is the function of the jury to assess the credibility of witnesses and the weight to be accorded their testimony (Mizowek v. De Franco (1976), 64 Ill.2d 303, 309-10, 1 Ill.Dec. 32, 356 N.E.2d 32), and the jury's determination will not be overturned unless contrary to the manifest weight of the evidence (Bauske v. City of Des Plaines (1957), 13 Ill.2d 169, 181, 148 N.E.2d 584). As such, the sufficiency of the evidence is not contingent upon the sheer number of witnesses; a jury is free to credit the testimony of one witness against the conflicting testimony of several witnesses. Here, we cannot say that Levy's testimony was contrary to the manifest weight of the evidence. Levy's testimony that he was promised "appropriate listings" without inquiring as to the number or placement of the listings is quite plausible since he well could have entrusted such matters to defendant's expertise.

We agree with the appellate court that "[u]ltimately, this case turns on whether one chooses to believe plaintiff's witness, Levy, concerning the terms of the contract, or defendant's witnesses." (149 Ill.App.3d 53, 60, 103 Ill.Dec. 742, 501 N.E.2d 1280.) In our view, it is certainly not implausible that the defendant may have promised Levy "appropriate listings" in order to induce him to undertake distribution of the Guide.

Defendant contends that there was no enforceable contract to provide plaintiff with "appropriate listings" since there was no meeting of the minds between the parties on this term. Defendant argues that it only understood that it was to provide a free back-page advertisement in exchange for the distribution service. Thus, defendant asserts that even if the plaintiff understood that it was to receive "appropriate listings," there was still no meeting of the minds since there was no evidence that it shared this understanding.

In order for there to be a contract between parties there must be a meeting of the minds or mutual assent as to the terms of the contract; however, it is not necessary that the parties share the same subjective understanding as to the terms of the contract. (1 S. Williston, Contracts secs. 21, 22 (3d ed. 1957).) "It suffices that the conduct of the contracting parties indicates an agreement to the terms of the alleged contract." (Steinberg v. Chicago Medical School (1977), 69 Ill.2d 320, 331, 13 Ill.Dec. 699, 371 N.E.2d 634.) Otherwise, a party would be free to avoid his contractual liabilities by simply denying that which his course of conduct indicates. As such, defendant's subjective understanding of the terms of the contract is immaterial. The jury found that the defendant promised "appropriate listings" and whether this promise accurately reflected the defendant's subjective intention is simply irrelevant.

Defendant next claims that a...