In January 1998, plaintiff, IOS Capital, Inc., formerlyknown as IKON Capital Resources (IOS), and defendant, Phoenix Printing, d/b/a Colortech Printing (Colortech), entered into a five-yearwritten agreement for the lease of two black-and-white photocopymachines (copiers). After May 2000, Colortech stopped making payments, which IOS deemed a default under the agreement. Plaintiffsued defendants, Colortech, Joseph Legener, and Robert Russell, onvarious counts, including conversion. The parties proceeded to trialon the conversion count only against Russell. Following a June 2002bench trial, the trial court found for IOS and against Russell on theconversion count for $139,457.

On appeal, Russell argues the trial court erred because(1) IOS failed to prove he was guilty of conversion, (2) the award ofdamages and the elements making up the award were inappropriate, and(3) it admitted certain hearsay statements not subject to any exception into evidence. IOS cross-appeals, arguing the court erred incalculating damages. We reverse.

I. BACKGROUND

In January 1998, IOS and Colortech executed a writtenfive-year agreement (Agreement) for the lease of the copiers by IOSto Colortech. The Agreement required Colortech to make monthlypayments of $6,450. Pursuant to the Agreement, if Colortech defaulted, it would pay IOS, inter alia, attorney fees, all amounts dueunder the Agreement, and a 5% penalty on the overdue amount, andwould return the system to IOS at Colortech's expense.

Russell was majority owner of Colortech and held a position on the three-member board of directors. He was not active inthe daily business of Colortech or operating the copiers. He didauthorize Legener, company president, to enter into the Agreementwith IOS on behalf of Colortech.

Legener was a corporate officer and director of Colortechuntil March 2001, when Russell fired him as an employee, officer, anddirector. While president of Colortech, he managed daily businessand oversaw operations at both corporate locations.

Legener testified for IOS that he signed the Agreement onbehalf of Colortech and also as a personal guarantor. Colortech madeonly 26 of 60 payments on the Agreement, the last one on May 1, 2000. On cross-examination, Legener acknowledged whenever he needed IOScopiers moved or picked up, IOS had always been the party to do so. He asked IOS prior to the onset of litigation to pick up the copierson three separate occasions, but IOS did not do so. He stated thecopiers were not performing and maintenance and service were notadequate, such that "[i]t was costing me more to own the copier thanI could possibly get out of the sales and production of the jobs theywere designed to produce."

IOS presented evidence Colortech retained the copiersafter May 1 and continued to use them for 23 months, made 706,408photocopies on the copiers during that time, and collected $49,007.88of revenue from the sale of those photocopies. Almost all of thecopies and revenue occurred before November 2000. IOS stated it haddemanded Colortech return the copiers to IOS but Colortech refused todo so.

Stephen Young, IOS's recovery analyst, testified he phonedColortech in October 2000 and "asked to speak to someone in authority." He was transferred to "Diane." Young believed she was someonein authority who could make a decision and resolve the dispute overthe copiers. When Young asked about getting the copiers back,"Diane" told him "she was not going to release the equipment and didnot want to discuss it any further."

Colortech was served with summons on December 5, 2000. After that date, but before or during March 2001, Russell met withhis attorneys, Scott and Scott, who advised him not to return thecopiers to IOS. Russell took the advice and ordered Legener not toreturn the copiers to IOS. At trial, Russell admitted he did nothave to take the advice and the decision was his to make.

IOS retrieved the copiers on April 30, 2002. After benchtrial, the trial court found for IOS and against Russell on theconversion count and awarded total damages of $139,457, categorizedas follows:

This appeal followed.

II. ANALYSIS

The issue is whether a corporate director and shareholdercan be held liable for conversion of copiers subject to a contract bythe corporation where his participation was limited to retaining thechattel months after the item was initially converted by the corporation and he relied on the advice of counsel in authorizing theconversion.

A. Conversion

Russell argues IOS failed to prove (1) all elements ofconversion and (2) he actively participated therein. We agree withhis second contention.

1. Elements

Conversion is the unauthorized deprivation of propertyfrom a person entitled to its possession. Sandy Creek CondominiumAss'n v. Stolt & Egner, Inc., 267 Ill. App. 3d 291, 294, 642 N.E.2d171, 174 (1994). To prove conversion, the plaintiff must establish(1) a right in the property, (2) a right to immediate possession, (3)wrongful control by the defendant, and (4) a demand for possession. Cirrincione v. Johnson, 184 Ill. 2d 109, 114, 703 N.E.2d 67, 70(1998). When the trial court determines a plaintiff has proved theelements of conversion, we will reverse only when the decision isagainst the manifest weight of the evidence. See Ruiz v. Wolf, 250Ill. App. 3d 121, 123-24, 621 N.E.2d 67, 69 (1993).

IOS presented evidence at trial it had a right in thecopiers. The Agreement indicated Colortech was leasing the copiersfrom IOS. Legener identified the Agreement as a lease betweenColortech and IOS for two black-and-white copiers. Further, in itsinitial answer, Colortech admitted IOS was the "sole and lawfulowner" of the copiers.

IOS also showed it had a right to immediate control. Legener acknowledged the copiers were subject to the Agreement. TheAgreement stated a failure to make payments constituted a default,which allowed IOS to either repossess the copiers or demand return ofthe copiers to IOS at Colortech's expense. Legener acknowledgedColortech was consistently late in making payments. IOS introducedevidence showing Colortech defaulted on the Agreement and had notmade a payment since May 1, 2000. In addition, Legener identified aletter received from IOS indicating notice of default.

