Industrial Lift Truck Service Corp. v. Mitsubishi Intern. Corp.

• Decision Date: 04 February 1982
• Docket Number: No. 81-11,81-11
• Citation: 104 Ill.App.3d 357,432 N.E.2d 999,60 Ill.Dec. 100
• Parties: , 60 Ill.Dec. 100 INDUSTRIAL LIFT TRUCK SERVICE CORPORATION, Plaintiff-Appellant, v. MITSUBISHI INTERNATIONAL CORPORATION, Defendant-Appellee.
• Court: United States Appellate Court of Illinois

Page 999

432 N.E.2d 999

104 Ill.App.3d 357, 60 Ill.Dec. 100

INDUSTRIAL LIFT TRUCK SERVICE CORPORATION, Plaintiff-Appellant, v. MITSUBISHI INTERNATIONAL CORPORATION, Defendant-Appellee.

No. 81-11.

Appellate Court of Illinois, First District, Fourth Division.

Feb. 4, 1982.

[60 Ill.Dec. 101] Moriarty, Hultquist, McDevitt & Howlett, Ltd., Chicago, for plaintiff-appellant; Maurice J. Moriarty, Richard F. Hudzik, Chicago, of counsel

Masuda, Funai, Eifert & Mitchell, Ltd., Chicago, for defendant-appellee; James R. Mitchell, Sally Hastings, Chicago, of counsel.

LINN, Justice:

Plaintiff, Industrial Lift Truck Service Corporation, appeals from an order entered in the circuit court of Cook County which dismissed three counts of plaintiff's five count second amended complaint. The counts dismissed were III, IV, and V. The primary issues on appeal are whether Counts III and IV stated a valid cause of action for recovery in quasi-contract, and whether Count V was barred by the previous dismissal of three counts of plaintiff's first amended complaint.

We affirm.

BACKGROUND

Plaintiff, Industrial Lift, is an Illinois corporation in the business of selling and servicing fork-lift trucks. Defendant, Mitsubishi International Corporation, is the United States distributor of fork-lift trucks manufactured by Nippon Yusoki Corporation of Japan. In 1973, plaintiff and defendant entered into a dealership agreement under which plaintiff would purchase fork-lift trucks from defendant and use its best efforts to sell the trucks to plaintiff's customers. Plaintiff was also required to service the trucks it sold under the manufacturer's warranty.

In November 1976, the original agreement was terminated and replaced by a new agreement under which plaintiff would use its best efforts to sell and service defendant's product. The agreement contained numerous terms and was designated to be the entire and exclusive agreement of the parties and could be amended only by written agreement. The terms in the contract important to this case were the following:

(1) defendant could terminate the agreement without cause by giving 90 days written notice except that such termination could not occur during the first year of the agreement;

(2) following termination, defendant would not be liable for any losses incurred by plaintiff as a result of termination.

From 1973 through 1977, plaintiff enjoyed success in selling defendant's product and allegedly became the nation's largest dealer in the product as a result of "great expenditures of time, effort, and money." Among the "great expenditures of time, effort, and money" were expenditures that went into making several design changes, which we need not detail, in defendant's product. These design changes were made by plaintiff because it believed them necessary to adapt defendant's Japanese product to an American market. The changes were not made because of any express or implied request or demand by defendant. Apparently, plaintiff sold many trucks with the design changes and eventually defendant incorporated the changes into the products it sold to its other dealers.

In August 1978, defendant sent plaintiff notice of termination of the dealership agreement. Defendant cited as cause plaintiff's declining sales in the previous year, but indicated that it was exercising its right to terminate under the 90 day notice of termination without cause term in the contract. Thereafter, plaintiff brought this action. Of importance here are parts of plaintiff's first amended complaint and second amended complaint.

Plaintiff's first amended complaint contained three counts based on breach of contract. In these counts, plaintiff alleged that the dealership agreement was a transaction involving goods under the Uniform Commercial Code. (Ill.Rev.Stat.1979, ch. 26, par. 2-102.) In one count, plaintiff, citing the Commercial Code, alleged that defendant had an obligation under the contract to act in good faith. (Ill.Rev.Stat.1979, ch. 26, par. 1-203.) Plaintiff contended that termination of the agreement without cause violated the duty of good faith and constituted breach of contract. In another count, plaintiff, citing the Commercial Code, alleged that defendant was required to give reasonable notice of termination. (Ill.Rev.Stat.1979, ch. 26, par. 2-309(3).) Plaintiff contended that the 90 day notice of termination given was unreasonable because it did not give plaintiff sufficient time to recoup the expenses it had incurred in making the design changes. In a third count, plaintiff contended that the notice of termination given did not comply with the terms of the contract and thus the termination was improper and constituted breach of contract.

The above three counts of the first amended complaint were dismissed with prejudice and with a finding that there was no just reason to delay enforcement or appeal of the dismissal order. The order was entered on April 22, 1980. No appeal was taken. Plaintiff's second amended complaint, filed on May 23, 1980, included Count V which is now before us. In this count, plaintiff alleged that the dealership agreement was a contract of adhesion and as a result the 90 day notice of termination without cause term of the contract was invalid and defendant's termination of the contract without cause constituted breach of contract. The trial court dismissed this count finding that it was barred by its order dismissing the three breach of contract counts in the first amended complaint.

The first amended complaint also contained a count seeking recovery based on quasi-contract principles. This count was dismissed with leave to amend. As a result, plaintiff, in its second amended complaint, brought two counts, III and IV, seeking recovery based on quasi-contract principles. Though the parties on appeal have attempted to argue distinctions in the two counts, except for some minor additions and changes, we find that Count IV is merely a repetition of Count III and we will treat the counts as one. Other than the facts which have already been set out in this opinion, these two counts alleged that defendant was profitting from the design changes made by plaintiff, that defendant had failed to reimburse plaintiff for the costs incurred in developing the design changes, that defendant's retention of the benefits accruing to it as a result of the design changes was unjust, and that plaintiff should receive restitution for those benefits including the reasonable value of the expenses plaintiff had incurred in developing the design changes. The quasi-contract

[60 Ill.Dec. 103] counts of the second amended complaint were dismissed as failing to state a cause of action.

OPINION

I Quasi-contract

A contract implied in law, or a quasi-contract, is fictitious and arises by implication of law wholly apart from the usual rules relating to contract. (Town of Montebello, Hancock County v. Lehr (1974), 17 Ill.App.3d 1017, 309 N.E.2d 231.) Quasi-contractual claims involving services usually arise when there is no contract, either express or implied, between the parties. One party performs a service that benefits another. The benefitting party has not requested the service but accepts the benefit. Circumstances indicate that the services were not intended to be gratuitous. As a result, the law will sometimes impose a duty on the benefitting party to pay for the services rendered despite the lack of a contract. See Hamilton v. American Gage & Machine Corp. (1976), 35 Ill.App.3d 845, 342 N.E.2d 758.

Difficulties arise with quasi-contractual claims when there is an express contract between the parties. The general rule is that no quasi-contractual claim can arise when a contract exists between the parties concerning the same subject matter on which the quasi-contractual claim rests. (See La Throp v. Bell Federal Savings & Loan Association (1977), 68 Ill.2d 375, 12 Ill.Dec. 565, 370 N.E.2d 188, cert. denied, 436 U.S. 925, 98 S.Ct. 2818, 56 L.Ed.2d 768 (1978); Goodman v. Motor Products Corp. (1959), 22 Ill.App.2d 378...