Heidelberger v. Jewel Companies, Inc.

Citations: 312 N.E.2d 601; 57 Ill. 2d 87; 1974 Ill. LEXIS 370Docket: 46029

Court: Illinois Supreme Court; March 29, 1974; Illinois; State Supreme Court

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In the case of Heidelberger v. Jewel Companies, Inc., the Supreme Court of Illinois addressed two consolidated class actions where plaintiffs sought injunctive relief and refunds for check-cashing fees charged by Jewel Companies. The plaintiffs contended that Jewel’s practice of cashing checks for a fee of five cents constituted the operation of an unlicensed community currency exchange under the Community Currency Exchange Act. The circuit court denied Jewel's motion for summary judgment, prompting an appeal based on substantial legal questions identified by the trial judge.

The relevant statutory framework, particularly sections .01 and 1 of the Community Currency Exchange Act, establishes that community currency exchanges must be licensed and regulated due to their public interest. The Act defines a "community currency exchange" and exempts retailers who cash checks as an incidental part of their retail business. The court noted prior rulings that emphasized the Act's purpose to protect the public in transactions involving check cashing and currency exchange services. The Supreme Court ultimately reversed and remanded the case for further proceedings.

The court clarified that exemptions in section 1 apply to businesses not primarily engaged in currency exchange or check cashing, but rather to those whose main activities involve different services, such as transportation or retail sales, with incidental check cashing permissible. Jewel Companies, Inc. has operated in the retail grocery sector in Illinois since 1932 and began cashing checks for customers in the late 1930s, initially payroll checks due to limited banking options. Their practice evolved to include personal checks, requiring customers to apply for check-cashing privileges, which involves providing personal, employment, and banking information for management verification. Approved customers receive an identification card for check cashing.

At checkout, customers may use the card to pay for merchandise with a check for the exact amount or receive cash back if the check exceeds the purchase amount by no more than $10, without incurring a fee. For checks exceeding the purchase amount by more than $10 or for cash-only transactions, customers must present their check at the "accommodation desk" and pay a five-cent fee. Jewel documents each transaction and reports significant usage of the service, particularly in suburban areas, where over 75% of customers utilize it. However, the service operates at a loss, with annual deficits around $1,000,000.

Jewel contended in its summary judgment motion that it is exempt from the licensing requirements of the Community Currency Exchange Act under the retailer's exemption, asserting it sells tangible personal property at retail. The central dispute lies in whether Jewel’s check-cashing services occur "in the course of such business and only as an incident thereto" as defined by the exemption. Plaintiffs counter that the exemption applies only when retailers cash checks as a courtesy without charging fees, pointing out that the exemption specifically mentions retailers who "cash checks" but omits reference to those who do so for a fee.

The plaintiffs argue that the legislature did not intend for the retailer's exemption to apply to retailers charging a fee for check cashing, asserting that Jewel's fee-based check cashing constitutes a separate business activity. The court disagrees, stating that the statute clearly exempts retailers who cash checks as an incident of their business, regardless of whether a fee is charged. The court finds that the plaintiffs' interpretation would unjustly limit the exemption as intended by the legislature, which defined it broadly.

The appeal, allowed under Rule 308, questions whether the trial court erred in denying the defendant's motion for summary judgment. According to section 57 of the Civil Practice Act, summary judgment should be granted if there are no genuine issues of material fact. The court concludes that the uncontradicted affidavit supports the defendant's claim that Jewel operates as a grocery retailer and that its check-cashing service is incidental to its retail business. The court dismisses the plaintiffs' argument that the service operates as a separate business, noting it was designed to enhance customer convenience and incentivize grocery purchases.

Ultimately, the court finds no material fact dispute regarding Jewel's check-cashing practices, which were clearly incidental to its primary retail operations. As a result, the circuit court's judgment is reversed, and the case is remanded with directions to enter summary judgment in favor of the defendant.