text:
    MARY PEARSON, Plaintiff-Appellee, v. BOARD OF REVIEW OF THE DEPARTMENT OF EMPLOYMENT SECURITY et al., Defendants-Appellants.
    First District (6th Division)
    No. 1—89—1861
    Opinion filed February 23, 1990.

      Neil F. Hartigan, Attorney General, of Springfield (Robert J. Ruiz, Solicitor General, and Tanya Solov, Assistant Attorney General, of Chicago, of counsel), for appellants.
    Legal Assistance Foundation, of Chicago (Timothy J. Hufman, Derrick M. Ford, and James 0. Latturner, of counsel), for appellee.
   JUSTICE McNAMARA

delivered the opinion of the court:

Claimant, Mary Pearson, sought unemployment compensation following her discharge from employment with Illinois Bell Telephone Company. A claims adjudicator denied the request for benefits on the ground that claimant voluntarily quit her job when she did not pay her union dues. After a hearing, a referee agreed, finding claimant ineligible for benefits. On review, defendant, Board of Review of the Department of Employment Security (Board), affirmed the referee’s determination. The circuit court of Cook County reversed the Board’s decision, finding that the Board’s finding of voluntary termination was contrary to law. The Board appeals, contending that it properly found that claimant voluntarily terminated the employment. Since few of the facts are in dispute, some of the facts will be contained in our analysis.

Claimant worked as an installer of telephones and cables for Illinois Bell. Pursuant to a union contract, claimant was required to pay union dues. Failure to pay dues entitled the union to direct Illinois Bell to discharge the worker. Claimant’s dues were automatically deducted from her paycheck, pursuant to an authorization she signed for the union local, until June 1987, when she was transferred to another job location which fell under the jurisdiction of a different union local. At the time of the transfer, she was not asked to nor did she sign a deduction authorization form for that local.

In August 1987, a union steward informed claimant that her dues had not been paid for three months and that she must pay the $80 by the end of August. At the end of September, claimant agreed to pay the money by October 10. When she did not do so, she was terminated. She turned in her identification card and left.

Claimant thereafter applied for unemployment benefits. An investigation report was apparently completed by the claims adjudicator. That handwritten report contained a statement quoting claimant as saying, “[I]t was just too much of a hassle, I quit.” The report concludes that claimant voluntarily quit when she refused to pay the union dues, although she was aware that paying dues was part of the contract of hire. The claims adjudicator’s determination form marks a box which finds that claimant’s reason for leaving is attributable to the employer because it was aware of the conditions and had the ability to control them. However, “the conditions or acts were not serious violations of the original hiring agreement or did not create a substantially less favorable work situation,” and, therefore, “the claimant left work voluntarily without good cause attributable to the employer.”

On appeal, a hearing before a referee of the Department of Employment Security, appeals division, was held on December 14,1987.

Claimant testified that she worked for Illinois Bell for a little over a year. She was unaware that the deductions were not being made in Summer 1987. “[N]o one told me that I had to resign to another union when I transferred out to Arlington Heights.”

She had no money because she was supporting herself and three children. Her pay decreased from $7 to $5.98 per hour when she transferred. She spent about $60 per week in commuting to Arlington Heights. She incurred medical expenses when her son was treated at a hospital. In August, she borrowed $729 from the credit union. In September, she was only able to pay half her rent, and she borrowed the remainder of the rent. In September, she also received a disconnection notice from the electric company for nonpayment of her bill.

In September 1987, claimant signed an authorization to automatically deduct dues from her paycheck. Claimant testified that she asked the union steward if she could have the $80 taken from future checks, and he said no. She did not know there was any other union official she could ask about this request and did not know there was a union office on location which she could telephone about the request.

Claimant described the October 10, 1987, termination of her employment. She stated that she did not have the money. At this point, her supervisor said that the union had instructed him to terminate her employment. Claimant turned in her identification card and went home. Claimant also testified that her supervisor offered to lend her the money. She refused because she could never pay it back.

Allan Bergstrom testified that he was the area manager for Illinois Bell. When claimant transferred, she had paid dues through June, and, therefore, the agreement permitted her to work in another local for that period. Illinois Bell does not receive notice of new employees, however, for at least a month after the dues stop. It received notice about claimant in the first week of August and contacted her in the second week of August. Claimant stated that she would send the dues. Bergstrom stated that in October he asked a “temporary supervisor to go out and make sure that she had paid the dues.” The supervisor returned and said, “Here’s her identification card, she quit.” Bergstrom also stated that the temporary supervisor offered to lend claimant the money.

Roland Anderson, a union representative, stated that he talked to claimant about the dues, and she promised to send a check. In October, Bergstrom informed Anderson that claimant had resigned.

The hearing referee determined that claimant was ineligible for benefits because claimant failed to “make an adequate attempt to resolve the payment of the dues prior to leaving work.” The Board of Review of the Department of Employment Security affirmed the referee’s finding.

On April 24, 1989, the trial court announced its decision in the administrative appeal. The court relied on the fact that claimant was financially unable to pay her union dues. The court found that under Barron v. Ward (1987), 165 Ill. App. 3d 653, 517 N.E.2d 591, a claimant need not exhaust all reasonable alternatives to resolve a conflict arising from employment. The court believed it was “a fiction” to find claimant voluntarily left when “she was in fact discharged for nonpayment of arrearage of union dues from money she did not have.” The court concluded that the Board of Review’s decision was contrary to law. On June 15, 1989, the trial court entered a written order to that effect.

The Illinois Unemployment Insurance Act provides that an individual is ineligible for benefits if she voluntarily left work without good cause attributable to the employer. (Ill. Rev. Stat. 1987, ch. 48, par. 431(A).) Whether or not an individual has “good cause attributable to the employing unit” (Ill. Rev. Stat. 1987, ch. 48, par. 431(A)) for terminating employment is generally a factual issue. (Collier v. Department of Employment Security (1987), 157 Ill. App. 3d 988, 510 N.E.2d 623.) The agency’s determination is prima facie true and will not be disturbed on review unless its findings are contrary to the manifest weight of the evidence. (Collier v. Department of Employment Security, 157 Ill. App. 3d 988, 510 N.E.2d 623.) Claimant bears the burden of proving eligibility. Collier v. Department of Employment Security, 157 Ill. App. 3d 988, 510 N.E.2d 623.

Claimant maintains that the issue here is a question of law, not fact. The issue is not limited, however, to the legal question of whether any employee, under any circumstances, can receive unemployment compensation after being asked to leave for nonpayment of union dues. While many of the facts were not disputed, different inferences can be drawn. Thus, particularly in light of the testimony of Bergstrom and Anderson, we view the issue before us as a question of fact, and we have accordingly given due deference to the findings of the administrative agency. We hold, however, that its findings are against the manifest weight of the evidence.

The Board based its refusal to award employment benefits on findings that claimant was aware that union dues were a condition of employment; that claimant had the burden of paying, even if the employer had an automatic deduction plan; that the employer had no authorization to deduct past dues; and that claimant failed to use the available and reasonable means of remaining employed by borrowing from her supervisor or arranging for a payment of the arrearage on a deferred plan. The Board concluded that “claimant voluntarily left work without good cause attributable to the employer and therefore was subject to a disqualification of benefits.”

The key fact here is that claimant, upon being told that the old authorization did not cover the new union local, signed a new authorization which directed Illinois Bell to “deduct membership dues from my pay for the first payroll of each month.” Nothing limited the authorization to future dues. Nothing prevented Illinois Bell from deducting the $80 owed by claimant for past union dues. Thus, the Board is factually incorrect in finding that the employer had no authorization to deduct past dues.

Moreover, Illinois Bell also failed to inform claimant of the need for a new authorization; failed to have a union steward contact her within five days of her transfer, pursuant to the union contract; delayed telling claimant the dues were not being withheld for several months; and failed to offer her any alternative payment plan.

The Board found further that claimant, not Illinois Bell, should have explored other means of remaining employed. The evidence fails to show anything, either in the union contract, in the authorization card, or in the testimony, that tends to show the payment absolutely had to be made in a lump sum. In fact, there is testimony by Illinois Bell to the contrary. The language of the authorization card also implies that past debts can be taken from future checks. Without such evidence of a lump sum requirement, it is not relevant what steps claimant went through to pay the debt in partial payments.

Significantly, when analyzing whether good cause for leaving is attributable to the employer, the focus is on the employer’s conduct, not that of the employee. (Barron v. Ward, 165 Ill. App. 3d 653, 517 N.E.2d 591.) Illinois Bell had a new payroll deduction authorization from claimant as of September 1987. It also had money which it owed to claimant, prior to issuing a paycheck. It merely had to deduct all or part of the $80. The Board argues before us that Illinois Bell had no authority to deduct the previously owed dues, yet Illinois Bell argued in the trial court that if claimant had made it aware of her financial position, other arrangements could have been made.

Thus, the Board erroneously focused on claimant’s delay in making payment. Yet it ignored the multitude of facts showing that in the same month or two, she took out several loans, could only pay half her rent, received disconnection notices from a utility company, required hospital treatment for herself and her son without medical insurance, was forced to take a cut in pay and to incur increased costs for commuting. The Board must follow the law requiring it to examine the employer’s conduct, under the factual circumstances in which it found itself, to determine whether the cause for leaving was attributable to the employer. Illinois Bell need not have been “at fault” under some type of negligence standard. (See Davis v. Board of Review (1984), 125 Ill. App. 3d 67, 465 N.E.2d 576.) It is enough that the facts overwhelmingly establish that Illinois Bell’s conduct caused the employment termination to occur.

