author: JUSTICE LINN

text:
    CHRISTEL HAGER-FREEMAN et al., Plaintiffs-Appellants, v. CARL SPIRCOFF et al., Defendants-Appellees.
    First District (4th Division)
    No. 1—90—1987
    Opinion filed May 7, 1992.
    Rehearing denied June 3,1992.

      Wiczer & Associates, Chartered, of Northbrook (Fred L. Berkovits, of counsel), for appellants.
    John O. Tuohy, of Chicago, for appellees.
   JUSTICE LINN

delivered the opinion of the court:

Plaintiffs, Christel Hager-Freeman and Walter 0. Freeman, filed a multiple-count action against Carl Spircoff, William O’Keefe, and Show-Biz Home Video, Inc., an Illinois corporation (Show-Biz). Chris-tel and Carl, along with Charles DiCaro, were the three shareholders of the corporation formed to operate a video rental store. O’Keefe was the lawyer for Show-Biz. The controversy pending before the court arose from a transaction in which Charles sold his shares to Carl alone, instead of jointly to Carl and Christel as allegedly intended. According to Christel, she and Carl had agreed to jointly purchase Charles’ shares, and to that end both deposited $5,000 with O’Keefe, as partial payment for the shares. O’Keefe allegedly assured her that he could handle the transaction for both parties and that she need not consult her own counsel. Without Christel’s knowledge, and with the help of O’Keefe, Carl purchased Charles’ shares in his own name and took over control of the business, locking out Christel and denying her access to the books and records. Christel’s employment with Show-Biz was terminated. She filed suit against Carl and O’Keefe, seeking various forms of equitable relief.

All but two counts of the second amended complaint have been dismissed, with prejudice, for failure to state causes of action. Plaintiffs’ appeal is limited to the dismissal of counts III and VII, which may be described, respectively, as a claim against attorney O’Keefe for breach of a duty sounding in agency and a shareholder action against defendants Carl and Show-Biz for oppression. Counts IV and VI survived the motion to dismiss, but plaintiffs withdrew them, for purposes of the appeal, with leave to reinstate. Before we can consider the legal sufficiency of counts III and VII, however, we must unravel and resolve the jurisdictional matters.

The record in this case is daunting, filled with innumerable motions and briefing schedules. The complaint was amended twice, answered, and subjected to repeated motions to dismiss. Both sides sought summary judgment as to some counts. The trial court denied summary judgment but then dismissed certain counts with prejudice and let other counts stand. The procedural history leading up to the two orders is convoluted and confusing. The appellate briefs do not, unfortunately, dispel the confusion that has been generated by the years of pleadings battles.

JURISDICTIONAL BACKGROUND

Plaintiffs filed their notice of appeal on July 10, 1990, seeking review of an order entered on June 12, 1990. The June 12 order denied plaintiffs’ motion to reconsider an earlier order (March 13, 1990) that dismissed with prejudice counts III and VII of the second amended complaint. The June 12 order also granted defendants’ motion to strike plaintiffs’ motion to reconsider the dismissal of those counts. Counts IV and VI were stricken with leave to reinstate. The June 12 order contains a finding under Supreme Court Rule 304(a) (134 Ill. 2d R. 304(a)) that the decision to deny plaintiffs’ motion to reconsider and to grant defendants’ motion to strike the motion to reconsider was a final and appealable order.

In the earlier order of March 13, 1990, the trial court had dismissed count III (against attorney O’Keefe) with prejudice and entered a finding pursuant to Supreme Court Rule 304(a) that there was no just reason to delay enforcement of or appeal from that ruling. The March 13 order also dismissed count VII with prejudice but at the same time granted plaintiffs leave to file their brief in support of count VII, in the form of a motion to reconsider. Count VII may be referred to as the “shareholder oppression” claim. The court in the March 13 order denied defendants’ motion to dismiss counts IV and VI. Count IV challenges Carl’s wrongful refusal to allow Christel her shareholder’s right to inspect the books and records of Show-Biz. Count VI sounds in constructive trust and seeks to impose an equitable lien on one-half of the shares of the business, based on Carl’s alleged fraudulent misrepresentations.

In one other development that occurred after entry of the June 12 order appealed from, Carl moved for attorney fees pursuant to section 2 — 611 of the Code of Civil Procedure. (Ill. Rev. Stat. 1989, ch. 110, par. 2 — 611.) This motion was filed on July 11, 1990, one day after plaintiffs filed their timely notice of appeal. According to defendants, Carl’s motion for attorney fees divested the appellate court of jurisdiction under the original notice of appeal. Carl contends that because plaintiffs failed to refile their notice of appeal after the disposition of the fee motion, pursuant to Supreme Court Rule 303(a)(2), this court lacks jurisdiction over this appeal.

Opinion

I

In their initial brief, filed in December 1990, plaintiffs asserted that the June 12 order was final and appealable under Supreme Court Rules 301 and 303. Thereafter, the appeal was dismissed on defendants’ motion. Plaintiffs moved to reinstate the appeal and filed an additional or amended statement of jurisdiction, premised on Supreme Court Rule 304(a). This court then reinstated the appeal. Subsequently, defendants filed their appellee briefs. (Carl Spircoff and Show-Biz Home Video, Inc., filed one brief, and attorney William O’Keefe filed a separate brief.) Defendants’ briefs both challenge this court’s jurisdiction.

Carl’s brief asserts that the plaintiffs failed to properly perfect this appeal because after the notice of appeal was filed the trial court ruled on what Carl terms a “post-trial” motion, his motion for attorney fees under section 2 — 611 of the Code of Civil Procedure. Under Supreme Court Rule 303(a)(2), when post-trial motions are filed, either before or after a notice of appeal is filed, the notice of appeal has no effect and must be withdrawn by the appellant by moving for dismissal of the notice of appeal pursuant to Supreme Court Rule 309. After the post-trial motion is ruled upon, the appellant must then refile the notice of appeal. Plaintiffs did not refile their notice of appeal after the fee motion was determined, and Carl maintains that this divests the court of appellate jurisdiction.

O’Keefe joins in this argument, but makes additional challenges. He contends that plaintiffs have waived jurisdictional arguments under Supreme Court Rule 304(a) because the statement of jurisdiction in plaintiffs’ opening brief relies on Supreme Court Rules 301 and 303. Those rules involve appeals from judgments that are final and appealable as to all matters, without a special finding. Notwithstanding the waiver argument, O’Keefe claims that the June 12 order did finally dispose of all matters on that date (despite the express finding under Supreme Court Rule 304(a)), because the plaintiffs had voluntarily dismissed the two remaining counts of their complaint, and there was nothing left to be determined at that point. O’Keefe thereby maintains that jurisdiction would have been proper under Rules 301 and 303 but that plaintiffs have abandoned this base of jurisdiction by relying on Rule 304(a) (which he claims they have waived in any event.

This court admits to lingering confusion over the exact jurisdictional arguments being joined in this appeal, as the above attempt to summarize defendants’ positions indicates. We can state with certainty, however, that the only possible basis for this court’s jurisdiction is Supreme Court Rule 304(a), because the March 13 and June 12 order clearly show that not all counts of the second amended complaint were finally put to rest. In the June 12 order, counts IV and VI were dismissed without prejudice and with leave to reinstate. Those two counts survived the motion to dismiss, but the transcript of the hearing indicates that plaintiffs were allowed to put them “in abeyance” by withdrawing them without prejudice and with leave to reinstate. The apparent purpose of this procedure was to facilitate appellate review by fashioning a final disposition of the lawsuit. (We note the fallacy in such an approach, however, as the June 12 order could not be made final as to all claims by the simple device of dismissing viable counts with leave to reinstate.) In any event, both the March 13 and June 12 orders determine “fewer than all the rights and liabilities in issue or fewer than all of the matters involved in the case.” (Getzelman v. Koehler (1958), 14 Ill. 2d 396, 400, 152 N.E.2d 833, 835.) Accordingly, our jurisdiction over this appeal can only be premised on Supreme Court Rule 304(a). (E.g., Marsh v. Evangelical Covenant Church (1990), 138 Ill. 2d 458, 563 N.E.2d 459.) To come within this provision, the order appealed from must contain the trial court’s express finding that there is no just reason to delay enforcement of or appeal from the ruling. In the pending case the orders appealed from do contain such a finding, but that is only the beginning of the inquiry into this court’s authority to hear this appeal.

PROCEDURAL HISTORY

To straighten the strands of the jurisdictional tangle, we believe it may be useful to first examine the nature of the controversy, to better understand which counts were dismissed at what point and for what reasons. Massive motion practice occurred in the years after the initial filing and that has contributed to the current confusion over the appealability of the orders on appeal.

A simplified summary of the operative facts would include the key allegation that Carl purposefully deceived Christel over the stock purchase arrangement and thereafter used his majority shareholder position to take over complete control of the business, terminate Chris-tel’s employment, and deny her access to the corporate books and records. He is also alleged to have forgiven a corporate debt of $20,000, without Christel’s knowledge or approval, thereby diminishing the corporate assets. The trial court noted that the alleged agreement between Christel and Carl to buy Charles’ stock was in the nature of a joint venture. Ultimately, the court sustained count IV of the complaint, which seeks a constructive trust on one-half of the shares of stock Carl purchased from Charles. The other count that withstood summary disposition, count VI, involves Carl’s alleged failure to permit Christel access to the corporate books and records, thus denying her a significant right as a minority shareholder. Plaintiffs seek an accounting and the dissolution of the business, among other relief.

As against the corporation’s attorney, plaintiffs allege that O’Keefe made knowingly false representations and assurances to Christel, that she need not consult another lawyer regarding the contemplated joint purchase of Charles’ one-third share of the stock. O’Keefe accepted her initial payment of $5,000 to put toward the purchase. He purportedly assured her he would handle the stock purchase on behalf of her and Carl, but then drafted a purchase agreement by which Carl took all of Charles’ stock in his name alone. Plaintiffs apparently seek to hold O’Keefe liable under an agency-byestoppel theory.

INJUNCTION PROCEEDINGS

The record reveals that in August 1987 the trial court granted certain temporary injunctive relief to maintain the status quo pending further court proceedings. Shortly thereafter, Carl answered the original seven-count complaint and raised laches as an affirmative defense. O’Keefe also filed an answer, generally denying the allegations directed at him.

