Corbett v. Devon Bank

• Decision Date: 25 June 1973
• Docket Number: No. 56690,56690
• Parties: J. Joseph CORBETT et al., Plaintiffs-Appellants, v. DEVON BANK et al., Defendants-Appellees.
• Court: United States Appellate Court of Illinois

Page 521

299 N.E.2d 521

12 Ill.App.3d 559

J. Joseph CORBETT et al., Plaintiffs-Appellants, v. DEVON BANK et al., Defendants-Appellees.

No. 56690.

Appellate Court of Illinois, First District, First Division.

June 25, 1973.

Fohrman, Lurie, Holstein, Sklar & Cottle, Ltd., Chicago (Paul M. Lurie, Chicago, of counsel), for plaintiffs-appellants.

McCarthy, Scheurich, Duffy & McCarthy, Chicago (John M. Duffy, Daniel J. McCarthy and Stephen A. Snakard, Chicago, of counsel), for defendants-appellees.

GOLDBERG, Justice.

This proceeding is a class suit which seeks to halt renewal sales of Illinois motor vehicle licenses through various banks in the State, and an accounting for service charges paid to the banks. The named plaintiffs, J. Joseph Corbett, Gerald M. Penner and Charles Cohn, have appealed from an order entered by the circuit court sustaining the motions of various defendants and dismissing the suit for want of equity. Plaintiffs joined as named defendants some 34 banks doing business in Illinois. Plaintiffs also joined, as class defendants, all other banking institutions in Illinois which have collected service fees in connection with these transactions. The named defendants as well as the class defendants will be referred to as 'defendants', as they are in the pleadings. The Secretary of State of Illinois (Secretary) was also named as a defendant.

The pertinent facts appear from the properly pleaded allegations of the second amended complaint, admitted by the motions to dismiss. (Holiday Magic, Inc. v. Scott, 4 Ill.App.3d 962, 963, 282 N.E.2d 452 and cases therein cited.) The second amended complaint alleged that plaintiffs brought the suit individually and on behalf of all other persons similarly situated who have obtained Illinois motor vehicle registration plates since 1965 and who will in the future obtain such plates from defendants and who have paid and will in the future pay service charges to defendants in connection with such purchases. The defendants had entered into written agreements with the Secretary which designated them as his authorized agents for the distribution of renewal license plates for passenger cars and for the collection of the statutory fees from plaintiffs. A copy of the agreement was appended to the complaint.

It was also alleged that the only authorization for the collection of such fees and charges by defendants is that set forth in the applicable statute. The statute provides for purchase of motor vehicle licenses by the owners thereof, and for payment by them to the Secretary of annual registration fees at specified rates. (Ill.Rev.Stat.1971, ch. 95 1/2, par. 3--806.) Each of the named plaintiffs had obtained license plates from the Secretary in the past and they had, after 1965, purchased these license plates from one of the named defendant banks. In each such instance, before the bank would issue the license plates, it had required payment from the named plaintiffs, and from other members of the class represented herein, of a service fee of $1 for each set of plates for each year. The second amended complaint described these charges as 'unlawful.' It alleged that the Secretary had allowed and assisted such unlawful activity by furnishing the defendants with license plates for distribution.

The second count of the second amended complaint adopted the principal allegations of the first count. In addition, it alleged that all of the defendants were either state banks governed by the Illinois Banking Act (Ill.Rev.Stat.1971, ch. 16 1/2) or were national banks governed by the National Bank Act (Title 12, United States Code) and by regulations issued pursuant to these statutes. It further alleged that there was no authority in these statutes or regulations for defendants to distribute license plates and to profit from this service by charging fees in addition to those authorized by statute.

The second amended complaint prayed a variety of relief: a declaration that the service fees required by defendants for 1966 to 1971 inclusive were illegal and unlawful and for injunction against this practice an accounting by defendants to plaintiffs for all charges thus wrongfully collected plus interest during the specified and subsequent years; an order segregating all funds thus wrongfully collected; injunction preventing the Secretary from furnishing license plates to defendants or otherwise assisting them in the wrongful practice; injunction restraining defendants from collecting service charges from plaintiffs; injunction against prosecution of other actions in any court involving plaintiffs in the same class and raising substantially similar issues; and, finally, allowance of reasonable attorneys fees.

