text:
    OAK PARK TRUST & SAVINGS BANK, as Trustee, et al., Plaintiffs-Appellees, v. THE VILLAGE OF MOUNT PROSPECT et al., Defendants-Appellants.
    First District (1st Division)
    No. 1—88—0565
    Opinion filed March 7, 1989.
    — Rehearing denied May 1, 1989.

      Burke & Ryan, of Chicago (Thomas T. Burke, William E. Ryan,, and Barry A. Springer, of counsel), for appellants.
    Richard J. Troy and William G. Hutul, both of Chicago, for appellees.
   JUSTICE QUINLAN

delivered the opinion of the court:

Plaintiffs in this case filed a lawsuit in the circuit court of Cook County challenging the validity and constitutionality of certain sections of the Village of Mount Prospect’s landlord-tenant ordinance. Plaintiffs sought an injunction and such other relief that the court deemed appropriate. After the parties filed memoranda of law and presented oral arguments, the trial court ruled that certain disputed sections of the landlord-tenant ordinance were unconstitutional and invalid. Defendants, the Village of Mount Prospect and various village officers, now appeal from that judgment to this court. We reverse.

On September 6, 1983, the Village of Mount Prospect (Village) amended its “Residential Landlord and Tenant Regulations” by passing ordinance No. 3366 (the Ordinance). The stated purpose of the Ordinance was “to protect and promote the public health, safety and welfare of its citizens, to establish rights and obligations of the landlord and the tenant in the rental of dwelling units in the Village and to encourage the landlord and tenant to maintain and improve the quality of rental housing within the community.” (Mount Prospect, Ill., Ordinance 3366, §23.1801 (September 6, 1983).) The Ordinance applied to rental agreements for dwelling units within the Village of Mount Prospect, with some exceptions. Mount Prospect, Ill., Ordinance 3366, §23.1802 (September 6,1983).

The plaintiffs here include the Oak Park Trust and Savings Bank (Oak Park Trust), which is the trustee of real estate on which there are 1,048 rental apartments; S.D.M. Realty, Inc. (S.D.M.), which is the landlord of the 1,048 rental apartments and the successor corporation to the named plaintiff, Cottonwood Management, Inc.; Salvatore DiMucci, the beneficiary of the land trust and an officer and shareholder of S.D.M.; and Mary Bouris, a tenant of one of the rental apartments contained in the land trust. The defendants include the Village of Mount Prospect, a home rule unit; Carolyn H. Krause, the mayor of Mount Prospect; Terrance L. Burghard, the village manager of Mount Prospect; and Carol A. Fields, the village clerk of Mount Prospect.

The plaintiffs filed a six-count complaint seeking an injunction and any other'appropriate relief, claiming that the Ordinance was illegal, void, and unenforceable because: (1) it allowed tenants to withhold rent payments for alleged building violations; (2) it allowed tenants to pay the withheld rents to the Village of Mount Prospect, to be held by the Village as trustee of the funds; (3) it allowed tenants to file counterclaims in forcible entry and detainer actions; (4) it required all owners or landlords of multifamily dwelling units located within the Village of Mount Prospect to be licensed; (5) it charged a licensing fee based on the number of rental units; and (6) it allowed landlords to collect the license fee from tenants.

The defendants filed an answer to the plaintiffs’ complaint and also filed a counterclaim seeking a declaratory judgment that the Ordinance was valid. Thereafter, the defendants filed a motion for summary judgment, but the circuit court of Cook County denied the motion for summary judgment in a written order.

Subsequently, the parties filed memoranda of law with the trial court and the matter proceeded to trial before the court, which was sitting without a jury. At trial, the plaintiffs did not present any witnesses, but the defendants presented Michael Janonis, the acting village manager for the Village of Mount Prospect. In his testimony, Janonis said that the fees charged for the operating licenses did not even cover the expenses incurred by the Village in regulating and inspecting the rental dwellings. Following the testimony of Mr. Janonis and the presentation of oral argument by the parties, the trial court then held that the Ordinance was unconstitutional, and thus, invalid. The court then entered judgment against defendants.

The defendants raise six issues on appeal. In their first issue they argue that the trial court erroneously ruled that the Ordinance’s licensing scheme and licensing fee were beyond their police powers, were in reality a revenue raising device, and consequently, were unconstitutional under the Illinois Constitution. The pertinent section of the ordinance provides, in relevant part:

“No dwelling structure shall be operated as a rental multiple-family dwelling structure unless the owner or landlord as defined here-in holds a current, unrevoked operating license issued by the Village of Mount Prospect for the specific named multiple dwelling.
The annual fee for operating licenses for multiple family dwellings shall be $7.00 per dwelling unit. The landlord shall charge the fee to the tenants on such terms as they may agree.” Mount Prospect, Ill., Ordinance 3366, §§23.1814(A)(1), (B) (September 6,1983).

The defendants assert that the Ordinance was constitutional. Their argument here specifically addresses each of the plaintiffs’ allegations below. Defendants contend (1) that the Village has the power to license landlords and that section 23.1814(A) is, accordingly, a proper regulatory measure and not a revenue raising measure; (2) the license fee set out in section 23.1814(B) is a valid fee imposed to defray costs of regulation; (3) the trial court erroneously ruled that since the owner here, a land trustee owner, had no authority to manage rental property, the requirement for owners to have a license imposed obligations beyond the police power of the Village; and (4) the trial court erroneously held that the license fee was not a fee but a tax because it was imposed on a graduated basis and could be passed on to the tenant.

Article VII, section 6, of the Illinois Constitution of 1970 provides that “a home rule unit may exercise any power and perform any function pertaining to its government and affairs including, but not limited to, the power to regulate for the protection of the public health, safety, morals and welfare; to license; to tax; and to incur debt.” (Ill. Const. 1970, art. VII, §6(a).) However, section 6 also provides that “[a] home rule unit shall have only the power that the General Assembly may provide by law *** (2) to license for revenue or impose taxes upon or measured by income or earnings or upon occupations.” (Ill. Const. 1970, art. VII, §6(e)(2).) But later, in section 6(m), the Constitution specifically directs that the powers and functions of home rule units are to be liberally construed. Ill. Const. 1970, art. VII, §6(m).

It has been recognized that the power to regulate includes the power to charge a license fee in order to defray all or part of the costs incurred as a result of regulation and inspection. (Larson v. City of Rockford (1939), 371 Ill. 441, 444, 21 N.E.2d 396, 398.) As long as the ordinance contains genuine regulatory provisions, it cannot be invalidated merely because the license fee raises revenue. (Larson, 371 Ill. at 444, 21 N.E.2d at 398.) The license fee, nevertheless, must bear some reasonable relationship to the cost of regulation (Arends v. Police Pension Fund (1955), 7 Ill. 2d 250, 253, 130 N.E.2d 517, 519; Larson, 371 Ill. at 444, 21 N.E.2d at 398), but the mere possibility or even the probability that the fee might exceed in some degree the cost of regulating the business does not invalidate the ordinance on the grounds that it is a revenue raising measure. (Larson, 371 Ill. at 444, 21 N.E.2d at 398; Quad Canteen Service Corp. v. Ruzak (1980), 85 Ill. App. 3d 256, 258, 406 N.E.2d 616, 618.) Additionally, the party seeking to invalidate an ordinance has the burden of proving that there is no reasonable relationship between the fees charged and the cost of regulation. Larson, 371 Ill. at 445, 21 N.E.2d at 398; Quad Canteen Service Corp., 85 Ill. App. 3d at 258, 406 N.E.2d at 618.