In October 1987, after a hearing, the court held that plaintiffs had failed to sustain their burden for a preliminary injunction. The court’s order, however, left in effect certain restraints on defendants, barring the concealment of corporate assets or disposal of assets in other than the usual course of business. Carl was granted the right to change the locks on the business and make other business decisions, but was enjoined from interfering with the rights of Christel as “at least a minority shareholder.” Plaintiffs were given “some form of access to the books and records” and the case was given a short date for status.

Following the preliminary injunction hearing, further battles were joined, such as a skirmish over the Federal income tax return and allegations of impropriety regarding the keeping of the corporate records. The record on appeal contains substantial paperwork relating to motions for sanctions filed by both sides. While these various disputes are not directly relevant to this appeal, they demonstrate that nothing in this case proceeded equably or with much efficiency.

AMENDED COMPLAINT; MOTIONS TO DISMISS AND FOR SUMMARY JUDGMENT

Carl filed a motion for summary judgment in September 1988. Plaintiffs took defendants’ depositions before the motion was heard, and on November 7, 1988, plaintiffs were given leave to file a first amended complaint, over defendants’ objections. Carl filed a motion to strike and dismiss the first amended complaint, although he also filed an answer. Although it is not clear in the record, apparently Carl’s pending motion for summary judgment on the original complaint was then treated as a motion for summary judgment as to certain counts of the first amended complaint. Plaintiffs filed a counter-motion for summary judgment. Defendants’ motion to dismiss and both sides’ motions for partial summary judgment were heard together.

By order entered March 23, 1989, the court granted defendants’ motion to dismiss certain counts of the first amended complaint, with prejudice: count I (“Oppression,” alleging Carl’s freeze out of Chris-tel); count II (“Breach of Fiduciary Duty By Director,” naming Carl and O’Keefe); and count V (“Refusal to Transfer Shares”). The court denied the motion to dismiss, however, as to count III (“Breach of Fiduciary Duty By Attorney”); count IV (“Refusal To Permit Examination of Records (Carl)); count VI (“Constructive Trust On Corporate Shares” (Carl)); and count VII (“Dissolution By Reason of Deadlock”). Defendants’ motion for summary judgment as to counts IV, VI, and VII was denied, and the motion for summary judgment as to count III was continued for later ruling. Plaintiffs’ countermotion for summary judgment was denied. The order also granted time for filing additional responses.

Defendant Carl then moved the court to reconsider its denial of his motion to dismiss counts IV, VI, and VII and yet another briefing schedule was entered. In an order entered on June 26, 1989, the court struck those three counts of the amended complaint, along with count III, and granted leave to amend.

SECOND AMENDED COMPLAINT; SECTION 2-615 AND SECTION 2-619 MOTIONS TO DISMISS

The second amended complaint was filed, on August 7, 1989, in four counts. These counts were then renumbered to correspond to the numbering of the earlier complaint, so the second amended complaint actually consists only of counts III, IV, VI, and VII. This corrected version of the second amended complaint was filed in January 1990. It is this “second” second amended complaint that is, finally, the subject of this appeal.

Carl next filed a motion to dismiss plaintiffs’ entire action pursuant to section 2 — 619 of the Illinois Code of Civil Procedure (Ill. Rev. Stat. 1989, ch. 110, par. 2 — 619), generally alleging the affirmative defense of unclean hands. This motion was based on an assertion that Christel had kept two sets of books for Show-Biz Video. Plaintiffs countered with a motion for sanctions, and the court found that Carl had filed a false affidavit regarding his lack of knowledge of Christel’s bookkeeping methods. After another flurry of motions for sanctions— on both sides — the court entered an order on December 7, 1989, in which it denied Carl’s motion to dismiss pursuant to the unclean hands doctrine.

THE MARCH 13 AND JUNE 12,1990, ORDERS APPEALED FROM

The last round of motions in this case led to the dismissal of counts III and VII, with prejudice. Count III, which asserted a claim against O’Keefe based on his alleged breach of fiduciary duty to the shareholders of Show-Biz, was dismissed with prejudice in the March 13, 1990, order. The court noted that the attorney’s duty was to the corporation and that plaintiffs failed to plead an adequate basis for holding him liable. In adding the Rule 304(a) language to its order, the court finally disposed of this count. The court also dismissed count VII with prejudice, the shareholder oppression count, but in that order expressly granted plaintiffs leave to file, as a motion to reconsider, their cases in support of their legal theory and in opposition to the motion to dismiss.

At the June 12 hearing the court granted defendants’ motions to strike the motion to reconsider the earlier dismissal of counts III and VII, presumably because plaintiffs raised no new evidence. The court also denied plaintiffs’ motion to reconsider. The parties and the court discussed the appealability of the June 12 order and the court acknowledged that “it is hard to understand count 7 unless you understand the other [pending] counts.” Plaintiffs argued that if they could not proceed on count VII, they probably would not go to trial on the two remaining counts because they would be unable to get appropriate relief. Based on this representation, the trial court agreed to strike counts IV and VI, without prejudice, apparently as a means by which the appellate court could review the legal sufficiency of counts III and VII before the remaining claims proceeded to trial.

We conclude that the entry of the June 12 order, while final as to the trial court’s disposition of counts III and VII, was not final as to counts IV and VI, which had been stricken with leave to reinstate. The order on its face demonstrates its lack of finality as to two counts. Accordingly, the only way for this court to obtain appellate jurisdiction was for the trial court to enter the special finding under Supreme Court Rule 304(a), which it did.

Defendants, however, persist in treating the June 12 order as one that finally disposed of the entire litigation.

DID THE FILING OF THE FEE PETITION NULLIFY THE NOTICE OF APPEAL?

Carl’s challenge to our jurisdiction is based on the argument that the June 12 order was, in substance, a final disposition of all claims under Supreme Court Rules 301 and 303. As such, he contends that it was subject to the provision of Supreme Court Rule 303(a)(2), which states as follows:

“[When a timely post-trial motion is filed by any party], a notice of appeal filed before the entry of the order disposing of the last pending post-trial motion shall have no effect and shall be withdrawn by the party who filed it ***. This is so whether the timely post-trial motion was filed before or after the date on which the notice of appeal was filed. A new notice of appeal must be filed within the prescribed time measured from the entry of the order disposing of the post-trial motion ***.” (134 Ill. 2d R. 303(a)(2).)

Under Carl’s reasoning, the July 10 notice of appeal is null and void because Carl filed a motion for attorney fee sanctions on July 11, within 30 days of the June 12 order. Plaintiffs did not refile the notice of appeal following the disposition of his fee motion.

Carl’s conclusion — if not his analysis — would be accurate if the June 12 order lacked the Rule 304(a) finding and instead was a final judgment as to which a proper post-trial motion was directed. To explain why that is so we must explore another aspect of the law of appealability.

In Marsh v. Evangelical Covenant Church (1990), 138 Ill. 2d 458, 563 N.E.2d 459, the Illinois Supreme Court defined “post-trial motions” and explained how the filing of a fee petition after entry of a judgment tolls the appealability of that judgment. First the court cited the language and construction given to section 2 — 1203 of the Illinois Code of Civil Procedure. That section provides that in nonjury cases, a party may file post-trial motions within 30 days of judgment “for a rehearing, or a retrial, or modification of the judgment or to vacate the judgment or for other relief.” (Ill. Rev. Stat. 1989, ch. 110, par. 2 — 1203.) The court in Marsh held that for a fee petition to qualify as a true post-trial motion, one directed at the judgment as contemplated in section 2 — 1203, it must be an integral part of the relief requested in the judgment. Thus, for example, if a mortgage agreement included an attorney fee provision and a party requesting fees as part of his recovery was denied fees in the judgment, a subsequent motion for the court to reconsider the denial of fees would be considered a true post-trial motion. (See Benet Realty Corp. v. Lisle Savings & Loan Association (1988), 175 Ill. App. 3d 227, 529 N.E.2d 718, appeal denied (1989), 124 Ill. 2d 553, 535 N.E.2d 912.) Similarly, if a section 2 — 611 motion was brought as a part of a motion to dismiss (under law then in effect), resolution of the fee question was considered part of the main action and thus a proper subject of a post-trial motion. (See Hise v. Hull (1983), 116 Ill. App. 3d 681, 452 N.E.2d 372.) Under the Hise analysis, Carl’s fee petition would not be considered a true post-trial motion, since he filed his petition for fees as a separate motion rather than as part of the motion to dismiss.

As the court in Marsh pointed out, however, section 2 — 611 was amended and in its current incarnation (Supreme Court Rule 137), attorney fee claims must be brought as part of the underlying action and not as a separate action. This is true even though a claim for attorney fee sanctions still may be viewed as a “claim” that is separate from the main relief. The Marsh court concluded that even if a judgment fully resolves the underlying litigation, as long as a claim for attorney fees is outstanding, the judgment may not be appealed unless the order appealed from contains the requisite finding of appealability pursuant to Supreme Court Rule 304(a).

Because the March 13 and June 12 orders in the pending case do contain the required finding, the pendency of Carl’s fee petition did not affect their appealability. Carl’s argument that the fee issue divested this court of jurisdiction fails; subsequent proceedings in the trial court on other matters did not affect the appealability of the June 12 order.

DID PLAINTIFFS WAIVE OR ABANDON THEIR JURISDICTIONAL ARGUMENT?

O’Keefe’s challenges to this court’s jurisdiction are no more substantial than Carl’s and may be summarily dispatched. As earlier noted, O'Keefe argues both that plaintiffs waived Rule 304(a) as a ground for jurisdiction and also abandoned any argument they might have had pursuant to Rules 301 and 303. We have concluded, however, that the sole possible base for our jurisdiction is pursuant to Rule 304(a). Plaintiffs’ appeal was reinstated by order of this court when plaintiffs amended their statement of jurisdiction to rely on Supreme Court Rule 304(a). The waiver argument necessarily fails; we have expressly allowed that which is said to be waived.