We agree with the reasoning in Hanson v. I.D.S. Properties Management Co. (1976), 308 Minn. 422, 242 N.W.2d 833, where the court reversed the employment commissioner’s denial of unemployment compensation. The employer had failed to withhold a union initiation fee from the employee for seven months; it then demanded the money in five days. The court found that termination was the natural, probable and foreseeable result of the employer’s failure to withhold the fee. Moreover, the court pointed out that the statute does not require all causative factors to flow from the employer. (Hanson v. I.D.S. Properties Management Co., 308 Minn, at 424, 242 N.W.2d at 835.) Illinois’ statute is similar. It demands that the employer not be even one causal factor in the termination: “An individual shall be ineligible for benefits for the week in which he has left work voluntarily without good cause attributable to the employing unit.” (Emphasis added.) (Ill. Rev. Stat. 1987, ch. 48, par. 431(A).) It was sufficient that one cause, the employer’s conduct in not withholding any part of the dues, proximately caused the termination.

We hold that the trial court properly overturned the Board’s decision. The Board’s finding that claimant voluntarily terminated her employment is against the manifest weight of the evidence.

For the foregoing reasons, the judgment of the circuit court of Cook County is affirmed.

Judgment affirmed.

LaPORTA, P.J., and RAKOWSKI, J., concur.


source: Caselaw Access Project

author: JUSTICE FREEMAN

license: Public Domain

text:
    TRUCK INSURANCE EXCHANGE, Plaintiff-Appellee, v. JOHN E. WASHBURN, Director of Insurance of the State of Illinois, et al., Defendants-Appellants.
    First District (3rd Division)
    No. 1—88—1182
    Opinion filed February 28, 1990.

      Neil F. Hartigan, Attorney General, of Springfield (Robert J. Ruiz, Solicitor General, and Deborah L. Ahlstrand, Assistant Attorney General, of counsel), for appellants.
    Hopkins & Sutter, of Chicago (Richard Bromley, John L. Conlon, and Mary Kay McCalla, of counsel), for appellee.
   JUSTICE FREEMAN

delivered the opinion of the court:

Plaintiff, Truck Insurance Exchange, a reciprocal insurer incorporated in the State of California, filed a complaint against the Director of the Illinois Department of Insurance, the State Treasurer and the State Attorney General to obtain a credit on its 1986 retaliatory tax (Ill. Rev. Stat. 1985, ch. 73, par. 1056) of the amount it had paid into the Illinois Insurance Guaranty Fund for 1986 (Ill. Rev. Stat. 1985, ch. 73, par. 1065.87 — 6). The circuit court of Cook County granted plaintiffs motion for summary judgment and denied defendants’ motion for summary judgment. Defendants appeal.

In addition to the annual privilege tax which foreign insurers must pay Illinois (Ill. Rev. Stat. 1985, ch. 73, par. 1021), they are also subject to the payment of a retaliatory tax (Ill. Rev. Stat. 1985, ch. 73, par. 1056). Section 444 of the Illinois Insurance Code (Code) provides:

“Whenever the existing or future laws of any other state * * * shall require of companies incorporated or organized under the laws of this State as a condition precedent to their doing business in such other state ***, compliance with laws, rules, regulations and prohibitions more onerous or burdensome than the rules and regulations imposed by this State on foreign *** companies, or shall require any deposit of securities or other obligations in such state ***, for the protection of policyholders or otherwise or require of such companies *** the payment of penalties, fees, charges or taxes greater than the penalties, fees, charges or taxes required in the aggregate for like purposes by this Code or any other law of this State, of foreign *** companies, *** then such laws, rules, regulations and prohibitions of said other state *** shall apply to companies incorporated or organized under the laws of such state *** doing business in this State, and all such companies *** shall be required to make deposits, pay penalties, fees, charges and taxes, in amounts equal to those required in the aggregate for like purposes of Illinois companies doing business in such state.” Ill. Rev. Stat. 1985, ch. 73, par. 1056.

In short, a foreign insurer doing business in Illinois is subject to a retaliatory tax when the State of its incorporation imposes greater economic burdens on an Illinois insurer than Illinois places on the foreign insurer. As a foreign insurer, plaintiff was obligated to submit a privilege and retaliatory tax report for the year 1986. (Ill. Rev. Stat. 1985, ch. 73, par. 1022.) In the retaliatory portion of its report for that year, plaintiff was required to compare the aggregate taxation upon it by Illinois with the aggregate taxation of an Illinois company doing the same volume of business in California. The imposition of a retaliatory tax depended upon the “State of Illinois Basis” being less than the “State of Incorporation Basis.” In calculating its liability for the retaliatory tax, plaintiff entered as a credit to the “State of Incorporation Basis” its payment of $36,822 to the Illinois Insurance Guaranty Fund (Ill. Rev. Stat. 1985, ch. 73, par. 1065.82 et seq.). As a result, the “State of Incorporation Basis” was less than the Illinois basis and no retaliatory tax appeared due Illinois from plaintiff.

The Illinois Insurance Guaranty Fund (Fund) is established in article XXXIV of the Code. (Ill. Rev. Stat. 1985, ch. 73, pars. 1065.82 to 1065.102.) The Fund was created to, inter alia, avoid financial losses to claimants or policyholders due to the insolvency of insurers and to assess the cost of the protection afforded by the Fund among the member companies. (Ill. Rev. Stat. 1985, ch. 73, par. 1065.82.) Member companies are all insurers, whether foreign or domestic, holding certificates of authority to transact business in Illinois. (Ill. Rev. Stat. 1985, ch. 73, par. 1065.84 — 5.) All member companies “shall be and remain members of the Fund as a condition of their authority to transact business in [Illinois].” (Ill. Rev. Stat. 1985, ch. 73, par. 1065.85.) The Fund is a non-profit, unincorporated entity governed by a Board of Directors elected by the member companies. Their election is subject to the approval of the Illinois Director of Insurance. (Ill. Rev. Stat. 1985, ch. 73, pars. 1065.85, 1065.86.) To cover claims and expenses, member companies are assessed amounts proportionate to their volume of business in the State when compared to the volume of business done by all insurers in the State. However, in any year they cannot be assessed more than 1% of their total premiums. (Ill. Rev. Stat. 1985, ch. 73, par. 1065.87 — 6.) Finally, member companies receive refunds of their assessments when the Fund’s assets at the end of the year exceed its estimated liabilities and expenses for the coming year or when the Fund is reimbursed by estates of insolvent insurers. Ill. Rev. Stat. 1985, ch. 73, pars. 1065.88-8, 1065.90-8.

Upon receipt of plaintiff’s privilege and retaliatory tax report, the Illinois Department of Insurance denied plaintiff a credit for the Fund assessment and calculated that plaintiff owed a retaliatory tax of $27,710, including fines, penalties and interest. Plaintiff paid that amount under protest and instituted this litigation.

Opinion

On appeal, defendants first contend that Fund assessments are not penalties, fees, charges or taxes for purposes of the retaliatory tax statute. In deciding this issue, we must construe the retaliatory tax statute strictly, i.e., we cannot “read into it words and meanings not found in the body of the act itself.” (Pacific Mutual Life Insurance Co. v. Lowe (1933), 354 Ill. 398, 405, 188 N.E. 436.) Plaintiff’s reliance on Twin City Fire Insurance Co. v. Bell (1983), 232 Kan. 813, 658 P.2d 1038, for the assertion that the statute should be liberally construed is unavailing in the face of our supreme court’s holding to the contrary.

Citing Pacific Mutual Life Insurance Co. v. Gerber (1961), 22 Ill. 2d 196, 174 N.E.2d 862, defendants assert that the penalties, fees, charges or taxes imposed by Illinois and includable in the calculation of the retaliatory tax are only those that are a condition precedent to doing business in Illinois and that are imposed exclusively upon foreign insurers. Defendants conclude that Fund assessments meet neither of these criteria.

We disagree with defendants’ construction of Gerber as holding that, in order to be includable in the retaliatory tax calculation, Illinois penalties, fees, charges or taxes must be imposed exclusively against foreign insurers.

In Gerber, the court noted that the reference in the retaliatory tax statute “to taxes required ‘for like purposes by this Code or any other law of this State,’ is immediately limited to the taxes required ‘of foreign *** companies.’ ” (Gerber, 22 Ill. 2d at 200.) This observation could arguably be given defendants’ construction. However, its correct construction is revealed by the court’s immediately following observation that “[this] provision is limited to foreign *** companies and appertains to taxes imposed on foreign *** companies as such” and its later conclusion that “only the taxes paid by insurance companies, as such, as a condition precedent to their doing business in the respective States” were within the scope of the statute. (Emphasis added.) Gerber, 22 Ill. 2d at 200-01.

In view of the fact that the insurer in Gerber sought to increase its Illinois retaliatory tax basis by its Illinois ad valorem personal property taxes, the latter observations reveal that the Gerber court did not distinguish taxes imposed on foreign insurers from those imposed on domestic insurers but, rather, distinguished taxes paid by foreign insurers in order to transact business in Illinois from taxes paid by all taxpayers in Illinois. While the former were includable on the Illinois side of the retaliatory tax calculation, the latter were not. Gerber, 22 Ill. 2d at 201-02.

Beyond the fact that Gerber does not support defendants’ assertion, we also note that the Fire Marshal’s tax, to which all insurers, foreign and domestic, are subject (Ill. Rev. Stat. 1985, ch. 1271/2, par. 16), is included as a line item in the form provided by the Department of Insurance for the calculation of the retaliatory tax.