Applying these principles to the present case, we find that the Ordinance, particularly section 23.1814(A), contains genuine regulatory provisions and that the fee assessed is not an improper revenue raising measure. The purpose, as stated in the Ordinance, of the licensing provision is to insure that multi-unit rental dwellings in the Village of Mount Prospect meet the requirements, rules and regulations as set-, forth in the Village code. (Mount Prospect, Ill., Ordinance 3366, §23.1814(A)(4) (September 6, 1983).) Hence, we find that the Ordinance is a valid regulation and is also within the Ordinance’s stated purpose “to protect and promote the public health, safety and welfare of its citizens.” (Mount Prospect, Ill., Ordinance 3366, §23.1801 (September 6, 1983).) Since the Ordinance contains genuine regulatory provisions, the licensing provision of defendants’ Ordinance is valid unless the fee charged to obtain a license is unreasonable or not related to the costs of regulation.

Here, the defendants presented testimony that the fees charged in connection with licensing the rental units were, in fact, insufficient to cover all of the necessary costs incurred under the Ordinance in regulating landlords or owners of multi-unit rental housing. The plaintiffs, on the other hand, presented no testimony or evidence to support their claim that the license fees charged were unreasonable or unrelated to the costs of regulation. Thus, plaintiffs failed to sustain their burden of proving that there was no reasonable relationship between the licensing fees and the costs of regulation. (See Larson, 371 Ill. 2d at 445, 21 N.E.2d at 398; Quad Canteen Service Corp., 85 Ill. App. 3d at 258, 406 N.E.2d at 618.) Based on this record, it is clear that the fees charged here do not exceed the costs of regulation and, accordingly, we must conclude these fees were legitimately imposed. The fees are, at least, arguably necessary to defray the costs incurred as a result of the regulation and inspection scheme. In such circumstances, the Ordinance’s licensing fees are constitutionally permissible.

The trial court also held that the licensing provision was invalid because, as it interpreted the Ordinance, the licensing provision required plaintiff Oak Park Trust to obtain an operating license, even though it had no authority under the terms of its land trust agreement to manage the property. Therefore, the court held that the license requirement went beyond the Village’s power to regulate for its own government and affairs and to protect the health, safety and welfare within the community of Mount Prospect. We find the trial court’s ruling and reasoning erroneous.

Initially, we note that the regulation of the relationships between landlords and tenants has been held to be within the police power of home rule units. The Illinois Supreme Court, in City of Evanston v. Create, Inc. (1981), 85 Ill. 2d 101, 421 N.E.2d 196, held that “allowing a home rule unit to control its unique problems regarding the relationship between landlord and tenant is consistent with the role of home rule.” (Create, 85 Ill. 2d at 113, 421 N.E.2d at 201.) In Create, our supreme court upheld the City of Evanston’s landlord-tenant ordinance. The court there distinguished the Evanston ordinance from other home rule ordinances that had been declared invalid on the basis that the Evanston ordinance, unlike the other ordinances, limited its application to leases for property -within its own borders. (Create, 85 Ill. 2d at 110, 421 N.E.2d at 200.) In the present case, the Ordinance regulates only those leases for properties that are located within the boundaries of the Village of Mount Prospect. Hence, we find that the trial court here improperly concluded that the license requirement went beyond the limits of the Village’s power to protect the health, safety and welfare of its community.

Furthermore, as defendants have observed, section 23.1814(A) only requires either the owner or the landlord to hold a current, valid operating license. The Ordinance then defines a “landlord” as the “owner, lessor or sublessor of the dwelling unit or the building of which it is a part,” and defines an “owner” as one or more persons that jointly or severally are vested with all or part of the legal title to the premises or all or part of the beneficial ownership of the premises. (Mount Prospect, Ill., Ordinance 3366, §23.1803 (September 6, 1983).) Given these definitions, it is clear that the Ordinance is intended to reach the party with the authority to manage and control the property and, by its express terms, does not reach one who is merely a land trustee without any beneficial ownership. In the present case, for example, the landlord of the property, S.D.M., is an entity that does, in fact, have the authority to manage the property, and Salvatore DiMucci, an officer and shareholder of S.D.M., is the beneficial owner of the property. Accordingly, even though Oak Park Trust does have legal title to the property as land trustee, Oak Park Trust is irrelevant to the licensing requirement under the Ordinance. Thus, the trial court also erroneously invalidated the Ordinance based on Oak Park Trust’s inability to manage the trust property.

The trial court further held that section 23.1814(B) was invalid because the license fees were based on a graduated fee schedule rather than a flat fee schedule, and because the landlord could, under the Ordinance, pass the fee on to the tenant, which the court found was indicative of a tax. Initially, we note that the trial court’s finding that defendants’ licensing fees were based on a graduated fee schedule was not accurate. Seven dollars per unit is actually a flat fee schedule, merely determined on the basis of the number of rental units. In addition, a license fee is, in any event, valid so long as it is reasonably related to the costs of regulation. A fee may be graduated so long as the amount of the fee is fair and equitable. (9 E. McQuillin, Municipal Corporations §26.38, at 106 (3d ed. 1986).) For example, fees have been upheld that were based on the number of stores under a single management or ownership, or on the basis of the amount of square feet in the particular business location. (See 9 E. McQuillin, Municipal Corporations §26.38, at 106 (3d ed. 1986).) The basis for graduating the fee need only be reasonably connected with the subject matter and not be merely incidental to it. (9 E. McQuillin, Municipal Corporations §26.38, at 106 (3d ed. 1986).) Here, as stated above, the record does not show that $7 per rental unit was unreasonable, but rather established that, regardless of the basis of assessment, the fee was inadequate to cover the costs of regulation. Under such circumstances, the trial court erred in striking down the Ordinance on the basis that it was a graduated fee.

Furthermore, the trial court also erred in holding that the Ordinance was invalid since the license fee could be charged to the tenant. Actually, such a provision allowing a licensing fee to be passed on to the tenants has been held to be denotative (although not conclusively) that the challenged fee is not a prohibited occupation tax but a proper tax or fee. (See, e.g., Chicago Health Clubs, Inc. v. Picur (1988), 124 Ill. 2d 1, 9, 528 N.E.2d 978, 981; Commercial National Bank v. City of Chicago (1982), 89 Ill. 2d 45, 67, 432 N.E.2d 227, 237; see also 9 E. McQuillin, Municipal Corporations §26.20, at 46 (3d ed. 1986).) In any event, and as stated earlier, the evidence here established that the fee imposed was below the costs of regulation and, hence, the ability of a landlord to pass the fee on to his tenant also does not affect the validity of the fee.

Nevertheless, the plaintiffs on appeal contend that the license fee here is really an impermissible occupation tax and not a fee at all. We find this contention to be without merit. The difference between license or inspection fees and occupation taxes is that “occupations may be licensed and a fee imposed upon them to cover the expense of licensing, inspecting and regulating them under the police power *** [while] taxes for revenue [are] imposed on occupations, without regard for policing them. *** [L]icense and inspection fees imposed by virtue of the police power on occupations are not occupation taxes for revenue.” (9 E. McQuillin, Municipal Corporations §26.19, at 43 (3d ed. 1986).) As observed above, the defendants presented evidence here that the licensing scheme was a proper, regulatory measure and, thus, the licensing fees are a valid means to defray the costs of this regulation. Additionally, as also noted, plaintiffs failed to provide any evidence that the licensing scheme was either designed to be a revenue raising tax or that the fees actually imposed were unrelated to the costs of regulation.

Defendants’ second contention on appeal is that the Illinois Real Estate License Act of 1983 (Ill. Rev. Stat. 1987, ch. Ill, par. 5801 et seq.) did not preempt the enactment of the Ordinance by the Village of Mount Prospect. Plaintiffs raised this issue in their complaint and raise it again on appeal, but the trial court did not directly address the issue in its order. However, we will address this issue since it involves a constitutional challenge which could be raised at another time.

While a reviewing court will defer to the trial court’s findings concerning factual issues, the scope of review on questions of law is an independent review and the court need not defer to the trial court’s reasoning on findings of law. (In re Marriage of Skinner (1986), 149 Ill. App. 3d 788, 791, 501 N.E.2d 311, 313; Hatton v. Money Lenders & Associates, Ltd. (1984), 127 Ill. App. 3d 577, 582, 469 N.E.2d 360, 364.) Therefore, for purposes of our review, it is not important that the trial court did not pass on this issue.

