Case Title: Paris v. Feder

Citation: 

Docket Number: 82713

State: illinois

Court: Illinois Supreme Court

Date: 1997-10-23T00:00:00Z

Document:
Paris v. Feder, No. 82713 (10/23/97) 
 
    NOTICE: Under Supreme Court Rule 367 a party has 21 days after the filing of the 
    opinion to request a rehearing. Also, opinions are subject to modification, correction or 
    withdrawal at anytime prior to issuance of the mandate by the Clerk of the Court. 
    Therefore, because the following slip opinion is being made available prior to the 
    Court's final action in this matter, it cannot be considered the final decision of the 
    Court. The official copy of the following opinion will be published by the Supreme 
    Court's Reporter of Decisions in the Official Reports advance sheets following final 
    action by the Court. 
 
               Docket No. 82713--Agenda 36--May 1997. 
     JOHN PARIS et al., Appellants, v. SAMUEL FEDER et al. (The Department 
               of Professional Regulation, Appellee). 
                  Opinion filed October 23, 1997. 
 
          JUSTICE BILANDIC delivered the opinion of the court: 
          In this appeal we must determine how the statutory $10,000 limit on 
     recovery from the Real Estate Recovery Fund (225 ILCS 455/23 (West 1992)) 
     operates where multiple parties have been injured as a result of a single 
     transaction. 
 
                              FACTS 
          In 1993, the two plaintiffs, John and Barbara Paris, entered into a written 
     agreement to purchase certain real estate located in Skokie, Illinois, from the 
     owner of record. Plaintiffs deposited $20,750 in earnest money with the seller's 
     licensed real estate broker, Liberty Real Estate, Inc. The purchase agreement 
     terminated without default, but Liberty Real Estate failed to return plaintiffs' 
     earnest money. 
          According to the record, one of the owners of Liberty Real Estate stole 
     plaintiffs' earnest money and disappeared. The company's president, Samuel 
     Feder, later signed a promissory note agreeing to repay the stolen earnest money 
     to plaintiffs, but never did so. 
          Plaintiffs brought an action against Liberty Real Estate, Feder, and others 
     for conversion and breach of the promissory note in the circuit court of Cook 
     County. Ultimately, the circuit court entered a default judgment in favor of 
     plaintiffs and against Liberty Real Estate and Feder for $20,750 plus costs. A 
     separate, punitive damages award was also entered. 
          Unable to collect on their $20,750 judgment, plaintiffs filed a verified 
     claim against the Real Estate Recovery Fund (the Fund). Although the verified 
     claim is not contained in the record, the parties agree that plaintiffs sought 
     recovery from the Fund in the amount of $20,000, plus an additional 15% for 
     attorney fees, for a total of $23,000. Plaintiffs apparently did not seek to recover 
     any costs of suit from the Fund. See 225 ILCS 455/23 (West 1992). 
          The Department of Professional Regulation, then the governmental entity 
     in charge of maintaining the Fund (225 ILCS 455/23 (West 1992)), intervened and 
     filed a response to the verified claim. The Department argued that the statute 
     governing the Fund limits recovery from the Fund to a maximum of $10,000 for 
     each transaction, plus an additional 15% for attorney fees, regardless of the 
     number of parties aggrieved in the transaction. The Department relied on the 
     appellate court decision of Von Meeteren v. Sell-Sold, Ltd., 274 Ill. App. 3d 993 
     (1st Dist. 1995). Accordingly, the Department contended, the Fund's maximum 
     liability to plaintiffs was $10,000 plus $1,500 for attorney fees. 
          Plaintiffs argued in reply that the statutory $10,000 limit on recovery does 
     not apply to each transaction, but rather only to each aggrieved party. Relying on 
     the appellate court opinion of Reda v. Otero, 251 Ill. App. 3d 666 (2d Dist. 1993), 
     plaintiffs claimed that, under the statute, each and every aggrieved party is entitled 
     to recover from the Fund $10,000 plus $1,500 in attorney fees. Plaintiffs therefore 
     maintained that, as two aggrieved parties, they were entitled to recover from the 
     Fund a total of $23,000. 
          The circuit court rejected plaintiffs' contention and directed the Fund to 
     pay them $10,000 plus $1,500 for attorney fees. The appellate court affirmed, 
     following Von Meeteren. 285 Ill. App. 3d 1016. We allowed plaintiffs' petition 
     for leave to appeal (155 Ill. 2d R. 315(a)) and now affirm the circuit and appellate 
     courts. 
 