As for the assertion that plaintiffs have abandoned any argument that the June 12 order disposed of all claims and thus was appealable under Rules 301 and 303, we agree. They have abandoned it, and rightly so. It is defendants who persist in arguing that the June 12 order resolved all matters and therefore is subject to the operation of Rule 303(a)(2) regarding the filing of post-trial motions. To that end, they ignore the Rule 304(a) finding and its significance. Hence, while plaintiffs’ initial mistaken view of jurisdiction may have started the argument, defendants have chosen to prolong it. We conclude, finally, that we do have jurisdiction over this appeal.

II

We next consider whether counts III and VII state recognizable causes of action under Illinois law.

COUNT VII — VIOLATIONS OF THE ILLINOIS BUSINESS CORPORATION ACT

Defendants Carl and Show-Biz cite a single case in the IV2 pages of argument in their brief in defense of the trial court’s dismissal of count VII. According to them, the complaint failed to meet the minimal requirements of pleading because it made “reference to Paragraph 1 through 43, in a conclusionary manner” and used “a shotgun approach” to get around the pleading requirement of setting out the facts relied upon to state a cause of action under the Business Corporation Act. Defendants add that corporations are creatures of statute and may only be dissolved according to statute, citing Central Standard Life Insurance Co. v. Davis (1957), 10 Ill. 2d 566,141 N.E.2d 45.

Defendants’ argument is puzzling, however, because far from being conclusory, we find the complaint to be perhaps excessively detailed. All four counts begin with the same first 23 paragraphs, which set out background information regarding the formation of Show-Biz and the relationships of the parties. Christel, Carl, and Charles DiCaro (Charlie) formed the corporation in 1984, with O’Keefe acting as corporate counsel. Carl and Christel had known each other for several years when he introduced her to Charlie. The three agreed to contribute $30,000 each and act as the officers and directors, each holding one-third of the total shares. Each was to have specific jobs and to help manage the business. In the spring of 1986, disputes arose between Carl and Charlie. Charlie informed the other two that he wished to sell his shares. In 1987, following the disputed sale of Charlie’s stocks to Carl, Carl cut Christel off from the business and terminated her employment.

In paragraphs 24 through 57 of count VII, Christel spells out the factual basis for the shareholder oppression theory. She alleges that from October 1984 to June 1987, no meetings of the shareholders or directors were ever held. On June 9, 1987, pursuant to written notice by Christel, a special meeting of the board of directors of Show-Biz took place. Carl and Christel were the two remaining directors and shareholders. (By this time, Charlie’s shares had been sold to Carl.) O’Keefe also attended the meeting, along with Christel’s attorney. According to the allegations of count VII, Carl announced at the meeting that “as the major stockholder” he was going to “run this corporation the way it is supposed to be run.” He also was making a resolution to relieve Christel of her duties as director and secretary and employee, because they “could not see eye-to-eye.” He added that he had the same problems “when Charlie would act up” and that he (Carl) was “running the show.”

Christel alleges that when she obtained the corporate records and minute book from O’Keefe in February 1987, entries had been made therein including “forgeries of her signature” and that “the dates on the stock certificates were erased and typed over” without her knowledge or consent. Shortly after the June 9 directors’ meeting, Carl told Christel to submit a letter of resignation and to pick up her belongings and leave. Thereafter, in addition to terminating her, Carl froze her out of the business without authority or approval of the board of directors or shareholders. Among the specific acts she alleges: Carl removed Christel as a signatory on all the corporate accounts; he hid the checkbooks, changed the locks, ceased providing her with any financial information; and deprived Christel of the opportunity to participate in the management and business decisions of a corporation in which Christel had invested her life savings.

Additional allegations state that Christel has not received any distributions of profits or dividends and Carl has told her she will get no return on her investment in the future. Christel made written demand for an accounting, which Carl has ignored. Shortly after the institution of her lawsuit, and after the preliminary injunction hearing, Carl called a meeting of shareholders for Show-Biz, called the meeting to order, and then elected himself and his son as two of the three directors. He refused to permit Christel to discuss business matters including the financial condition of the corporation and the correction or amendment of erroneous corporate tax returns. Christel further alleges that at the meeting Carl refused to discuss the $20,000 subscription price that Charlie still owed to the corporation for his initial shares. This debt was assumed by Carl pursuant to his written agreement with Charlie.

Christel further alleges that after the above shareholder meeting, Carl called a meeting of the board of directors at which he was elected president and his son was elected secretary. Salaries of $10,000 were approved for Carl and his son (a full-time college student at Southern Illinois).

Count VII goes on. Christel alleges that Carl violated the previously entered restraining order by entering on the records of ShowBiz a false entry showing that Christel owed a debt of more than $15,000 to the corporation. She alleges that financial statements for the corporation produced through discovery show dramatic reductions in the corporate earnings since Carl’s unilateral actions. This raises serious question as to Carl’s mismanagement of the business, she asserts, as shown by Carl’s manipulation of inventory and reserves for depreciation, to understate the corporation’s value. She also states that he has increased the salaries of himself and his son while the corporation’s earnings have dropped.

We do not agree with Carl that the above summary of Chris-tel’s allegations are conclusory. She sets out specific actions that Carl took to deny her access to and information regarding the business she helped start, finance, and run for several years. Her allegations as to the drop in corporate earnings since Carl ousted her and took over are backed by specific dollar amounts taken from the financial statements of Show-Biz. Since the quantum of proof and matters of credibility are not in issue on motions to dismiss pleadings, we must take Christel’s allegations as true. That being the case, we do not agree that count VII fails to state a cause of action.

Pursuant to section 12.50(b)(2) of the Illinois Business Corporation Act of 1983 (Ill. Rev. Stat. 1989, ch. 32, par. 12.50(b)(2)), a court may dissolve a corporation in an action by a shareholder if it is established that “[t]he directors or those in control of the corporation have acted, are acting, or will act in a manner that is illegal, oppressive or fraudulent.” Shareholder oppression has not been limited to actions defined as “illegal” or “fraudulent” or necessarily including misapplication of corporate assets or mismanagement of funds. (See Central Standard Life Insurance Co. v. Davis (1957), 10 Ill. 2d 566, 573, 141 N.E.2d 45.) In Gidwitz v. Lanzit Corrugated Box Co. (1960), 20 Ill. 2d 208, 170 N.E.2d 131, the court applied the term in the context of a corporation with two equal shareholder factions, one of which had taken over control and run the corporation for years, to the exclusion of the other faction. In holding that such conduct was oppressive, the court followed Central Standard and noted that the word need not necessarily savor of fraud or refer to imminent disaster; rather, it can contemplate a- continuing course of heavy-handed conduct.

In the pending case, Christel’s allegations set out a course of unfair and heavy-handed conduct that may be fairly viewed as oppression under the statute. Defendants have declined to squarely address the theory in their brief and rely instead on an argument of form over substance. By insisting that plaintiffs’ pleading is merely conclusory, defendants avoid an explanation of why the detailed facts in count VII fall short of stating an action for shareholder oppression.

Plaintiffs, on the other hand, cite a number of cases in support of their position. See, e.g., Gidwitz, 20 Ill. 2d 208, 170 N.E.2d 131 (president and controller of 50% shares acted as sole proprietor while paying technical respect to corporate form and laws; his continuing course of conduct that excluded other shareholders from participation in the business and income was held to be oppressive, justifying dissolution of corporation); Notzke v. The Art Gallery, Inc. (1980), 84 Ill. App. 3d 294, 405 N.E.2d 839 (one of three equal shareholders was “demoted” to minority status through a “conspiratorial ploy” involving transfer of stock and then fired from employment after being accused of theft; appellate court affirmed trial court’s judgment in favor of minority shareholder based on oppression); Compton v. Paul K. Harding Realty Co. (1972), 6 Ill. App. 3d 488, 285 N.E.2d 574 (president shareholder’s “overbearing and heavy-handed” course of conduct included imperious attitude and failure to consult with plaintiff or allow plaintiff to participate in the business); see also Gray v. Hall (1973), 10 Ill. App. 3d 1030, 1034, 295 N.E.2d 506 (reversing trial court’s denial of minority shareholders’ request for accounting to determine whether acts of majority shareholders were oppressive).

Show-Biz is not a large corporation with publicly traded stock. Christel alleges that she put her life savings into the business and helped run it for several years before Carl decided to take over. Carl not only took over control but allegedly enriched himself and his son with corporate assets at the expense of Christel’s rights as shareholder. He supposedly told her she would receive no profit or dividend in the future, while apparently writing off Charlie’s $20,000 debt to the corporation. At the same time, the financial statements of the business show a significant drop in earnings. Furthermore, Carl’s actions as controlling shareholder cannot be divorced from his alleged misconduct in acquiring that controlling interest in the first place. See Notzke, 84 Ill. App. 3d 294, 405 N.E.2d 839.

We conclude that plaintiffs’ count VII should not have been dismissed for failure to state a cause of action. Accordingly, we vacate the dismissal of that count and reinstate it.

COUNT III — THE CLAIM AGAINST O’KEEFE

We find the allegations of count III to be more problematical than those of count VII. We agree with the trial court that the attorney for a corporation, even a closely held one, does not have a specific fiduciary duty toward the individual shareholders. (E.g., Felty v. Hartweg (1988), 169 Ill. App. 3d 406, 523 N.E.2d 555.) We also agree that plaintiffs do not assert, and cannot assert, the existence of an attorney-client relationship between O’Keefe and Christel or a third-party beneficiary theory. Therefore, attorney malpractice is not an issue.

Count III of the second amended complaint, in paragraph 28, incorrectly states O’Keefe’s duty as deriving from his status as attorney for the corporation who “owed the shareholders equally a duty of strict fairness and utmost good faith in dealing with the affairs of the corporation and its shareholders.” The count goes on to assert that by accepting Christel’s $5,000 initial payment for half of Charlie’s shares and by representing to Christel that she need not obtain independent counsel for the joint purchase transaction, O’Keefe breached his duty when he then drafted the purchase agreement in Carl’s name only and for Carl’s sole account. Moreover, O’Keefe’s office kept Christel’s check for $5,000 for seven months without explanation before returning it to her.

The transcript of the hearing on this count reveals that the trial court believed that plaintiffs’ counsel was able to state an actionable theory during oral argument, but that plaintiffs had failed to use the right words in the complaint. The court commented, “[S]o much of this is in your head but not on the paper. That’s what I’ve been trying to get to you, you have got to put down the obvious things.” The court then added that “[pjleadings are to be strictly construed and that the count must be viewed strictly in terms of the wording within it.”