Plaintiffs alleged in their complaint that the Ordinance was preempted by the Illinois Real Estate License Act because, they asserted, it is possible that a real estate broker, who was licensed under the Real Estate License Act, might also be a landlord or owner of a multi-unit rental dwelling and, under the Ordinance, be required to obtain a license even though he had already been licensed under the real estate statute. This would be, they contend, contrary to the express provisions of the real estate statute, which makes the statutory scheme of regulation the exclusive means of regulating real estate brokers. (See Ill. Rev. Stat. 1987, ch. Ill, par. 5833.) Contrarily, defendants argue that the Real Estate License Act regulates an area distinct from those areas regulated by Mount Prospect’s Ordinance. Hence, the defendants argue that each enactment regulates and licenses a wholly independent activity and, as such, the enactments do not conflict.

The Illinois Constitution provides that “[h]ome rule units may exercise and perform concurrently with the State any power or function of a home rule unit to the extent that the General Assembly by law does not specifically limit the concurrent exercise or specifically declare the State’s exercise to be exclusive.” (Ill. Const. 1970, art. VII, §6(i).) Furthermore, if a statute is intended to declare that a power or function in an area is to be exclusively exercised by the State, it must expressly so provide. Beverly Bank v. County of Cook (1987), 157 Ill. App. 3d 601, 605, 510 N.E.2d 941, 944.

The Real Estate License Act, in accordance with article 7, sections 6(h) and (i), of the Illinois Constitution, did provide that the powers and functions set forth in the Act were exclusive State powers and functions. (Ill. Rev. Stat. 1987, ch. Ill, par. 5833.) However, as argued by the defendants, these provisions relate only to the licensing, evaluation and regulation of real estate brokers, and not to landlord-tenant relationships or to the owning and managing of rental housing. (See Chicago Board of Realtors v. City of Chicago (7th Cir. 1987), 819 F.2d 732, 740 (where the Seventh Circuit also observed that the Real Estate Licensing Act was concerned solely with the licensing of real estate brokers and did not preempt home rule units in the area of landlord-tenant law).) Construing the powers of a home rule unit liberally, as we must, we find that the Village here could regulate and license owners and managers of rental housing, even if those owners and managers were also real estate brokers, and that that power was not preempted by the Real Estate License Act. We believe that the activities regulated by the State and by the Village of Mount Prospect are wholly separate from, and independent of, one another. The Ordinance is, as it states, intended only to cover the activity involved in the rental of dwelling units, for the purpose of maintaining and improving the quality of rental housing within the community, which is an area not regulated by, and thus not preempted by, the Real Estate License Act.

In their third issue on appeal, defendants defend section 23.1808(D)(1)(a) of their Ordinance, which authorizes a tenant to withhold rent under' certain circumstances. Specifically, section 23.1808(D)(1)(a) provided:

“[Wjhere the landlord breaches his obligations to render the rental unit habitable and maintain the same in good repair, the tenant may:
*** notify the landlord of his intention to withhold from the monthly rent an amount which reasonably reflects the reduced value of the premises or the cost of obtaining compliance, but not exceeding 75% of the monthly rent and to deposit said amount, with the Village of Mount Prospect along with a non-refundable filing fee of Ten Dollars ($10.00). If the landlord fails to correct the condition within seven (7) days after being notified by the tenant, the tenant may, during the time such failure continues, deduct from the rent the stated amount and deposit it with the Village which will hold the same and use its best efforts to resolve the situation.” (Mount Prospect, Ill., Ordinance 3366, §23.1808(D)(1)(a) (September 6, 1983).)

The trial court held that this provision was an unconstitutional deprivation of the plaintiffs’ property without due process.

We disagree and find this provision of the Ordinance, allowing a tenant to withhold up to 75% of his rent, to be constitutional and also find that it does not deprive the landlord of his property without due process. Although we agree with the proposition that a tenant remains liable for rent as long as he is in possession of the rented premises, it is not unconstitutional under either the Federal or Illinois Constitution to allow a tenant to withhold rent under proper circumstances. (Pole Realty Co. v. Sorrells (1981), 84 Ill. 2d 178, 183, 417 N.E.2d 1297, 1300; Jack Spring, Inc. v. Little (1972), 50 Ill. 2d 351, 359, 280 N.E.2d 208, 213.) Actually, the Ordinance here requires the tenant to continue to pay rent, albeit to pay it in escrow to the Village of Mount Prospect.

Similar provisions have been upheld against charges that they were an unconstitutional deprivation of property in Chicago Board of Realtors and in Create. (Chicago Board of Realtors, 819 F.2d 732; Create, 85 Ill. 2d 101, 421 N.E.2d 196.) The provisions in those cases, however, did not even contain the safeguard present here that the tenant pay the rent into escrow. (See Chicago Board of Realtors, 819 F.2d at 738; Create, 85 Ill. 2d at 106-07, 421 N.E.2d at 198.) Under the Mount Prospect Ordinance, the landlord is assured that his rent money will be available to him once he repairs the property or rectifies the problem which renders the property uninhabitable. Inasmuch as our supreme court in Create has upheld similar provisions which provided even less protection of the plaintiffs’ interests, we find the trial court’s ruling that the Ordinance provision here was an unconstitutional deprivation of property to be error.

Defendants’ fourth contention on appeal is that the trial court improperly ruled that section 23.1808(D)(1)(b) of the Ordinance was unconstitutional because it imposed a waiting period. Under that section, before the tenant or landlord can go to court to assert his rights, he must wait for a period of 21 days beginning at the time that a tenant notified his landlord of his intention to withhold rent. The trial court held that this provision amounted to an unconstitutional denial of access to the courts.

We disagree. We believe this 21-day waiting period was merely a notice provision and again was similar to the provision that the supreme court upheld in the Create case. In Create, the supreme court ruled that the provision of the Evanston ordinance requiring a landlord to give a 10 days’ notice to a tenant before the landlord could pursue his remedies for nonpayment of rent was constitutional. (Create, 85 Ill. 2d at 106, 421 N.E.2d at 198.) The court there held that such a provision was solely a notice provision and that it did not place a condition or barrier upon a citizen’s access to the courts. Create, 85 Ill. 2d at 116, 421 N.E.2d at 203.

Likewise, the provision here does not prevent a landlord or tenant from seeking relief in the courts, since either party is free to file suit once the notice period has expired. The fact that the notice period here is 21 days, while the notice provision in Create was 10 days, is not, in our judgment, a critical difference. We do not find the 21-day period substantially different from the 10-day period upheld in Create. We agree that at some point the delay might be so long that it could amount to a denial of access to the courts, but we are not presented with such a case here. Accordingly, we hold the trial court improperly found that the Ordinance’s 21-day notice period provision was an unconstitutional limitation on access to the courts.

The defendants contend in their fifth argument that the trial court erroneously found that the Ordinance dictated State court procedures and rules. The provisions complained of by the plaintiffs provide that a tenant may counterclaim for any amount due him under the rental agreement in an action by a landlord for rent or for possession, and that a court in such a case may order the tenant to pay all rents owed, or thereafter accruing, into court, pending the outcome of the case. (Mount Prospect, Ill., Ordinance 3366, §23.1808(E)(1) (September 6, 1983).) In their amended complaint, plaintiffs alleged that the Ordinance was void because of this provision, which they claimed allowed tenants to file counterclaims in forcible detainer actions, and this, they assert, is contrary to settled law. The trial court held that the Ordinance provision “purported] to define the courts [sic] role in forcible detainer cases” and was, accordingly, unconstitutional.