                            ANALYSIS 
          Illinois' Real Estate Recovery Fund, conceived in legislation enacted in 
     1973 (1973 Ill. Laws 2746, 2749-50), is now governed by certain provisions of 
     the Real Estate License Act of 1983 (the Act) (225 ILCS 455/23 through 30 (West 
     1992)). Supported by fees paid by real estate professionals, the Fund provides a 
     pool of money from which persons who are injured by the misconduct of licensed 
     real estate professionals, and who are not able to collect on a judgment obtained 
     against such professionals, may be able to receive payment. 225 ILCS 455/15, 23 
     through 25 (West 1992). Recoveries from the Fund are limited and are not 
     intended to be fully compensatory. See Daly v. Three Star Enterprises, Inc., 110 
     Ill. App. 3d 386, 388 (1982); 225 ILCS 455/23 (West 1992). 
          We are here called upon to interpret the $10,000 limit on recovery from 
     the Fund as set forth in section 23 of the Act (225 ILCS 455/23 (West 1992)). 
     The question is whether the $10,000 recovery limit applies on a per transaction 
     basis, as the Department contends, or only on a per aggrieved party basis, as the 
     plaintiffs contend. 
          Our appellate court is divided on how to interpret the $10,000 recovery 
     limit. The appellate court in this case and in Von Meeteren determined that the 
     limit applies on a per transaction basis, thereby limiting all parties whose injuries 
     arose out of a single transaction to one $10,000 recovery. Von Meeteren, 274 Ill. 
     App. 3d at 999-1000. The appellate court in Reda, on the other hand, held that the 
     limit applies only on a per aggrieved party basis, thereby allowing every party 
     aggrieved in a single transaction to separately recover up to the $10,000 limit. 
     Reda, 251 Ill. App. 3d 666. 
          The cardinal rule of statutory construction is to ascertain and give effect 
     to the true intent of the legislature. Solich v. George & Anna Portes Cancer 
     Prevention Center of Chicago, Inc., 158 Ill. 2d 76, 81 (1994). The best evidence 
     of legislative intent is the language used in the statute itself, which must be given 
     its plain and ordinary meaning. Kraft, Inc. v. Edgar,  138 Ill. 2d 178 , 189 (1990); 
     People v. Tucker,  167 Ill. 2d 431 , 435 (1995). The statute should be evaluated as 
     a whole, with each provision construed in connection with every other section. 
     Abrahamson v. Illinois Department of Professional Regulation,  153 Ill. 2d 76 , 91 
     (1992). If legislative intent can be ascertained from the statute's plain language, 
     that intent must prevail without resort to other interpretive aids. People v. 
     Fitzpatrick,  158 Ill. 2d 360 , 364-65 (1994). We conduct de novo review when 
     resolving an issue of statutory construction. Lucas v. Lakin, 175 Ill. 2d 166, 171 
     (1997). 
          Section 23 of the Act provides in relevant part: 
                    "The Department shall establish and maintain a Real Estate 
                    Recovery Fund from which any person aggrieved by an act, 
                    representation, transaction or conduct of a duly licensed broker *** 
                    may recover. Such aggrieved person may recover *** an amount 
                    of not more than $10,000 from such fund for damages sustained by 
                    the act, representation, transaction, or conduct, together with costs 
                    of suit and attorneys' fees incurred in connection therewith of not 
                    to exceed 15% of the amount of the recovery ordered paid from the 
                    Fund. *** 
                    The maximum liability against the Fund arising out of any 
                    one act shall be as provided in this Section and the judgment order 
                    shall spread the award equitably among all co-owners or otherwise 
                    aggrieved persons, if any. The maximum liability against the Fund 
                    arising out of the activities of any single broker *** shall be 
                    $50,000." 225 ILCS 455/23 (West 1992). 
          Our examination of this provision persuades us that the Department's 
     position is correct. The plain language of the statute clearly establishes a 
     maximum recovery for liability against the Fund for injuries arising out of a single 
     transaction where it states: "The maximum liability against the Fund arising out 
     of any one act shall be as provided in this Section ***." (Emphasis added.) The 
     remainder of that sentence then provides that "the judgment order shall spread the 
     award equitably among all co-owners or otherwise aggrieved persons, if any." This 
     phrase demonstrates that the legislature clearly contemplated that in situations 
     where more than one person has been injured in a single transaction, an equitable 
     division of the maximum recovery limit should be made. We therefore hold that 
     the $10,000 recovery limit applies to each transaction, regardless of the number 
     of persons aggrieved as a result of the transaction. 
          Plaintiffs' contentions otherwise are not persuasive. They argue that the 
     language setting the per transaction limit refers to the $50,000 recovery limit 
     contained in the statute, not the $10,000 recovery limit. We acknowledge that the 
     language setting the single transaction limit does not specify to which recovery 
     limit it refers, but rather simply states that the limit "shall be as provided in this 
     Section." Once the statute is evaluated as a whole, however, it becomes apparent 
     that the legislature intended this language to refer to the $10,000 recovery limit. 
     As noted, the sentence "The maximum liability against the Fund arising out of any 
     one act shall be as provided in this Section" establishes a recovery limit for 
     liability arising out of a single act. The sentence directly following this one then 
     sets a $50,000 recovery limit for liability arising out of all "the activities of any 
     single broker." Given that the first sentence speaks in terms of a single act 
     whereas the second sentence clearly refers to the multiple activities of any single 
     broker, we find it apparent that these two sentences fulfill different functions and 
     consequently must refer to different recovery limits. We therefore reject plaintiffs' 
     assertion that the language setting the per transaction limit refers to the $50,000 
     recovery limit. Contrary to plaintiffs' claim, the statute provides a $10,000 
     recovery limit for injuries arising out of a single transaction, and a $50,000 
     recovery limit for injuries arising out of all the activities of a single broker. 225 