We acknowledge that count III does not accurately state the nature of the legal duty that O’Keefe is alleged to have breached. We also believe that the trial court took great pains to allow all parties to argue at length and to brief at even greater length. At some point, a trial court is justified in refusing to allow lawyers additional time to get their pleadings in order. The fault is not entirely plaintiffs’, however, because they were subjected to repeated challenges at every step, from discovery requests to numerous motions to dismiss and objections to the filing of amended pleadings. At the same time defendants were challenging the legal sufficiency of the complaints, they were also filing answers and a motion for summary judgment. The parties fired off motions for sanctions right and left and no bone of contention was left unpicked. In light of the extensive factual allegations of the entire complaint, however, we cannot conclude that “no set of facts can be proved which will entitle plaintiff to recover” as against O’Keefe. (Ogle v. Fuiten (1984), 102 Ill. 2d 356, 360-61, 466 N.E.2d 224, 226.) The standard, of course, is that pleadings are to be liberally, not strictly, construed “with a view to doing substantial justice between the parties.” (Ill. Rev. Stat. 1989, ch. 110, par. 2 — 603(c); see Dunavan v. Calandrino (1988), 167 Ill. App. 3d 952, 522 N.E.2d 347, appeal denied (1988), 122 Ill. 2d 573, 530 N.E.2d 243.) If evidence to sustain the allegations is lacking, the trial court may enter directed findings. At the pleadings stage, however, we must take the facts as true and on that basis decide whether the conduct is actionable.

The second amended complaint alleges that O’Keefe assured Christel that he would handle, on her behalf, what was to be a joint stock purchase of Charlie’s shares of the business. He told her she did not need her own lawyer and he accepted her deposit money at the same time he accepted an equal amount from Carl. Contrary to what he told Christel he would do on her behalf, he then prepared a purchase agreement in which Carl bought all of Charlie’s shares in his own name. O’Keefe did not notify Christel of his own failure to do that which he said he would do and did not return her $5,000 for seven months after Carl secretly bought Charlie’s shares.

In count IV, the constructive trust count against Carl, O’Keefe’s name surfaces as a party to the transaction that is the basis of the constructive trust theory. Thus, while it is not alleged that O’Keefe and Carl acted in concert or conspired to defraud Christel, by deceiving her or otherwise defeating her opportunity to purchase half of Charlie’s shares, we find that it is implicit in the complaint as a whole that much of the conduct complained of implicates O’Keefe as well as Carl. Therefore, dismissing the only count against O’Keefe without leave to amend is not appropriate unless it is clear the specific facts concerning O’Keefe’s conduct cannot fit into a viable legal theory.

In his brief on appeal O’Keefe characterizes himself as a mere stakeholder of the deposits Carl and Christel made to purchase Charlie’s shares. He denies any authority to act on behalf of individual shareholders, relying heavily on his status as attorney for the corporation. Plaintiffs, on the other hand, maintain that he acted as Christel’s agent for the limited purpose of the joint stock purchase and is therefore liable under an agency-by-estoppel theory.

We believe that the scope of O’Keefe’s undertaking, if any, is a question of fact to be resolved at trial. Because of the peculiar way in which this case proceeded, the record contains affidavits and discovery material in which key allegations of the complaint have been denied under oath. Matters of credibility have not been determined in a trial, however, and at the pleadings stage we cannot speculate on what the evidence will establish. We do agree that the pleading of count III could be improved. Nevertheless, we would be remiss in holding that no possible claim could be asserted against an attorney (or anyone, for that matter) who had the apparent authority to handle a joint stock purchase transaction on behalf of two people; who made certain representations to induce one of them to forego independent counsel; who accepted deposits of money on behalf of the intended stock purchasers; and who then acted in the interests of one over the other. Accordingly, we hold that plaintiffs’ factual allegations are sufficient to assert a duty — not based on O’Keefe’s role as corporate attorney or as a shareholder’s attorney, but as Christel’s agent for a specific transaction. The allegations sustain a breach of the duty. The element of injury proximately caused by the breach may be more difficult to state. Possibly, she might claim as legal damages an amount equal to the value of the shares she would have owned had O’Keefe performed as stated. On the other hand, since O’Keefe as an agent would not be a “guarantor” that the joint stock purchase would go through as planned, some other means of determining damages might be appropriate, based on the element of deceit or concealment and the resulting loss of opportunity Christel had to compete for or negotiate on her own behalf. The effect of the transaction was to demote her from one of three equal shareholders, with equal control over the business, to a minority shareholder lacking the most rudimentary control or even information regarding the conduct of the business and its financial health. At the pleading stage, we must take care not to foreclose the fashioning of an appropriate remedy based on what the trial evidence might establish.

We conclude that plaintiffs have alleged an adequate basis for stating a claim for relief against O’Keefe. Because count III does not precisely state the agency theory, however, we believe plaintiffs should be allowed leave to amend this count.

Accordingly, we reverse the trial court’s dismissal of counts VII and III for failure to state a cause of action; reinstate count VII; grant leave to amend count III; and remand for further proceedings.

Reversed and remanded.

JIGANTI, P.J., and JOHNSON, J., concur.

      Tn retrospect, we believe that it would have been preferable for the trial court to refuse to enter the Rule 304(a) finding. Where, as here, there is a core group of operative facts from which the various legal theories arise, allowing an interlocutory appeal from some of the counts does not promote judicial economy. Here, the conduct complained of in each count began with the secretive stock purchase transaction that Christel characterizes as a breach of Carl’s fiduciary duty. That transaction forms the basis of the constructive trust count against Carl, which has not been adjudicated, as well as the agency-by-estoppel against O’Keefe, which has been dismissed with prejudice. Those counts, IV and III, set out common law theories based on shared facts. Carl’s alleged trickery in obtaining the shares also gave rise to the statutory claims of counts VI and VII, both of which arise from the wrongful actions Carl allegedly engaged in once he took over as majority shareholder. The court allowed count VI, the claim based on the denial of Christel’s written demand for access to the corporate books and records, but dismissed count VII, which alleged a series of specific instances of related, and more serious, actions. Accordingly, we do not find this case one that is well served by interlocutory appeal under Rule 304(a). We decline to dismiss the appeal on that basis, however, since the orders appealed from do contain the trial court’s final disposition of counts III and VII and plaintiffs maintain that those counts are critical to their lawsuit.

      The transcript reveals that while plaintiffs had briefed the oppression theory and cited cases in an earlier response, they had not refiled a formal response to this latest motion to dismiss count VII. The court stated that it did not believe the count stated a cause of action and dismissed it with prejudice at that time; however, the court simultaneously granted plaintiffs leave to brief the issue in a future motion to reconsider.

      We do not believe it is appropriate to strike a motion and deny it at the same time. Apparently, the defendants attacked the legal sufficiency of the motion to reconsider because it did not raise new material but instead reargued the original matters raised in the motion to dismiss. We do not agree that parties are limited to raising entirely new material in motions to reconsider, as it is proper to argue that the court misapplied the cited law or misunderstood key facts. In this case, moreover, the trial court expressly granted plaintiffs at the March 13 hearing the right to file their brief in opposition to the motion to dismiss as their motion to reconsider, at least with respect to count VII. Accordingly, we view as surplusage the striking of plaintiffs’ motion to reconsider and hold that it does not bear on the appealability of the orders in question.

      This reference to the numbers of paragraphs cited is inaccurate, as count VII of the second amended complaint incorporates by reference paragraphs 1 through 23 of the common facts and then continues for an additional 34 paragraphs.


source: Caselaw Access Project

author: PRESIDING JUSTICE McNULTY

license: Public Domain

text:
      In re ESTATE OF LAWRENCE LAIRD SUTHERLAND, a/k/a Laird Sutherland, Deceased (John Ellis, Petitioner-Appellant, v. Thomas Chuhak, Adm’r with the Will Annexed of the Estate of Lawrence Laird Sutherland, Deceased, Administrator-Appellee).
    First District (5th Division)
    No. 1—91—0588
    Opinion filed May 15, 1992.
    Law Offices of Jacob and Lawrence S. Bloom, of Chicago, for appellant.
    Richard J. Ciecka, John Laurence Kienlen, Barry Feinberg, and Jeffrey C. Schmidt, all of Chicago, for appellee.
   PRESIDING JUSTICE McNULTY

delivered the opinion of the court:

Petitioner-appellant John Ellis (Ellis) filed a petition in the probate division of the circuit court of Cook County, seeking leave to file a claim against the Sutherland estate for services rendered. This petition was denied because the court determined that the claim period had expired. An appeal was taken from this denial pursuant to Supreme Court Rule 304(b)(1) (107 Ill. 2d R. 304).

The sole issue presented for review is whether Ellis, a creditor of the estate whose name and whereabouts were known, received sufficient notice under the due process clause of the fourteenth amendment of the United States Constitution and article I, section 2, of the Illinois Constitution (U.S. Const., amend. XIV; Ill. Const. 1970, art. I, §2) of the proceedings in the Sutherland estate to afford him an opportunity to file his claim prior to the running of the claims limitation period. The trial court found that he had. For the following reasons, we affirm the decision of the trial court.

Ellis had assisted Lawrence Laird Sutherland in the management of- certain real estate Sutherland owned and continued to provide services after his death. On January 31, 1988, Sutherland (decedent) died testate. On August 8, 1988, Ellis, a creditor of the estate, appeared through his attorney, Hugh J. Schwartzberg, before the trial court and presented a petition for probate of will and for letters of administration with the will annexed seeking to nominate himself as administrator of the estate. Thomas Chuhak, the public administrator, also appeared through his attorney before the trial court that day pursuant to notice given to him of Ellis’ petition. Also appearing was a representative of the State’s Attorney’s office. The court entered an order granting all parties leave to answer or otherwise plead to the petition, which was not filed but continued to August 16, 1988, for hearing.