At the outset, we note that plaintiffs mistakenly assert that allowing a tenant to counterclaim in a forcible detainer action is contrary to settled law. Matters germane to a forcible detainer action may be introduced by the defendant through a counterclaim or by raising equitable defenses. (Jack Spring, 50 Ill. 2d at 359, 280 N.E.2d at 213; Rosewood Corp. v. Fisher (1970), 46 Ill. 2d 249, 255, 263 N.E.2d 833, 837; Rodriguez v. Owaynat (1985), 137 Ill. App. 3d 1017, 1021, 485 N.E.2d 438, 441-42.) Our supreme court has defined “germane” as closely related, relevant, or pertinent. (Rosewood Corp., 46 Ill. 2d at 256, 263 N.E.2d at 838.) Examples of matters held to be germane to a forcible entry and detainer action include: whether the landlord had breached an express covenant to repair (Peoria Housing Authority v. Sanders (1973), 54 Ill. 2d 478, 483, 298 N.E.2d 173, 175; Jack Spring, 50 Ill. 2d at 359, 280 N.E.2d at 218); whether the landlord brought his forcible entry and detainer action in retaliation for complaints brought by the tenant to the housing authority (Clore v. Fredman (1974), 59 Ill. 2d 20, 27, 319 N.E.2d 18, 22); and defenses which challenge the landlord’s right to rent or possession (Daehler v. Oggoian (1979), 72 Ill. App. 3d 360, 364, 390 N.E.2d 417, 421).

In this case, the provision at issue here provided that “the tenant may counterclaim for any amount which he may recover under the rental agreement or this Article.” (Mount Prospect, Ill., Ordinance 3366, §23.1808(E) (September 6, 1983).) Presumably, any matter arising under the rental agreement or the Village’s Ordinance would be germane to the issue of whether the landlord is entitled to possession or rent. Further, if a court found that the matter raised by the tenant in his counterclaim was not germane to the forcible entry and detainer action, nothing in the Ordinance prevents a court from striking the counterclaim.

Furthermore, the mere fact that an ordinance defines notice procedures, the duties of the parties, and the remedies available to the parties does not interfere with the court system. Our courts are often requested to enforce or interpret municipal ordinances. (Create, 85 Ill. 2d at 116, 421 N.E.2d at 203.) In fact, the Evanston ordinance that was upheld in Create contained provisions authorizing remedies which were virtually identical to the provisions at issue in this case. (See Cre ate, 85 Ill. 2d at 106-07, 421 N.E.2d at 198; City of Evanston, Ill., Residential Landlord and Tenant Ordinance §5 — 3—7—4 (June 1983).) Significantly, in both Create and in this case, the provisions challenged as impermissibly dictating court procedures used the word “may” in defining available remedies. (See Create, 85 Ill. 2d at 106-07, 421 N.E.2d at 198; Mount Prospect, Ill., Ordinance 3366, §23.1808(E)(1) (September 6, 1983).) At most, we believe the provision challenged here only sets forth additional remedies that a court may employ. We cannot see how such a provision impermissibly dictates court procedures. Thus, we find that Create controls and find that the provision allowing a tenant to file a counterclaim is constitutional.

The sixth and final argument of the defendants on appeal is that the trial court erroneously determined that the Village could not act as trustee in escrow for any rents withheld by tenants. The provision of the Ordinance at issue states that a tenant will “pay any withheld rents to the Village pending resolution of a dispute by mediation, lawsuit or otherwise.” (Mount Prospect, III., Ordinance 3366, §23.1808(D)(1)(c) (September 6, 1983).) The plaintiffs argue that the trial court’s ruling was correct because “a municipal corporation has no power to accept or hold property in trust for purely private purposes,” quoting 10 E. McQuillin, Municipal Corporations §28.25, at 58 (3d ed. 1981). A home rule municipality in Illinois, however, may now constitutionally, as noted earlier, exercise any power or perform any function relating to its government and affairs. Ill. Const. 1970, art. VII, §6(a).

We hold that the disputed provision here is within the Village’s constitutional powers to regulate matters relating to its government and affairs. By requiring a tenant to pay all accrued and accruing rent to the Village as trustee, the Ordinance merely insures that the party who ultimately prevails in the dispute, whether landlord or tenant, will receive all the money that is owed. Such a provision is clearly intended for public, as opposed to private, purposes and is related to the government and affairs of the Village of Mount Prospect.

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

Judgment reversed.

MANNING, P.J., and CAMPBELL, J., concur.

      The Ordinance excluded rental agreements for residence at public or private medical, geriatric, educational, religious, nursing or retirement institutions; residence in a residential care home, transient occupancy in a hotel or motel licensed by the Village; rental of single-family dwellings; and rental where the tenant is also the purchaser under a contract for sale of the dwelling unit. Mount Prospect, Ill., Ordinance 3366, §23.1802(B) (September 6,1983).

      Hóme rule units under article VII, section 6, of the Illinois Constitution are municipalities having a population of more than 25,000 or those municipalities which elect by referendum to become home rule units. Ill. Const. 1970, art. VII, §6(a).


source: Caselaw Access Project

author: JUSTICE LINN

license: Public Domain

text:
    THE PEOPLE ex rel. THE VILLAGE OF WINNETKA, Plaintiff-Appellant, v. ELIZABETH DORNER, Defendant-Appellee.
    First District (4th Division)
    No. 1—88—1041
    Opinion filed March 16, 1989.
    Abell & Redding, of Winnetka (Jane Schulteis Muno, of counsel), for the People.
    James P. Hilliard, of Chicago, for appellee.
   JUSTICE LINN

delivered the opinion of the court;

Following a bench trial, defendant, Elizabeth Domer, was found guilty of exceeding the speed limit while driving her automobile in a school zone. (Ill. Rev. Stat. 1987, ch. 951/2, par. 11 — 605.) The trial court sentenced defendant to a period of supervision and imposed a fine of $35. On appeal, plaintiff contends that the trial court erred in sentencing defendant to a period of supervision.

On December 14, 1987, defendant was arrested by an officer of the Winnetka police department and was charged under section 11— 605 of the Illinois Vehicle Code with speeding in a school zone. (Ill. Rev. Stat. 1987, ch. 951/2, par. 11 — 605.) Defendant received a traffic citation which alleged that she had been travelling 42 miles per hour in a 20-miles-per-hour school-speed zone.

The case was tried on March 25, 1988, during the Winnetka routine traffic court call, the proceedings of which are not recorded. Defendant pleaded not guilty and executed a waiver of her right to a jury trial. After a bench trial, the trial judge found defendant guilty, sentenced her to a period of supervision, and imposed a fine of $35.

Section 5—6—1(c) of the Unified Code of Corrections defines the circumstances under which a sentence of supervision may be imposed. (Ill. Rev. Stat. 1987, ch. 38, par. 1005 — 6—1(c).) Section 5 — 6—1(e) provides, however, that “[t]he provisions of paragraph (c) shall not apply to a defendant charged with violating paragraph (b) of Section 6— 104, or Section 11 — 605 of The Illinois Vehicle Code or a similar provision of a local ordinance.” (Ill. Rev. Stat. 1987, ch. 38, par. 1005 — 6—1(e).) Thus, section 5 — 6—1(e) clearly indicates that supervision is not a possible sentence for a violation of section 11 — 605 of the Illinois Vehicle Code, the offense for which defendant was convicted.

In construing statutes, the role of the court is to ascertain and give effect to the intent of the legislature (Methodist Medical Center v. Taylor (1986), 140 Ill. App. 3d 713, 489 N.E.2d 351; Indian Valley Golf Club, Inc. v. Village of Long Grove (1985), 135 Ill. App. 3d 543, 481 N.E.2d 277), and the plain meaning of the language used by the legislature is the safest guide in construing any act. Indian Valley Golf Club, Inc. v. Village of Long Grove, 135 Ill. App. 3d 543, 481 N.E.2d 277; Illinois Publishing & Printing Co. v. Industrial Comm’n (1921), 299 Ill. 189, 132 N.E. 511.

In the instant case, the relevant statutory language expressly provided that supervision was not a sentencing alternative for a conviction of speeding in a school zone in violation of section 11 — 605. The trial judge found defendant guilty of that offense but sentenced her to a period of supervision, contravening the plain meaning of the language of section 5 — 6—1(e). Consequently, we find that the defendant’s sentence must be vacated and the cause remanded to the trial court for imposition of a sentence in accordance with applicable statutes.

