author: JUSTICE UNVERZAGT

text:
    MITCHELL BUICK AND OLDSMOBILE SALES, INC., Plaintiff-Appellee, v. McHENRY SAVINGS BANK, Defendant-Appellant.
    Second District
    No. 2—91—1314
    Opinion filed October 8, 1992.

      Ronald E. Shadle and Paul M. Orenic, both of Cappetta & Shadle, of Oakbrook Terrace, for appellant.
    Michael F. Kukla, of Michael F. Kukla, Ltd., of Crystal Lake, for appellee.
   JUSTICE UNVERZAGT

delivered the opinion of the court:

Defendant, McHenry Savings Bank (McHenry), appeals the judgment of the circuit court for $10,000 in favor of plaintiff, Mitchell Buick & Oldsmobile Sales, Inc. The parties agreed to vary the terms of the Uniform Commercial Code — Bank Deposits and Collections (Ill. Rev. Stat. 1989, ch. 26, par. 4 — 101 et seq.) when McHenry agreed to hold a check for payment rather than dishonor the check immediately. The issue on appeal is whether McHenry breached that agreement by refusing to pay plaintiff’s check when the drawer deposited other checks into the account irrespective of whether the checks were ever collected.

At the trial, John A. Mitchell, president of plaintiff, testified that on July 10, 1989, Roger Little, as the owner of Masterson Motors, drew plaintiff a $10,000 check. According to the complaint, Masterson drew the check in return for the sale of plaintiff’s used cars. Mitchell called Bud Adams at McHenry, where Masterson kept its account, to determine if the check was good. Adams told him that the check was not good. Mitchell asked if he could present the check to be held for collection and if there would be any drafts in front of plaintiff’s check. Adams told Mitchell plaintiff’s check would be in first place if it was presented immediately. Mitchell did not deposit the check with plaintiff’s own bank but sent an employee to present it to McHenry. Mitchell testified that Adams told him that as soon as deposits added up to $10,000, the check would be paid. In return for holding the check for collection, plaintiff paid $7. The bank typed a receipt on a slip of paper labelled “COLLECTION ON [account number] PAYABLE TO MITCHELL BUICK & OLDSMOBILE SALES, INC.” Mitchell repeated that Adams said that as soon as the deposits would equal the amount of the check it would be paid. The bank did not tell him that anyone would be paid ahead of plaintiff.

Mitchell then called Little and told him the check was not good. Little said that he would deposit over $50,000 in third-party checks into his account that afternoon. Little stopped at plaintiff’s business on the way to the bank and showed Mitchell the checks. Later that afternoon, Mitchell called McHenry, and someone told him that the deposit had not yet been recorded. On July 24, McHenry returned the $10,000 check and a $7 refund. Mitchell called McHenry, and someone told him that the check was returned because Masterson’s account was closed.

On cross-examination, Mitchell said that Adams’ “exact words” were: “if Masterson Motors would deposit ten thousand or over, they would pay the check”; Adams did not say anything regarding whether the funds were actually collected.

Plaintiff called Brian T. Nash as its next witness. He was the manager of McHenry’s checking department. McHenry’s records showed a deposit of $53,262.54 into the Masterson Motors account on July 10, and this created an initial balance of $64,341.60. That day, the bank also charged the account $16,000 for a check which Little had drawn against the account for cash on June 16. McHenry had paid him $16,000, but the Federal Reserve Bank had returned the item as there were insufficient funds to cover that amount. McHenry also charged the account $20,000, representing another check, deposited June 15, that was returned for insufficient funds. These debits left a balance of $28,341.60.

McHenry also called Nash to testify; McHenry no longer employed Adams. McHenry collected no funds on the Masterson account after July 10, 1989; the deposited checks bounced. On July 10, McHenry did not make any payments to anyone. The $16,000 item posted on July 10 was just a journal entry of an item that was paid a month earlier. The $20,000 debit reflected the return of an insufficiently funded check previously deposited. McHenry’s records also showed that Mas-terson’s account had a nominal $11,079.06 balance prior to July 10, when Adams told Mitchell there were no funds to pay the $10,000 check.

Nash attempted to testify with respect to the standard practice in accepting checks for collection, but plaintiff objected to the relevance of the testimony. Plaintiff contended that the standard practice was not relevant to the terms of the contract to which Mitchell had testified. The court sustained the objection because Adams could have deviated from the scope of his authority or from the standard practice by agreeing to some other kind of contract for collection of an item. However, the court permitted McHenry to make an offer of proof. Nash testified that the practice of McHenry was to pay only on collected funds, not deposited funds, when paying an item held for collection. McHenry did not pay the $10,000 check on July 10 despite the nominal $11,079.06 balance because that balance did not represent collected funds. Nash was not aware of any agreement ever made by McHenry of an agreement to pay on mere deposited funds.

The court entered judgment for plaintiff. The judge referred to his own experience that his bank as a courtesy permits him to write checks the day he deposits his State payroll check. The court noted that Mitchell’s testimony was uncontroverted and found that McHenry should have paid the check.

The parties have addressed numerous issues arising from the above facts, and both counsel have done a commendable job in preparing their briefs. Although all the issues are interrelated because they all involve the proper interpretation of the parties’ contract, McHenry makes the following arguments: (1) the terms of the Uniform Commercial Code were not varied by an agreement of the parties; (2) as a collecting bank, McHenry was the agent for plaintiff and did not become liable to it; (3) McHenry did not pay any other parties’ checks before plaintiff’s; (4) the judgment is against the manifest weight of the evidence; and (5) the trial court erred in refusing to consider the evidence of the ordinary practices of holding checks for collection.

Article IV of the Uniform Commercial Code (Code) governs the actions of banks in depositing and collecting checks. The purposes of the Code are to simplify, clarify, and unify the law governing commercial transactions, to permit the expansion of commercial practices through custom, usage and agreement of the parties, and to make the law among the various States uniform. (Ill. Rev. Stat. 1989, ch. 26, par. 1 — 102(2).) However, the parties may vary the effect of the Code by agreement. Ill. Rev. Stat. 1989, ch. 26, par. 4 — 103(1).

A payor bank may charge against a customer’s account any item which is otherwise properly payable even though the charge creates an overdraft (Ill. Rev. Stat. 1989, ch. 26, par. 4 — 401(1)), but a bank is not ordinarily liable to the payee of a check made by a drawer who has no funds on deposit to cover the check, even though the bank has previously honored overdrafts (Ill. Ann. Stat., ch. 26, par. 4 — 401, Illinois Code Comment, at 527 (Smith-Hurd 1963)). Subject to any right of the customer’s bank to apply the credit to an obligation of the customer, a provisional credit given by a bank for an item deposited into an account becomes available for withdrawal as of right when the provisional settlement given by the collecting banks becomes final and the bank has had a reasonable time to learn the settlement is final. (Ill. Rev. Stat. 1989, ch. 26, par. 4 — 213(4)(a).) The provisional settlement becomes “final” when the third-party or collecting bank pays the item in cash, posts the check to the drawer’s account or does some other action deemed to make the settlement irrevocable. (Ill. Rev. Stat. 1989, ch. 26, par. 4 — 213(1).) We note here that McHenry has cited section 4 — 213(6) (Ill. Rev. Stat. 1989, ch. 26, par. 4 — 213(6); see Ill. Rev. Stat. 1991, ch. 26, par. 4 — 215(f)), but that section applies only to the deposit of cash, which is final for withdrawal purposes the day following the deposit.

An application of these statutes to the facts before the court makes the meaning of these technical statutes clearer. We first note that “deposits” are not withdrawable; it is the credit resulting from the deposits which is withdrawable by the customer of the bank. A bank account is an intangible asset representing a bank’s debt to its customer. When Masterson, the customer, deposited with McHenry the third-party checks for collection, McHenry gave a provisional credit to Masterson’s account and sent the third-party checks to the Federal Reserve Bank for collection from the various banks from which those checks were drawn. McHenry received only a provisional settlement for those third-party funds, which could not become final until those other banks honored the checks. However, no bank honored the checks to make the items “final.” (Ill. Rev. Stat. 1989, ch. 26, par. 4 — 213(1).) Thus, the provisional credit in Masterson’s account for the deposited third-party items never became final and never became withdrawable as of right. (Ill. Rev. Stat. 1989, ch. 26, par. 4— 213(4)(a).) McHenry was under no obligation to pay a check drawn on Masterson’s account when it contained insufficient funds. (Ill. Rev. Stat. 1989, ch. 26, par. 4 — 401.) Also, McHenry had the right to apply the credits created by the deposits to a previous obligation of Master-son, namely, the revoking of the provisional settlement made by a previously bounced third-party check, prior to Masterson’s right to withdraw money against any finalized deposit. (Ill. Rev. Stat. 1989, ch. 26, pars. 4 — 213(4), 4 — 212(1).) In addition, in the absence of a contrary agreement, the payor bank may pay any item in any order convenient to the bank; no check has priority over another check. (Ill. Rev. Stat. 1989, ch. 26, par. 4 — 303(2).) This last section is irrelevant to this cause because there was no credit to pay any of Masterson’s checks.