This conclusion notwithstanding, we do agree with defendants that Gerber does establish that the penalties, fees, charges and taxes includable in the Illinois retaliatory tax basis are those imposed only as a condition precedent to an insurer’s doing business in Illinois.

Plaintiff argues that the condition precedent language of the retaliatory tax statute is limited to compliance with laws, rules, regulations and prohibitions required of Illinois insurers by other States and does not extend to the payment of penalties, fees, charges or taxes required by Illinois of foreign insurers. Whatever our inclination to agree with plaintiff, Gerber forecloses any such holding. The Gerber court construed the condition precedent language of the retaliatory tax statute as applying to each clause thereof when, in summary, it construed the statute as including within its scope only taxes paid by insurers as a condition precedent to their doing business in the respective States. (Gerber, 22 Ill. 2d at 201.) We are required to adhere to the supreme court’s construction of the statute.

However, this conclusion is of no avail to defendants in view of our agreement with plaintiff that payment of Fund assessments, once they are made, is a condition precedent to doing insurance business in Illinois.

Section 108(1) of the Code provides that “[u]pon complying with the provisions of this article [VI], a foreign company organized as a reciprocal insurer may be admitted to transact” business in Illinois. (Ill. Rev. Stat. 1985, ch. 73, par. 720.) Section 109 requires foreign insurers to apply for and procure a certificate of authority to transact business in Illinois. (Ill. Rev. Stat. 1985, ch. 73, par. 721.) Section 111 establishes conditions for the issuance of a certificate of authority to foreign insurers. (Ill. Rev. Stat. 1985, ch. 73, par. 723.) The payment of Fund assessments is not one of the conditions established for the issuance of a certificate.

Section 113 of the Code provides that a certificate of authority will issue when, inter alia, a foreign insurer has complied with the requirements of article VI, all other requirements imposed by existing laws and has paid the taxes, fees and charges imposed by law. However, we do not believe that section 113 requires that foreign insurers pay, as a condition of obtaining certificates of authority to transact business in Illinois, Fund assessments made before they have obtained such certificates. Such a construction would be illogical. We must construe the statute so as to avoid illogical and absurd results. Budha v. Board of Public Safety Commissioners (1983), 120 Ill. App. 3d 348, 458 N.E.2d 126; Board of Education v. Community High School District No. 211 (1967), 89 Ill. App. 2d 481, 232 N.E.2d 316.

However, section 114 of the Code does provide for the annual renewal of a foreign insurer’s certificate of authority upon, inter alia, payment of the annual privilege tax imposed by the Code (Ill. Rev. Stat. 1985, ch. 73, par. 1021) and the nonexistence of any of the grounds specified in section 119 for revocation of a certificate of authority (Ill. Rev. Stat. 1985, ch. 73, par. 731). (Ill. Rev. Stat. 1985, ch. 73, par. 726.) The payment of the privilege tax is thus a condition precedent to the annual renewal of a certificate of authority. (Gerber, 22 Ill. 2d at 197.) The nonexistence of any of the grounds specified in section 119 for revocation of a certificate of authority must also be considered such a condition precedent. Included in these grounds are the violation of any Illinois law (Ill. Rev. Stat. 1985, ch. 73, par. 731(e)) and the failure to pay any fees, taxes or charges prescribed by the Code (Ill. Rev. Stat. 1985, ch. 73, par. 731(k)). Section 119(k) is of no value in resolving whether the payment of Fund assessments is a condition precedent to doing insurance business in Illinois since it merely repeats the language of the retaliatory tax statute at issue here. The same is not true of section 119(e), however.

Unlike the situation with section 119(k), we need not first determine whether Fund assessments are “fees, charges or taxes” required by the Code, and thus includable in calculating the retaliatory tax, in order to conclude that nonpayment thereof must be considered a violation of Illinois law. Section 544 of the Code, similarly to section 119, allows the Director of Insurance to suspend or revoke the certificate of authority of any insurer failing to pay Fund assessments when due. Therefore, the payment of Fund assessments is a condition precedent to a foreign insurer’s doing business in Illinois under section 119(e) of the Code. Thus, they would be includable in the retaliatory tax calculation if they are also either “fees, charges, or taxes” required by the Code.

Defendants note that section 534.5 of the Code provides that any insurer holding a certificate of authority in Illinois is a Fund member (Ill. Rev. Stat. 1985, ch. 73, par. 1065.84 — 5) and that section 535 merely provides that all member companies “shall be and remain members of the Fund as a condition of their authority to transact business” in Illinois. (Ill. Rev. Stat. 1985, ch. 73, par. 1065.85.) However, we do not believe that there is any material distinction between a “condition precedent” to doing insurance business in Illinois and a “condition” thereto. While only insurers already holding certificates of authority are members of the Fund and are therefore liable for Fund assessments, section 119(e) conclusively establishes payment of any Fund assessments as a precondition to having those certificates renewed.

Defendants further seek to exclude Fund assessments from the scope of the “fees, charges or taxes” includable within the retaliatory tax calculation by asserting that article XXV of the Code exclusively sets forth the “fees, charges and taxes” which the legislature has established for all insurers.

Plaintiff responds that, contrary to defendants’ position, article XXV of the Illinois Insurance Code does not alone establish the penalties, fees, charges, or taxes to which the retaliatory tax statute refers inasmuch as neither that statute nor article XXV so provide. Moreover, plaintiff notes, the plain language of the retaliatory tax statute requires the comparison of penalties, fees, charges or taxes imposed by a foreign State to those required by the Code or any other Illinois law. Plaintiff further notes that defendants’ position is at odds with the inclusion of the Fire Marshal’s tax in the privilege and retaliatory tax report form issued by the Department of Revenue. That tax, it notes, is not established by article XXV of the Code but by section 12 of “An Act relating to the investigation and prevention of fire” (Ill. Rev. Stat. 1985, ch. 1271/2, par. 16).

We agree with defendants that article XXV of the Code exclusively sets forth the fees, charges and taxes includable within the retaliatory tax calculation. Plaintiff correctly notes that neither article XXV nor section 444 of the Code expressly so provides. However, plaintiff fails to cite any other provision of the Code or any other statute not contained therein which establishes fees, charges or taxes that a foreign insurer must pay as a condition precedent to doing business in Illinois and that are not recognized in article XXV. The fact that the language of the retaliatory statute recognizes that possibility is of no avail to plaintiff absent the actual existence of such a fee, charge or tax.

In this regard, plaintiff is correct that the Fire Marshal’s tax to which all insurers, foreign and domestic, are subject is not established in article XXV of the Code. (See Ill. Rev. Stat. 1985, ch. 1271/2, par. 16.) However, plaintiff ignores that article XXV expressly recognizes the obligation of all insurers to pay the Fire Marshal’s tax in section 412. (Ill. Rev. Stat. 1985, ch. 73, par. 1024.) As such, its establishment outside of the Code is immaterial.

Because the Fund is established in an article of the Code separate from article XXV and because Fund assessments are not recognized as “fees, charges, or taxes” in that article nor in any other part of the Code, we conclude that Fund assessments are not a “fee, charge or tax” required by the Code and are thus not includable in the retaliatory tax calculation, notwithstanding that they are required by the Code as a condition precedent to the doing of insurance business in Illinois.

In view of the foregoing conclusion, we need not address the remaining arguments of the parties or the amici curiae, the Fund, the Alliance of American Insurers and the National Association of Independent Insurers.

For the reasons stated herein, we reverse the summary judgment for plaintiff and enter summary judgment for defendants.

Reversed.

RIZZI and WHITE, JJ., concur.

      On appeal, plaintiff concedes that it should have instead entered the Fund assessment as a fee or charge in the Illinois basis column. Because plaintiff’s procedure had the same result as that procedure would have had, the difference is immaterial.

      While plaintiff generally asserts that Fund assessments are either “penalties, fees, charges or taxes,” it fails to cite any authority for construing them as “penalties.” Moreover, it cannot, as a practical matter, be seriously contended that Fund assessments constitute “penalties” under Illinois law.


author: JUSTICE GORDON

text:
    THE PEOPLE OF THE STATE OF ILLINOIS, Plaintiff-Appellee, v. JAMES CLAYBORN, Defendant-Appellant.
    First District (5th Division)
    No. 1—87—0381
    Opinion filed March 2, 1990.

      Paul P. Biebel, Jr., Public Defender, of Chicago (James H. Reddy, Assistant Public Defender, of counsel), for appellant.
    Cecil A. Partee, State’s Attorney, of Chicago (Inge Fryklund, Joseph G. Howard, and Brian T. Sexton, Assistant State’s Attorneys, of counsel), for the People.
   JUSTICE GORDON

delivered the opinion of the court:

After a bench trial, defendant, James Clayborn, was convicted of burglary (Ill. Rev. Stat. 1985, ch. 38, par. 19 — 1) on an accountability theory and sentenced to five years in prison. On appeal, he contends that he was not proven guilty of burglary on an accountability theory. We affirm defendant’s conviction.

The undisputed facts are that in the early morning hours of July 1, 1986, John O’Donnell parked his 1980 Pontiac automobile at 4848 North Broadway in Chicago. When he parked it there, the passenger side rear window was not smashed and a rebuilt carburetor, air filter, and set of jumper cables were on the back seat of the auto. He had not given anyone permission to enter or damage his auto. At about 2:10 a.m., Kenneth Simmons was sitting in O’Donnell’s automobile at 4848 North Broadway and defendant, James Clayborn, was standing on the sidewalk next to the smashed passenger side window of that auto.