We note that defendant argues that the judgment entered by the trial court is not subject to review on appeal because plaintiff did not raise this issue before the trial court and because plaintiff failed to file a report of the proceedings conducted before the trial court. We find these arguments to be without merit. A void judgment is one entered by a court that lacks the inherent power to make or enter the particular order involved and may be attacked at any time, either directly or collaterally. (People v. Wade (1987), 116 Ill. 2d 1, 506 N.E.2d 954.) Because the trial court here lacked the inherent power to sentence defendant to supervision, that judgment is void and is subject to review even if not raised before the trial court.

Additionally, the failure to present a report of proceedings does not require dismissal or affirmance where the issues can be resolved on the record as it stands. (Venturini v. Affatato (1980), 84 Ill. App. 3d 547, 405 N.E.2d 1093.) Although the parties may disagree in their perceptions of the facts upon which defendant’s conviction was based, the question presented is whether the trial court properly imposed a sentence of supervision for the offense. Thus, the issue before us is a question of law that does not require review of the testimony or arguments presented at trial. Venturini v. Affatato, 84 Ill. App. 3d 547, 405 N.E.2d 1093.

Finally, we must reject defendant’s argument that the sentence of supervision should be affirmed because the evidence was insufficient to support a charge of speeding in a school zone where defendant testified that there were no children present on the street or outside the school at the time she was ticketed. The trial court found defendant guilty of the offense charged, and the sufficiency of the evidence presented at trial is not before us.

That portion of the judgment of the circuit court sentencing defendant to supervision is vacated, and the cause is remanded to the trial court for imposition of a sentence in accordance with applicable statutes.

Vacated in part and cause remanded.

JOHNSON and McMORROW, JJ., concur.


author: JUSTICE LORENZ

text:
    H&M DRIVER LEASING SERVICES, UNLIMITED, INC., Plaintiff-Appellee, v. CHAMPION INTERNATIONAL CORPORATION, Defendant-Appellant.
    First District (5th Division)
    No. 1—87—3106
    Opinion filed March 17, 1989.

      Greenberger, Krauss & Jacobs, Chartered, of Chicago (John S. Mrowiec, of counsel), for appellant.
    Hinshaw, Culbertson, Moelmann, Hoban & Fuller, of Chicago (Stephen R. Swofford, Robert S. Minetz, and Scott M. Levin, of counsel), for appel-lee.
   JUSTICE LORENZ

delivered the opinion of the court:

This appeal arises out of a breach of contract action in which plaintiff, H&M Driver Leasing Services, Unlimited, Incorporated (H&M), alleged defendant, Champion International Corporation (Champion), wrongfully hired a truck driver furnished by plaintiff to defendant under a driver leasing agreement. Following a bench trial, the circuit court ruled in favor of H&M, awarded $10,000 in liquidated damages, enjoined Champion from future breaches, and ordered payment of $6,300 in attorney fees and costs.

We affirm in part, vacate in part, and remand with directions.

The following facts are undisputed. On August 26, 1985, H&M and Champion entered into a duly executed contract whereby H&M agreed to lease truck drivers, as needed, to Champion. Pertinent here, paragraph 12 of the contract provided:

“[Champion] agrees that it will not hire any of the drivers that [H&M] furnished to [Champion] for a period of one (1) year from the termination date of this Agreement. In the event that [Champion] does hire any of the drivers in violation of the terms of this Agreement, then [Champion] shall pay to [H&M] all costs and expenses, including attorney’s fees incurred by [H&M] in enforcing the provisions of this Agreement including injunctive relief. [Champion] also agrees to pay $10,000.00 liquidated damages to [H&M], plus any and all actual damages resulting to [H&M].” (Emphasis added.)

In July of 1985, H&M hired Clifton Sweezy and, the following month, supplied him as a driver to Champion.

On March 14, 1986, H&M filed a complaint against Champion alleging that, in January of 1986, Champion had hired Sweezy as one of its own employees in violation of paragraph 12 of the contract. Plaintiff sought injunctive relief to prohibit Champion from hiring other drivers in future breach of the contract. Additionally, plaintiff sought, pursuant to paragraph 12, actual damages, $10,000 in liquidated damages, and attorney fees and costs.

In its answer, Champion admitted hiring Sweezy. However, Champion raised three affirmative defenses: (1) because Sweezy left Champion’s employ in February 1986, the claim for injunctive relief was moot and any damage claim could not extend beyond that time; (2) the claim for $10,000 in liquidated damages was unenforceable as constituting a penalty provision; and (3) H&M waived any right under the contract with respect to the hiring of Sweezy.

After a two-day trial, the circuit court concluded Champion violated paragraph 12 of the contract by hiring Sweezy and granted judgment for plaintiff. The trial judge concluded that, because actual damages were “incalculable,” plaintiff was entitled to $10,000 in liquidated damages under paragraph 12. Subsequently, the judge entertained plaintiff’s motion for attorney fees, awarding $6,300 to plaintiff. This appeal followed.

Opinion

On appeal, defendant first contends the trial court erred in awarding $10,000 in liquidated damages pursuant to paragraph 12 of the agreement because the clause constituted an unenforceable penalty. We agree.

Generally, although a nonbreaching party may recover only damages to the extent of injury, parties may specify a particular sum in liquidation where actual damages would be difficult to ascertain. (Stride v. 120 West Madison Building Corp. (1985), 132 Ill. App. 3d 601, 477 N.E.2d 1318.) However, if the purpose of the clause fixing damages is merely to secure a party’s performance, it will be treated as a penalty and only actual damages proved can be recovered. (Scofield v. Tompkins (1880), 95 Ill. 190.) Where a contract provides that the breaching party must pay all damages caused by the breach as well as a specified sum in addition thereto, the sum so specified can be nothing but security for performance and, therefore, constitutes an unenforceable penalty. See 5 A. Corbin, Contracts §1059 (1964).

Here, paragraph 12 of the contract expressly provided that the $10,000 “liquidated damages” was recoverable in addition to “any and all actual damages” resulting from breach. As such, that clause imposed a clear penalty which cannot be enforced. We therefore vacate the judgment below as it relates to recovery of the liquidated damages amount.

Having determined plaintiff is not entitled to the liquidated amount, we must consider the measure of actual damages.

At trial, Henry Szymanowski, owner and president of H&M, testified concerning damages resulting from Champion’s breach of the contract. Szymanowski stated that H&M trained Sweezy for 28 days at a total cost to H&M of $2,210. Szymanowski also testified concerning lost revenues and resulting costs occasioned to H&M by Champion’s subsequent hiring of Sweezy.

A document, prepared in anticipation of trial which detailed amounts associated with the above testimony, was admitted into evidence. That exhibit contains computation of the $2,210 worth of costs incurred in Sweezy’s training. However, the document included no specific sum of other damages attributable to Champion’s hiring of Sweezy, reflecting Szymanowski’s testimony that such amounts were not ascertainable.

In his oral ruling at the conclusion of trial, the trial judge stated:

“Secondly, the evidence as to actual damages leaves a lot to be desired. This Court finds that the actual damages, although $2,210.00 was alleged to be ascertained by the Plaintiff, is [sic] really incalculable, and the Court is not going to accept a statement prepared just for the purposes of trial. The damages are, indeed, incalculable; and, therefore, the liquidated damages clause will be enforced and [judgment] will be entered against Champion in the sum of $10,000.00.”

