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A constructive trust is not an action for "recovery" or compensation under any theory of contract or tort. It is a strict equitable doctrine applied to cure a fiduciary's breach of his duty of loyalty by erasing the source of his conflict of interest, and transferring it to the innocent beneficiary. Bad faith is not an essential element of disloyalty and good faith is no defense to the charge. Courts are not interested in a fiduciary's particular motive for accepting a payment or gift, but rather with the general effect of such payments or gifts. Nor are courts concerned with the question of actual damage to the beneficiary.
Former County Clerk, Edward J. Barrett served as the elected Clerk of Cook County from 1956 through 1970, a position of trust imposing obligations to faithfully perform the duties of office in the interest of the people of Cook County and not for the incumbent's personal gain. His salary for the position was fixed by law and was to be his "only compensation for services rendered in the capacity of County Clerk, or any other capacity." Throughout the period of Barrett's tenure, the County Board of Commissioners at various times purchased and rented voting machines for use in elections. The board acted on the basis of contracts and proposals submitted and recommended by Barrett. By virtue of his office and influence with the board, his recommendations were "tantamount to the acceptance" of the proposals tendered by him. During this same time, he was also charged with the responsibility to care for voting machines in County custody which included the discretion to award contracts of insurance on the machines.
The County of Cook filed a complaint and an amended complaint in chancery against Barrett, seeking the declaration of a constructive trust and an accounting for bribes allegedly received by him while he held office. Also named as defendants were the sureties on Barrett's official bond, the Fidelity and Deposit Company of Maryland and the United States Fidelity and Guaranty Company. The amended complaint composed of three counts. Count I charged that Barrett abused his position of trust by employing it to seek secret personal gains from the Shoup Voting Machine Corporation, in that he caused Shoup "to secretly pay him money that constituted fees and/or allowances and/or bribes," as a consequence of which the County paid considerably more money for the voting machines purchased and rented from Shoup than it would have otherwise. Count II also prayed for a declaration of constructive trust and for an accounting, but arose from a different group of transactions. The remedy was invoked to recover secret payments received by Barrett from Arthur Gallagher & Company, an insurance agency, in connection with his award of insurance contracts on County voting machines to companies represented by Gallagher. The final count was against the sureties on the bonds Barrett had given for the faithful performance of the duties of his office. In dismissing the action the chancellor ruled that "a cause of action of this kind, by a public body to recover a bribe or kickback paid to one of its officers or employees or agents, as a matter of law cannot be maintained."
Do the allegations of the complaint state a cause of action for constructive trust?
At all times and for all the transactions pertinent to the complaint Barrett was the fiduciary of the people of Cook County. As an elected public official he held a position of the highest public trust. In the transactions with Shoup and Gallagher, Barrett acted as the County's agent, negotiating terms of purchase and recommending County action. An agent is fiduciary to his principal and the relation is treated generally the same, and with virtually the same strictness, as that of trustee and beneficiary. In deciding this appeal, it is not necessary to locate the perimeters of the fiduciary obligations due the public from their elected officials. It is sufficient to recognize that, when such an official acts as agent for the public body in business transactions, he owes to his principal duties of loyalty and good faith at least equal to those required of a private fiduciary in like circumstances. The obligations of a person who occupies the latter category are such that he must not place himself in a position which is adverse to that of his principal during the continuance of the agency. Despite the dearth of Illinois law on the subject, there is no logical reason why the remedy should not be extended to public officers in appropriate cases, the same as it would reach private trustees, employees and agents. Indeed, such application is no novelty.
In related contentions contained in both his pleadings and brief, Barrett assails the County's complaint for its failure to allege damage. He states that the averments that the County paid excess sums because of his misfeasance are speculative and that there was no averment that he was unjustly enriched at the County's expense. The absence of an allegation of damage is immaterial. Barrett also suggests that the County "is not entitled to money which is not legally collected and such money is the property of the person from whom it has been exacted." This contention was invited by the broad language of the complaint, which termed the payments by Shoup and Gallagher "fees and/or allowances and/or bribes." It has been held that where public officers charge greater fees for the performance of ministerial functions than those prescribed by law, retaining the portion wrongfully exacted, the payors are entitled to the return of so much of the fee as is unlawful, and the public body, in the absence of statutory authority requiring that such funds be deposited in the public treasury, has no greater claim to the excess charge than the officer who fraudulently collected it. This is the gist of the several cases cited by the defendant. However, the rule has no pertinence to cases of bribery. The payments alleged in this case came to Barrett personally and were not treated either by the payors or the recipient as fees or allowances due the County. So, Barrett is correct insofar as he contends that the County is not "entitled" to the money, i.e., it never held a claim at law on the funds. But that fact furnishes the very reason for the County's resort to equity to claim the money. Barrett errs in his view that Shoup and Gallagher retained a superior right to the funds. The court know of no action cognizable at law or equity for the return of illegal payments knowingly and willingly made.