On August 16, 1988, the petition seeking to appoint Ellis as the personal representative of the Sutherland estate was filed with the clerk of the probate division of the circuit court of Cook County. Thomas Chuhak, as the public administrator of Cook County, also filed his petition for letters of administration to collect and cross-petition for letters of administration with the will annexed the same day. It is unclear from the record whether copies of these petitions were served upon Ellis or his attorney. However, Ellis and/or his attorney were in court on August 8, when the court set the August 16 date for further hearing. On August 16, 1988, the court entered an order appointing Thomas Chuhak the administrator to collect the estate of Sutherland. The record does not reflect that copies of this order were sent to Ellis or his attorney, nor does it reflect that these actions by the court were opposed by Ellis or the State’s Attorney.

Pursuant to the authority granted, the public administrator petitioned the court in September of 1988 to sell certain securities of the estate. Notice of this petition was sent to Ellis’ attorney, Schwartz-berg, and to the State’s Attorney. Permission was subsequently granted by the court without opposition.

On February 2, 1989, a copy of Chuhak’s amended petition for letters of administration with the will annexed, along with a notice of motion stating that on February 9, 1989, he would present his amended petition to the court, was sent to Schwartzberg. On February 9, 1989, letters of office were issued to Thomas Chuhak as administrator with the will annexed. On February 17, 1989, pursuant to the provisions of the Probate Act of 1975 in effect at that time (Ill. Rev. Stat. 1987, ch. llO1^, par. 18 — 3), the administrator caused publication to be made in which the statutory period for filing claims against the estate was fixed at six months, commencing on February 9, 1989, and ending on August 9,1989.

In May 1989, Mrs. Bayne Cherami Dean (Dean), decedent’s sole heir and legatee, apparently discussed the management of the estate’s real estate with Ellis. On May 23, 1989, by letter to Ellis in care of Hugh Schwartzberg, his attorney, she gave Ellis specific instructions regarding the management of the estate’s real property. In that letter Dean requested Ellis to prepare a bill for his services from the date of Sutherland’s death to current date, to send it to her for approval, and she would submit it to the administrator for payment.

In response to this letter, Ellis sent a series of 17 statements all dated August 3, 1989, to Dean for services rendered to the estate from February 1, 1988, through June 30, 1989. It appears that these documents were transmitted between August 4 and 8 of 1989. Each statement was approved in writing by Dean. There is no evidence in the record that Dean submitted these claims to the administrator as she stated she would in her letter to Ellis.

On December 4, 1990, almost four months after the expiration of the deadline for filing claims against the estate, Ellis, appearing through new attorneys, presented his petition for leave to file his claim against the Sutherland estate. On February 1, 1991, after a hearing at which the administrator and apparently Dean opposed Ellis’ request, the court entered an order denying Ellis leave to file the claim as untimely. It is undisputed that the administrator did not notify Ellis, by mail or otherwise, of the statutory deadline for filing claims against the estate. The notice provisions of the Probate Act in effect at the time required only notice by publication to creditors. Ill. Rev. Stat. 1987, ch. llOVa, pars. 18 — 3(a), 18 — 12.

Ellis challenges the constitutionality of sections 18 — 3 and 18 — 12 of the Probate Act in effect at the time his claim arose. Section 18 — 3 required only notice by publication to creditors of a probate estate and barred all claims not presented to the administrator or the court within six months after issuance of letters of office and the requisite notice by publication. He relies principally on Tulsa Professional Collection Services, Inc. v. Pope (1988), 485 U.S. 478, 99 L. Ed. 2d 565, 108 S. Ct. 1340. In Tulsa, the Supreme Court scrutinized an Oklahoma probate statutory scheme very similar to the one then in effect in Illinois. Under the Oklahoma probate code, creditors’ claims against an estate were generally barred unless those claims were presented within two months of publication of notice that probate proceedings had commenced. In Illinois, the claim period is six months. The Supreme Court held in Tulsa that notice by publication to certain estate creditors was inadequate for purposes of the due process clause of the fourteenth amendment. It found that notice by publication to known creditors or those readily ascertainable was inadequate because, under the circumstances, it was not reasonably calculated to reach those who could easily be informed by other means at hand, citing Mullane v. Central Hanover Bank & Trust Co. (1950), 339 U.S. 306, 94 L. Ed. 865, 70 S. Ct. 652. In Mullane, the court held that the constitutionally required notice to beneficiaries of certain trust funds whose names and addresses were known was “notice reasonably calculated under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.” (Mullane, 339 U.S. at 314, 94 L. Ed. at 873, 70 S. Ct. at 657.) The court observed that notice by mail to such persons provides an efficient and inexpensive means of communication upon which prudent men will ordinarily rely in the conduct of their business.

Further, in City of New York v. New York, New Haven & Hartford R.R. Co. (1953), 344 U.S. 293, 97 L. Ed. 333, 73 S. Ct. 299, the Supreme Court held that the claim of a creditor of a bankrupt railroad who was known to the bankrupt could not be barred on publication notice even if it had general knowledge that a court reorganization of the railroad was taking place. It said: “even [those] creditors *** have a right to assume that the statutory ‘reasonable notice’ will be given them before their claims are forever barred.” (344 U.S. at 297, 97 L. Ed. at 337, 73 S. Ct. at 301.) Accord Walker v. City of Hutchinson (1956), 352 U.S. 112, 1 L. Ed. 2d 178, 77 S. Ct. 200 (notice of condemnation proceeding published in a local newspaper was an inadequate means of informing a landowner whose name was known to the city and was on the official record); Schroeder v. New York City (1962), 371 U.S. 208, 9 L. Ed. 2d 255, 83 S. Ct. 279 (publication notice to a property owner in a condemnation proceeding was inadequate where his name and address were readily ascertainable from both deed records and tax rolls).

Greene v. Lindsey (1982), 456 U.S. 444, 72 L. Ed. 2d 249, 102 S. Ct. 1074, applied the Mullane standard in holding that under the factual circumstances of the case, posting notice on an apartment door did not satisfy minimum standards of due process in a forcible entry and detainer action of informing the tenant of the proceedings. There was evidence presented that children frequently removed these notices from apartment doors.

In the case preceding Tulsa, the Supreme Court in Mennonite Board of Missions v. Adams (1983), 462 U.S. 791, 77 L. Ed. 2d 180, 103 S. Ct. 2706, struck down as violative of the due process clause of the fourteenth amendment the notice provisions of an Indiana statute that permitted the interest of a mortgagee of record to be foreclosed in a property tax sale on publication notice. The Court reiterated that the notice required must not rely on chance alone to reach interested parties, but rather notice meeting the standard set forth in Mullane was the minimum due process protection required by the fourteenth amendment.

The due process standard enunciated in Tulsa was applied in Rose v. Kaszynski (1988), 178 Ill. App. 3d 266, 533 N.E.2d 73, upon which Ellis relies. Rose filed a breach of contract action against Ben Kaszynski. During the pendency of the action, Ben Kaszynski died. On April 10, 1984, Mary Kaszynski, decedent’s widow (defendant), was appointed executor of decedent’s estate. Section 18 — 3 of the Probate Act provided notice by publication to estate creditors, and section 18 — 12 barred all claims not filed with the estate representative or the court within six months after the entry of the order directing issuance of letters of office. Ill. Rev. Stat. 1987, eh. 110x/2, pars. 18 — 3,18—12.

On October 4, 1984 (six days prior to the expiration of the claim period), the death of decedent was suggested and spread of record. Defendant was joined as a party to the contract action on February 19, 1985, and was served with summons about one month later. Defendant moved for involuntary dismissal on the ground that because she was not joined as a party in the lawsuit until February 19, 1985, over five months after the expiration of the claim period, plaintiff’s claim against her as executor of decedent’s estate was untimely. The trial court denied defendant’s motion, the jury awarded damages against the estate and defendant appealed.

In his appeal, defendant relied upon the decision of the Illinois Supreme Court in In re Estate of Worrell (1982), 92 Ill. 2d 412, 442 N.E.2d 211, which had barred a plaintiff’s claim for failure to file his claim in the probate proceedings within the six-month period under section 18 — 13 of the Probate Act. The appellate court disagreed, holding that Tulsa governed the outcome and that Worrell was no longer viable at least under the circumstances presented.

The court in Rose observed that, as in Tulsa, defendant never gave actual notice to the plaintiff in the contract action. Given the fact that defendant was decedent’s widow and the contract action had been pending for almost five years before decedent’s death, the court found that plaintiff was a known or reasonably ascertainable creditor of the estate. Thus, notice by mail or other means as certain to ensure actual notice to the plaintiff was required, and under the mandate of Tulsa, the decision of the trial court to allow plaintiff’s action was proper notwithstanding the Illinois Supreme Court’s decision in Worrell to the contrary. But see Farm Credit Bank v. Brown (1991), 217 Ill. App. 3d 730, 577 N.E.2d 906 (in which the Fifth District Appellate Court declined to apply Tulsa retroactively).

In the instant case, creditor Ellis contends that the decision in Rose set forth above should be dispositive of this case. Since the decision in Rose, the legislature has amended the Illinois Probate Act to conform to the principle enunciated in Tulsa. It now provides that the estate representative “mail or deliver to each creditor of the decedent whose name and address are known to or are reasonably ascertainable by the representative and whose claim has not been allowed or disallowed *** a notice stating the death of the decedent, the name and address of the representative and of his attorney of record, that claims may be filed on or before the date stated in the notice.” Ill. Rev. Stat. 1989, ch. llO1^, par. 18 — 3.

However, an adequate consideration of the due process issue presented by the facts of the case before us is not complete without an analysis of In re Estate of Malone (1990), 198 Ill. App. 3d 960, 556 N.E.2d 678, relied upon by the administrator. Malone was also decided after the Supreme Court’s decision in Tulsa and before the 1989 amendment to the Illinois Probate Act set forth above. It concerned a plaintiff (Pavela) who had filed a stockholder’s derivative suit against Martin Malone, a director and major shareholder of Creative Office Interiors, Inc. (Creative), on March 8, 1985. Malone died testate on December 21, 1986, during the pendency of the derivative action. His widow, Florence (Mrs. Malone), was named executor of the estate. Pursuant to section 18 — 3 of the Probate Act, notice of Malone's death was published in the Chicago Daily Law Bulletin. The notice indicated that letters of office had been issued on January 12, 1987, and that claims against the estate must be filed within six months of that date.