The record is sufficient to support a finding that the parties varied the bank’s privilege to pay any item without priority because McHenry agreed to pay plaintiff’s check before any other checks written by Masterson. The record is also sufficient to support a finding that the parties modified McHenry’s obligation to provide timely notice of dishonor of plaintiff’s check (Ill. Rev. Stat. 1989, ch. 26, pars. 4 — 301, 3 — 506); instead, McHenry was to hold the check until a condition was met. The parties dispute what that condition was. McHenry contends that the agreement was to hold the check until the deposit became final or sufficient funds were collected to pay the check. Plaintiff contends that the agreement was to hold the check until the drawer merely deposited an amount equal to the tenor of the check.

The evidence underlying the terms of the oral agreement is in controversy. Mitchell recollected from his short telephone call that Adams told him that the $10,000 check would be paid when Masterson made deposits. This statement is belied by other evidence. If the parties meant uncollected, nonfinal deposits, then Adams would not have told Mitchell the check was not good when McHenry was holding an $11,000 provisional credit in Masterson’s account. If Mitchell thought the check would be paid after the mere deposit, and he knew that Masterson was depositing the other checks that day, then he would have expected payment that day; instead, he did nothing while the bank tried to collect the Masterson deposits. In addition, the ordinary practice was relevant to determine the reliability of Mitchell’s recollection and to explain the terms of the statements forming the alleged agreement. The trial court erred by accepting only one party’s testimony regarding the terms of the oral agreement and by excluding any evidence contrary to that version. The trial court deemed the terms of the oral contract proved without considering all the evidence. The cases which plaintiff cites refer to extrinsic evidence contradicting written terms, and those cases are not relevant to the determination of what comprised the terms of an oral agreement.

Even if Adams had said that McHenry would pay the check if Masterson made deposits, the contract would have to include the provisions of the Code implying “final” deposits. No reasonable person on hearing the objective manifestations of the term “deposits” in the offer or acceptance could infer that a check would be paid on uncollected funds. The term “deposits,” as used by the parties, was ambiguous and vague and could have included deposits of cash, government checks, or cashier’s or certified checks; these items would provide credit available for withdrawals the next day (Ill. Rev. Stat. 1989, ch. 26, par. 4-213(5); 12 U.S.C.A. §4002 (West 1989)). Plaintiff should have known the deposits could have included checks of a lesser quality, including nonlocal checks, two-party checks, stolen checks, forged checks, insufficiently funded checks or checks written with disappearing ink. The term “deposits” does not distinguish between direct deposits, wire deposits, branch office deposits, automatic-teller-machine deposits or nonproprietary-automatic-teller-machine deposits. Thus, plaintiff’s construction of the terms of the alleged agreement is manifestly unreasonable since plaintiff did not specify what might be deposited. Plaintiff unreasonably assumed, contrary to law, that the credit obtained from depositing third-party checks was the same as the credit obtained from depositing cash or cash equivalents. Even if we accept Mitchell’s recollection of the exact words, “if Masterson Motors would deposit ten thousand or over,” the court must infer of what units 10,000 are deposited. We can infer dollars, but Masterson did not deposit dollars; it deposited negotiable instruments, which do not create credit withdrawable as of right until made final. In interpreting a contract, a court will seek a reasonable interpretation of the terms of the contract. (Ebrahim v. Checker Taxi Co. (1984), 128 Ill. App. 3d 906, 907.) Plaintiff’s interpretation is unreasonable, and we must reverse the judgment.

Moreover, there is no evidence that the parties intended to vary the terms of the Code regarding when the deposits would be with-drawable as of right, or that plaintiff sought to vary the term of Mas-terson’s contract with McHenry. Instead, the only reasonable interpretation of the agreement is that, in consideration of a $7 fee, McHenry would hold, rather than return and dishonor, plaintiff’s check until such time as McHenry collected sufficient funds to make the deposits withdrawable by right.

In addition, plaintiff’s argument that the terms of the Code should not apply to the contract unless specifically incorporated is patently unreasonable. This nation handles over 50 billion checks annually (Ill. Ann. Stat., ch. 26, par. 4 — 101, Uniform Commercial Code Comment, at 155 (West Supp. 1992)), and few parties, depositors, endorsers or drawers to these checks actually refer to the Code when handling a check; yet the precise instructions of the Code are followed when the checks are deposited, collected and paid. Plaintiff’s own act of endorsing the check resulted in a myriad of consequences which cannot be understood without reference to the commercial paper laws. If plaintiff’s check had been stolen or paid over a forged endorsement, plaintiff would be the first party to demand redress under the Code even though it made no express contract with the bank. While a court will not imply factual conditions which the parties failed to express in a contract, a court cannot construe a contract outside the legal conditions underlying a transaction. (McMahon v. Chicago Mercantile Exchange (1991), 221 Ill. App. 3d 935, 945.) The existing laws and statutes become implied terms of the contract as a matter of law. 221 Ill. App. 3d at 945.

McHenry is correct when it says that the Code applies because the agreement to hold the check for collection rather than to immediately dishonor it establishes that, at least, McHenry believed the oral agreement was subject to the Code and either there was never a meeting of the minds or the contract needs to be interpreted under the Code to bind McHenry, if at all.

Plaintiff also claims that McHenry had a reasonable expectation that McHenry would pay its item in spite of the overdraft since the evidence showed McHenry had honored such insufficiently funded items in the past. However, the evidence does not show plaintiff had knowledge of Masterson’s prior overdraft, and, therefore, plaintiff could not have such an expectation. Even if plaintiff had an expectation, it was unreasonable. Ill. Ann. Stat., ch. 26, par. 4 — 401, Illinois Code Comment, at 527 (Smith-Hurd 1963).

For the above reasons, the judgment of the circuit court of McHenry County is reversed.

Reversed.

WOODWARD and McLAREN, JJ., concur.


source: Caselaw Access Project

author: JUSTICE McLAREN

license: Public Domain

text:
    PALMETTO LEASING COMPANY, Plaintiff-Appellant, v. HARRY R. CHILES, JR., et al., Indiv. and d/b/a Chiles and Wallach, Defendants-Appel-lees.
    Second District
    No. 2—91—1329
    Opinion filed October 14, 1992.

      Michael G. Philipp and Michael C. Wiedel, both of Carney & Hultquist, Chartered, of Downers Grove, for appellant.
    Harry Ray Chiles, Jr., and Kevin G. Wallach, both of Chiles & Wallach, of Wheaton, appellees pro se.

   JUSTICE McLAREN

delivered the opinion of the court:

Plaintiff, Palmetto Leasing Company, appeals the judgment of the circuit court in favor of the defendants, Harry R. Chiles, Jr., and Kevin Wallach, individually and doing business as Chiles and Wallach. Plaintiff sued to collect on a check written by Chiles against the Chiles and Wallach trust account on behalf of their client, Winifred Crespo. The trial court found the defense of lack of consideration. Plaintiff appeals and raises three issues: (1) whether the check was issued for consideration; (2) whether plaintiff was a holder in due course; and (3) whether defendants are liable as an accommodation party. We affirm.

No transcript of the proceeding is available, but the parties have produced a report of proceedings certified by the trial court pursuant to Supreme Court Rule 323(c) (134 Ill. 2d R. 323(c)).

Plaintiff originally sued Crespo in cause No. 90 — LM—0486. The record of that proceeding is not before us. Apparently, plaintiff sued on a breach of contract involving business equipment plaintiff had leased to Crespo. Chiles represented Crespo, and William M. Christou of Carney & Hultquist, Chartered, represented plaintiff.

The court scheduled the Crespo cause for April 24, 1990, for a trial. After a series of negotiations, the parties agreed to enter an agreed order which provided that judgment was entered against Crespo in the amount of $5,967 plus costs and $1,300 in attorney fees; that plaintiff was entitled to the return of the equipment; and that the execution of the judgment was stayed for seven days. The agreed order was part of the parties’ agreement whereby Crespo’s obligation to plaintiff could be satisfied by the payment of $9,000 and Crespo would keep the equipment. Chiles wrote a check drawn on the Chiles and Wallach clients’ trust account in the amount of $9,000. He signed “Harry R. Chiles” on the signature line. On the memorandum line he noted “FOR WINNI CRESPO LUXURY IMPORT AUTO.” The parties did not sign a satisfaction of judgment, release, or bill of sale. The check was deposited on or about April 30, but, on May 1, defendants stopped payment on the check. Plaintiff then sued defendants for drawing the note. Defendants filed a third-party complaint against Crespo, but they alleged she had filed bankruptcy; they voluntarily dismissed the complaint when the court entered judgment for defendants.

At the trial against defendants on the check, Christou testified that on April 24, 1990, he met repeatedly with Chiles outside the presence of the clients and that he relayed the offers to plaintiffs representative, David Borg. Christou testified that the terms of the settlement were that, in return for $9,000, plaintiff would release Crespo from any financial obligation caused by any breach of the lease and that Crespo would buy the equipment. Plaintiff insisted that the settlement include the entry of a money judgment against Crespo.

Plaintiff also would not accept an uncertified check from Crespo. Although Crespo did produce a check drawn from an out-of-State bank, plaintiff would not accept it; plaintiff claimed that several of Crespo’s checks had been returned for insufficient funds. Christou could not remember the terms of the earlier settlement proposals. Christou testified that Chiles offered his trust account to pay the $9,000 settlement, but Chiles also stated that they would need extra time to allow Crespo to deliver funds to Chiles to deposit in the account. The parties agreed that the $9,000 check so written would not be deposited until April 29.