We find the above ruling ambiguous. Although the court acknowledged plaintiff presented proof as to a portion of the damages amounting to $2,210 for the cost of training Sweezy, the court concluded that actual damages were “really incalculable.” We must assume that conclusion was based, at least in part, on further testimony regarding the difficulty in ascertaining damages occasioned by Champion’s breach unrelated to training costs. We can conclude that the court awarded the liquidated amount in substitution for proven damages based, in part, on that testimony. What remains unclear is whether the court’s conclusion that actual damages were incalculable includes either the determination that the $2,210 amount, in actuality, could not have been ascertained or the determination that that amount was not sufficiently proven. It is axiomatic that, in the absence of a valid liquidated damages clause, incalculable amounts cannot be recovered. Nor may ascertainable damages be recovered where proof is lacking. Therefore, we remand the matter with directions for the court to make a determination, based on the record, as to the amount of actual damages proved, if any, and to enter an order awarding plaintiff that amount. However, if the court determines the evidence insufficient to substantiate any recovery, the court should award plaintiff zero damages.

Champion next contends that the trial court erred in enjoining the hiring of drivers employed by H&M in the future. Defendant argues the evidence did not establish irreparable harm or inadequacy of legal remedy necessary to support injunctive relief. Additionally, Champion contends no basis for an injunction existed, citing evidence establishing the sale, to another venture, of that portion of Champion’s enterprise using leased drivers and the fact that Champion stopped using H&M’s drivers in December of 1985.

We summarize below testimony pertinent to our disposition of the issue.

Szymanowski testified that H&M began leasing drivers to Champion immediately after the contract was signed. He stated that, although H&M last provided drivers to Champion in December 1985, he had not agreed to terminate the contract either orally or in writing.

Szymanowski stated that H&M was prepared to satisfy Champion’s driving requirements, but that after Champion hired Sweezy, the relationship terminated. He testified H&M subsequently hired and trained several drivers to service accounts, explaining Sweezy possessed versatile truck-driving skills and an ability to work on different types of accounts. He further stated that Sweezy was well-liked and was requested back as a driver by many of the accounts for which he drove. Sweezy was directly responsible for attracting business to the company.

On cross-examination, Szymanowski admitted that H&M had no agreement to provide any drivers to Champion other than on an “as needed” basis. He also admitted that the company did not automatically hire a driver to replace a driver who left.

Gerald Tannenbaum, a superintendent at Stone Container Corporation, testified that, in February 1986, that enterprise bought the corrugated division of Champion, which included plants located in Naperville and Joliet, Illinois. In connection with business at the Naperville plant, Champion used temporary drivers in addition to two of its own drivers. Tannenbaum stated that in early February (presumably 1986) he spoke with a woman by the name of Debi at H&M and related Champion’s intention to hire Sweezy. Tannenbaum testified that Champion was still in business.

Debi Behnke, former general manager at H&M, testified as an adverse witness that there was a turnover of drivers at H&M. She stated that she has never spoken to Gerald Tannenbaum.

Szymanowski was also called to testify as an adverse witness. He stated that, to the best of his knowledge, H&M did not provide drivers to Champion other than for Champion’s Naperville facility.

Based on that evidence, the court found the contract had not been terminated and, because Champion continued to do business notwithstanding sale of the Naperville plant, Champion might require drivers under the contract. The court determined injunctive relief was therefore proper to prevent Champion from hiring H&M’s drivers away in future breach.

Somewhat analogous facts were present before the court in American Food Management, Inc. v. Henson (1982), 105 Ill. App. 3d 141, 434 N.E.2d 59, a case we find instructive in determining the propriety of injunctive relief in the instant appeal. American Food involved a contract between plaintiff, a provider of food, services, and defendant, owner of college dormitories, obligating plaintiff to furnish services to those facilities. Relevant here, clauses in the parties’ contracts precluded defendant from hiring plaintiff’s management employees, for purposes of providing food service, for the duration of the agreements and for one year thereafter. When one of plaintiff’s managers was hired by defendant following termination of his employment, plaintiff filed suit seeking, in part, injunctive relief against defendant employer. Following an evidentiary hearing, the trial court ordered a permanent injunction enjoining defendant from hiring plaintiff’s management employees, including the individual manager hired, for the duration of the period as stated in the clause. The appellate court affirmed, noting evidence substantiated the harm occasioned where such provisions were not honored, namely, loss of plaintiff’s trained employees as well as loss of service contracts. American Food, 105 Ill. App. 3d at 147, 434 N.E.2d at 64.

For similar reasons, we conclude the trial court did not abuse its discretion in granting injunctive relief in the matter before us. Here, H&M presented testimony establishing that defendant’s hiring of Sweezy resulted in loss to plaintiff of a trained and valued employee as well as anticipated benefits from a healthy continuing business relationship with defendant. Additionally, testimony substantiated that the contract had not been formally terminated as of the time of trial. Thus, injunctive relief was not improper because, as in American Food, the operative clause prohibited hirings within one year from the contract’s termination. Further, Szymanowski’s statement, that to his knowledge, drivers were furnished only to Champion’s Naperville facility, did not eliminate the basis for injunctive relief. We agree with the trial court that testimony showed Champion continued as a viable concern and could seek out plaintiff’s services under the contract in the future, further observing that plaintiff’s services were not limited to providing drivers only for Champion’s Naperville plant.

We last consider defendant’s contentions that the award of attorney fees was improper. Generally, provisions in contracts for award of attorney fees are an exception to the rule that the unsuccessful litigant in a civil action is not responsible for the payment of the opponent’s fees. (See Abdul-Karim v. First Federal Savings & Loan Association (1984), 101 Ill. 2d 400, 462 N.E.2d 488.) In considering the amount of fees recoverable under such provisions, this court recently stated:

“An appropriate fee consists of reasonable charges for reasonable services [citation]; however, to justify a fee, more must be presented than a mere compilation of hours multiplied by a fixed hourly rate or bills issued to the client [citation], since this type of data, without more, does not provide the court with sufficient information as to their reasonableness — a matter which cannot be determined on the basis of conjecture or on the opinion or conclusions of the attorney seeking the fees [citations]. Rather, the petition for fees must specify the services performed, by whom they were performed, the time expended thereon and the hourly rate charged therefor. [Citation.] Because of the importance of these factors, it is incumbent upon the petitioner to present detailed records maintained during the course of the litigation containing facts and computations upon which the charges are predicated. [Citations.]
Once presented with these facts, the trial court should consider a variety of additional factors such as the skill and standing of the attorneys, the nature of the case, the novelty and/or difficulty of the issues and work involved, the importance of the matter, the degree of responsibility required, the usual and customary charges for comparable services, the benefit to the client [citation], and whether there is a reasonable connection between the fees and the amount involved in the litigation [citations]. Finally, the decision of the trial court will not be reversed absent an abuse of discretion. [Citation.]” Kaiser v. MEPC American Properties, Inc. (1987), 164 Ill. App. 3d 978, 983-84, 518 N.E.2d 424, 427-28.

Defendant raises several arguments to support the contention that the award of $6,300 in fees to plaintiff in the instant case was improper. However, we need address here only defendant’s argument that the trial court improperly denied Champion an evidentiary hearing on the amount of attorney fees as other points raised by defendant are essentially based on the premise that defendant had not breached the contract.

The record reveals that on July 17, 1987, plaintiffs counsel filed a document labelled “PETITION FOR FEES AND SUPPORTING AFFIDAVIT.” That document consisted of plaintiffs counsel’s sworn statement that an attached computer-generated billing memorandum represented the time expended in plaintiff’s cause and the hourly rates customarily charged and paid for similar services rendered. The billing memorandum indicated total fees of $6,973.24. On August 10, 1987, Champion filed a response to the petition for fees which challenged the reasonableness of the number of hours and the hourly rates applied in computing the amount of fees. Champion’s response also argued that because H&M did not receive an invoice for fees, an inference arose that plaintiff did not incur any legal expense. Subsequently, Champion filed a notice pursuant to Supreme Court Rule 237(b) (107 Ill. 2d R. 237(b)) requesting H&M to produce, at the scheduled hearing on the matter of fees, various documents related to fees paid by H&M or which were billed to H&M but remained unpaid. Plaintiff filed a reply to Champion’s response. Hearing on the petition for fees was conducted on September 15, 1987.