The written agreements entered into between the defendants and the Secretary provided that the bank was to purchase at its own cost a machine used to validate renewals of motor vehicle licenses. The signatory banks were authorized to issue only renewal license plates for passenger automobiles. The bank agreed to send at least two employees for training by the Secretary regarding proper procedure in issuance of the plates. The bank assumed full responsibility for transporting a supply of license plates to its place of business and for returning unsold plates to the Secretary within two weeks after the last official date for purchase thereof. The bank agreed to keep all license plates safely in its custody and to indemnify the Secretary and the State of Illinois against loss of such plates and of revenues received by the bank. All such revenues were to be transmitted daily to the Secretary in Springfield. The bank assumed full responsibility for furnishing the required help. In addition, the bank was to obtain a proper bond holding the Secretary harmless against all acts or failure to act by the bank or its employees and copies of this bond were to be furnished to the Secretary.

The record shows three separate motions to dismiss the second amended complaint. One of the motions stated that Count I failed to state a cause of action because the claims of the individual plaintiffs against defendants were all separate and independent without community of interest; plaintiffs have received the full benefit of voluntary transactions and that the decision in the Remittance Agents case is dispositive of the issues raised. (Illinois Association of Remittance Agents v. Powell, 122 Ill.App.2d 322, 258 N.E.2d 827.) As to Count II, the motion set forth that no cause of action was stated because the claims of members of the purported class were distinct and independent without community of interest; the validity of transactions engaged in by the banks could not be questioned by private parties who were voluntary participants, who received the full benefit of the transactions and were not injured therefrom; and, also, that plaintiffs were not creditors, shareholders or competitors of the banks; further, that the collection of service charges by the banks was permitted by law. Similar motions to dismiss were filed by certain of the remaining banks.

In this court, plaintiffs urge that the banks have no authority to charge for this type of service. Under this heading, they contend that no such authority results from statutes or regulations; the banks cannot charge amounts in excess of that established by statute; the agreements between plaintiffs and defendants were void as against public policy and permitting recovery by plaintiffs would advance enforcement of public policy. Plaintiffs also urge that this court is not bound by the previous decision in Illinois Association of Remittance Agents v. Powell, 122 Ill.App.2d 322, 258 N.E.2d 827 (leave to appeal denied), decided in the Fourth District of this court in 1970. Plaintiffs have also argued at length that their complaint constitutes a valid class action characterized by community of interest of plaintiffs in a dominant and pervasive issue.

This court has been favored with two separate briefs expounding the theories of defendants. One bank has filed its individual brief and another brief has been filed in behalf of a great many other defendant banks. These briefs urge that service charges paid to the banks may not be recovered because they were voluntary payments. They contend that collection of these charges is not Ultra vires or outside the authority of the state and national banks; and, regarding completed or executed transactions, plaintiffs may not recover on the Ultra vires theory. In this connection, defendants urge that the issues regarding legality of collection of the service charges have been disposed of by the Remittance Agents case which this court is obliged to follow as precedent. Finally, defendants contend that the claims here may not be maintained as a class action since no common question of law and fact exists; there is no community of interest by plaintiffs in a dominant issue; the members of the class do not share a common interest in asserting a claimed right and plaintiffs do not fairly and adequately represent the class.

It is advisable at the outset to consider the previous decision in the Remittance Agents case cited above. The proceedings there were initiated in the circuit court of Sangamon County by the Illinois Association of Remittance Agents. The members of this association were licensed under the applicable statute which authorized them to accept payment of fees for vehicle licenses and registration fees from members of the public and to remit these funds to the Secretary. (Ill.Rev.Stat.1969, ch. 95 1/2, pars. 3--900 to 3--917 inclusive.) Plaintiff sought to prevent sale of motor vehicle licenses by the Secretary acting through various banks, precisely as in the case at bar. The Secretary was the only defendant. The circuit court granted plaintiff the desired relief. This court (fourth district) held to the contrary and the decree appealed from was reversed. A number of the banks involved in the...