Christou further testified that he asked Chiles what would happen if Crespo failed to provide the funds to Chiles for deposit and that Chiles responded that in that event the check would be “my problem.” On cross-examination, Christou did not recall that the “my problem” statement was made in the context of a settlement proposal in which a judgment would not be entered against Crespo.

Chiles testified that he negotiated the settlement on April 24. The settlement payment was to be satisfied by a check in the amount of $9,000 written on the trust account. Plaintiff agreed not to present the check for payment until April 29. The settlement agreement was to be a full and complete disposition of all matters between the parties. Chiles contended that in an earlier negotiation session, in the context of a proposal in which no judgment would be entered against Crespo, Christou inquired what would happen if Crespo failed to provide the funds. Chiles said such failure would be “my problem.” Chiles testified that he did not make the statement in relation to the final agreement but only in the context of a previous, unaccepted offer. Chiles testified that he did not recall stating that he would not be responsible for the payment if Crespo failed to deliver.

The trial court found the absence of any consideration to support a promise to pay plaintiff $9,000, and, therefore, plaintiff could not recover on the unpaid check. The trial court also stated that the agreed order entered in the previous cause was the full and complete agreement between the parties and that it did not mention a $9,000 check. The trial court further stated that the $9,000 did not represent defendants’ promise to pay but was “merely an accommodation to counsel.” Following a denial of plaintiff’s post-trial motion, it filed a timely notice of appeal.

Plaintiff first contends that the trial court erred in finding a lack of consideration. Where the drawer admits his signature, the holder of an instrument is entitled to recover on it unless the drawer establishes a defense. (Ill. Rev. Stat. 1989, ch. 26, par. 3 — 307(2).) Section 3 — 408 of the Uniform Commercial Code (Code) (Ill. Rev. Stat. 1989, ch. 26, par. 3 — 408; see Ill. Rev. Stat. 1991, ch. 26, par. 3 — 303 (effective Jan. 1, 1992)) provides that a failure of consideration is a defense against any person not having the rights of a holder in due course, except that no additional consideration is necessary for the giving of an instrument in payment of an antecedent debt. The obligation to pay an antecedent debt is suspended by the delivery of a check. (Ill. Rev. Stat. 1989, ch. 26, par. 3 — 802(1)(b).) Consideration sufficient to uphold an ordinary contract is sufficient to validate a negotiable instrument. (Rybak v. Dressier (1988), 178 Ill. App. 3d 569, 582.) Valuable consideration consists of some right, interest, profit or benefit accruing to one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other. Rybak, 178 Ill. App. 3d at 581.

The maker bears the burden of proof of the defense (Rybak, 178 Ill. App. 3d at 582; Ill. Ann. Stat. 1989, ch. 26, par. 3 — 307, Uniform Commercial Code Comment 2, at 204 (Smith-Hurd 1963)); the court presumes consideration exists for the instrument (Rybak, 178 Ill. App. 3d at 582). However, the adequacy, as opposed to the existence, of consideration is not relevant to the determination. (178 Ill. App. 3d at 582.) Finally, a promise based upon consideration of a benefit to a third person constitutes sufficient consideration for a promise to guarantee a debt. Finn v. Heritage Bank & Trust Co. (1989), 178 Ill. App. 3d 609, 612; First National Bank v. Achilli (1973), 14 Ill. App. 3d 1, 6.

Thus, defendants bore the burden of establishing the lack of consideration for the giving of the check. Plaintiff contends that defendants obtained the benefit of goodwill from their client by signing the check. Plaintiff argues also that Crespo received a third-party benefit because without the attorney’s check she could not have reached a favorable settlement. Plaintiff argues that there was no evidence that defendants did not intend to be bound by the signature. Plaintiff also contends that the trial court erred by finding that the check was not part of the settlement because it was not reflected in the agreed judgment in the Crespo case.

The record does reflect that the agreed judgment was only part of a settlement contemplated by the parties. Plaintiff demanded the extra security of having a judgment for the $7,267 obligation and an order to return the equipment. The $9,000 payment would both extinguish the judgment and transfer ownership of the equipment to Crespo. That plaintiff insisted on a judgment reflects that the parties did not intend the agreement to be finally settled because, if the $9,000 payment were not forthcoming, plaintiff could always enforce the judgment without the transfer of title to the equipment. The judgment was also stayed for seven days, the same time as the pending delivery of the funds, and this fact also reflects that the parties did not intend the settlement to be final; they wanted to see if Crespo would provide the funds. By its nature, a lease does not ordinarily provide for the obligation to purchase the leased property; the record does not reflect any such antecedent obligation. Thus, the record does not reflect a binding intention to pay $9,000 on defendants’ part and does not clearly establish a contract with definite terms.

The record does not clearly show that the parties intended that defendants be bound. Plaintiff did not sign a release or a satisfaction of the judgment against Crespo; moreover, the record is not clear whether plaintiff would release its claim to possession of the equipment or would execute a bill of sale when Crespo supplied the funds. Thus, the trial court did not err by holding that the agreed judgment constituted the entire agreement of the parties since the other agreement was too indefinite to be enforced. The parties should have incorporated their settlement into the agreed order and specified whether the contract was mutual or conditional. They proceeded in derogation of the agreement they presented to the court. There was no showing that plaintiff had a right to enforce the alleged agreement against Crespo or that the agreement was not conditioned on Crespo’s performance. Since the alleged contract was not evidenced in the agreed judgment, defendants’ order of payment made in the $9,000 check was incurred without consideration; Crespo never supplied the funds to satisfy the condition precedent to the operation of the alleged contract. Thus, we conclude the trial court’s finding of a lack of consideration to defendants is not manifestly erroneous, and, accordingly, we do not disturb the finding of the trial court. Ahern v. Knecht (1990), 202 Ill. App. 3d 709, 714.

Plaintiff also argues that it is a holder in due course (HDC). The defense of lack of consideration is not effective against an HDC. (Ill. Rev. Stat. 1989, ch. 26, pars. 3 — 408, 3 — 305, 3 — 306(c).) An HDC is a person in possession of an instrument drawn or endorsed to him; who takes it for value; in good faith; and without notice of any defense against it. (Ill. Rev. Stat. 1989, ch. 26, pars. 3-302, 1-201(20).) The payee of a check may be an HDC. (Ill. Rev. Stat. 1989, ch. 26, par. 3 — 302(2).) A taker of an instrument has notice of a defense if the instrument on its face is so incomplete or so irregular as to call into question its validity or to create an ambiguity as to the party to pay. (Ill. Rev. Stat. 1989, ch. 26, par. 3 — 304(1).) Knowledge that the instrument was issued in return for an executory promise or accompanied by a separate agreement does not by itself give the holder notice of a claim unless the holder has notice that a defense has arisen from the terms of the agreement. Ill. Rev. Stat. 1989, ch. 26, par. 3— 304(4)(b).

The record reflects that plaintiff had actual knowledge of the defense of failure of consideration at the time it took the check. Plaintiff knew that the check had to be held until Crespo delivered the funds into the account. While the post-dating of an instrument is not enough to give a detached holder notice of a defense (see Ill. Rev. Stat. 1989, ch. 26, par. 3 — 304(4)(a)), here, plaintiff knew that defendants did not intend the check to be paid unless Crespo delivered the funds in the future and, therefore, that they had no consideration. Thus, plaintiff does not qualify for the status of a holder in due course.

Finally, plaintiff seizes upon the trial court’s statement that the $9,000 was “an accommodation to counsel.” “Accommodation Party” is a term the Uniform Commercial Code uses to describe a person who signs an instrument in any capacity for the purpose of lending his name to another party to it. (Ill. Rev. Stat. 1989, ch. 26, par. 3— 415(1).) The accommodation party is in the nature of a surety, and the party is liable in the capacity in which he signs, e.g., comaker, endorser, or guarantor. (See Ill. Ann. Stat., ch. 26, par. 3 — 414, Uniform Commercial Code Comment, at 301 (Smith-Hurd 1963).) Lack of consideration, in terms of a benefit to the accommodation party, is not a defense available to an accommodation party. (In re Estate of Williams (1982), 109 Ill. App. 3d 828, 832.) Thus, plaintiff contends that defendants were liable as accommodation parties and that they lent their names to the transaction.

However, the trial court actually stated that the issuance of the check was “an accommodation to counsel” rather than defendants were “accommodation parties.” We cannot read the trial court’s statement as a legal determination that the defendants had that status. The record contains no allegations by plaintiff that it presented that theory before the trial court to support the conclusion or that it argued defendants were sureties or guarantors. Plaintiff never raised section 3 — 415. Where the record does not show that a matter urged on appeal was decided by the trial court, the issue is not properly preserved for review. (Hotze v. Daleiden (1992), 229 Ill. App. 3d 301, 310; Johnson v. Machetti (1992), 228 Ill. App. 3d 420, 423.) To the extent the argument is inherent in the other arguments presented to the trial court, the argument must fail because the record does not clearly show that defendants intended to lend their credit to Crespo. (See Ill. Rev. Stat. 1989, ch. 26, par. 3 — 415(1); Williams, 109 Ill. App. 3d at 832.) Rather, defendants were accommodating opposing counsel by acting as the conduit of the payment. They did not become liable on the instrument.

For the above reasons, the order of the circuit court of Du Page County is affirmed.

Affirmed.