At the beginning of the hearing, the court noted plaintiff had reduced the total amount of fees to $6,463.24, but that Champion contested that amount. After unsuccessfully attempting to settle the matter, the court heard argument on the petition. During the hearing, Champion’s counsel pointed out that the contract for award of attorney fees was in the nature of an indemnity agreement to reimburse for monies actually expended by H&M and that plaintiff’s counsel’s petition and attached billing memorandum did not conclusively establish that any amount had, in fact, been billed to H&M. As to the issue of computation of the fee amount, defendant’s counsel initially challenged the reasonableness of the hourly rate, given the total amount at stake in the matter but, later in the hearing, conceded that the hourly rate was reasonable in the community and stated that counsel contested only the number of hours contained in the billing memorandum. Following argument, the court stated that plaintiff was entitled to the $6,463.24 amount based on plaintiff’s counsel’s petition and billing memorandum, noting that defendant’s counsel filed no counter affidavit. When defendant’s counsel indicated he desired a hearing for purposes of eliciting whether, in fact, H&M had been billed for services, the court stated its intention to rule on the basis of the pleadings. The judge then ruled plaintiff was entitled to $6,300 in total fees.

We must conclude that that award constituted an abuse of discretion. We initially note that the billing memorandum attached to plaintiff’s petition for fees consists of general descriptions of services rendered by plaintiff’s counsel, including dates when the work was performed, who performed the work, how much time was expended for each activity, and the rate charged. However, the memorandum does not indicate that any amount was, in fact, due and owing by plaintiff for those services. The memorandum indicates that the total of $6,973.24 reflects the amount of “Unbilled Services” rendered. The memorandum shows $0 amounts for “Invoices confirmed but not paid” and “Invoices printed but not confirmed,” as well as for “Fee billing.” Further, plaintiff’s counsel’s affidavit artfully evades stating that plaintiff had been charged any amount for services rendered. The affidavit states only that the billing memorandum was in a form customarily used by plaintiff’s counsel, that it accurately reflected the time expended by counsel on the case, that the hourly rates represented those customarily charged and paid by the firm’s clients for the type of services rendered, and that those rates were customarily charged by attorneys in the Chicago area for similar services.

Thus, the court could not have properly concluded on the basis of the petition and attached billing memorandum, even though plaintiff’s counsel’s affidavit stood uncontradieted, that plaintiff had actually incurred any costs of representation such as would justify fees under the language of paragraph 12 of the contract.

Moreover, review of the transcript of the hearing on fees indicates the trial judge arrived at the amount of $6,300 without considering any factors outside of the documents before him such as this court, in Kaiser, has considered to be important to the determination of whether the amount of the award is reasonable. Indeed, the transcript reveals no reason why the amount of $6,300 should have been awarded over the amount of $6,946.24, as indicated in the petition, or $6,463.24, as reduced by plaintiff’s counsel.

We therefore vacate the award of attorney fees in the amount of $6,300 and remand the matter for farther proceedings to determine the amount of fees recoverable in accordance with the considerations stated in Kaiser.

Affirmed in part; vacated in part and remanded with directions.

MURRAY, P.J., and PINCHAM, J., concur.


author: PRESIDING JUSTICE MANNING

text:
    NICOLE MOTORS, INC., Plaintiff-Appellee, v. JIM EDGAR, Secretary of State, Defendant-Appellant.
    First District (1st Division)
    No. 1—86—3052
    Opinion filed March 20, 1989.

      Neil F. Hartigan, Attorney General, of Springfield (Roma Jones Stewart and Cynthia M. Bretthauer, Assistant Attorneys General, of counsel), for appellant.
    Law Offices of V.L. Milos, Ltd., of Chicago (Vivian L. Milos, of counsel), for appellee.
   PRESIDING JUSTICE MANNING

delivered the opinion of the court:

Plaintiff, Nicole Motors, Inc., filed for administrative review of the Secretary of State’s decision to revoke its dealer plates. The trial court reversed the administrative decision as being against the manifest weight of the evidence. We reverse the decision of the trial court.

In 1983 the Secretary of State filed a complaint and a rule to show cause at the administrative level against the plaintiff, a used car dealer, as to why its 1983 Illinois “Dealer Certificates of Authority” and dealer plates and any subsequent renewal should not be revoked. The Secretary of State claimed that the plaintiff: (1) failed to maintain an established place of business in violation of section 5 — 100 of the Illinois Vehicle Code (Code) (Ill. Rev. Stat. 1985, ch. 951/2, par. 5— 100), and section 1020.10 of 92 Ill. Adm. Code of rules and regulations (92 Ill. Adm. Code 1020.10 (1985)); (2) failed to maintain required records in violation of section 5 — 401 of the Code (Ill. Rev. Stat. 1985, ch. 951/2, par. 5 — 401); and (3) filed fraudulent tax returns with the Illinois Department of Revenue in violation of section 5 — 402 of the Code (Ill. Rev. Stat. 1985, ch. 951/2, par. 5 — 402).

At the administrative hearing, the hearing officer found that the plaintiff had not shown cause why its licenses and plates should not be revoked, made certain findings of fact and recommended that all Illinois dealer certificates of authority and dealer plates be revoked. The Secretary of State adopted the findings of fact and recommendations and revoked plaintiff’s licenses and plates. Plaintiff’s subsequent application for its 1984 dealer licenses and plates was denied by the Secretary of State.

Plaintiff filed for administrative review in the circuit court. After a hearing, the trial court reversed the administrative decision, ruling the Secretary of State’s findings and conclusions were against the manifest weight of the evidence.

The Secretary of State appeals that decision, arguing that the circuit court applied the wrong standard of review and abused its discretion in reversing the administrative decision. It claims that the trial court was limited to the sole issue, determining whether the Secretary of State’s findings and conclusions were against the manifest weight of the evidence and had no authority to reweigh the evidence.

Section 3 — 110 of the Administrative Review Law provides, inter alia, that the findings and conclusions of the administrative agency on questions of fact shall be held to be prima facie true and correct. (Ill. Rev. Stat. 1985, ch. 110, par. 3 — 110.) The court is not permitted to reweigh the evidence on administrative review; its function is solely to ascertain whether the agency’s decisions are against the manifest weight of the evidence. (Sheldon v. Edgar (1985), 131 Ill. App. 3d 489, 491, 475 N.E.2d 956.) The fact that the record reveals conflicting testimony alone is not sufficient to warrant a reversal of the decision of the agency. (Schoenbeck v. Board of Fire & Police Commissioners (1979), 69 Ill. App. 3d 366, 372, 387 N.E.2d 738.) The administrative agency, not the court, is charged with weighing the conflicting evidence and determining the credibility of the witnesses. (Nendza v. Board of Review of the Department of Labor (1982), 105 Ill. App. 3d 437, 442, 434 N.E.2d 470.) To find that a decision is against the manifest weight of the evidence, the reviewing court must conclude that all reasonable and unbiased persons acting within the limits prescribed by law and drawing all inferences in support of the finding would agree that the finding is erroneous. (Schoenbeck v. Board of Fire & Police Commissioners (1979), 69 Ill. App. 3d 366, 372-73, 387 N.E.2d 738.) If there is substantial competent evidence to support an agency’s action, the court will not disturb the agency’s decision. (Hale v. First National Bank (1978), 57 Ill. App. 3d 310, 314, 372 N.E.2d 959.) It is well established that a reviewing court must examine the entire record to determine whether the decision is against the manifest weight of the evidence. Baldridge v. Department of Reg istration & Education (1977), 52 Ill. App. 3d 568, 574, 367 N.E.2d 95.

Pursuant to section 5 — 501 of the Code any license issued pursuant to the Code may be denied, revoked or suspended if the Secretary of State finds that the licensee, any officer, director, shareholder having 10% or greater ownership interest in the corporation, owner partner, trustee, manager, employee or member of the licensee has violated any provision of the Code or committed certain other transgressions. (Ill. Rev. Stat. 1985, ch. 951/2, par. 5 — 501.) In the present case, the Secretary of State determined that the respondent had committed the following violations:

(1) Failed to maintain an established place of business as required because:
(a) the premises were not used exclusively for the business;
(b) there were no business signs; and
(c) there were no hours posted.
(2) Failed to maintain required records of the acquisition and disposal of vehicles and parts in that it:
(a) bought and sold salvaged autos without designating the components and necessary parts purchased; and
(3) Failed to maintain required records upon the issuance of Illinois temporary registration permits.