IOS also presented sufficient evidence of wrongful control. Colortech made no payments on the Agreement after May 1, 2000,yet retained the copiers. IOS attempted to enforce its rights underthe Agreement's default provisions to retake the copiers but claimsLegener and Colortech ignored the demands. In October 2000, Russelldiscovered Colortech had stopped paying on the IOS Agreement. Russell told Legener he should work out a deal with IOS, but no dealever transpired. Colortech was served with summons on December 5,2000, and Russell was aware of this fact. He later met with hisattorneys, who advised him not to return the copiers. Russelladmitted he was not obligated to take their advice and he was theultimate decision maker. Russell instructed Legener not to returnthe copiers, even though he knew Colortech had stopped making payments under the Agreement. Legener did not return the copiers. Russell admitted keeping the copiers without paying for them waswrong. Under these facts, the trial court could reasonably determineColortech exercised unauthorized control over the copiers.

IOS also showed it made a demand for the copiers. IOSmade several payment demands on Colortech. Further, IOS made multiple demands for the copiers themselves, including one on November 22,2000. In addition, Colortech admitted in its initial answer IOSdemanded surrender and delivery of the copiers to IOS and Colortechfailed and refused to do so.

The trial court's finding IOS proved all elements ofconversion is not against the manifest weight of the evidence.

2. Participation

Russell argues because demand was not made on him personally he cannot be guilty of conversion. However, the question is notwhether each element is satisfied as to him but whether he activelyparticipated in the tort.

Corporate officers are generally not liable for corporateobligations. Mannion v. Stallings & Co., 204 Ill. App. 3d 179, 191,561 N.E.2d 1134, 1141 (1990). However, they "are liable for any tortof the corporation in which they participate." Landfield Finance Co.v. Regal Paper Box Co., 345 Ill. App. 611, 104 N.E.2d 359 (1952)(conversion).

In National Acceptance Co. of America v. Pintura Corp., 94Ill. App. 3d 703, 706, 418 N.E.2d 1114, 1116-17 (1981), the courtrecognized the need to protect corporate officers from individualcontractual liability. However, it distinguished situations involving breach of contract from those involving torts. National Acceptance Co., 94 Ill. App. 3d at 706, 418 N.E.2d at 1117. A corporateofficer who participates in a tort by the corporation may be liablein any one of a number of tort categories, including intentionalinterference with a contract and conversion. National AcceptanceCo., 94 Ill. App. 3d at 706, 418 N.E.2d at 1117; see also Mannion,204 Ill. App. 3d at 191-92, 561 N.E.2d at 1141 (extending the active-participation doctrine in National Acceptance Co. to tortious interference with a business expectancy). "[A] corporate officer'sindividual liability for conversion committed by him personally inbehalf of the corporation is established in the same manner as hisliability for any other tort; by proof of active participation in theconversion." National Acceptance Co., 94 Ill. App. 3d at 707, 418N.E.2d at 1117. Therefore, an officer or director is liable inconversion only where he actively participates therein.

Here, Russell knew Colortech was retaining IOS's copiers,even though Colortech had since stopped making payments on theAgreement and IOS considered Colortech to be in default. The recordfurther shows he knew IOS had made demands for the copiers. However,knowledge of the corporation's tort is not enough to hold a corporateofficer liable thereunder. Acting on the advice of counsel, Russelldecided Colortech would not return the copiers to IOS. He stated thedecision was his to make. He participated in the conversion fromthis point.

However, any participation in the tort does not necessarily subject an officer or director to individual liability. Personalliability for actions taken on behalf of the corporation attachesonly when the officer or director is alleged to have taken part inthe wrongful act initially giving rise to the corporation's liability. See Musikiwamba v. Essi, Inc., 760 F.2d 740, 753 (7th Cir.1985) (discussing principles of officer and director liability incontext of employment discrimination case); see also National Acceptance Co., 94 Ill. App. 3d at 707, 418 N.E.2d at 1117 ("Although acorporate officer is not generally liable for breach of contract, hisstatus does not shield him from liability for tortious acts fromwhich the breach proximately resulted" (emphasis added)).

Here, IOS contends that the conversion of the copiersbegan in June 2000, when Colortech stopped making payments on theAgreement. According to IOS, this would be the date on whichColortech became liable for conversion. IOS acknowledges the actgiving rise to Russell's liability is the order he gave to retain thecopiers after speaking with his attorneys. The record contains noevidence Russell gave that order until sometime between December 5,2000, and March 2001. Therefore, his participation in the conversionwas not that which initially gave rise to the corporation'sliability.

Moreover, the situation here starkly differs from thesituation in National Acceptance Co., where the appellate courtconcluded a corporate officer was liable for conversion by signingchecks for funds due an assignee corporation and depositing them intohis own company's account without authorization from the assigneecorporation. National Acceptance Co., 94 Ill. App. 3d at 704-05, 418N.E.2d at 1115-16. The trial court erred here in concludingRussell's participation in the conversion subjected him to liabilitythereunder.

B. Qualified Privilege

Even if Russell's participation had been sufficient tofind him liable for conversion, if the conduct was privileged orjustified, Russell is not liable in tort. See 19 C.J.S. Corporations