INGLIS, P.J., and DUNN, J., concur.


author: JUSTICE DOYLE

text:
    ELLIS V. STANLEY, Plaintiff-Appellant, v. THE DEPARTMENT OF EMPLOYMENT SECURITY et al., Defendants-Appellees (Mullins and Associates, Inc., Defendant).
    Second District
    No. 2—91—1267
    Opinion filed October 8, 1992.

      Leonard D. Litwin, of Sheldon Hodes & Associates, of Chicago, for appellant.
    Roland W. Burris, Attorney General, of Springfield, and Robert E. Zeit-ner, of Chicago (Rosalyn B. Kaplan, Solicitor General, and Claudia Sainsot and Richard S. Grenvich, Assistant Attorneys General, of Chicago, and Elizabeth A. Foran, Assistant Attorney General, of Waukegan, of counsel), for appellees.
   JUSTICE DOYLE

delivered the opinion of the court:

After the Board of Review (Board) of the Department of Employment Security (Department) denied his application for unemployment compensation, plaintiff, Ellis V. Stanley, filed a complaint in administrative review in the circuit court of McHenry County. The complaint did not name the Board as a defendant, and plaintiff never served summons on the Board. The circuit court dismissed the suit for lack of subject-matter jurisdiction, holding that plaintiff had failed to comply with the strict prerequisites for suit under the Administrative Review Law (the Act) (Ill. Rev. Stat. 1991, ch. 110, par. 3 — 101 et seq.). The court also denied plaintiff leave to amend the complaint.

On appeal, plaintiff argues that his failure to name the Board as a defendant did not deprive the circuit court of jurisdiction over his timely complaint in administrative review. He maintains that (1) he was not required to name the Board as a defendant; and (2) assuming that he was required to name the Board as a defendant, the circuit court should have granted him leave to amend the complaint.

Defendants argue that (1) under section 3 — 107 of the Act (Ill. Rev. Stat. 1991, ch. 110, par. 3 — 107) and Cuny v. Annunzio (1952), 411 Ill. 613, the Board, as the “agency” of whose decision plaintiff sought review, was a necessary party to the suit; (2) under Lockett v. Chicago Police Board (1990), 133 Ill. 2d 349, plaintiff’s failure to name the Board as a defendant within 35 days of being served with a copy of its decision (see Ill. Rev. Stat. 1991, ch. 110, par. 3 — 103) was a jurisdictional defect which could not be cured by amendment; and (3) plaintiff’s failure to serve summons on the Board within this 35-day period (see Ill. Rev. Stat. 1991, ch. 110, par. 3 — 105), although not a jurisdictional defect, mandated dismissal of the complaint under the circumstances of this case.

We hold that the Board was a necessary party to the suit and that plaintiff’s unexplained failure to name the Board and serve summons within 35 days mandated dismissal of the complaint without leave to amend.

On June 28, 1991, plaintiff filed his complaint in administrative review, naming the Department, the Department’s Director, Loleta Didrickson, and his former employer, Mullins and Associates, Inc. (Mullins), as defendants. Plaintiff alleged that after Mullins terminated his employment on December 4, 1990, he applied to the Department for unemployment compensation. On May 24, 1991, after “all appropriate appeals,” the Board denied plaintiff’s claim. Plaintiff alleged that the decision to deny him unemployment benefits was against the manifest weight of the evidence. Appended to the complaint was a copy of the Board’s decision, which affirmed and incorporated the decision of a referee of the Department’s appeals division.

On June 28, 1991, plaintiff filed his “summons in administrative review” and certified that he had mailed copies of the summons to the Department, Didrickson and Mullins. There is no record of any service of summons or attempted service of summons on the Board.

On July 15, 1991, Didrickson moved to dismiss the complaint, arguing that under the Act the failure to name and serve the Board within 35 days mandated dismissal of the complaint. After a hearing, the circuit court agreed and dismissed the complaint.

Section 1100 of the Unemployment Insurance Act (Ill. Rev. Stat. 1991, ch. 48, par. 520) states unambiguously that the Board’s decisions shall be reviewable only under and in accordance with the Administrative Review Law. The Act is a departure from the common law, and parties seeking its application must adhere strictly to its procedures. Lockett, 133 Ill. 2d at 353; Winston v. Zoning Board of Appeals (1950), 407 Ill. 588, 595.

Section 3 — 107 of the Act requires that in “any action to review any final decision of an administrative agency, the administrative agency *** shall be made” a defendant. (Ill. Rev. Stat. 1991, ch. 110, par. 3 — 107(a).) In Cuny v. Annunzio (1952), 411 Ill. 613, 616, the supreme court held that where a claimant seeks administrative review of the Board’s denial of unemployment compensation, the Board is “the administrative agency” denoted by the above-quoted language. The Act requires the claimant-plaintiff to name the Board specifically as a party defendant to the suit. Cuny, 411 Ill. at 616-17.

Cuny is still good law and binding on this court. Plaintiff argues that Cuny is distinguishable because there the plaintiff named or served neither the Department nor the Board, whereas here plaintiff named and served the Department. Plaintiff argues that naming and serving the Department is tantamount to naming and serving the Board, which is a division of the Department. However, his argument ignores the plain language of Cuny that “while the Board *** may be a division or arm of the Department *** which operates under the superintendence of a Director, it is the Board which acted as the administrative agency and entered the administrative decision, and is the party contemplated by section 8 of the Administrative Review Act [identical in substance to the current section 3 — 107].” Cuny, 411 Ill. at 616-17.

Moreover, at least one later case also recognizes that, under section 3 — 107 of the Act, the “agency” is the final decision maker from whose holding the plaintiff appeals. (Zientara v. Lottery Control Board (1991), 214 Ill. App. 3d 961.) In Zientara, the court held that the plaintiff’s complaint in administrative review was deficient in not naming the Director of the Lottery Control Board as a defendant. Relying on Cuny, the court refused to hold that naming the Lottery Control Board was sufficient. Although the Director was an officer of the Lottery Control Board and reviewed a decision originally made by that board, she was also the final decision maker from whose ruling the plaintiff appealed; therefore, the Director was the “agency” contemplated by section 3 — 107. Zientara, 214 Ill. App. 3d at 966-67.

Further refuting plaintiff’s argument that the Department is an adequate surrogate for the Board is the statutory fact that the Board derives its decision-making powers from the legislature “without any direction, supervision, or control by the Director of Employment Security.” Ill. Rev. Stat. 1991, ch. 127, par. 44a.

We conclude that plaintiff’s complaint was deficient in not naming the Board as a defendant. Plaintiff also failed to comply with section 3 — 105 of the Act, as he never served summons on the Board. The only question is whether these shortcomings required dismissal of the complaint without leave to amend. Lockett holds that they did.

In Lockett, the Chicago police board affirmed a decision of the Chicago police department and ordered the plaintiff discharged from his employment. The supreme court held that although the plaintiff filed his complaint in administrative review within the 35-day period required by section 3 — 103 of the Act, the trial court nonetheless properly dismissed his complaint without leave to amend. The dismissal was proper because the plaintiff had failed to name and serve the police superintendent, a necessary party under section 3 — 107.

Lockett observed that section 3 — 102 of the Act states that “ ‘[u]n-less review is sought *** within the time and in the manner herein provided,’ a party is barred from bringing an action for administrative review.” (Emphasis in original.) (Lockett, 133 Ill. 2d at 353, quoting Ill. Rev. Stat. 1985, ch. 110, par. 3 — 107.) The court held that because the plaintiff failed to name and serve the superintendent within the 35-day period mandated by sections 3 — 103 and 3 — 105 of the Act, the trial court properly dismissed the complaint without leave to amend.

It is clear that the failure to file the complaint within 35 days is a jurisdictional defect. (Lockett, 133 Ill. 2d at 354-55.) The summons requirement of section 3 — 105 is mandatory but not jurisdictional. (Lockett, 133 Ill. 2d at 355.) Even here, however, the strict nature of the Act requires a plaintiff who does not meet the time limit to show that he had made a “good-faith effort to issue summons within the statutory period.” (Lockett, 133 Ill. 2d at 355.) The court’s reason for this concession was that the failure to file summons within the 35-day period may be the result of circumstances beyond the control of an otherwise diligent plaintiff. Lockett, 133 Ill. 2d at 355.

We view Lockett as controlling the issue of whether plaintiff’s complaint was properly dismissed because of plaintiff’s failure to name the Board and serve summons within 35 days of the Board’s final decision. We find it unnecessary to determine, as some appellate courts have done, whether the failure to name a necessary defendant is a jurisdictional defect necessitating dismissal and prohibiting amendment. (Compare Marozas v. Board of Fire & Police Commissioners (1991), 222 Ill. App. 3d 781; Strang v. Department of Trans portation (1990), 206 Ill. App. 3d 368 (cases holding such a defect to be jurisdictional), with Gilty v. Village of Oak Park Board of Fire & Police Commissioners (1991), 218 Ill. App. 3d 1078; Zientara v. Lottery Control Board (1991), 214 Ill. App. 3d 961 (holding defect to not be jurisdictional).) Because of the disposition of the issue in Lockett, we need not decide the jurisdictional ramifications, if any, of the failure to name a necessary party in a complaint for administrative review.

