Marcus v. Wilson

• Decision Date: 27 December 1973
• Docket Number: No. 57380,57380
• Parties: Gale L. MARCUS and Marcus & Orr, a Partnership, Plaintiffs- Appellants, v. James B. WILSON et al., Defendants-Appellees.
• Court: United States Appellate Court of Illinois

Page 554

306 N.E.2d 554

16 Ill.App.3d 724

Gale L. MARCUS and Marcus & Orr, a Partnership, Plaintiffs- Appellants, v. James B. WILSON et al., Defendants-Appellees.

No. 57380.

Appellate Court of Illinois, First District, Third Division.

Dec. 27, 1973.

James C. Kellogg and Gale L. Marcus, Chicago, for plaintiffs-appellants.

Schwartz, Cooper, Kolb & Gaynor, Chartered, Chicago, for defendants-appellees; Narcisse A. Brown, Martin W. Salzman, Chicago, of counsel.

McNAMARA, Justice:

Plaintiffs filed this action in the circuit court of Cook County to recover damages sustained as a result of the alleged interference by the defendant-attorneys with an agreement and attorney-client relationship between plaintiffs and the other defendants. The trial court, sitting without a jury, held that, although plaintiffs may have been damaged, defendants were not responsible. On appeal plaintiffs' primary contention is that the court erred in determining that defendants were not liable for the damages which plaintiffs sustained. They also argue that the court improperly permitted defendants to raise affirmative defenses not raised in their pleadings; that the court improperly permitted the introduction of certain evidence; and that the court erroneously denied plaintiffs' motion to file an amended complaint to conform to the proof at trial.

Plaintiffs' complaint alleged that, pursuant to a request by James B. Wilson, they performed legal services for Wilson, Charles Elias, Paul Westfall and Shalcross Corporation. Wilson, stated that either he or Shalcross would be responsible for the payment of fees. Wilson owned ninety percent of the stock in Shalcross, while Westfall and Elias, the corporation's only officers, each owned five percent.

The complaint further alleged that Wilson owed plaintiffs more than ten thousand dollars for their legal services. Wilson, as Shalcross' agent, delivered a note for fifteen thousand dollars to plaintiffs payable to the Hartford Plaza Bank. The note was signed on its face by Wilson and John J. Vitacco and endorsed 'without recourse' on the reverse side by Hartford to Shalcross. The complaint also recited that, when delivering the note to them, Wilson directed plaintiffs to file suit against Vitacco, stating that he had the authority to so direct them. Plaintiffs were to receive the entire proceeds of the note as compensation for past services and for fees incurred in the collection of the note. Plaintiffs confessed judgment on the note and, as attorneys for Shalcross, filed garnishment proceedings against two banks holding Vitacco's funds. The complaint further alleged that, without notice to or permission from plaintiffs, defendants executed a satisfaction reciting that Shalcross had received full payment and releasing the judgment against Vitacco. The satisfaction was signed by Westfall and Shalcross.

Plaintiffs' complaint charged that Westfall, Elias, and Wilson, individually and as agents for Shalcross, and Malcolm Gaynor, individually and as an agent for the defendant law firm, fraudulently conspired to deprive plaintiffs of their rights to the proceeds of the judgment on the note. Plaintiffs also charged that, notwithstanding plaintiffs' agreement with the other defendants, Malcolm Gaynor, individually and as an agent for the defendant law firm, and Vitacco fraudulently induced the other defendants to breach their agreement with plaintiffs and destroy their lien rights by inducing those defendants to execute and file a satisfaction without paying the funds to plaintiffs.

Malcolm Gaynor and the defendant law firm filed an answer to the complaint in which they denied that Wilson directed plaintiffs to file suit on the note against Vitacco. The answer denied that plaintiffs were authorized to act as attorneys for Shalcross, but admitted plaintiffs were attorneys of record for Shalcross in the suit. The answer further denied that defendants executed the satisfaction and stated that plaintiffs' permission was not required to file the satisfaction.

John Vitacco filed an answer setting forth the same defenses as the defendant-attorneys. Vitacco further stated that his obligation and liability on the note were extinguished upon the payment by Wilson to the holder at maturity.

Wilson, Westfall, Elias, and Shalcross were all dismissed as defendants. The cause proceeded to trial against Vitacco, Gaynor, and the law firm of Schwartz, Cooper, Kolb and Cohen. Upon the death of Schwartz, his estate was substituted as defendant.