Subsequently, on March 12, 1987, Creative’s annual shareholders’ meeting was held. Present were Pavela, Mrs. Malone, their respective attorneys, and James Flynn, the secretary of Creative. At the meeting, Flynn confirmed that Mrs. Malone had been named independent executor of Malone’s estate, that Malone’s 1,500 shares of Creative stock had been transferred to Mrs. Malone pursuant to his will and that the shares would be probated with the estate.

On August 26, 1987, Pavela filed his motion to suggest the death of Malone and to substitute his widow as a defendant in the shareholder’s derivative suit. On November 4, 1987, Pavela’s motion was denied on the ground that the six-month statutory claim period under the Probate Act had expired.

Pavela filed a motion for reconsideration predicated on Tulsa, asserting that because he was a known claimant of Malone’s estate who had been given only publication notice, he had been denied due process and his motion to substitute Mrs. Malone as executor should have been granted.

Mrs. Malone, the executor, moved for summary judgment, which was granted. The trial court declined to rule on the issue of the constitutionality of section 18 — 3 of the Probate Act then in effect, based upon the fact that plaintiff and his attorney had had actual notice of Malone’s death within the six-month claim period and, therefore, lacked standing to challenge the constitutionality of sections 18 — 3 and 18 — 12 of the Act. The court observed that in determining whether notice given in a particular circumstance is sufficient to ensure actual notice, the United States Supreme Court has looked at four factors: (1) whether the form of notice relies on mere chance to reach the attention of the other party (Mullane, 339 U.S. 306, 94 L. Ed. 865, 70 S. Ct. 652); (2) whether the form of notice is designed to attract the attention of the other party (Mennonite, 462 U.S. 791, 77 L. Ed. 2d 180, 103 S. Ct. 2706); (3) whether the actual means of providing notice is reliable (Greene, 456 U.S. 444, 72 L. Ed. 2d 249, 102 S. Ct. 1074); and (4) whether the means of notice was reasonable when compared to other alternatives (Greene, 456 U.S. 444, 72 L. Ed. 2d 249,102 S. Ct. 1074).

The court observed that three months before the actual expiration of the statutory claim period, Pavela and his attorney attended the shareholders’ meeting and learned from the corporate secretary that Mrs. Malone had been named executor of Malone’s estate and that Malone’s stock had been transferred to her pursuant to decedent’s will and would be probated with the estate. Therefore, the court held that Pavela had sufficient actual notice at the time of this meeting to timely file his motions in the probate proceeding. The court said: “First, the information conveyed at the meeting did not rely on chance to bring notice to [Pavela] of Malone’s death, of [Mrs. Malone’s] appointment as executor, and of the transfer of Malone’s shares. The meeting was an annual shareholders’ meeting, which [Pavela], as a shareholder, attended. Secondly, the Secretary’s report was specifically prepared to be read to the shareholders and was intended to attract their attention. Third, the report was reliable and, fourth, it was a reasonable means by which to convey the information relevant to the shareholders. Although notice by mail could also have conveyed this information to [Pavela], the Supreme Court has not held that mail notice is necessary in every situation where notice is required. The Court merely held that the form of the notice must be certain to ensure actual notice.” Malone, 198 Ill. App. 3d 960, 963-64, 556 N.E.2d 678, 681, citing Mullane, 339 U.S. 306, 94 L. Ed. 865, 70 S. Ct. 652.

Both Pavela and his attorney were presumed to know they must substitute a party for the deceased in the pending claim according to applicable law. Checking the probate file or inquiring of Mrs. Malone as to when her letters of office issued would have apprised Pavela and his attorney of when the statutory claim period had begun to run. Instead, Pavela did nothing for more than five months. Therefore, the court in Malone concluded that his failure to timely file his motions was not due to a deficiency of actual notice, but rather to a failure to act timely on the notice received.

The facts of the case before us are even stronger than those in Malone and we therefore deem the rationale of that case to be dispositive.

Ellis was not just a creditor of the Sutherland estate. In fact, it was Ellis who brought to the attention of the probate court and the public administrator the death of Sutherland. He was the one who initially instituted court proceedings on August 8, 1988, by filing a petition for probate of will and for letters of administration with the will annexed, seeking to have himself appointed personal representative of the estate. Attorney Schwartzberg represented him at that time and he has been represented by an attorney throughout the probate proceedings, including this appeal. He and Schwartzberg were present in court on that date when the matter was continued to August 16, 1988.

On August 16, 1988, Ellis filed his petition with the court and Thomas Chuhak, the public administrator, filed his petition for letters of administration to collect and cross-petition for letters of administration with will annexed. On that day, Chuhak was appointed administrator to collect the estate of Lawrence Laird Sutherland. The record does not reflect that this action by the court was opposed by Ellis.

On February 2, 1989, a copy of Chuhak’s amended petition for letters of administration with the will annexed, along with a notice of motion stating that on February 9, 1989, he would present his amended petition to the court, was sent to Schwartzberg, attorney for Ellis. On February 9, 1989, the court granted Chuhak’s petition. There is also no indication in the record that this action was opposed by Ellis.

Furthermore, in Ellis’ dealings with Dean, the sole heir of the estate regarding his bill for services and the manner of payment, her correspondence was directed to him do Schwartzberg, Barnett and Cohen, Suite 2400, 55 West Monroe Street, Chicago, Illinois, 60603. The 17 statements sent to Dean by Ellis and approved by her listed the same address as that of his attorneys. Although we observe parenthetically that the actions of Dean, the sole heir and legatee, raise an interesting question as to whether they could reasonably have led Ellis to conclude his bills were fair and would be paid, this issue is not before us. There is, however, no evidence in the record that the public administrator knew or approved of Dean’s dealings with Ellis regarding his bill for services in connection with real property belonging to the estate.

Apparently, it is Ellis’ position that because the administrator of the estate did not mail notice to him stating the death of the decedent, the name and address of the representative and his attorney of record, the claim date and its expiration as now required by the Probate Act (Ill. Rev. Stat. 1989, eh. lKWa, par. 18 — 3), the due process requirements of Tulsa have not been met. However, in Tulsa, Mullane, and all of the other Supreme Court cases discussed above, the creditor or other person with a protectable property interest was not a party to the legal proceedings and had never received notice of the pendency of the proceedings apprising that person that his rights might be affected and affording him an opportunity to appear and be heard.

In contrast, in the case before us, Ellis initiated the probate proceedings and his attorney was sent timely notice by mail by the public administrator, Chuhak, of his intent to seek admission of the will to probate and appointment as administrator with the will annexed on February 9, 1989. Since he did not oppose this action, we are entitled to presume that he knew it was likely that the court would grant the relief requested. Since his attorney initially requested similar relief on Ellis’ behalf at the initial stages of the probate proceedings, his attorney is presumed to know that the issuance of letters of office would trigger the running of the six-month claim period. Tulsa does not require that in addition notice to Ellis must be mailed to him specifically advising of the commencement and expiration of the claim period. Tulsa only requires that the form of notice must be certain to ensure actual notice. The actions of Chuhak in timely apprising Ellis through his attorney of the date and purpose of the proceeding which occurred on February 9, 1989, certainly met the due process requirements of Tulsa under the circumstances of this case, and the public administrator was not further required to take the steps mandated by section 18 — 3 of the Probate Act, now in effect, but which was not in effect at the time this dispute arose.

We determine that Ellis received actual notice apprising him of the pendency of a probate proceeding which might affect his rights as a creditor in time for him to take appropriate steps to protect them. Even if the publication notice provisions of section 18 — 3 of the Probate Act were constitutionally deficient as to a creditor without notice of the probate proceeding, Ellis’ receipt of actual notice “deprives him of standing to raise the claim ***. *** [He] has clearly been accorded due process in the application of the statute as to him personally.” Wiren v. Eide (9th Cir. 1976), 542 F.2d 757, 762.

Ellis, however, made no effort to file his claim until 10 months after letters of office had issued to the public administrator and four months after the claim period had expired. As the appellate court observed in Malone, “petitioner’s failure to timely file *** is not the result of insufficiency of actual notice; it is the result of failure to timely act on the notice received.” Malone, 198 Ill. App. 3d at 964, 556 N.E.2d at 681.

For the reasons set forth above, the judgment of the circuit court of Cook County is affirmed.

Affirmed.

LORENZ and GORDON, JJ., concur.


author: JUSTICE GORDON

text:
    HOWARD SCHICKLER et al., Plaintiffs-Appellants, v. SANTA FE SOUTHERN PACIFIC CORPORATION et al., Defendants-Appellees.
    First District (5th Division)
    No. 1—90—0320
    Opinion filed May 15, 1992.
    Richard S. Schiffrin and Michael D. Craig, both of Schiffrin & Craig, of Chicago, for appellants.
    Weston W. Marsh and Thomas J. Healey, both of Atchison, Topeka and Santa Fe Railway Company, of Chicago, for appellees.
   JUSTICE GORDON

delivered the opinion of the court:

Plaintiffs Howard Schickler and David Noparstak, on behalf of all holders of Atchison, Topeka & Santa Fe Railway Company General Mortgage 4% Gold Bonds Due 1995, brought an action against defendants Santa Fe Southern Pacific Corporation, Atchison, Topeka & Santa Fe Railway Company and Manufacturers Hanover Trust Company as successor trustee under the indenture created at the time of the issuance of the bonds. Count I was an action for breach of contract due to Santa Fe’s failure to pay the semi-annual interest due on the bonds in gold coin or its equivalent as required by the terms of the bonds. Count II alleged breach of fiduciary duty by Manufacturers Hanover Trust in allowing the other defendants to make interest payments in cash rather than in gold coin or its equivalent.

Defendants filed a motion to dismiss the complaint pursuant to section 2 — 615 of the Code of Civil Procedure. (Ill. Rev. Stat. 1989, ch. 110, par. 2 — 615.) The defendants’ motion was granted, and plaintiffs appeal. For the reasons set forth below, we affirm.

Background

By a general mortgage dated December 12, 1895, Atchison, Topeka & Santa Fe Railway Company mortgaged certain of its assets in exchange for long-term general mortgage gold bonds. These bonds mature on October 1, 1995. The terms of the bonds state that the principal “is payable *** in gold coin of the United States, of the present standard of weight and fineness, or its equivalent, and to bear interest at the weight of four per cent, per annum, payable semi-annually in like gold coin.”