Here, just as in Lockett, plaintiff failed to both name a defendant and secure summons within 35 days. The Lockett court held that absent evidence of a good-faith effort to comply with the requirements of the Act, failure to name a defendant and serve summons within 35 days justifies dismissal of the complaint. (Lockett, 133 Ill. 2d at 355-56.) Thus, because we perceive no evidence of any good-faith effort to comply with the Act by naming and serving the Board within 35 days, Lockett compels our affirmance of the circuit court’s dismissal of plaintiff’s complaint.

Concerning a good-faith effort to comply in this context, we note the language in Lockett wherein the court referred to “circumstances beyond [plaintiff’s] control.” (Lockett, 133 Ill. 2d at 355.) The supreme court cited as examples of good-faith exceptions only cases in which a plaintiff had made a reasonable effort to comply but had been thwarted by some circumstance independent of his own efforts. Here, plaintiff’s failure to serve summons was inextricably related to his failure properly to name the Board as defendant. It was not attributable, for example, to any act or omission by anyone responsible for issuing or serving a summons otherwise properly requested by plaintiff. (See Lockett, 133 Ill. 2d at 355.) The failure properly to name a necessary party as a defendant cannot be said to excuse the timely service of summons or otherwise constitute a good-faith effort in complying with the statute where, as here, the law clearly required the Board to be named as a defendant. (See Cuny, 411 Ill. 613.) Any such interpretation of Lockett would create an impermissibly broad exception to the requirements of the Act inconsistent with the purpose of those requirements. We decline to equate a plaintiff’s failure to comply with the clear statutory requirements of the Act with a well-intentioned but uncontrollable lack of compliance.

Plaintiff argues finally that under section 3 — 111(a)(3) of the Act the circuit court has the power to “allow substitution of parties by reason of marriage, death, bankruptcy, assignment or other cause” (Ill. Rev. Stat. 1991, ch. 110, par. 3 — 111(a)(3)). Plaintiff cites no authority for this construction of section 3 —111(a)(3), and we are aware of none. Moreover, we agree with defendants that section 3 — 111(a)(3) exists so that the circuit court may adapt the proceedings to changed circumstances, not so that the court may rescue a party from his own failure to follow the strict but clear requirements of section 3 — 107 of the Act.

The judgment of the circuit court of McHenry County is affirmed.

Affirmed.

BOWMAN and NICKELS, JJ., concur.


text:
    RICHARD M. MARSH et al., Plaintiffs-Appellants, v. JAMES R. NELLESSEN, d/b/a Nellessen Construction, Defendant-Appellee.—JAMES R. NELLESSEN, d/b/a Nellessen Construction, Plaintiff-Appellee, v. RICHARD M. MARSH et al., Defendants-Appellants.
    Second District
    Nos. 2—91—1429, 2—91—1468 cons.
    Opinion filed October 16, 1992.

      Donald C. Stinespring, of Donald C. Stinespring & Associates, of Richmond, and Burton A. Gross, of Chicago, for appellants.
    Donald W. Truckenbrod and Thomas L. Cowlin, both of Truckenbrod & Cowlin, of McHenry, for appellee.
   JUSTICE McLAREN

delivered the opinion of the court:

Richard M. Marsh and Monica L. Marsh appeal the orders of the circuit court in this consolidated appeal. In appeal No. 2 — 91—1468, they appeal the order of the circuit court denying them leave to file a counterclaim in cause No. 90 — LM—251. In appeal No. 2 — 91—1429, they appeal the order of the circuit court dismissing their complaint in cause No. 91 — LA—471. The dismissed complaint was nearly identical to the denied counterclaim in the previously filed action. The first issue on appeal is whether the trial court abused its discretion in denying the Marshes the right to proceed with their allegations as a counterclaim when they alleged the same facts in their answer and affirmative defense previously filed. The second issue on appeal is whether the trial court abused its discretion in dismissing with prejudice the Marshes’ separate cause of action. Because these two issues are so closely related, we will address them simultaneously. We reverse the orders of the circuit court and remand the causes.

On May 24, 1990, James R. Nellessen, d/b/a Nellessen Construction, filed a complaint in cause No. 90 — LM—251 in which he alleged that the Marshes breached their contract to pay for the building of a house. Nellessen alleged that he built the house for the contract price of $84,320 plus extras of $1,950.11 and that the Marshes paid $78,000, leaving a balance of $8,270.11. On August 7, 1990, the Marshes answered the complaint by denying that Nellessen duly performed his duties under the contract. The Marshes filed an affirmative defense in which they alleged nine defects in the construction, such as crooked walls, water leakage, improperly installed trim and the failure to use screws and glue on the walls. The Marshes responded to Nellessen’s demand for a bill of particulars by supplying the detailed locations of the defects.

On June 7, 1991, the panel of arbitrators made an award in favor of Nellessen in the amount of $8,270.11. On July 2, the Marshes filed a notice of rejection of the award. The court scheduled trial for November 18, 1991. On September 25, 1991, The Marshes’ counsel served a notice of motion for October 30, to present counsel’s motion for leave to v/ithdraw as their attorney. On November 1, the Marshes served a notice of motion to present a motion for leave to file a counterclaim and to continue the trial. On November 6, the court denied the motion for leave to file the counterclaim. The facts alleged in the counterclaim were substantially the same as those in the affirmative defense. However, the Marshes added two allegations regarding the wavy floors and improperly installed plumbing and prayed for total damages of $19,237.50.

On November 8, 1991, the Marshes initiated cause No. 91 — LA-471 by filing a complaint nearly identical to the counterclaim and a notice of motion for November 14 for their motion to consolidate the two causes. Nellessen moved to dismiss the complaint because another action involving the same facts was already being litigated. (See Ill. Rev. Stat. 1991, ch. 110, par. 2 — 619(a)(3).) On November 14, the court dismissed the action and denied the motion to consolidate. On November 26, the trial court denied the Marshes’ motion to reconsider, and they filed a notice of appeal on December 16.

The Marshes also moved to reconsider the denial of the counterclaim in the original cause, No. 90 — LM—251. The trial court denied the motion on November 18 and found there was no just cause to delay enforcement or appeal of the order. The Marshes filed a notice of appeal on December 16.

We have jurisdiction under Supreme Court Rule 301 (134 Ill. 2d R. 301) regarding the dismissal of the cause of action in No. 91 — LA-471 and under Supreme Court Rule 304(a) (134 Ill. 2d R. 304(a)) regarding the denial of the counterclaim in cause No. 90 — LM—251. We subsequently granted the Marshes’ motion to consolidate the appeals.

The Marshes contend the trial courts abused their discretion by denying them leave to file a counterclaim and by dismissing their collateral complaint. Section 2 — 608 of the Code of Civil Procedure (Code) provides:

“(a) Any claim by one or more defendants against one or more plaintiffs, or against one or more codefendants, whether in the nature of setoff, recoupment, cross claim or otherwise, and whether in tort or contract, for liquidated or unliquidated damages, or for other relief, may be pleaded as a cross claim in any action, and when so pleaded shall be called a counterclaim.
(b) The counterclaim shall be a part of the answer, and shall be designated as a counterclaim. Service of process on parties already before the court is not necessary.” Ill. Rev. Stat. 1991, ch. 110, par. 2 — 608.

Section 2 — 608 gives a defendant discretion whether to file the counterclaim by permitting a party to plead the claim either in a separate action or as a counterclaim. (Bartsch v. Gordon N. Plumb, Inc. (1985), 138 Ill. App. 3d 188, 200.) Section 2 — 608 does not require a defendant to assert immediately his rights by way of a counterclaim if it would be inconvenient or strategically inadvisable to do so or where the full extent of the damages was not known earlier. (Kennedy v. First National Bank (1985), 129 Ill. App. 3d 633, 636.) The allegations did not involve contribution, which must be raised in a counterclaim to a pending action. (Laue v. Leifheit (1984), 105 Ill. 2d 191, 196.) Thus, the Marshes should not have been precluded from filing an action based on their claim that Nellessen failed to perform adequately.

In addition, section 2 — 616 of the Code provides for the liberal amendment of pleadings:

“(a) At any time before final judgment amendments may be allowed on just and reasonable terms, introducing any party who ought to have been joined as plaintiff or defendant, dismissing any party, changing the cause of action or defense or adding new causes of action or defenses, and in any matter, either of form or substance, in any process, pleading, bill of particulars or proceedings, which may enable the plaintiff to sustain the claim for which it was intended to be brought or the defendant to make a defense or assert a cross claim.” (Ill. Rev. Stat. 1991, ch. 110, par. 2-616.)

A trial court has broad discretion to allow amendments and supplements to pleadings. The court may consider whether the amendment would further the ends of justice; the ultimate efficacy of the claim; and the previous opportunities to assert it. (Healy v. Bearco Management, Inc. (1991), 216 Ill. App. 3d 945, 960.) The court should consider the timeliness of the amendment and whether other parties have been prejudiced or surprised. 216 Ill. App. 3d at 960; see People ex rel. Foreman v. Village of Round Lake Park (1988), 171 Ill. App. 3d 443, 447-48.