There is a dispute in the testimony, however, over what defendant and Simmons were doing at O’Donnell’s parked auto. Officer Kotowitz, who was in an unmarked police car being driven by his partner, Officer Szparkowski, testified that as he and his partner were driving past the automobile, at a distance of approximately 35 feet away and at a rate of speed of approximately 20 to 25 miles per hour, he saw Simmons passing jumper cables, a 10-inch by 10-inch air filter box and another object to Clayborn through the smashed rear window. Kotowitz and his partner then drove about three quarters of a block past the parked automobile, made a U-turn, parked in a gas station and watched Simmons and Clayborn. They then walked toward the parked auto, and when they were within three feet, they saw the front passenger door open, the smashed window and a carburetor and box containing an air filter on the ground close to where Clayborn was standing. Clayborn was holding jumper cables in his hands, and Simmons was in the front seat of the Pontiac using a screwdriver on the car radio. When Koto-witz announced that he and his partner were police officers, Clayborn and Simmons attempted to flee but were caught and arrested. Szparkowski’s testimony was essentially the same as that of Kotowitz except that he said he never saw Simmons hand the cables to Clay-born, and when he announced that he was a police officer, Clayborn turned and attempted to walk away.

Both Clayborn, who had a criminal history including four prior theft convictions and one prior robbery conviction, and Simmons testified that in the early morning hours of July 1, 1986, they were sitting and drinking wine on the steps of the post office building located in the 4800 block of North Broadway when they heard a window break. They went to see what happened and saw some people fleeing from a parked auto with a smashed window. They then walked over to the auto, and while Clayborn stood outside the auto, Simmons went in to see if he could find something which would identify the owner of the vehicle. Shortly thereafter, the police arrived and arrested both of them. Clay-born denied ever having jumper cables in his hands and denied moving away when the police arrived.

Defendant argues that he was not proven guilty of burglary because the credible evidence merely established his presence at the scene but did not establish any culpable conduct on his part. He also argues that he could not properly be found guilty of the crime of burglary on an accountability theory because the crime was completed when Simmons entered the parked automobile. The State argues that defendant was proven guilty on evidence that: (1) he had accepted a number of items passed through the broken window by Simmons; (2) he was holding a set of jumper cables and dropped them when the police officers arrived; and (3) he attempted to leave the scene when the police arrived. The State further argues that his burglary conviction was proper because the crime was in progress during the time he was present. We find that there was sufficient evidence to properly convict defendant of burglary on an accountability theory.

When there is a dispute in the testimony of witnesses at a trial, the question of whom to believe is for the trier of fact, and we will not reverse a conviction based on the trier of fact’s determination of that question unless the evidence is so improbable to raise a reasonable doubt of guilt. (People v. Manion (1977), 67 Ill. 2d 564, 578, 367 N.E.2d 1313, 1320.) Where defendant presents a credibility issue, we must view all evidence in a light that is most favorable to the prosecution. (People v. Pryor (1988), 170 Ill. App. 3d 262, 268, 524 N.E.2d 700, 704.) A person is legally accountable for another’s action when “[e]ither before or during the commission of an offense, and with the intent to promote or facilitate such commission, he solicits, aids, abets, agrees or attempts to aid, such other person in the planning or commission of the offense.” (Ill. Rev. Stat. 1985, ch. 38, par. 5—2(c).) Although mere presence at the scene of a crime is insufficient to establish accountability (In re Whittenburg (1976), 37 Ill. App. 3d 793, 795-96, 347 N.E.2d 103, 105), if a person is present at the scene of a crime and does not disapprove of or oppose the crime, his conduct may be considered together with other circumstances in determining whether he has aided or abetted in the commission of the crime. (People v. Cleveland (1986), 140 Ill. App. 3d 462, 469, 488 N.E.2d 1276, 1281.) One circumstance which courts have considered in determining that a defendant has aided in the commission of a burglary is his receipt of property which he knew did not belong to the person handing it to him. People v. Ruckholdt (1984), 122 Ill. App. 3d 7, 12, 460 N.E.2d 847, 851.

We have viewed the evidence in this case in a light most favorable to the prosecution and cannot say that it is so improbable to raise a reasonable doubt as to defendant’s guilt. The undisputed evidence places defendant at the scene of the crime at 2:10 a.m., on July 1, 1986. Officer Kotowitz’s testimony establishes that Simmons passed several items, including jumper cables, from the parked auto to defendant through the smashed window. Officers Kotowitz’s and Szparkowski’s testimony establishes that defendant was holding the jumper cables when they walked up to him and was standing close to a carburetor and air filter box. Their testimony also establishes that defendant dropped the cables and attempted to leave when they announced that they were police officers. This evidence is sufficient to establish defendant’s guilt of a crime.

The evidence does indicate that Officer Szparkowski did not see Simmons passing the cables to defendant, but that does not make Ko-towitz’s testimony incredible or the evidence improbable, and the trial court could have concluded that Szparkowski did not see it because he was the driver of the car. The evidence also indicates that Officer Ko-towitz was travelling in a car at a rate of speed of approximately 20 to 25 miles per hour and at a distance of approximately 35 feet when he saw the items being passed, but again that does not make his testimony incredible or the evidence improbable. It would have been reasonable for the trial court to conclude that Kotowitz saw the three items passed because three items can be passed rather quickly during a burglary and because both Kotowitz and Szparkowski saw these three items when they approached Clayborn. The fact that Clayborn’s testimony on what he was doing at the parked automobile contradicted the State’s testimony did not make the State’s testimony incredible or improbable since the trial court, as trier of fact, could choose to disbelieve defendant’s testimony. Considering the circumstances of this case, as well as defendant’s considerable criminal history, we cannot say that the trial court’s assessment of his credibility was wrong.

The evidence in this case further supports defendant’s conviction of the crime of burglary on an accountability theory. Contrary to defendant’s argument, the evidence reveals that he not only was present at the time the automobile was being burglarized but that he played an active role in aiding Simmons during the commission of the burglary. Defendant served as the outside man on the burglary and received, without apparent objection, goods which he had to know did not belong to Simmons. (People v. Ruckholdt (1984), 122 Ill. App. 3d 7, 12, 460 N.E.2d 847, 851.) The facts that he dropped the cables and attempted to leave the scene of the crime when the police arrived serve to further demonstrate his involvement in the burglary. (People v. Miscichowski (1986), 143 Ill. App. 3d 646, 656, 493 N.E.2d 135, 142.) Also, contrary to defendant’s argument, the evidence in this case reveals that the burglary was in progress when defendant received the carburetor, air filter box and cables from Simmons. The crucial evidence of that is that Simmons was still in the auto at that time. (See Ruckholdt, 122 Ill. App. 3d at 12, 460 N.E.2d at 850-51.) Since the burglary was in progress at the time defendant was providing his assistance, he is legally accountable for the actions of Simmons.

The facts in this case are similar to facts in People v. Ruckholdt (1984), 122 Ill. App. 3d 7, 460 N.E.2d 847. In Ruckholdt, the reviewing court affirmed a defendant’s conviction of burglary on an accountability theory on facts which showed: (1) he was present at the time his companion entered a vehicle; (2) he knew the vehicle did not belong to his companion; (3) his companion removed a toolbox from the vehicle and handed it to him and he then placed it in a car; and (4) he left the scene of the crime in that car. In affirming the conviction, the Ruck-holdt court stated that the trial court had reasonably concluded on the basis of these facts that defendant was a participant in the burglary rather than an innocent bystander. (Ruckholdt, 122 Ill. App. 3d at 12, 460 N.E.2d at 851.) The court additionally noted that even though defendant had not seen his companion enter the vehicle, the fact that he was still in the vehicle when handing the toolbox to defendant indicated that the burglary was still in progress. (Ruckholdt, 122 Ill. App. 3d at 12, 460 N.E.2d at 851.) On the basis of the similar facts in the present case, we find that the trial court reasonably concluded that defendant was a participant in an ongoing burglary.

Defendant relies upon In re Whittenburg (1976), 37 Ill. App. 3d 793, 347 N.E.2d 103, and People v. Curtis (1977), 45 Ill. App. 3d 771, 360 N.E.2d 122, in arguing that the evidence failed to support his conviction on an accountability theory, but we believe these cases are factually distinguishable. Whittenburg involved a conviction based on facts that defendant was present at and fled from a house just before police arrested two individuals walking out of the house with stolen goods. Thus, there was no evidence of his presence or participation during the commission of the crime. Curtis involved a conviction based on facts that defendant was merely seen in the presence of others who had stolen property from a service station. Thus, there was no evidence of his participation in the crime other than his closeness to the perpetrators of the crime. In the present case, the evidence shows that defendant was both present at the scene of the burglary when it was occurring and he aided the commission of that crime by receiving stolen goods. Thus, he was properly found guilty of burglary on an accountability theory.

For the foregoing reasons, the judgment of the circuit court of Cook County is affirmed.

Affirmed.

COCCIA, P.J., and LORENZ, J., concur.


author: JUSTICE LORENZ

text:
    CONTINENTAL ASSURANCE COMPANY et al., Plaintiffs-Appellants, v. COMMONWEALTH EDISON COMPANY, Defendant-Appellee.
    First District (5th Division)
    No. 1—88—1502
    Opinion filed March 2, 1990.