In 1933, as part of a comprehensive effort to revitalize the economy during the depression, Congress passed a joint resolution which declared gold clauses such as those in the bonds at issue here to be void as against public policy. The joint resolution, commonly and hereinafter referred to as the Abrogation Act (or Act), provided:

“To assure uniform value to the coins and currencies of the United States.
Whereas the holding of or dealing in gold affect the public interest, and are therefore subject to proper regulation and restriction; and
Whereas the existing emergency has disclosed that provisions of obligations which purport to give the obligee a right to require payment in gold or a particular kind of coin or currency of the United States, or in an amount of money of the United States, measured thereby, obstruct the power of the Congress to regulate the value of the money of the United States, and are inconsistent with the declared policy of the Congress to maintain at all times the equal power of every dollar, coined or issued by the United States, in the markets and in the payment of debts. Now, therefore, be it
Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, THAT (a) every provision contained in or made with respect to any obligation which purports to give the obligee a right to require payment in gold or a particular kind of coin or currency, or in an amount in money of the United States measured thereby, is declared to be against public policy; and no such provision shall be contained in or made with respect to any obligation hereafter incurred. Every obligation, heretofore or hereafter incurred, whether or not any such provision is contained therein or made with respect thereto, shall be discharged upon payment, dollar for dollar, in any coin or currency which at the time of payment is legal tender for public and private debts. Any such provision contained in any law authorizing obligations to be issued by or under authority of the United States, is hereby repealed, but the repeal of any such provision shall not invalidate any other provision or authority contained in such law.
(b) As used in this resolution, the term ‘obligation’ means an obligation (including every obligation of and to the United States, excepting currency) payable in money of the United States; and the term ‘coin or currency’ means coin or currency of the United States, including Federal Reserve notes and circulating notes of Federal Reserve banks and national banking associations.” 48 Stat. 112-13 (1933).

In related legislation, in 1973 and 1974, Congress enacted the “Gold Ownership Amendments,” which repealed a 1934 ban on private ownership of gold. In 1977, Congress expressly amended the joint resolution of 1933, by stating that the prohibition against gold clauses would not apply to gold clauses in obligations issued on or after the date of its enactment. 31 U.S.C. §5118(d)(2) (1988) (“An obligation issued containing a gold clause or governed by a gold clause is discharged on payment (dollar for dollar) in United States coin or currency that is legal tender at the time of payment. This paragraph does not apply to an obligation issued after October 27, 1977”).

In 1985, Congress passed the “Anti-Apartheid Act of 1985,” which authorized the minting of gold coins by the United States government. (31 U.S.C. §5112 (1988).) Although the coins are legal tender at their face value, by statute they may be issued only at their bullion value, which is considerably greater than the face value.

Plaintiffs brought this action in 1989, seeking to permanently enjoin the defendants from making interest or principal payments on the bonds in any form other than gold coin or its equivalent, as well as seeking compensatory damages for defendants’ failure to make such payments in the past. Defendants filed a motion to dismiss the complaint, contending that plaintiffs’ cause of action was barred by the joint resolution of 1933 which declared void the gold clauses in these bonds. Following briefing and oral argument, the court granted defendants’ motion, and this appeal followed.

Opinion

Plaintiffs contend that “dramatic changes” in facts and circumstances since the time of passage of the Abrogation Act have rendered the legislation abrogating gold clauses invalid. Although acknowledging that the Abrogation Act was held to be constitutional in Norman v. Baltimore & Ohio R.R. Co. (1935), 294 U.S. 240, 79 L. Ed. 885, 55 S. Ct. 407, it is plaintiffs’ position that the circumstances upon which the Supreme Court relied to find the Act valid no longer exist. Plaintiffs argue that the Court based its holding “firmly and exclusively” upon the policy of establishing a uniform currency and parity between kinds of currency, a policy which they contend has been abandoned by the acts of 1973, 1977 and 1985. Therefore, according to the “changed circumstances” principle of statutory construction as set forth in Chastleton Corp. v. Sinclair (1924), 264 U.S. 543, 547-48, 68 L. Ed. 841, 843, 44 S. Ct. 405, 406 (“[a] law depending upon the existence of an emergency or other certain state of facts to uphold it may cease to operate if the emergency ceases or the facts change even though valid when passed”), plaintiffs urge that we should declare the Abrogation Act invalid and hold defendants liable for breach of contract for their failure to make interest payments in gold or its equivalent.

Defendants respond that the Abrogation Act remains valid and bars plaintiffs’ cause of action. According to defendants, the "changed circumstances” principle of Chastleton upon which plaintiffs rely applies only to a minority of laws which are themselves constitutional only because temporary circumstances give rise to an enlarged legislative function. In other words, the legislation at issue would be invalid were it not for the special circumstances existing at the time of passage, and if those circumstances change, the law may become prospectively invalid. Chastleton is inapplicable, defendants urge, in this instance because the power of Congress to enact the Abrogation Act is grounded in its constitutional power over the monetary system and not based on any circumstances which existed in 1933. We agree with the defendants.

In reaching our conclusion that Chastleton is inapplicable here, we first must look to Block v. Hirsch (1921), 256 U.S. 135, 65 L. Ed. 865, 41 S. Ct. 458, which considered a 1919 act establishing a commission to control rents in the District of Columbia. The act declared that an emergency existed in the District caused by the influx of people to the District as a result of World War I, and by its otto terms was to expire in two years. The Supreme Court held that the emergency justified the regulation of rents in the District, pursuant to the police power of Congress, so long as the emergency lasted. The validity of exercise of the power to regulate rents arose from the emergency and would not ordinarily constitute a proper exercise of police power. “Plainly, circumstances may so change in time or so differ in space as to clothe with such an interest what at other times or in other places would be a matter of purely private concern.” Block v. Hirsch, 256 U.S. at 155, 65 L. Ed. at 870, 41 S. Ct. at 459. See also Home Building & Loan Association v. Blaisdell (1934), 290 U.S. 398, 78 L. Ed. 413, 54 S. Ct. 231 (mortgage moratorium act, sustained on basis that economic crisis justified suspension of rights of mortgagees, could not validly outlast the emergency).

Chastleton, decided three years later in 1924, involved the same rent control commission considered in Block v. Hirsch. In Chastleton, the Court considered a 1922 act which declared that the emergency still existed and reenacted the 1919 act. Although holding that a declaration by Congress relating to the existence of an emergency is entitled to great respect, citing Block v. Hirsch, the Court nevertheless remanded the case for a determination as to whether the exigency still existed upon which the continued operation of the law depended. The Court stated that “[a] law depending upon the existence of an emergency or other certain state of facts to uphold it may cease to operate if the emergency ceases or the facts change even though valid when passed.” (Chastleton Corp. v. Sinclair, 264 U.S. at 547-48, 68 L. Ed. at 843, 44 S. Ct. at 406.) When read in light of Block v. Hirsch, it is apparent that the Chastleton Court was referring to the power of the legislature to enact the statute in question which may cease to operate if the facts or circumstances change. See also Daly v. County of Madison (1941), 378 Ill. 357, 369, 38 N.E.2d 160 (discussing Chastleton, the court said “[t]he case was disposed of on the sole ground that there was no power to adopt or enforce the order, except to meet an existing emergency. The existence of the emergency was the source of the power. *** The power existed only in the emergency, and when the emergency ceased to exist the power likewise ceased”).

The relevant questions, therefore, are whether the power of the legislature to enact the Abrogation Act was dependent for its validity upon a particular set of facts or circumstances existing at the time of its passage, and if so, whether those facts or circumstances have changed so as to render the Act invalid. As discussed below, we answer the first question in the negative. As a result, we do not reach the second.

Although the Abrogation Act was passed during the crisis of the Great Depression, the Court in Norman v. Baltimore & Ohio R.R. Co. did not uphold the Act as an exercise of power dependent upon the economic circumstances which precipitated its passage. Rather, it found the Act to be a legitimate exercise of Congress’ constitutional power over the monetary system of the country. In reaching this conclusion, the Court first noted that Congress possessed a “broad and comprehensive national authority over the subjects of revenue, finance and currency *** derived from the aggregate of the powers granted to the Congress.” (Norman, 294 U.S. at 303, 79 L. Ed. at 900, 55 S. Ct. at 414; U.S. Const., art. I, §8, cl. 5.) The Court went on to establish the power of Congress to invalidate the provisions of existing contracts which interfere with the exercise of its constitutional authority. (Norman, 294 U.S. at 306-11, 79 L. Ed. at 901-04, 55 S. Ct. at 415-17.) Finally, the Court determined that the gold clauses did constitute an actual interference with the monetary policy established by Congress. “We are concerned with the constitutional power of the Congress over the monetary system of the country and its attempted frustration.” Norman, 294 U.S. at 316, 79 L. Ed. at 906, 55 S. Ct. at 419. See also Feldman v. Great Northern Ry. Co. (S.D.N.Y. 1977), 428 F. Supp. 979, 982 (Norman Court “upheld the power of Congress, based on its constitutional authority over the monetary and currency system, to enact the Resolution and invalidate private contracts for payment in gold or any amount of money indexed to gold”).

It cannot be questioned that circumstances have changed since the Abrogation Act was enacted in 1933. We are no longer in the midst of a great depression. However, as discussed above, the Act was upheld in Norman based upon Congress’ power to regulate currency and to adopt a uniform currency as granted by the Constitution, a power which exists today just as it did in 1933. See Southern Capital Corp. v. Southern Pacific Co. (8th Cir. 1978), 568 F.2d 590, 591-92 (“[w]e are persuaded that the congressional power to establish a uniform monetary system which existed in 1933 and provided a basis upon which the Supreme Court upheld the constitutionality of the Joint Resolution in 1934 still exists today”).