The Code is to be construed liberally. (Ill. Rev. Stat. 1991, ch. 110, par. 1 — 106; Patsis v. Zion-Benton Township High School, No. 126 (1992), 234 Ill. App. 3d 232, 238.) The purpose of the Code is to provide substantial justice and a resolution on the merits rather than to impose procedural hurdles to litigation. (Patsis, 234 Ill. App. 3d at 238.) The Marshes’ counterclaim was substantially similar to the affirmative defenses. No party was surprised or prejudiced by the new claim. Theoretically, there was no difference between their affirmative defense and the counterclaim other than that the amount of damages in the counterclaim exceeded the amount in the plaintiff’s prayer for relief, while in the affirmative defense the damages acted either as a setoff up to the amount of plaintiff’s damages or to negate the main action as a whole by denying the plaintiff’s due performance. Other than the addition of two factual allegations, only the amount of damages has changed in this case. Nellessen has shown no prejudice from the timing of the reassessment of the damages, and the Marshes’ amendment was introduced prior to trial. In the case cited by Nellessen (American Pharmaseal v. T E C Systems (1987), 162 Ill. App. 3d 351, 359-61), the defendant did not assert its affirmative defense until after the plaintiff rested its case; here, Nellessen had notice, prior to the scheduled trial date, of the Marshes’ factual claims as well as the theory underlying them. We believe that the trial court abused its discretion by denying the Marshes leave to amend their pleadings by filing the late counterclaim.

In addition, since the Marshes could have filed their claim in a collateral proceeding, the court could have consolidated the two proceedings and joined the claims. (Ill. Rev. Stat. 1991, ch. 110, pars. 2— 1006, 2 — 614; see Patsis, 234 Ill. App. 3d at 238.) Judicial economy would be served by allowing the counterclaim, thus avoiding the duplicative step of filing a new complaint and more hearings before another judge.

Nellessen, however, raises Supreme Court Rule 89 (134 Ill. 2d R. 89), which states:

“Discovery may be conducted in accordance with established rules and shall be completed prior to the hearing in arbitration. No discovery shall be permitted after the hearing, except upon leave of court and good cause shown.”

This rule provides that parties should not use the arbitration proceeding merely as an opportunity to discover the adversary’s case en route to the eventual trial. (134 Ill. 2d R. 89, Committee Comments.) Rule 89 does not prohibit the filing of new claims. By negative implication the rule permits the filing of new claims. The parties may ask leave of the court to pursue more discovery for a good cause, such as when a new claim is pleaded or when the full extent of the damage is not known at the time the answer was filed (see Kennedy, 129 Ill. App. 3d at 636). If Nellessen has been prejudiced by the Marshes’ amendment after the arbitration hearing, the trial court may permit more discovery or may bar those elements of the counterclaim which were not disclosed prior to the arbitration hearing and which should have been disclosed. (See 134 Ill. 2d R. 219(c).) In other words, the trial court should remedy any prejudice that might arise as a result of the arbitration while respecting the Marshes’ rights to add claims pursuant to section 2 — 616.

For the above reasons, the orders of the circuit court of McHenry County are reversed, and the causes are remanded for further proceedings.

No. 2 — 91—1429, Reversed and remanded.

No. 2 — 91—1468, Reversed and remanded.

UNVERZAGT and WOODWARD, JJ., concur.


author: JUSTICE McLAREN JUSTICE McLAREN

text:
    THE PEOPLE OF THE STATE OF ILLINOIS, Plaintiff-Appellee, v. ETHEL B. LEWIS, Defendant-Appellant.
    Second District
    No. 2—91—0016
    Opinion filed September 29, 1992.
    Rehearing denied November 24, 1992.— Supplemental opinion filed June 8,1994.

      G. Joseph Weller, Thomas A. Lilien, and Steven E. Wiltgen, all of State Appellate Defender’s Office, of Elgin, for appellant.
    Dennis Schumacher, State’s Attorney, of Oregon (William L. Browers, Marshall M. Stevens, Lisa A. Hoffman, Robert J. Biderman, and Jeffrey K. Davison, all of State’s Attorneys Appellate Prosecutor’s Office, of counsel), for the People.
   JUSTICE McLAREN

delivered the opinion of the court:

Defendant, Ethel Lewis, was charged by indictment with the unlawful delivery of a controlled substance for allegedly delivering less than one gram of cocaine to an undercover officer on November 3, 1988 (Ill. Rev. Stat. 1987, ch. 56½, par. 1401(c)). Defendant was found guilty following a jury trial in September of 1990. On December 12, 1990, defendant was sentenced to a term of 30 months’ probation with the condition that she perform 100 hours of public service per year and serve a period of home detention from 6 p.m. until 6 a.m. for 360 days. Defendant appeals the sentence imposed, claiming that the trial court miscalculated the probationary term and street value fine and failed to give credit for time served. For the following reasons, we dismiss defendant’s appeal.

Defendant was convicted of an offense which is a Class 2 felony. (Ill. Rev. Stat. 1989, ch. 56½, par. 1401(c).) Section 5 — 8—1 of the Unified Code of Corrections (Ill. Rev. Stat. 1989, ch. 38, par. 1005— 8 — 1), effective February 1, 1989, sets forth the sentence of imprisonment imposed for felonies. Additionally, it states as follows:

“A motion to reduce a sentence may be made, .or the court may reduce a sentence without motion, within 30 days after the sentence is imposed. ***
If a motion to reduce a sentence is timely filed within 30 days after the sentence is imposed, the proponent of the motion shall exercise due diligence in seeking a determination on the motion and the court shall thereafter decide such motion within a reasonable time.
If a motion to reduce a sentence is timely filed within 30 days after the sentence is imposed, then for purposes of perfecting an appeal, a final judgment shall not be considered to have been entered until the motion to reduce a sentence has been decided by order entered by the trial court.
A motion to reduce a sentence shall not be considered to have been timely filed unless it is filed with the circuit court clerk within 30 days after the sentence is imposed ***.” Ill. Rev. Stat. 1989, ch. 38, par. 1005 — 8—1(c).

This language was recently interpreted by the Appellate Court, Fifth District, in People v. Macke (1992), 224 Ill. App. 3d 815. In Macke, the court concluded that section 5 — 8—1(c) of the Unified Code of Corrections requires a defendant to file a motion to reduce his sentence in the trial court within 30 days after the sentence was imposed in order to appeal only the sentence. (Macke, 224 Ill. App. 3d at 816.) Since the defendant failed to file a post-trial motion (Ill. Rev. Stat. 1989, ch. 38, par. 116 — 1(b)) or a motion to reduce his sentence (Ill. Rev. Stat. 1989, ch. 38, par. 1005 — 8—1(c)), the trial court found that defendant failed to properly preserve any error that might have occurred, thereby waiving his right to appeal. Macke, 224 Ill. App. 3d at 816.

In reaching this decision, the Macke court stated as follows:

“Requiring a defendant to file a motion to reduce his sentence is similar to requiring a post-trial motion to preserve issues on appeal (Ill. Rev. Stat. 1989, ch. 38, par. 116 — 1(b)) and requiring a defendant who pleads guilty to move to withdraw that plea before appealing. (134 Ill. 2d R. 604(d).) Failure to file these motions denies the trial court the opportunity to correct any error that might have occurred and thereby burdens appellate counsel and the court of review with the time and expense of preparing and processing appeals. (See People v. Enoch (1988), 122 Ill. 2d 176 ***; People v. Wilk (1988), 124 Ill. 2d 93.)” (Macke, 224 Ill. App. 3d at 816.)

Although Macke was decided after the time during which defendant may have been required to file a motion to reduce her sentence, we find that the decision can be applied retroactively. A decision will be applied retroactively unless the court expressly declares that “its decision is a clear break with the past, such as when a court explicitly overrules its own past precedent, disapproves a practice that it has previously approved, or overturns a well-established body of lower court authority.” People v. Perruquet (1989), 181 Ill. App. 3d 660, 662.

Prior cases have discussed whether a defendant waives the right to appeal a sentence imposed by failing to file a motion to reduce the sentence (Ill. Rev. Stat. 1989, ch. 38, par. 1005 — 8—1) or ■withdraw a guilty plea (134 Ill. 2d R. 604(d)) when the defendant has entered a negotiated plea of guilty. (See People v. Wallace (1991), 143 Ill. 2d 59; People v. Wilk (1988), 124 Ill. 2d 93; People v. Smith (1990), 198 Ill. App. 3d 695; People v. Kennedy (1989), 188 Ill. App. 3d 1; see also People v. Phillips (1991), 219 Ill. App. 3d 877.) However, our research reveals that no prior cases have determined whether a defendant, convicted by a jury, waives the right to appeal a sentence imposed by failing to file a motion to reduce the sentence. Nevertheless, we find that Macke expands, but does not change or overrule, any decisions, including those cited above, but “promotes judicial economy and finality of judgments” as in Enoch (122 Ill. 2d at 190). (Macke, 224 Ill. App. 3d at 816.) For the foregoing reasons, we find that defendant has failed to properly preserve any error which might have occurred in sentencing, thereby waiving her right to appeal the issues she raises relating to sentencing.

Appeal dismissed.

GEIGER and BOWMAN, JJ., concur.