      Stanley J. Adelman and William M. McErlean, both of Rudnick & Wolfe, of Chicago, and Brackett B. Denniston III and Michael J. Tuteur, both of Goodwin, Procter & Hoar, of Boston, Massachusetts, for appellants United Services Automobile Association and USAA Casualty Insurance Company.
    James E. Spiotto, Ann Acker, and Donna Ross Daniels, all of Chapman & Cutler, of Chicago, for appellants Continental Assurance Company and Continental Casualty Company.
    Altheimer & Gray, of Chicago (Theodore J. Low and Brian C. Witter, of counsel), for appellee.

      Justice R. Eugene Pincham participated in the above-entitled cause prior to his resignation. Justice Joseph Gordon was designated the third member of the panel and has read the record and briefs and has listened to a recording of the oral arguments.

   JUSTICE LORENZ

delivered the opinion of the court:

Continental Assurance Company, Continental Casualty Company, McDonnell Douglas Finance Corporation, United Services Automobile Association, and USAA Casualty Insurance Company (shareholders) appeal from the dismissal of their complaint challenging Commonwealth Edison Company’s redemption of a stock issuance.

We reverse in part and affirm in part.

In 1982, Commonwealth Edison Company (Edison) issued 300,000 shares of $15 “Cumulative Preference Stock without Par Value” ($15 Series). Together, the shareholders accounted for the purchase of 330,000 of the shares. Edison created the $15 Series pursuant to a “Statement of Resolution Establishing Series Adopted by Board of Directors” (Resolution) adopted July 14, 1985. Section V of the Resolution contained a provision for Edison to redeem the $15 Series. Section V provided:

“SPECIAL REDEMPTION. The share of the $15.00 Series may be *** redeemed *** at any time *** on or after the effective date of any statute of the United States of America, or any regulation of the Department of the Treasury, or any ruling, technical advice, finding or determination of the Internal Revenue Service of the United States of America ***, enacted, promulgated, published or issued after the date of adoption of this resolution creating the $15.00 Series, which statute, regulation, ruling, technical advise, finding or determination would, in the reasonable and good faith determination of [Edison], came any corporate holder of the $15.00 Series to lose the benefit of, lose the right to claim, or suffer disallowance with respect to, all or any part of the 85% dividendfs] received deduction provided for by Section 243 (a)(1) of the Internal Revenue Code of 1954, as amended [.]” (Emphasis added.)

Approximately four years after the shareholders purchased the $15 Series, Congress, as part of the Tax Reform Act of 1986, reduced the dividends received deduction (DRD) from 85% to 80%, effective January 1, 1987. See Tax Reform Act of 1986, Pub. L. No. 99 — 514, §611, 100 Stat. 2085, 2249-50 (1986).

Based on that reduction, Edison advised the shareholders that on February 1, 1987, Edison would redeem outstanding shares of the $15 Series pursuant to section V of the Resolution. Edison proceeded to redeem the shares on January 30, 1987, by crediting bank accounts of the shareholders.

On September 18, 1987, the shareholders filed a six-count complaint challenging Edison’s redemption. Common to each count, the shareholders alleged that, although the DRD had been reduced in the Tax Reform Act of 1986, the reduction had been more than offset by changes in corporate tax rates taking effect July 1, 1987. The complaint stated that, prior to the Tax Reform Act of 1986, corporate income was taxed at the maximum rate of 46%. Under the 85% DRD, dividends were thus taxed at a maximum rate of 6.9% (46% x 15%). However, under the Tax Reform Act of 1986, the maximum corporate income tax rate was lowered to 34%, effective July 1, 1986. Had the DRD not been reduced, dividends would have been taxed at a maximum rate of 5.1% (34% x 15%). Thus, the shareholders alleged, Congress reduced the DRD to compensate for the lower maximum corporate income tax rate. Given the new corporate income tax rate and reduced DRD, dividends would be taxed at a maximum of 6.8%. Because, shareholders alleged, they had lost no real benefit derived from the DRD, as reduced, the shareholders alleged Edison could not have made “a reasonable and good faith determination” that a shareholder would lose all or part of the DRD to justify redemption pursuant to section V.

Based on the allegations as summarized above, the shareholders sought, in their complaint, rescission (count I), injunctive relief (count II), declaratory relief (count III), damages for breach of contract (count IV) and fiduciary duty (count V), and damages or, alternatively, injunctive relief for violation of the Illinois Consumer Fraud and Deceptive Business Practices Act (Ill. Rev. Stat. 1987, ch. 12V-Iz, par. 261 et seq.) (count VI).

Edison successfully moved to dismiss the complaint pursuant to section 2 — 615 of the Code of Civil Procedure (Ill. Rev. Stat. 1987, ch. 110, par. 2 — 615). In his ruling, the trial judge determined section V was expressly incorporated into the Agreement and that the language “loses the right to claim a part of the dividend[s] received deduction” contained in section V controlled disposition of the case. The trial judge determined that the language permitted Edison to redeem the $15 Series because the DRD had, in fact, been reduced from 85% to 80% under the Tax Reform Act of 1986.

This appeal followed.

Opinion

Because this appeal concerns the propriety of the dismissal of the shareholders’ complaint, we must accept as true all properly pleaded facts and are concerned only with the question of law presented by the pleadings. (Fancil v. Q. S. E. Foods, Inc. (1975), 60 Ill. 2d 552, 328 N.E.2d 538.) We note that the construction, interpretation, or legal effect of a contract presents such a question. (Premier Electrical Construction Co. v. La Salle National Bank (1984), 132 Ill. App. 3d 485, 477 N.E.2d 1249.) In construing a contract’s terms, the primary object is to give effect to the parties’ intentions. (Srivastava v. Russell’s Barbecue, Inc. (1988), 168 Ill. App. 3d 726, 523 N.E.2d 30.) And, absent ambiguity in its written terms, that intention is to be derived solely from the language of the instrument. Faerber Electrical Co. v. International Telephone & Telegraph Corp. (1984), 123 Ill. App. 3d 704, 463 N.E.2d 820.

The shareholders’ principal argument on appeal is that the trial judge failed to give due weight to language in section V requiring Edison to make a good-faith determination that a change in the tax law affected the parties. More specifically, the shareholders argue that the trial judge failed to read section V in conjunction with paragraph 8 of a separate “Purchase Agreement” (Agreement) also executed by the parties on July 14, 1982. Paragraph 8 of the Agreement provided, in part:

“Tax Indemnity. This Agreement has been entered into on the assumptions that for Federal income tax purposes *** the divi dends on the Shares will be eligible for the Dividends Received Deduction. If under any circumstances or for any reason whatsoever [the shareholder] shall lose the benefit of, lose the right to claim or suffer disallowance with respect to, all or any part of the Dividends Received Deduction with respect to *** the Shares (any such treatment, loss or disallowance being hereinafter called a ‘Loss’), then, *** (A) [Edison] shall pay to [the shareholder] not later than 60 days following written notice to [Edison] *** of such loss, such sums as *** shall be required, in the reasonable opinion of [the shareholder] to cause the effective after-tax yield of [the shareholder] to be 13.965% per annum, and (B) *** [Edison] shall pay to [the shareholder] *** such sums as, when taken together with the dividends paid to [the shareholder], *** shall be required in the reasonable opinion of [the shareholder] *** to cause the effective after-tax yield of [the shareholder] *** to be 13.965% per annum [.] *** If [Edison] shall *** redeem Shares pursuant to Section V of the Resolution, [Edison] shall pay to [the shareholder] in addition to *** the redemption price specified in Section V of the Resolution *** such sums as *** shall be required *** to cause the effective after-tax yield of [the shareholder] *** to be 13.965% per annum." (Emphasis added.)

The shareholders argue that, when read together with paragraph 8 of the Agreement, section V obligates Edison to consider the ultimate impact of reduction of the DRD in light of the decrease in the corporate income tax rate after July 1, 1987. Because, shareholders point out after July 1, 1987, dividends were taxed at an effective rate of 6.8%, a rate actually .01% lower than the rate prior to reduction of the DRD effective January 1, 1987, the shareholders were not deprived of the benefit of the DRD. Shareholders point out that, if the right to redeem was solely dependent on mathematical reduction of the DRD, the language of section V of the Resolution pertaining to Edison’s good-faith determination would be meaningless. The shareholders argue the use of such language in section V is at least sufficient to render the terms of the contract ambiguous, thus precluding grant of Edison’s motion to dismiss. Shareholders direct our attention to American Home Assurance Co. v. Baltimore Gas & Electric Co. (2d Cir.1988), 845 F.2d 48, decided by the United States Court of Appeals for the Second Circuit, which shareholders argue supports their analysis.

American Home involved interpretation of a tax indemnity provision of a stock purchase agreement substantially identical to paragraph 8 of the Agreement in the instant case. In section 6.2 of the stock purchase agreement in American Home, Baltimore Gas & Electric Company (BG & E) agreed to pay any of plaintiff shareholders, several insurance companies, such sums as would preserve an effective after-tax yield of 11.172% per annum, if the shareholder lost “the right to claim or suffer disallowance with respect to all or any part” of the DRD. Section 6.2 further provided for the repurchase of shares at par value if one of two events occurred: (1) a shareholder gave written notice of loss of all or part of the DRD, or (2) BG & E made a “good faith determination that there is substantial risk that it would be required to make any indemnity payments” pursuant to the section. (Emphasis added.) American Home, 845 F.2d at 49.

Citing the same reduction of the DRD relied on by Edison, BG & E notified shareholders of its intent to repurchase pursuant to section 6.2. The shareholders sued to void the repurchase, alleging BG & E did not make the requisite good-faith determination of financial risk. BG & E sought, unsuccessfully, to dismiss the complaint, and the district court thereafter granted summary judgment in favor of the shareholders.