     ILCS 455/23 (West 1992); see generally Note, The Real Estate Recovery Fund: 
     Constitutional and Procedural Critique of an Illinois Remedy, 56 Chi.-Kent L. 
     Rev. 401, 422 n.155, 423 n.156 (1980) (noting that most real estate recovery fund 
     statutes "place a maximum limit on the amount of recovery per transaction 
     involved" and also "place a ceiling on the maximum liability of the fund arising 
     out of the acts of a single licensee"). 
          Plaintiffs further maintain that the statute should be interpreted as follows: 
     that the first paragraph concerns the amount of relief for an "aggrieved person" 
     and establishes a $10,000 limit per aggrieved person, whereas the second 
     paragraph concerns the amount of relief for all persons aggrieved by a single 
     broker and establishes a $50,000 limit per broker. Under this interpretation, 
     whenever two or more persons are aggrieved by the single act of a broker, they 
     may each recover up to $10,000 from the Fund plus the permitted fees, with the 
     maximum liability against the Fund arising out of all the activities of any single 
     broker to be $50,000. Reda, 251 Ill. App. 3d 666. Plaintiffs, as two persons 
     aggrieved as a result of a single transaction, would therefore be entitled to recover 
     $20,000 plus $3,000 in attorney fees. This argument must be rejected because it 
     wholly ignores the statutory language providing for a maximum recovery for 
     liability against the Fund arising out of a single transaction, as discussed above. 
     It also ignores the statutory language distinguishing between a single act and the 
     multiple acts of one broker, also discussed above. 
          In conclusion, the statute's plain language places a $10,000 limit on 
     recovery for liability arising out of a single transaction, regardless of the number 
     of persons aggrieved as a result of the transaction. Von Meeteren, 274 Ill. App. 
     3d at 999-1000. The appellate court decision in Reda, 251 Ill. App. 3d 666, is 
     hereby overruled to the extent that it is not consistent with this holding. 
          The plain language of the statute being clear, we need not consider other 
     interpretive aids in order to ascertain legislative intent. See Advincula v. United 
     Blood Services, 176 Ill. 2d 1, 18-19 (1996) (setting forth when other interpretive 
     aids should be considered). We note, however, that our interpretation of the statute 
     is reinforced when one considers its legislative history.  
          A predecessor statute that governed the Fund provided in relevant part: 
                    "The Department shall establish and maintain a Real Estate 
                    Recovery Fund from which any person aggrieved by an act, 
                    representation, transaction, or conduct of a duly registered real 
                    estate broker *** may recover *** an amount of not more than 
                    $10,000 for damages sustained by the act, representation, 
                    transaction, or conduct *** together with costs of suit and attorney 
                    fees incurred in connection therewith of not to exceed 15% of the 
                    amount of actual damages awarded. 
                    The maximum liability against such Fund arising out of any 
                    one act shall be as provided in this Section and the judgment order 
                    shall spread the award equitably among all co-owners or otherwise 
                    aggrieved persons, if any." Ill. Rev. Stat. 1973, ch. 114«, par. 
                    108.1. 
     This predecessor statute thus provided only a single $10,000 recovery limit. It did 
     not contain the second, $50,000 recovery limit, which was added later. As a result, 
     in this version of the statute, the last sentence quoted above obviously referred to 
     the $10,000 limit. This last sentence also provided that the $10,000 limit applied 
     on a per transaction basis and was to be divided equitably among all the persons 
     aggrieved. These legislative intentions were made clear in the debates surrounding 
     the predecessor version. In summarizing some of the main points of this 
     legislation, the bill's sponsor explained: "It also provides that the maximum 
     liability *** is $10,000. That is that only $10,000 can be recovered from the 
     recovery fund from one incident so that if there were two contract purchases [sic] 
     *** each of whom lost $10,000, they would have to share *** in the $10,000 
     recovery." 78th Ill. Gen. Assem., House Proceedings, June 30, 1973, at 39 
     (statement of Representative Walsh). This legislative history therefore 
     demonstrates that our General Assembly intended the $10,000 recovery limit to 
     operate on a per transaction basis, regardless of the number of aggrieved parties. 
          The legislature subsequently amended the statute in 1975 to add the 
     $50,000 recovery limit by adding the following sentence: "The maximum liability 
     against such Fund arising out of the activities of any single broker *** shall be 
     the sum of $50,000." 1975 Ill. Laws 2308 (Pub. Act 79--749, approved September 
     4, 1975). When it added this sentence, the legislature did not change the wording 
     of the sentence pertaining to the maximum limit on liability arising out of a single 
     act. 1975 Ill. Laws 2308. We can infer from this decision that the legislature 
     intended to retain the $10,000 recovery limit on a per transaction basis and to add 
     the $50,000 recovery limit on a per broker basis. Therefore, the $50,000 per 
     broker limit added by that amendment did not alter how the $10,000 per 
     transaction limit operates. This conclusion is supported by the debates held on this 
     amendment. The debates reveal that the $50,000 per broker limit was aimed at a 
     particular concern, unrelated to the $10,000 per transaction limit. This concern was 
     that, without any cap on liability arising out of all the activities of a single broker, 
     any single broker could threaten the integrity of the entire Fund. See 79th Ill. Gen. 
     Assem., House Proceedings, May 21, 1975, at 44-46. This later legislative history 
     thus shows that our General Assembly, in adding the $50,000 recovery limit per 
     broker, did not in any way intend to change how the original $10,000 recovery 
     limit per transaction operates. 
          In the present case, the two plaintiffs concede that their injuries arose out 
     of a single transaction. As a result, consistent with our holding above, their 
     recovery from the Fund is limited to $10,000 plus $1,500 for attorney fees. 
 