SUPPLEMENTAL OPINION

JUSTICE McLAREN

delivered the opinion of the court:

Following a jury trial, the defendant, Ethel B. Lewis, was convicted of the offense of unlawful delivery of a controlled substance (cocaine). (Ill. Rev. Stat. 1987, ch. 56½, par. 1401(c) (now codified, as amended, at 720 ILCS 570/401(c) (West 1992)).) She was sentenced to a term of 30 months’ probation with the condition that she perform 100 hours of public service each year of probation and serve a period of home detention from 6 p.m. until 6 a.m. for 360 days. Without filing a post-sentencing motion pursuant to section 5 — 8—1(c) of the Unified Code of Corrections, the defendant appealed the sentence imposed, claiming that the trial court miscalculated the probationary term and the street-value fine, and failed to give credit for time served. In People v. Lewis (1992), 235 Ill. App. 3d 1003, we followed People v. Macke (1992), 224 Ill. App. 3d 815, and dismissed the defendant’s appeal on the basis that the defendant’s failure to file a motion to reduce her sentence in the circuit court within 30 days after the sentence was rendered resulted in waiver of the right to appeal issues relative to her sentence. (See Ill. Rev. Stat. 1987, ch. 38, par. 1005-8-1(c) (now 730 ILCS 5/5— 8 — 1(c) (West 1992)).) Our supreme court granted the defendant’s petition for leave to appeal. In People v. Lewis (1994), 158 Ill. 2d 386, our supreme court ruled that the filing of a post-sentencing motion pursuant to section 5 — 8—1 of the Unified Code of Corrections is not a jurisdictional prerequisite to filing an appeal which only raises sentencing issues. The cause was remanded to this court to consider whether the trial court erred (1) in assessing the term of probation; (2) in assessing the mandatory street-value fine; and (3) in failing to award a fine credit.

First, the defendant contends that the court miscalculated the term of probation. On December 12, 1990, the trial court ordered a term of 30 months’ probation to expire on June 30, 1993. A written order was prepared which stated that the defendant’s probation term would expire on June 30, 1990. The defendant asserts that the court miscalculated the expiration date because 30 months from December 12, 1990, would be June 12, 1993. The State responds by asserting that the written order superseded any prior oral pronouncements of sentence.

In People v. Tackett (1985), 130 Ill. App. 3d 347, this court addressed a disparity between an oral pronouncement of sentence and the written order. The Tackett court considered cases in which the report of proceedings prevailed over the common-law record in the event of a conflict. (Tackett, 130 Ill. App. 3d at 350; People v. Thompson (1977), 51 Ill. App. 3d 447; People v. DePratto (1976), 36 Ill. App. 3d 338.) However, in denying the defendant’s request to correct the mittimus, the Tackett court stated that the entire record should be considered in the event of a conflict. After reviewing the entire record, the Tackett court concluded that the disparity did not reflect that the written judgment constituted an increase of the defendant’s sentence but, rather, that the court denied the defendant’s request for credit for time served on probation.

In this case, as in Tackett, the oral pronouncement of sentence and written order were dated and filed on the same day in one transaction. Contrary to Tackett, however, the record does not indicate that the court took additional factors into consideration in setting the expiration of the probationary term beyond 30 months. Therefore, we modify the judgment of sentence to reflect that the defendant’s term of probation would expire on June 12, 1993.

Section 5 — 9—1.1 of the Unified Code of Corrections provides the following language for assessing a street-value fine in drug-related offenses:

“When a person has been adjudged guilty of a drug related offense involving possession or delivery of cannabis or possession or delivery of a controlled substance ***, in addition to any other penalty imposed, a fine shall be levied by the court at not less than the full street value of the cannabis or controlled substances seized.
‘Street value’ shall be determined by the court on the basis of testimony of law enforcement personnel and the defendant as to the amount seized and such testimony as may be required by the court as to the current street value of the cannabis or controlled substance seized.” (Emphasis added.) (Ill. Rev. Stat. 1987, ch. 38, par. 1005-9-1.1 (now 730 ILCS 5/5 — 9—1.1 (West 1992)).)

The sentencing order in this case contains a notation that a street-value fine of $100 would be imposed. During oral pronouncement of the sentence, the court did not mention the imposition of a fine. The defendant concedes that section 5 — 9—1.1 of the Unified Code of Corrections provides for a mandatory street-value fine for certain drug-related offenses. (See People v. Craddock (1987), 163 Ill. App. 3d 1039, 1048.) However, the defendant questions the amount of the fine imposed.

The “street value” of a controlled substance is the price in a sale between a willing seller and a willing buyer in the streets, based on testimony by law enforcement personnel and the defendant. (People v. Beavers (1986), 141 Ill. App. 3d 790, 796.) The sole testimony relating to the “street value” of the controlled substance the defendant was convicted of delivering came from Cathy Straight, an undercover officer with the Department of Criminal Investigation, who testified that the “going rate” of one gram of cocaine was $100 to $110. Since the chemist who weighed the controlled substance testified that the packet contained .5 of one gram, the defendant asserts that the fine should range from $50 to $55.

In People v. Elston (1991), 222 Ill. App. 3d 956, 961, we determined that the street value of a particular controlled substance provides a guideline of the minimum amount of the fine. (See also People v. Garcia (1991), 217 Ill. App. 3d 350, 351; People v. Pehrson (1989), 190 Ill. App. 3d 928, 933.) Therefore, the trial court is vested with discretion in imposing a fine under section 5 — 9—1.1, which will not be altered on review absent an abuse of that discretion. (See People v. Perruquet (1977), 68 Ill. 2d 149, 153.) We find that the trial court’s order imposing a fine of $100 was not an abuse of discretion.

Finally, the defendant claims that she should be afforded credit against the street-value fine for time served. Section 110 — 14 of the Code of Criminal Procedure of 1963 contains the following provision regarding credit for incarceration in bailable offenses:

“Any person incarcerated on a bailable offense who does not supply bail and against whom a fine is levied on conviction of such offense shall be allowed a credit of $5 for each day so incarcerated upon application of the defendant. *** However, in no case shall the amount so allowed or credited exceed the amount of the fine.” Ill. Rev. Stat. 1987, ch. 38, par. 110-14 (now 725 ILCS 5/110-14 (West 1992)).

The record reflects that the defendant was indicted on January 19, 1990, and that a warrant for her arrest was served and executed on January 22, 1990, at 9:14 a.m. The defendant executed a recognizance bond on January 23, 1990. The defendant asserts that she should be afforded a credit against the street-value fine for two days spent in confinement. The State responds by asserting that the bond was a recognizance bond upon which no time would be spent. Since the record does not contain an affidavit as to confinement, supported by jail records, the State asserts that the defendant is not entitled to credit for time served.

Our review of the record reveals that on January 22, 1990, at 9:14 a.m., Sheriff Jerry Brooks executed a warrant for the defendant’s arrest and took the defendant into custody. It was not until January 23, 1990, that the defendant executed the recognizance bond. Therefore, the defendant is entitled to credit for two days in custody.

For the foregoing reasons, we affirm the portion of the judgment of sentence which imposed a fine of $100. We modify the judgment to reflect that the defendant’s term of probation expired on June 12, 1993. We further modify the judgment to allow credit for two days in custody as provided by section 110 — 14 of the Code.

Affirmed as modified.

GEIGER and BOWMAN, JJ., concur.


text:
    THE PEOPLE OF THE STATE OF ILLINOIS, Plaintiff-Appellee, v. MICHAEL SAPYTA, Defendant-Appellant.
    Second District
    No. 2—91—0181
    Opinion filed October 15,1992.
    John F. Donahue, of Law Offices of Donahue, Sowa & Bugos, of Lisle, for appellant.

      James E. Ryan, State’s Attorney, of Wheaton (William L. Browers and Marshall M. Stevens, both of State’s Attorneys Appellate Prosecutor’s Office, of counsel), for the People.
   JUSTICE DOYLE

delivered the opinion of the court:

Following a stipulated bench trial, the defendant, Michael Sapyta, was convicted of driving while under the influence of alcohol (DUI) (Ill. Rev. Stat. 1989, ch. 951/2, par. 11 — 501) and sentenced to one year’s probation and 30 days’ confinement in the Du Page County jail. The trial court stayed the sentence pending appeal (134 Ill. 2d R. 609).

The defendant argues that the trial court erred in admitting into evidence the results of a blood-alcohol test performed by personnel of the hospital at which the defendant received treatment on the evening of his arrest. The defendant maintains that section 11 — 501.4 of the Illinois Vehicle Code (Ill. Rev. Stat. 1989, ch. 951/2, par. 11 — 501.4), which allows for the admission of such records as a business records exception to the hearsay rule, is invalid because it conflicts directly with Supreme Court Rule 236 (134 Ill. 2d R. 236). Thus, he contends the trial court should have suppressed the results of the examination.

We hold that section 11 — 501.4 does not conflict with Supreme Court Rule 236 and that the trial court properly considered the results of the hospital’s blood-alcohol test.

On November 17, 1989, the defendant was involved in an automobile accident. After being arrested for DUI, he was taken to the emergency room of La Grange Memorial Hospital. His treating doctor requested a test of the defendant’s blood alcohol. The test, performed at the hospital, showed that defendant’s blood-alcohol level exceeded that required to support a conviction of DUI.

Before trial, the defendant moved in limine to suppress the record of the blood-alcohol test. The State introduced testimony from the hospital’s medical transcriptions supervisor that the records of the defendant’s emergency room visit, including the results of the blood-alcohol test, were made in the regular course of the hospital’s business. The defendant stipulated that the records were a “generic business record,” but argued that, under Supreme Court Rule 236(b), such medical records were inadmissible. The trial judge ruled that the records were admissible pursuant to section 11 — 501.4 and that Rule 236(b) did not preempt section 11 — 501.4.

After a stipulated bench trial, the court found the defendant guilty of DUI. The court denied the defendant’s post-trial motion, and the defendant filed this timely appeal.