At trial plaintiffs called six witnesses. Doctor John Vitacco, called as an adverse witness, testified that he knew Wilson only slightly as a result of a federal case in which they were both involved. Vitacco knew Sam Mercurio and was involved with him in several business ventures, including a savings and loan association. Vitacco acknowledged co-signing the note with Wilson but could not remember when.

In 1966 Vitacco retained the defendant law firm to help him with some financial difficulties. This occurred prior to the confession of the instant note. Vitacco, upon receiving a written demand for payment of the note from plaintiffs, sent Sam Mercurio the demand and asked him to take care of it. Vitacco also referred the notice of garnishment proceedings to Mercurio. Vitacco further testified that he did not recall paying $16,965.26 and costs to Shalcross, as stated in the satisfaction.

Malcolm Gaynor, also called as an adverse witness, testified that he was employed by the defendant law firm, a firm specializing in financial problems. Gaynor did not recall seeing plaintiffs' names on any notices in connection with the confession suit. The first time he saw the court file was after the execution had been executed. Gaynor testified that he prepared the satisfaction which was executed by Westfall, the secretary-treasurer of Shalcross. The first time Gaynor met Westfall was the morning the satisfaction was signed. Gaynor stated that eventually he sent a copy of the satisfaction to plaintiffs. Gaynor testified that he believed the note was paid before he prepared the satisfaction because he was so advised by the Hartford Bank.

Gaynor, in a portion of a deposition which was introduced into evidence, stated that Schwartz, the firm's senior partner, had stated that he had a conversation with the attorneys for the judgment-creditors before the matter was assigned to Gaynor. Gaynor also stated that Vitacco told him that Westfall would execute the satisfaction.

Charles Elias, president of Shalcross, testified that Wilson treated the corporation as his own and had corporate checks issued for his personal obligations. Elias testified that plaintiffs represented Shalcross, Wilson, Westfall, himself, and others. Elias did not authorize plaintiffs to file suit on the note, although he delivered the note to plaintiffs. Elias was unaware of the satisfaction at the time it was executed, and he testified that there had been no corporate resolution authorizing it. Elias also testified that Shalcross was out of existence and that Wilson was in the penitentiary.

Wallace Orr, a partner in the plaintiff law firm, testified that he had done the majority of the work in the transaction. Orr requested security for the fees, which were becoming substantial, and Wilson offered him the note. When Orr inquired as to how he could be sure the note had any value, Wilson sent him a financial report on Vitacco.

In December, 1965, Wilson told Orr to confess judgment on the note. When Orr sent a demand letter to Vitacco, the latter referred him to his attorney, Joseph Schwartz. Schwartz asked Orr to hold off on the note. When nothing was accomplished, Orr confessed judgment on the note in June, 1966.

Gale Marcus, one of the plaintiffs, testified that his firm had received an initial retainer from Wilson for the work to be done for Wilson, Westfall, Elias, and Shalcross Corporation. The billing for legal services was done through the corporation for tax reasons. Plaintiffs received the note as security for the payment of these services when the amount reached $10,000.

Lawrence W. Northrup, president of the Hartford Plaza Bank, testified that the bank lent Wilson $15,000 only after the latter secured Vitacco as co-signer of the note. Northrup, present at the execution of the note, also testified that it was impossible to determine from the face of the note that the relationship of the parties was other than lender and borrower with two parties co-signing as borrowers. The proceeds of the loan were credited to Wilson's account at the bank. The original note was renewed and finally paid by Wilson. At the time of payment Northrup acceded to Wilson's request to endorse the note to Shalcross rather than mark the note paid. Northrup testified: 'I was glad to get the note paid and I wasn't particular how it was done.' Northrup agreed that the foregoing did not constitute normal banking practice.

Malcolm Gaynor, a defendant, testified that he was contacted by Vitacco and Mercurio in July, 1966. Gaynor was told that Vitacco had co-signed as an accommodation and had not received any proceeds. Gaynor also was informed by Northrup that the loan had been made to Wilson after Vitacco co-signed it, that Vitacco had received none of the proceeds, and that Wilson, after paying the note, had asked that the note be assigned to Shalcross. Westfall told Gaynor that plaintiffs did not have authority to confess judgment on the note.

Gaynor acknowledged that he had sent notice of the filing of the satisfaction on July 20, 1966, and that he had received notice from garnishee dated July 9. The notice showed that a copy had been sent to plaintiffs. Gaynor stated that he had been concerned about the possible existence of an attorneys' lien and the fact that he had not been in touch with the judgment-creditor's attorney. He decided, however, that since Westfall had told him that the attorneys lacked authority, his best...