The second circuit affirmed. In its decision, the second circuit concluded the indemnity provision was not self-generating and depended on a shareholder’s written notice of loss of the DRD. Because of that determination, the court concluded, in order to repurchase shares under the second triggering event (the good-faith determination that there was substantial risk that BG & E would be required to indemnify), BG & E was required to consider whether a shareholder would, in fact, send a written notice of loss. (American Home, 845 F.2d at 51.) The court noted, incidentally, that, because the market value of the shares exceeded the amount for which the shares could be redeemed by $8,780,000 and because the 5% reduction in the DRD would have only a small impact on after-tax yield, no shareholder had requested indemnification. American Home, 845 F.2d at 49-50.

Pertinent here, the second circuit rejected BG & E’s argument that the word “would” referred to whether circumstances were such that BG & E had to indemnify a shareholder if the written notice of loss was sent. The court stated:

“If we interpreted ‘would’ in this manner, then BG & E would have the right to redeem the *** Shares if there is any change in the tax laws that slightly reduces the [shareholder’s] DRD, whatever the likelihood that any [shareholder] would choose to exercise its right to indemnity payments because of the change in the law. If the contract were interpreted in this manner, then it would be difficult to give any meaning to the phrases ‘good faith determination’ and ‘substantial risk.’ For example, there ordinarily is no reason to introduce an element of ‘good faith’ into a ‘determination’ whether a provision of the Internal Revenue Code has been amended. Similarly, under this interpretation of the contract, any change in the tax laws that reduces the DRD, even by an infinitesimal amount, would automatically confer upon BG & E the right to redeem the stock. Thus, no determination at all about the ‘risk’ of making indemnity payments would have to be made if ‘would’ were given such an interpretation.” (American Home, 845 F.2d at 51-52.)

Thus, the court concluded, the contract could not be read to permit BG & E the right to redeem the shares, based on a change in tax laws slightly reducing the DRD, without consideration of whether a substantial risk existed that shareholders would request indemnity payments because of the change. American Home, 845 F.2d at 52.

Although we recognize Edison’s purported redemption in the instant case was based on the special redemption provision of section Y of the Resolution, and, unlike American Home, was not a repurchase pursuant to the Agreement’s tax indemnity provision, we find the second circuit’s analysis helpful to interpreting the operative language of section Y. Under section V, Edison is entitled to redeem the $15 Series “on or after the effective date of any statute *** which *** would in the reasonable and good faith determination of [Edison], cause any corporate holder of the $15.00 Series to lose the benefit of, lose the right to claim, or suffer disallowance with respect to all or any part of the 85% [DRD][.]” As the second circuit noted in American Home, no reason exists to introduce an element of good faith into a determination of an arithmetic change in the percentage of DRD through amendment of the Internal Revenue Code. We therefore agree with shareholders that an interpretation of section V suggesting that an arithmetic change in the DRD could alone provide basis for redemption, would render language pertaining to good faith meaningless.

Moreover, we are persuaded that Section V cannot be read independently of paragraph 8 of the Agreement. Paragraph 8 expressly grafts onto section V, in the following quoted language, Edison’s obligation to provide tax indemnity to preserve a predetermined annual yield if shares are redeemed pursuant to that section:

“If [Edison] shall *** redeem Shares pursuant to Section V of the Resolution, [Edison] shall pay to [the shareholder] in addition to *** the redemption price specified in Section V of the Resolution *** such sums as *** shall be required *** to cause the effective after-tax yield of [the shareholder] *** to be 13.965% per annum.”

We also note that paragraph 8 of the Agreement expressly provides that the entire purchase Agreement “has been entered into on the assumptions that for Federal income tax purposes *** the dividends on the Shares will be eligible for the [DRD].”

Reading the above provisions together, it would appear that the inference to be drawn is that Edison may not redeem the shares unless a change in tax laws has caused a real and detrimental change in the shareholders’ after-tax rate of return. Only such interpretation would seem to give real meaning to Edison’s obligation, in section V, to make a “reasonable and good faith determination” regarding change in the DRD. At a minimum, we are convinced that an ambiguity exists with respect to the purpose of section V in light of the language used in that section, as well as the effect of paragraph 8 thereon, precluding conclusive determination of the parties’ intentions solely from the documents. To that extent, we conclude the shareholders’ complaint should not have been dismissed.

However, we cannot conclude allegations in count VI provide basis for liability based on violation of the Illinois Consumer Fraud and Deceptive Business Practices Act (Act) (Ill. Rev. Stat. 1987, ch. 1211/2, par. 261, et seq.). Although, under the Act, the shareholders, corporate entities, may be considered consumers (see McDonald, The Applicability of the Illinois Consumer Fraud & Deceptive Business Practices Act to Private Wrongs, 39 DePaul L.R. 95, 109-21 (1989)) and the securities merchandise (see Onesti v. Thomson McKinnon Securities, Inc. (N.D. Ill. 1985), 619 F. Supp. 1262; People ex rel. Scott v. Cardet International, Inc. (1974), 24 Ill. App. 3d 740, 321 N.E.2d 386), count VI must fail because Edison’s alleged misrepresentations, occurring in conjunction with a stock redemption, relate to a transaction outside of the scope of those to which the Act is designed to apply*

Section 2 of the Act prohibits, in pertinent part, “any deception, fraud, false pretense, false promise, misrepresentation *** in the conduct of any trade or commercef.]” (Ill. Rev. Stat. 1987, ch. 121V2, par. 262.) Section 1 defines the terms “trade” and “commerce” collectively as:

“[T]he advertising, offering for sale, sale, or distribution of any services and any property, tangible or intangible, real, personal or mixed, and any other article, commodity, or thing of value wherever situated, and shall include any trade or commerce directly or indirectly affecting the people of this State.” Ill. Rev. Stat. 1987, ch. 1211/2, par. 261.

In count VI of the complaint, shareholders alleged Edison “repeatedly falsely stated and held out that it was redeeming the Stock based on its determination that the [DRD] has been reduced *** and omitted and failed to state that its true purpose was to avoid paying the dividends on the stock and to reduce its cost of funds, by replacing the Stock with other sources of funds, at less cost[.]”

Although we recognize the Act is to be liberally construed, we cannot conclude the Act can be reasonably interpreted to include the type of fraud alleged by shareholders here in the context of a stock redemption. The redemption of shares of stock cannot constitute any type of “advertising” or “offering for sale.” No more so, in our opinion, can the redemption in the instant case constitute a “sale” or “distribution” of property as those terms are used in the Act. While, conceivably, it might be argued Edison’s redemption is not precluded from being considered a sale or distribution of property to the extent the shareholders would be selling or distributing the shares back to Edison, that transaction could not serve as basis for liability under the Act because, in such circumstance, Edison would be the consumer and Edison is not seeking the Act’s protection.

Therefore, for reasons stated above, we reverse the dismissal of counts I through V of shareholders’ complaint. We affirm the dismissal of count VI. We remand the matter for further proceedings not inconsistent with this opinion.

Reversed in part; affirmed in part and remanded.

MURRAY and GORDON, JJ., concur.


author: JUSTICE MURRAY

text:
    NICHOLAS RAY JACOBS, a Minor, by His Mother and Next Friend, Pamela Jacobs, et al., Plaintiffs-Appellants, v. CENTRAL SECURITY MUTUAL INSURANCE COMPANY a/k/a Ansvar C.T. Insurance Company, et al., Defendants-Appellees.
    First District (5th Division)
    No. 1—88—3539
    Opinion filed March 2, 1990.
    Lindner, Speers & Reuland, P.C., of Chicago (Nancy M. Rundin, of counsel), for appellants.
    Judge & Knight, of Park Ridge (Jay S. Judge and Colleen H. Considine, of counsel), for appellees.
   JUSTICE MURRAY

delivered the opinion of the court:

Plaintiffs, Nicholas Ray Jacobs (Jacobs), a minor, by his mother and next friend Pamela Jacobs, appeal from an order of the circuit court of Cook County granting summary judgment to defendants, Central Security Mutual Insurance Co., a/k/a Ansvar C.T. Insurance Co., and Bonnie Ostberg (Ansvar), after finding that Jacobs was not covered for injuries under his grandfather’s insurance policy, which was issued by Ansvar. (Plaintiff Walter M. Ketchum is not a party in this appeal.) For the reasons set forth below, we reverse and remand.

On June 30, 1982, Jacobs, then two years old, was playing in a parking lot when he was struck by a vehicle operated by David Her-manson, an uninsured motorist. As a result, he suffered a fractured femur. Jacobs sought recovery of damages under an insurance policy issued to his grandfather by Ansvar. Ansvar did not respond to Jacobs’ claim and, accordingly, on May 24, 1984, a four-count complaint was filed by Jacobs against Ansvar seeking compensatory and punitive damages. Count I alleged that Ansvar vexatiously refused to arbitrate or negotiate Jacobs’ claim, and count II alleged the same allegation against an Ansvar employee, Bonnie Ostberg. In counts III and IV, Jacobs’ counsel, Walter M. Ketchum, alleged interference by employees of Ansvar with his contractual relationship with Jacobs. Subsequently, counts III and IV were dismissed, as well as Jacobs’ request for punitive damages in counts I and II.