The “changed circumstances” upon which plaintiffs base their arguments are actually changes in policy evidenced by subsequent acts of Congress, and not changes in facts upon which the validity of the Abrogation Act is dependent. Plaintiffs contend that the “Gold Ownership Amendments” of 1973 and 1974 represent a “major departure (i.e., change in facts) from the circumstances and policies existing during the 1930s regarding gold ownership.” In addition, they contend that the 1977 act, declaring gold clauses entered into after October 28, 1977, to be enforceable, indicates that “there is, in fact, no public policy against such clauses any longer.” (See Fay Corp. v. BAT Holdings I, Inc. (W.D. Wash. 1986), 646 F. Supp. 946, aff’d sub nom. Fay Corp. v. Frederick & Nelson Seattle, Inc. (9th Cir. 1990), 896 F.2d 1227 (1982 novation of lease created new contract rendering gold clause in lease which was otherwise invalid under 1933 act, revived and enforceable).) Moreover, plaintiffs contend that the 1977 amendment represented a major step toward complete abandonment of the policy favoring parity of currency. Finally, plaintiffs argue, the 1985 acts providing for the minting of gold coins which are legal tender at their face value demonstrate that “there is no possible logical argument for the proposition that there is a policy of uniformity or parity of the currency.”

While each of the acts plaintiffs rely upon may indeed indicate a change in prospective monetary policy, they are not dispositive of our determination of the continuing validity of the Abrogation Act as it relates to the enforceability of the preexistent gold clauses in question. We are in accord with the statement made by another court in another challenge to the Abrogation Act: “While there may be sentiments to the effect that no public policy objective is now being served by the prohibition of gold clauses *** it is Congress’ prerogative, not ours, to find and legislate that the public policy declaration of the Gold Clause Resolution is no longer operative.” (Emphasis in original.) (Feldman v. Great Northern Ry. Co., 428 F. Supp. at 987.) “The question before the Court is one of power, not policy.” (Norman, 294 U.S. at 297, 79 L. Ed. at 897, 55 S. Ct. at 411.) To find the statute invalid, it must be shown that the law “is so destitute of basis or so arbitrary or capricious as to place the legislation and the regulations beyond the constitutional authority of Congress over the monetary system of the United States.” (Laycock v. Kenney (9th Cir. 1959), 270 F.2d 580, 592.) As shall be discussed below, this has not been demonstrated or even argued by the plaintiffs in this cause. See United States v. Carolene Products Co. (1938), 304 U.S. 144, 82 L. Ed. 1234, 58 S. Ct. 778, and Milnot Co. v. Richardson (S.D. Ill. 1972), 350 F. Supp. 221, discussed below, wherein statutes were challenged as lacking a rational basis.

Defendants contend that the “changed circumstance” argument made by plaintiffs here is indistinguishable from an “implied repeal” argument, an argument which has been consistently rejected by the courts in regard to the Abrogation Act. (See, e.g., Southern Capital Corp. v. Southern Pacific Co., 568 F.2d 590; Feldman v. Great Northern Ry. Co., 428 F. Supp. 979; Gold Bondholder’s Protective Council v. Atchison, Topeka & Santa Fe Ry. Co. (Alaska 1982), 649 P.2d 947.) “[A]n implied repeal results when a statute is enacted which cannot be harmonized with the terms and effect of an earlier act. In these situations, the later expression will prevail since it cannot be presumed that the legislature intended to enact laws which are contradictory.” (In re Marriage of Burke (1989), 185 Ill. App. 3d 253, 258, 541 N.E.2d 245.) We agree that an implied repeal argument cannot prevail based on the cases cited above and on the fact that the 1977 amendment, which was the only act to provide for payment of obligations indexed to a certain value of gold, was explicitly made prospective only, a fact in no way inconsistent with the continued enforcement of the Abrogation Act as it applies to obligations issued prior to October 27,1977.

Plaintiffs contend that their argument is not one of implied repeal and that the trial court erroneously interpreted it as such in dismissing their complaint. Concomitantly, they urge, the Alaska case of Gold Bondholders Protective Council v. Atchison, Topeka & Santa Fe Ry. Co., upon which the trial court relied, is inapplicable since it relied solely upon a theory of implied repeal and did not base its conclusion upon Chastleton’s changed circumstance theory. In connection with this latter point, we note, however, that while the Alaska case did not cite to Chastleton, it nevertheless purported to “reconsider the validity of the statute in light of conditions which now exist” (Gold Bondholder’s Protective Council, 649 P.2d at 950), which would seem to be essentially the argument made by plaintiffs here. Further, among the factors which the court considered were the 1973 and 1974 statutes which permitted the private ownership of gold and the 1977 amendment which removed the prohibition against gold clauses in obligations issued after October 27, 1977, the same factors to which plaintiffs direct our attention. As a result, although we agree with plaintiffs that Gold Bondholder’s Protective Council is not binding on this court, we do not agree that it is totally irrelevant.

The remaining authorities cited by the plaintiffs in support of their “changed circumstances” argument are not sufficiently in point. As previously noted, in United States v. Carolene Products Co. and Milnot Co. v. Richardson the issue was whether a statute regulating interstate shipment of filled milk was unconstitutional under a “rational basis” test. In Carolene Products, the Court, citing Chastleton, acknowledged that

“the constitutionality of a statute predicated upon the existence of a particular state of facts may be challenged by showing to the court that those facts have ceased to exist. [Citation.] Similarly we recognize that the constitutionality of a statute, valid on its face, may be assailed by proof of facts tending to show that the statute as applied to a particular article is without support in reason because the article, although within the prohibited class, is so different from others of the class as to be without the reason for the prohibition.” (United States v. Carolene Products Co., 304 U.S. at 153-54, 82 L. Ed. at 1242, 58 S. Ct. at 784.)

It went on, however, to hold the statute constitutional, finding the statute not to be “without support in reason,” stating “[b]ut by their very nature such inquiries, where the legislative judgment is drawn in question, must be restricted to the issue whether any state of facts either known or which could reasonably be assumed affords support for it.” United States v. Carolene Products Co., 304 U.S. at 154, 82 L. Ed. at 1243, 58 S. Ct. at 784.

Thirty-four years later, in Milnot Co., the Court, relying on the “changed circumstances” principle of Chastleton, held that due to the proliferation of products similar to Milnot’s which were not regulated by the Act and changes in the dairy market over the years, application of the Filled Milk Act to Milnot no longer rested upon any rational basis and was therefore unconstitutional.

Here, as we have noted earlier, plaintiffs have not established or for that matter argued that the Abrogation Act lacks a rational basis and is therefore unconstitutional. Instead, our attention is directed to alleged changes in monetary policy, arguments properly directed to the legislature rather than the courts. A change in prospective policy will not by itself provide a basis for the judicial invalidation of an earlier law, so long as there is a rational basis for its continued enforcement. Clearly, the potential economic impact that would result from reviving gold clauses previously abrogated in 1933 would on its face provide a rational basis for application of the Abrogation Act retrospectively to gold clauses in existence prior to 1977. See Feldman v. Great Northern Ry. Co., 428 F. Supp. at 985 (in letter from Deputy Under Secretary of the Treasury to the Senate regarding repeal of the gold clause resolution, it was stated “any decision to repeal the Gold Clause Resolution would have to be based on consideration of its effect on our economy from both a domestic and international viewpoint”).

The only case cited by plaintiffs which appears to rely on Chastleton to hold an ordinance invalid and contrary to public policy due to changes in policy in a nonemergency situation is Fieldcrest Dairies, Inc. v. City of Chicago (7th Cir. 1941), 122 F.2d 132, vacated on jurisdictional grounds (1942), 316 U.S. 168, 86 L. Ed. 1355, 62 S. Ct. 986. There the court noted that ordinarily repeal or modification of existing legislation due to changed conditions is a function for the legislature, not the courts. “Changed conditions, of course, may make advisable a repeal or modification of existing legislation, but if so, the appeal should be to the legislature and not the courts.” (Fieldcrest Dairies, 122 F.2d at 135-36.) The invalidation was based on the fact that during the pendancy of the appeal there was an overt articulation of policy by the State legislature which directly conflicted with the municipal ordinance.

No such express statement of public policy exists in this case. As discussed above, the 1977 amendment, validating gold clauses prospectively only, may be viewed as an expression of policy that pre-1977 gold clauses should remain unenforceable. Had Congress intended to repeal the Abrogation Act and to revive those gold clauses which had clearly been invalidated by the Act, it could have done so, but did not. “If Congress had ‘clearly intended’ to revive gold obligations by enacting the [1977] Amendments, ‘it was strange indeed that [it] omitted the one clear provision that would have accomplished that result.’ ” Feldman v. Great Northern Ry. Co., 428 F. Supp. at 987, quoting Schwegmann Brothers v. Calvert Distillers Corp. (1951), 341 U.S. 384, 391-92, 95 L. Ed. 1035, 1046, 71 S. Ct. 745, 749.

Our conclusion that the Abrogation Act bars enforcement of the gold clauses in question here finds further support in the fact that every other court which has considered the question has reached the same result as we do here, although in each of these other cases plaintiffs’ arguments were framed in terms of “implied repeal.” See Rudolph v. Steinhardt (11th Cir. 1983), 721 F.2d 1324 (gold “devaluation” clause in lease entered into in 1970 not enforceable, 1977 amendment did not render clause enforceable as to payments due after that date); Southern Capital Corp. v. Southern Pacific Co., 568 F.2d 590 (Abrogation Act not impliedly repealed by 1973 and 1974 acts); Feldman v. Great Northern Ry. Co., 428 F. Supp. 979 (1973 and 1974 gold ownership amendments did not impliedly repeal Abrogation Act); Equitable Life Assurance Society v. Grosvener (W.D. Tenn. 1976), 426 F. Supp. 67 (1974 act removing restriction on gold ownership did not repeal, explicitly or implicitly, act of 1933); Radue v. Zanaty (1975), 293 Ala. 585, 308 So. 2d 242 (gold clause on check unenforceable); Gold Bondholders Protective Council v. Atchison, Topeka & Santa Fe Ry. Co., 649 P.2d 947 (no implied repeal by 1973, 1974 or 1977 amendment); Henderson v. Mann Theatres Corp. (1976), 65 Cal. App. 3d 397, 135 Cal. Rptr. 266 (gold clause in lease rendered unenforceable by 1933 act, not revived by 1973 act, rejecting express or implied repeal argument).

Accordingly, for all the above reasons, the judgment of the circuit court of Cook County is affirmed.

Affirmed.

McNULTY, P.J., and MURRAY, J., concur.