                           CONCLUSION 
          For the reasons stated, the judgment of the appellate court, affirming the 
     judgment of the circuit court, is affirmed.  
 
     Affirmed. 
 
                                                                      JUSTICE HEIPLE, dissenting: 
          This case presents a narrow question of statutory interpretation: Does the 
     $10,000 damage cap on claims paid out of the Real Estate Recovery Fund apply 
     per claimant or per transaction? The majority holds that the $10,000 cap applies 
     per transaction, so that the two plaintiffs--who were defrauded when their real 
     estate broker absconded with $20,750 in earnest money--may recover only $10,000 
     for the two of them. 
          The statute provides, however, that any person aggrieved by the fraudulent 
     act of a real estate broker may recover from the Fund an amount of not more than 
     $10,000 and that the Fund's maximum liability arising out of the activities of any 
     single broker is limited to $50,000. The word "transaction" in the Act is not a 
     word of limitation upon a claimant's right to recover. 
          As Justice Holmes once observed, "we do not inquire what the legislature 
     meant; we ask only what the statute means." O. Holmes, The Theory of Legal 
     Interpretation, 12 Harv. L. Rev. 417, 419 (1898). The statute's plain language 
     provides for a $10,000 cap which applies per claimant--not per transaction; the 
     majority opinion creates the latter limitation out of thin air. 
          Each plaintiff should be allowed $10,000 for a total claim on the Fund of 
     $20,000 plus attorney fees. Accordingly, I respectfully dissent. 
 
          JUSTICE HARRISON joins in this dissent.