In April 1985, Ansvar filed its answer to Jacobs’ complaint, contending that Jacobs was not entitled to coverage under his grandfather’s policy because he did not reside with him. On August 14, 1985, Jacobs filed a motion for summary judgment, which addressed Ans-var’s residency allegation. Attached to the motion were affidavits of nine individuals who attested to the fact that Jacobs resided with his grandfather. A hearing on this motion was never held.

In November 1985, Ansvar filed a cross-motion for summary judgment, alleging a new defense to coverage based upon a policy provision requiring that Jacobs must have been occupying his grandfather’s insured vehicle when injured in order to be covered under the policy for actions caused by an uninsured motorist. On July 15, 1988, Ansvar amended its summary judgment motion, asserting the “occupancy of an insured vehicle” defense only: Ansvar included an explanation that although it did not abandon the “resident of the household” defense, it was not necessary to address that issue. Attached to the motion was a certification to the policy stating that it was the policy in effect for Jacobs’ grandfather at the time of Jacobs’ injury.

On November 10, 1988, the trial court granted Ansvar’s motion for summary judgment, finding that Jacobs was a member of the insured’s household, that the certified policy did not violate Illinois public policy, and that the certified policy was the policy in effect on the date of Jacobs’ injury and, apparently, that Jacobs was not covered under the policy. This appeal followed. A notice of appeal filed by Ansvar, with respect to the trial court’s finding that Jacobs was a member of the insured’s household, was dismissed by this court as untimely.

The issues presented to this court by Jacobs are as follows: (1) whether the policy at issue provides uninsured motorist coverage for a member of the named insured’s household who did not occupy an insured vehicle at the time of the injury; (2) whether the interpretation of an insurance policy that it extends uninsured motorist coverage to a member of the named insured’s household only when that person occupies an insured vehicle is against public policy; (3) whether a question of fact existed that the policy at issue, certified by defendants to be the policy in effect, was in fact the policy; and (4) whether the provisions of the policy at issue were conflicting, or at the least ambiguous, so as to construe the medical expense coverage in favor of the plaintiffs.

It is well settled that a court must effectuate the intent of the parties as expressed by the insurance policy. Any ambiguity is to be construed against the insurer. A provision is ambiguous if more than one reasonable interpretation may be given. (State Farm Fire & Casualty Co. v. Moore (1981), 103 Ill. App. 3d 250.) If no ambiguity exists, the policy terms are to be given their plain and obvious import. In deciding whether an ambiguity exists, the court should consider the subject matter of the contract, the facts surrounding its execution, the situation of the parties, and the predominate purpose of the contract, which is to indemnify the insured. Adman Products Co. v. Federal Insurance Co. (1989), 187 Ill. App. 3d 322.

In the case before us, we find no ambiguity in the provisions of the subject insurance policy. On the other hand, contrary to the trial court’s apparent conclusion, we find that the policy provides coverage for Jacobs’ injury. The pertinent provisions of that policy are as follows. On page 2 of the policy, under the heading of “DEFINITIONS”:

“YOU, YOUR, YOURSELF means the person named on the Declaration Page and that person’s husband or wife if a resident of the same household, while Occupying a Car we insure. YOU, YOUR, YOURSELF also means a member of the family who is a resident of the household and who doesn’t own a Motor Vehicle or whose spouse doesn’t own a Motor Vehicle while Occupying a Car we insure.” (Emphasis added.)

On page 6 of the policy, under the heading of “MEDICAL EXPENSE INSURANCE”:

“We promise to pay medical expenses not covered by any other insurance for Your bodily injury, sickness, disease or death, suffered in a Car Accident while Occupying a Car we insure.” (Emphasis added.)

On page 8 of the policy, under the heading of “UNINSURED MOTORIST INSURANCE”:

“We promise to pay the Damages You’re legally entitled to receive from the owner or operator of an uninsured Motor Vehicle because of bodily injury You suffer in a car accident while Occupying a Car we insure or as a pedestrian, as a result of having been struck by an uninsured Motor Vehicle.” (Emphasis added.)

According to the definition of “YOU, YOUR, YOURSELF,” coverage under the policy is provided for the named insured, a resident spouse of the insured or a member or spouse of the member of the insured’s family residing in the insured’s household when they are injured “while Occupying a Car” insured by Ansvar. Applying these definitions to the above-quoted “Uninsured Motorist Insurance” provision, Ansvar provides to pay damages not only to the “You” persons injured “while Occupying a Car” it insures, but also promises to pay damages to the “You” persons injured “while a pedestrian,” which would include Jacobs, whom the court found to be a resident of the named insured’s household.

We further observe that it appears from our review of the policy that adding “as a pedestrian” in the “Uninsured Motorist Insurance” section of the policy was intended to expand coverage because of the possibility of hit-and-run accidents. In a hit-and-run accident, the person injured is more than likely to be outside of a car, rather than in it. Had Ansvar wanted to limit the pedestrian provision to the named insured only, we believe that it could or should have done so in the pertinent provision. Instead, this provision creates two situations in which the “You” persons will be covered; the “You” persons injured “while Occupying a Car” and the “You” persons injured while pedestrians.

We briefly note that we find Ansvar’s argument without merit that the definitional provision limits coverage to members of the insured’s family to those who are injured “while Occupying a Car” insured under the policy. If we were to so interpret this provision, then the named insured would also be limited to coverage only if he was “Occupying a Car” when injured. This result would be contrary to the separate provision under the “Uninsured Motorist Insurance” section of the policy which in fact does not limit coverage to the “You” persons injured “while Occupying a Car,” but instead specifically provides coverage for the “You” persons injured while pedestrians. Even if we would give weight to Ansvar’s contention, it would merely serve to create inconsistency and consequent ambiguity between the limitation of the definitional paragraph and the broader coverage extended on page 8 to the “You” person injured while “a pedestrian.” As previously noted, such ambiguity would, in any event, compel that it be resolved against Ansvar.

Finally, we also do not find that the “Medical Expenses Insurance” section of the policy is support for Ansvar’s contention that coverage is provided for only those persons injured “while Occupying a Car.” That provision, like the definitional provision, sets forth only one situation in which coverage is provided, while the “Uninsured Motorist Insurance” section simply expands coverage by adding damages coverage for injuries suffered while a pedestrian.

In light of the foregoing, we do not address any of the other issues raised by the parties.

The trial court’s order granting summary judgment to Ansvar is reversed, and the cause is remanded for further proceedings.

Reversed and remanded.

LORENZ and GORDON, JJ., concur.


author: JUSTICE McNAMARA

text:
    ZEE JAY, INC., Plaintiff-Appellee, v. ILLINOIS INSURANCE GUARANTY FUND, in lieu of Union Indemnity Insurance Company of New York, Defendant-Appellant.
    First District (6th Division)
    No. 1—89—0419
    Opinion filed March 2, 1990.

      Lord, Bissell & Brook, of Chicago (Hugh C. Griffin, Robert J. Pugliese, and Paul J. Peralta, of counsel), for appellant.
    Kane, Orbish & Propes, of Chicago (Michael J. Kane and Karen A. Ker-bis, of counsel), for appellee.
   JUSTICE McNAMARA

delivered the opinion of the court:

Defendant, Illinois Insurance Guaranty Fund, appeals from the order of the circuit court of Cook County granting the section 2 — 1401 petition (Ill. Rev. Stat. 1987, ch. 110, par. 2 — 1401) of plaintiff Zee Jay, Inc., to vacate in part a dismissal with prejudice. Defendant contends that the trial court abused its discretion in granting plaintiffs petition to vacate the “with prejudice” portion of the dismissal. Defendant argues that plaintiff never exercised due diligence in pursuing its case and waited nearly one year to attempt to vacate the dismissal. Defendant additionally contends that plaintiff’s petition was not supported by the required affidavit and merely attributed plaintiff’s previous disregard of court orders to its counsel’s negligence.

The underlying cause of action for breach of insurance contract and for money damages arose from property loss due to fire. The fire occurred on April 19, 1983, and in July 1985, Union Indemnity Insurance Company of New York denied coverage. Plaintiff subsequently filed suit on September 16, 1985. Defendant, appearing in lieu of Union Indemnity, denied all material allegations and raised several affirmative defenses based on plaintiff’s breach of express or implied policy conditions. These affirmative defenses generally alleged misconduct on the part of plaintiff and its owner, Zeno Toscas.

Defendant served plaintiff with interrogatories and a notice for production of documents on January 8, 1986. Plaintiff was required to respond to these requests by February 6, but failed to do so. On April 22, 1986, defendant’s counsel consulted with plaintiff’s then counsel requesting compliance with the overdue discovery. Plaintiff’s counsel assured defendant’s counsel that he would comply within 60 days. Accordingly, defendant’s counsel agreed to an extension. On April 26, 1986, defendant confirmed in writing that it agreed to the extension because it had been informed that Toscas had suffered a stroke. Plaintiff’s counsel, however, failed to comply with the discovery request within the extended time period.

On September 11, 1986, Toscas passed away. Plaintiff’s counsel did not contact defendant to inform it of Toscas’ death. On December 11, 1986, defendant sought compliance with discovery. Defendant’s motion was continued until February 18, 1987, and plaintiff was ordered to comply with all outstanding written discovery by February 5, 1987. Plaintiff did not advise the court or defendant of Toscas’ death.

Plaintiff did not comply with the February 18, 1987, order, and on February 24, 1987, defendant renewed its motion to compel. The court granted the motion and issued a second order, marked final, for plaintiff to comply with all outstanding discovery by March 24, 1987. Plaintiff did not file a response by March 24.

