Court Opinion

ID: 9860502
Source: CourtListenerOpinion
Date Created: 2023-09-24 23:23:51.745785+00
Date Added: 2024-06-11T11:16:00.387565
License: Public Domain

PRESIDING JUSTICE JIGANTI, dissenting: I respectfully dissent. The cross-complaint asks that Foster be indemnified from Continental for all amounts which Foster is required to pay as a result of the underlying action filed by the Attorney General in the name of the People of the State of Illinois against Foster. The action by the People against Foster alleges that Foster violated various statutory and common law duties affecting the public’s interest in trust funds. Foster’s complaint in turn against Continental alleges that he was a member of the Board of Directors of the Community Hospital of Evanston and that the Board of Directors entered into an agreement with Continental. Under that agreement, Continental was to manage trust funds. Continental knew that there were certain assets designated as “restricted for endowment fund.” However, Continental allowed the funds to be dissipated in contravention of the restrictions placed on the funds. As a result of Continental’s actions, Foster has been made a defendant in the present action and may be required to pay damages. The right to indemnity is based on the principle that everyone is responsible for his own wrongs and that if another has been called upon to pay damages for which the wrongdoer is primarily responsible, the latter becomes liable to the former. (Bituminous Casualty Corp. v. American Fidelity & Casualty Co. (1959), 22 Ill. App. 2d 26, 32, 159 N.E.2d 7, 10.) The principle is variously called restitution, quasi-contract, contract implied in law or assumpsit. The obligation arises not from the agreement of the parties but rather from their relationship. It is an action at law although it is governed by principles of equity. Beatrice Foods Co. v. Gallagher (1964), 47 Ill. App. 2d 9, 25, 197 N.E.2d 274, 283. See Restatement of Restitution Part I Introductory Note, at 4 through 10 (1937). The rule is stated most clearly in section 76 of the Restatement of Restitution: “A person who, in whole or in part, has discharged a duty which is owed by him but which as between himself and another should have been discharged by the other, is entitled to indemnity from the other, unless the payor is barred by the wrongful nature of his conduct.” (Restatement of Restitution §76, at 230 (1937).) As comment b states, the rule is applicable where two or more persons are subject to a duty to a third person under circumstances that between themselves one should perform the duty rather than the other. (Restatement of Restitution §76, comment b, at 230-31 (1937).) In this case, between Continental and Foster it was Continental which undertook the responsibility of Community Hospital to properly manage the account and as between Continental and Foster it was the duty of Continental to perform. Continental, according to the allegations in the complaint, would be unjustly enriched by having been relieved of a liability at the expense of Foster. Illustration 4 of the Restatement is applicable to this case: “4. A statute provides that street car companies shall keep the street between the tracks in repair. A street car company secures a franchise from a town. In laying the track the street car company creates a dangerous condition in the highway, and a third person suffers an injury for which both the town and the company are liable. After giving proper notice to the street car company of the proposed settlement with the third person, the town makes a reasonable settlement to avert threatened suit against it. The town is entitled to reimbursement from the street car company of the amount paid.” (Restatement of Restitution §76, illustration 4, at 232 (1937).) As in the illustration, the hospital and Foster had a duty to the public. Continental and the hospital entered into a contract similar to the franchise in the illustration. Continental breached the contract for which Foster is to be liable. H Foster pays any judgment, he is entitled to reimbursement from Continental for the same reason that the town in the illustration was entitled to reimbursement from the street car company. Accordingly, the cross-complaint should not have been dismissed as it states in action for indemnity. The majority in addressing section 76 of the Restatement of Restitution says that Foster may not recover from Continental because of the “wrongful nature” of his conduct. In response, consider the illustration with the street car company. The town was threatened with a suit by the plaintiff because of some wrongful conduct. The town was entitled to reimbursement from the street car company even though its conduct was allegedly wrongful because a statute imposed upon the street car company the duty to keep the tracks in repair. Continental, under the allegations of the complaint, assumed the duty not to dissipate the funds. Foster did not act wrongfully in contracting with Continental to manage the funds of the hospital. Continental also argues that its motion to dismiss is based on the Contribution Act. (Ill. Rev. Stat. 1987, ch. 70, pars. 301 through 305.) Its position is that they are allegedly joint tortfeasors and that under section 2(d) Continental’s settlement discharges Continental from any contribution action by Foster, another tortfeasor. The Contribution Act is based on contribution among joint tortfeasors. The complaint by the People against Foster is based not on tort but rather on the alleged violation of various statutory and common law duties affecting the public interest in trust funds. Continental and Foster are not subject to liability in tort and therefore are not within the purview of section 2(a) of the Act. For the reasons stated, I would reverse the dismissal.