Because the facts are not in dispute, we proceed directly to the defendant’s argument. Section 11 — 501.4 provides that in prosecutions for driving under the influence “the written results of blood alcohol tests conducted upon persons receiving medical treatment in a hospital emergency room are admissible in evidence as a business record exception to the hearsay rule” if certain conditions are met. (Ill. Rev. Stat. 1989, ch. 95½, par. 11 — 501.4(a).) The defendant concedes that here the State met all of these statutory conditions. He argues that the results of his blood-alcohol test were nonetheless inadmissible because section 11 — 501.4 conflicts with Supreme Court Rule 236, which provides, as relevant:

“(a) Any writing or record, whether in the form of any entry in a book or otherwise, made as a memorandum or record of any act *** shall be admissible as evidence of the act *** if made in the regular course of any business, and if it was the regular course of the business to make such a memorandum or record at the time of such an act *** or within a reasonable time thereafter. *** The term ‘business,’ as used in this rule, includes business, profession, occupation, and calling of every kind.
(b) Although medical records or police accident reports may otherwise be admissible in evidence under the law, subsection (a) of this rule does not allow such writings to be admitted as a record or memorandum made in the regular course of business.” 134 Ill. 2d R. 236.

The defendant argues that Rule 236(b) flatly prohibits the admission of medical records under the business records exception to the hearsay rule. He maintains that section 11 — 501.4, in allowing the admission of medical records under the business records exception to the hearsay rule, conflicts directly with the rule and is thus invalid. We disagree.

The defendant correctly asserts that where a statute directly and irreconcilably conflicts with a supreme court rule, the rule must prevail. (People v. Felella (1989), 131 Ill. 2d 525, 538; People v. Walker (1988), 119 Ill. 2d 465, 475; People v. Lendabarker (1991), 215 Ill. App. 3d 540, 560.) However, where the legislative enactment expresses a public policy determination, having as its basis something other than the promotion of efficient judicial administration, a court should strike down the statute only if the statute and the rule cannot reasonably be harmonized. (Walker, 119 Ill. 2d at 475.) We believe that the legislature’s determination that, as a matter of public policy, medical records should be admissible in a narrow range of criminal proceedings is entirely harmonious with Rule 236.

We recently held that section 11 — 501.4 and Rule 236 are harmonious because the statute applies exclusively to criminal proceedings and the rule applies exclusively to civil proceedings. (Lendabarker, 215 Ill. App. 3d at 560.) We based this conclusion on Supreme Court Rule 1, under which articles II and III of the supreme court rules apply only to civil and not criminal proceedings. 134 Ill. 2d R. 1, Committee Comments; Lendabarker, 215 Ill. App. 3d at 560.

The defendant argues that we should not follow Lendabarker because earlier cases held, or at least assumed, that Rule 236 applies to criminal proceedings. (See People v. Strausberger (1987), 151 Ill. App. 3d 832, 834; People v. Watkins (1981), 98 Ill. App. 3d 889, 900; People v. Boyd (1978), 66 Ill. App. 3d 582, 589; People v. Morris (1978), 65 Ill. App. 3d 155, 161.) Insofar as these cases conflict with Lendabarker, we choose not to follow them. We note that none of the opinions defendant cites consider the effect of Supreme Court Rule 1, under which article II of the supreme court rules applies only to civil proceedings. (134 Ill. 2d R. 1, Committee Comments.) Moreover, none of these cases directly addressed the validity of a statute that made medical or police records admissible under the business records exception to the hearsay rule. This does not end our discussion, however.

In People v. Jackson (1968), 41 Ill. 2d 102, a case neither party cites, the supreme court rejected the defendant’s argument that his “inmate history card” was the sort of medical record “intended to be excluded without doctor identification [by Rule 236].” (Jackson, 41 Ill. 2d at 114.) Jackson suggests without holding, therefore, that Rule 236 applies to criminal as well as civil proceedings. This suggestion arises from the court’s failure to hold that Rule 236 was applicable only to civil proceedings, even though this holding would have completely disposed of the defendant’s argument.

When the supreme court decided Jackson, Rule 1 and the accompanying committee comments were substantively the same as at the time we decided Lendabarker. (See 36 Ill. 2d R. 1, Committee Comments.) However, at the time of the trial involved in Jackson, Rule 1 stated more generally that “[r]ules governing trial court procedure apply only to civil proceedings unless the rules or their context otherwise indicate.” (7 Ill. 2d R. 1.) Effective January 1, 1967, the supreme court divided its rules into articles, making the rules in articles II and III (including Rule 236) applicable to civil proceedings and establishing that those rules applicable to both civil and criminal proceedings were to be found only in article I. 36 Ill. 2d R. 1, Committee Comments.

Thus, we believe Lendabarker does not conflict with Jackson, although some decisions between Jackson and Lendabarker have mechanically assumed that Rule 236 applies to criminal proceedings. These opinions do not mention the revision of Rule 1, effective January 1, 1967, and still in force. Also, as we have noted, none of the cases defendant cites actually decided the validity of a statute allegedly in conflict with Rule 236.

Apart from our determination that Rule 236 is inapplicable to criminal cases, we find an independent basis for concluding that no conflict exists between this rule and section 11 — 501.4. This conclusion is based upon the intent of Rule 236, as expressed in its language and the Committee Comments.

Rule 236(a) was promulgated to broaden the common-law business records exception to the hearsay rule by lessening the traditional foundation requirements. (134 Ill. 2d R. 236, Committee Comments; Ill. Ann. Stat., ch. 110A, par. 236, Historical & Practice Notes, at 504 (Smith-Hurd 1985).) Rule 236(b)’s language and history establish that Rule 236(b) does not bar the admission of medical records at trial and that the rule does not prevent the legislature from making such records admissible under the business records exception to the hearsay rule. Rather, Rule 236(b) means only that a party seeking to introduce medical records into evidence must invoke an exception to the hearsay rule other than the liberal Rule 236(a). This exception may be either the relatively stringent common-law business records exception or an exception that the legislature has created.

We believe that this conclusion follows from the plain and modest language of Rule 236(b) that “[although medical records *** may otherwise be admissible in evidence under the law, subsection (a) of this rule does not allow such writings to be admitted as a record or memorandum made in the regular course of business.” (Emphasis added.) (134 Ill. 2d R. 236(b).) Read naturally, this language does not bar the admission of medical records at trial; it simply cautions litigants that Rule 236(a)’s relatively liberal provisions do not of themselves allow medical records to be introduced at trial. Rule 236(b) in no way forecloses litigants from invoking other exceptions to the hearsay rule, such as the common-law exception or any exception created by the legislature.

The history of Rule 236 supports this conclusion. As the Historical and Practice Notes to the annotated edition of the rules aptly state:

“As originally adopted, paragraph (b) of the rule read: ‘This rule does not apply to the introduction into evidence of medical records or police accident reports.’ As so written, rule 236(b) was not a ban on the admissibility of medical records or police accident reports. Such records were admissible when a proper foundation was laid. *** But the question whether paragraph (b) simply excluded medical records and police accident reports from paragraph (a)’s liberalization of the common law rule concerning the admissibility of business records or somehow went further and was an affirmative declaration of their inadmissibility continued to cause difficulties, and so effective October 1, 1983 the Supreme Court amended the rule to reword paragraph (b) in a way that made its meaning unmistakable.” Ill. Ann. Stat., ch. 110A, par. 236, Historical & Practice Notes, at 504 (Smith-Hurd 1985).

Thus, there can be no conflict between section 11 — 501.4 and Rule 236(b), because Rule 236(b) limits only the application of Rule 236(a). Therefore, Rule 236(b) affects neither the legislature’s power to promulgate exceptions to the hearsay rule nor the courts’ ability to invoke the traditional business record exception. Any alleged conflict between Rule 236(b) and a statutory exception to the hearsay rule is illusory.

Even before the 1983 amendment, our courts generally recognized Rule 236(b)’s extremely modest scope. (See, e.g., Wilson v. Clark (1981), 84 Ill. 2d 186, 192; Andes v. Lauer (1980), 80 Ill. App. 3d 411, 416; Casey v. Penn (1977), 45 Ill. App. 3d 573, 583.) In concluding that the legislature did not intend to include prison incident reports, which have relatively scant indicia of trustworthiness, within the business records provision of the hearsay statute (Ill. Rev. Stat. 1989, ch. 38, par. 115 — 5), the supreme court has stated that “[i]t is, of course, not our place to exclude such reports from the business records statute if the legislature put them in.” People v. Smith (1990), 141 Ill. 2d 40, 76.

The first district (People v. Carpenter (1992), 228 Ill. App. 3d 899, 903-04; People v. Solis (1991), 221 Ill. App. 3d 750, 752-53) and fourth district (People v. Hoke (1991), 213 Ill. App. 3d 263, 268-71) have held that section 11 — 501.4 is valid and does not conflict with Rule 236(b). However, it appears that these opinions rely, at least in part, on a theory that section 11 — 501.4 allows the admission of medical records on a basis different from and more stringent than the business records exception to the hearsay rule. We agree with the results reached by the first and fourth districts but choose to follow our own reasoning.

Section 11 — 501.4 of the Illinois Vehicle Code is valid. The records at issue in this case were properly admitted into evidence.

The judgment of the circuit court of Du Page County is affirmed.

Affirmed.

WOODWARD and GEIGER, JJ., concur.