On April 28, 1987, plaintiff advised defendant that Toscas had passed away. Plaintiff denied that it had any of the documents requested by defendant. (In its August 9, 1988, section 2 — 1401 petition, plaintiff stated that it had the documents requested and had tendered them to its counsel.) Plaintiff subsequently filed the answers to defendant’s interrogatories, but was unable to answer several of the interrogatories, stating that Toscas was the only person with the requested information. Plaintiff further stated it did not have the names of all its employees who worked at the premises the week of the fire, and answered “unknown” when asked details about a previous fire loss claim made by Toscas.

On April 29, 1987, prior to being served with plaintiff’s responses to its interrogatories, defendant filed a motion to dismiss for plaintiff’s failure to produce documents. The trial court denied the motion but issued a third order requiring plaintiff to produce the requested documents by May 27. Plaintiff again did not comply.

On June 16, 1987, counsel for both parties appeared at a pretrial conference and the trial court admonished plaintiff that dismissal was imminent if plaintiff continued to ignore discovery deadlines. The court ordered plaintiff to comply with the discovery requests by July 15, 1987. Plaintiff did not comply.

On September 16, 1987, defendant filed a second motion to dismiss. Plaintiff did not file a written response to the motion. After hearing arguments, the court entered an order dismissing plaintiff’s action with prejudice for failure to comply with any of the prior discovery orders.

On April 20, 1988, plaintiff filed a section 2 — 1401 motion to vacate. Plaintiff did not directly serve defendant with its motion for post-judgment relief as required by section 2 — 1401(b). (Ill. Rev. Stat. 1987, ch. 110, par. 2 — 1401(b).) Defendant filed a special and limited appearance together with its motion to quash service. On May 31, 1988, the court granted the motion to quash service but granted plaintiff leave to attempt proper service. On August 9, 1988, plaintiff filed and properly served defendant with a section 2 — 1401 petition to vacate. On January 10, 1989, the court granted plaintiffs motion by vacating the “with prejudice” language of the September 16, 1987, dismissal and amending the dismissal order to be “without prejudice.” The court additionally granted plaintiff 39 days to refile its action. In so ruling, the court denied defendant’s motion to dismiss.

Defendant contends that the trial court abused its discretion in granting plaintiff’s section 2 — 1401 petition to vacate the prior dismissal with prejudice. Defendant maintains that the case was properly dismissed because of plaintiff’s failure to comply with previous court orders compelling discovery compliance.

Section 2 — 1401 provides for relief from final orders and judgments after 30 days from the entry thereof. (Ill. Rev. Stat. 1987, ch. 110, par. 2 — 1401(a).) In order to obtain relief under section 2 — 1401, a petitioner must establish that he has a meritorious claim, and that he exercised due diligence, both in presenting the defense or claim to the circuit court in the original action and in filing the 2 — 1401 petition for relief. (Smith v. Airoom, Inc. (1986), 114 Ill. 2d 209, 499 N.E.2d 1381.) Section 2 — 1401 relief will not be allowed to avoid a judgment resulting from a party’s or his attorney’s negligence or lack of due diligence in following his case. Kaput v. Hoey (1988), 124 Ill. 2d 370, 530 N.E.2d 230.

Nevertheless, a petition to vacate under section 2 — 1401 invokes the equitable powers of the court as justice and fairness may require. (Eastman Kodak Co. v. Guasti (1979), 68 Ill. App. 3d 484, 386 N.E.2d 291.) The court must consider all the circumstances of the proceedings and liberally construe the scope of relief available to prevent an unjust result. (Eastman Kodak Co. v. Guasti, 68 Ill. App. 3d 484, 386 N.E.2d 291.) The court will consider whether some meritorious position exists so that vacatur of the order will not be a useless act; whether some particular hardship will result from vacating the order; and whether some reasons exist for the failure to present a defense in apt time. (Cf. Mieszkowski v. Norville (1965), 61 Ill. App. 2d 289, 209 N.E.2d 358.) These determinations must be made within the framework of the legal philosophy that litigation should be determined on its merits if possible and according to the substantive rights of the parties. (Mieszkowski v. Norville, 61 Ill. App. 2d 289, 209 N.E.2d 358.) The court is justified in disturbing the trial court’s decision only if it finds that the trial court has abused its discretion. George F. Mueller & Sons, Inc. v. Ostrowski (1974), 19 Ill. App. 3d 973, 313 N.E.2d 684.

We hold that the trial court did not abuse its discretion in vacating the dismissal with prejudice and in entering a dismissal without prejudice. Initially, we note that although defendant urges us to find that the meritorious nature of plaintiff’s claim does not raise issues of equity sufficient to justify a relaxation of the due diligence requirements, defendant does not contest the validity of plaintiff’s position that it has a meritorious claim. Accordingly, we need not address that element of the section 2 — 1401 requirements.

Defendant maintains that plaintiff neither exercised due diligence in presenting its original claim nor in filing its section 2 — 1401 petition. Defendant notes that plaintiff failed to comply with four discovery orders over a three-year period. Defendant additionally points out that plaintiff’s section 2 — 1401 petition is based solely on allegations that plaintiff’s initial attorney mishandled the case.

Failure to exercise due diligence in presenting a cause of action and in seeking relief from final orders can serve as a sufficient basis to deny relief under section 2 — 1401. (See, e.g., Lammert v. Lammert Industries, Inc. (1977), 46 Ill. App. 3d 667, 360 N.E.2d 1355; Taxman v. Health & Hospital Governing Comm’n (1980), 83 Ill. App. 3d 499, 404 N.E.2d 419.) Nonetheless, even when a movant has not necessarily shown due diligence, section 2 — 1401 relief will be granted if to do so would be in the interests of justice and good conscience. (Verni v. Imperial Manor of Oak Park Condominium, Inc. (1981), 99 Ill. App. 3d 1062, 425 N.E.2d 1344.) The appellate court will be loathe to overturn a decision on a petition to vacate when that decision rests on equitable considerations unless an abuse of discretion by the trial court is clearly established. Resto v. Walker (1978), 66 Ill. App. 3d 733, 383 N.E.2d 1361.

It is clear that the decision to vacate here was based on equitable considerations. At the hearing on the petition, the trial court expressed surprise at the “with prejudice” language. The court stated that in situations where the basis for dismissal is discovery violations, its practice is to dismiss with leave to refile under section 13 — 217. (Ill. Rev. Stat. 1987, ch. 110, par. 13 — 217.) Further, the court noted that this court, in Kubian v. Labinsky (1988), 178 Ill. App. 3d 191, 533 N.E.2d 22, held that dismissal with prejudice is an inappropriate initial sanction for failure to comply with discovery. In light of these considerations, the court determined that its initial order should be vacated. Significantly, however, the court imposed a limitation on the time within which plaintiff permissibly could refile its action. Moreover, the court indicated that it would entertain a motion for attorney fees because a substantial amount of time had passed after the entry of the initial order of dismissal before plaintiff did anything to correct that order.

In our view, the trial court properly vacated the September 17, 1987, order and entered a new order which accurately reflected its original intent. Our review of the record reveals that the trial court considered all the circumstances of the proceedings and appropriately fashioned its new order so as to serve the interests of both plaintiff and defendant. The new order sanctions plaintiff but does not foreclose it from pursuing its claim. The court also stated that it would consider additional sanctions. We believe that this order better serves the goal of determining cases on their merits, and according to the substantive rights of the parties. Moreover, the new order better reflects our jurisprudence in the area of discovery violations. (See Gayton v. Levi (1986), 146 Ill. App. 3d 142, 496 N.E.2d 1045 (denial of section 2 — 1401 petition affirmed where order of dismissal with prejudice for discovery violations was tempered by conditions for reinstatement). See also Kubian v. Labinsky, 178 Ill. App. 3d 191, 533 N.E.2d 22.) Relaxation of the due diligence requirements here is in the best interests of justice and good conscience. See Verni v. Imperial Manor, 99 Ill. App. 3d 1062, 425 N.E.2d 1344.

Moreover, we find that defendant is not prejudiced by the reinstatement of this action. We reject defendant’s argument that its efforts to investigate are prejudiced by Toscas’ death, as he was in possession of the best information regarding plaintiff’s financial information.

The fire occurred on April 19, 1983. Defendant did not interview Toscas until July 1984, 13 months after the fire. It then took only one statement despite a policy provision permitting it to examine Toscas and obtain plaintiff's financial information as often as reasonably required. Yet during the two-year period between the fire and Toscas’ stroke, defendant did not seek to examine Toscas further. We note also that since defendant’s predecessor had denied coverage for the fire loss in 1985, it is clear that defendant must have been very familiar with the circumstances and the claim.

Defendant additionally contends that plaintiff’s section 2— 1401 petition should have been dismissed for failure to include the required verifications. (Ill. Rev. Stat. 1987, ch. 110, par. 2 — 1401(b).) Defendant points out that such unsupported petitions are insufficient as a matter of law. (Okumura v. Nisei Bowlium, Inc. (1976), 43 Ill. App. 3d 753, 357 N.E.2d 187.) The record, however, reveals that plaintiff submitted the verification both to the court and defendant’s counsel at the hearing on the section 2 — 1401 petition. Defendant did not object to its late submission at that time and, accordingly, has not properly preserved that issue for our review. See Reeves v. Brno, Inc. (1985), 138 Ill. App. 3d 861, 486 N.E.2d 405.

For the foregoing reasons, the order of the circuit court of Cook County vacating its dismissal with prejudice is affirmed.

Judgment affirmed.

LaPORTA, P.J., and EGAN, J., concur.