Court Opinion

ID: 9720923
Source: CourtListenerOpinion
Date Created: 2023-08-26 08:44:49.791507+00
Date Added: 2024-06-11T18:24:22.335310
License: Public Domain

JUSTICE COOK, specially concurring: I concur in the decision to reverse. National Acceptance is a troublesome case. National Acceptance recognizes the general rule, that “[o]ne of the purposes of a corporate entity is to immunize the corporate officer from individual liability on contracts entered into in the corporation’s behalf.” National Acceptance, 94 Ill. App. 3d at 706, 418 N.E.2d at 1116-17. That rule is not just a sidelight. The rule is essential and goes to the very reason for the existence of corporations. “Accordingly, in most instances, the law immunizes corporate officers from corporate liabilities and debts.” People ex rel. Madigan v. Tang, 346 Ill. App. 3d 277, 284 (2004). National Acceptance went on to recognize the exception where the officer actively participates in a tort. “[Ajlthough the officer is not liable for the corporation’s torts simply by virtue of his office, corporate[-] officer status does not insulate him from individual liability for the torts of the corporation in which he actively participates.” National Acceptance, 94 Ill. App. 3d at 706, 418 N.E.2d at 1117. Conversion and breach of contract are often pleaded interchangeably, but some distinction must be recognized, otherwise individual responsibility may be imposed, not just for participation in torts of the corporation, but for breaches of contract. Language in National Acceptance, however, seems to disagree with that proposition. “Notwithstanding the law in other [sjtates, we must disagree” with “the proposition thát a corporate officer’s liability for conversion requires proof of personal benefit in addition to active participation in the conversion.” National Acceptance, 94 Ill. App. 3d at 706, 418 N.E.2d at 1117. “We therefore hold that a corporate officer’s individual liability for conversion committed by him personally in behalf of the corporation is established in the same manner as his liability for any other tort[:] by proof of active participation in the conversion.” National Acceptance, 94 Ill. App. 3d at 707, 418 N.E.2d at 1117. National Acceptance was indifferent to the argument that it was circumventing the general rule that a corporate officer is not individually hable on a contract entered into by him for a corporation. “Such may be the effeet, but that is the rule in conversion.” National Acceptance, 94 Ill. App. 3d at 707, 418 N.E.2d at 1117. If National Acceptance holds that every breach of contract can be labeled a tortious conversion and thereby result in individual liability of corporate officers, I disagree with that holding. On its facts, however, National Acceptance does not so hold. In National Acceptance, 94 Ill. App. 3d at 705, 418 N.E.2d at 116, the corporation, Pintura, assigned monies due from Highland, for which it performed work, to Wille, a supplier. When the checks were received, however, Pintura’s president deposited them in a Pintura account. This fact situation is similar to that described in a Georgia federal case: “Georgia’s conversion law does not transform every breach of a contractual obligation to pay money into a tort, comprised of withholding funds and exercising dominion over them. Those cases cited by [the plaintiff] in support of its conversion argument are clearly distinguishable on their facts from the present case. In each case, funds held by the defendant for a particular purpose were misappropriated, thereby visiting an independent, noncontractual injury on the plaintiff.” (Emphasis added.) LaRoche Industries, Inc. v. AIG Risk Management, Inc., 959 F.2d 189, 191 (11th Cir. 1992) (determining whether punitive damages could be imposed). In National Acceptance, applying the LaRoche analysis, there was not simply a failure to pay a debt. Rather, funds held for a particular purpose were misappropriated, thereby giving rise to conversion. The present case, however, is simply the failure to pay a debt. The fact that the copiers were not sold but were leased is not significant. This was a commercial situation where the rights of the parties were based on contract. A simple breach of contract is not conversion for purposes of imposing personal liability on a corporate officer. The conduct in this case did not rise to the level of tortious conduct necessary for the imposition of personal liability.