In this opinion, we will restrict our review to those issues which were raised at the administrative hearing and as to which findings of fact were made.

Section 5 — 100 of the Code requires that a dealer maintain “adequate facilities to enable the dealer to carry out warranties made to the buyers of vehicles sold and to place the vehicles in safe operating condition, but such facilities need not be on the premises, if the dealer operating the place of business provides, by written contract, for the use of and uses an established vehicle repair shop for having the warranties carried out and the vehicles placed in safe operating condition.” (Ill. Rev. Stat. 1985, ch. 95V2, par. 5 — 100.) The place of business must: (1) have the name of the dealership posted on the front entrance door; (2) have a sign setting forth the regular hours posted on the front entrance door; (3) maintain a lot for the sale of vehicles which is separate and apart from any other business (this latter requirement is not applicable where the place for business has an indoor showroom properly illuminated, for the display of vehicles held for sale); and (4) display a permanent sign bearing the name of the dealership which shall be properly illuminated if open after sundown and which shall be visible from the highway leading to the established place of business. 92 Ill. Adm. Code 1020.10 (1985).

Officer Joseph Migliorese, the investigator for the Secretary of State, testified on direct examination that when he inspected the respondent’s premises, there were no signs on the outside of the premises displaying the name of the dealership or the hours of business. He testified on cross-examination, after being shown a photograph of a window of the dealership which was not admitted into evidence, that he remembered seeing the name, address and phone number on a window of the dealership. He did not see the hours of business posted or a permanent sign. The hearing officer made a finding of fact that there were no business signs or hours posted.

Regarding the repair facilities, Officer Migliorese testified that there were facilities 'within the building which could be used for the repair of vehicles; however, plaintiff maintained no dealer parts or inventory and the premises were empty but for one frame with a motor. The hearing officer made a finding that the plaintiff did not maintain an inventory but made no finding as to whether there was a repair facility.

Further, the hearing officer made a finding that the plaintiff violated the administrative rules because the premises were not used exclusively for the business. Section 1020.10(aX6) requires that, where there is no indoor showroom, an outdoor lot must be maintained separately from any other business. The premises in question had a facility for an indoor showroom, but it was not utilized. Consequently, it was a violation for the dealership to share the premises with a law office.

Section 5 — 401 of the Code specifies what type of records must be kept by used car dealers. This section requires them to maintain records of: (a) every new or used vehicle, used parts or accessories, body or engine of or for such vehicle; (b) every new or used vehicle, body, chassis or engine of or for such motor vehicle; and (c) every vehicle wrecked, dismantled or built by him. Dealers are also required to file affidavits supporting salvage certificates indicating any component parts that were added or changed on a salvage vehicle. Ill. Rev. Stat. 1985, ch. 95V2, par. 5 — 401.

In 1982-83 the plaintiff acquired and sold 75 salvage vehicles. Its ledger listed two component parts as being bought or sold, and all of the affidavits submitted by the plaintiff stated that no component parts were charged or added. The Secretary of State relies on the records of insurance companies from which these cars were obtained which show that the cars were missing either front ends, interiors, doors or other parts as evidence that the affidavits were inaccurate. He contends that the front ends, interiors and doors were component parts and should have been recorded as such.

Section 4 — 100 of the Code defined “parts” as any vehicle shell, essential part, component part or chassis. Section 1 — 118 of the Code defined “essential parts” as “all integral and body parts of a vehicle of a type required to be registered hereunder, the removal, alteration or substitution of which would tend to conceal the identity of the vehicle or substantially alter its appearance, model, type or mode of operation” (Ill. Rev. Stat. 1983, ch. 95V2, par. 1 — 118), while section 1 — 228 defined “component parts” as “any part of a vehicle, other than a tire, having a manufacturer’s identification number or an identification number issued by the Secretary of State.” Ill. Rev. Stat. 1981, ch. 951/2, par. 1 — 228 (repealed by Public Act 83 — 831, eff. Jan. 1, 1984).

Plaintiff argues that under these sections “essential” and “component” parts are only those which have vehicle identification numbers on them, those being the body, the frame, the engine. The Secretary of State relies on a 1985 amendment to the Code, which defines “essential parts” as including vehicle hulks, shells, chassis, frames, front end assemblies, front clip, rear clip, doors, hatch backs, fenders, quarter panels, deck lids, T-tops, sunroofs, moon roofs, astro roofs, transmission, engines and similar parts, to show that the interpretation offered by the plaintiff was not intended by the legislature.

We need not decide at this time which interpretation is correct, as we find that there was substantial evidence of other violations to support the Secretary of State’s decision. The respondent does not contest that a violation of any section of the Code is grounds for denial, revocation or suspension of a dealer’s license. Since there is competent evidence in the record to support the finding of fact that the dealership did not have its hours of business posted, did not have business signs, did not maintain an inventory and failed to use the premises exclusively for the business, we find that the decision of the Secretary of State was not against the manifest-weight of the evidence and reverse the decision of the trial court.

Judgment reversed.

BUCKLEY and O’CONNOR, JJ., concur.


text:
    ESTATE OF RAMON A. MUSCATO, Deceased-Appellant, v. NORTHWEST NATIONAL BANK OF CHICAGO, Respondent-Appellee.
    First District (1st Division)
    No. 1—87—0009
    Opinion filed March 20, 1989.

      John E. Cunningham, of Chicago, for appellant.
    Hurley & Kallick, Ltd., of Chicago (David H. Hight, of counsel), for ap-pellee.
   PRESIDING JUSTICE MANNING

delivered the opinion of the court:

The subject of this appeal is an order entered against the estate of Ramon A. Muscato (Estate) upon a motion for summary judgment filed by Northwest National Bank of Chicago (Bank). The Estate contends that the trial court erroneously determined that there were no genuine issues of material fact which precluded the entry of summary judgment.

According to the record, on December 9, 1983, a petition to probate the will of Ramon A. Muscato was filed in the circuit court of Cook County. Shortly thereafter, the Bank filed a claim against the Estate, alleging that decedent was in default on a business note in the amount of $58,914. The principal loan for $50,000 was made on March 3, 1981, and renewed April 23, 1982. Copies of the original and renewal notes were included in the record. Each copy had been signed thrice by Michael A. Zito and decedent. Their signatures appeared (1) on separate lines adjacent to the word “payee,” (2) under the typed statement warrant that the loan would be used for business purposes, and (3) at the foot of the page above the line where their names had been typed.

The Estate filed an answer to the Bank’s claim which denied the validity of the note, that the Estate was in default or that decedent had signed as a principal. The answer further averred that decedent had signed as a guarantor and raised the affirmative defense that decedent had been discharged from any obligation on the note because the Bank had unjustifiably impaired collateral, securing the note in violation of section 3 — 606 of the Uniform Commercial Code (Ill. Bev. Stat. 1987, ch. 26, par. 3 — 606). Apparently this contention was based on the fact that on April 23, 1982, the Bank renewed a secured loan in the amount of $97,000 that it had originally made in July 1981 to Michael Zito and three of his relatives. That loan had been secured by an assignment in certain land trusts.

Subsequently, the Bank filed a motion for summary judgment which asserted that the Estate’s answer admitted that decedent had signed the note, that decedent had not been identified as a guarantor on the face of the note but as principal obligor on the debt and that there was an outstanding balance due of $63,825. Attached to the motion was a copy of the note.

The Bank also filed a motion to strike the Estate’s affirmative defense, which alleged that because no collateral had been pledged as security, the note was unsecured, and the Bank could not be guilty of impairment of collateral.

The Estate filed a reply to the Bank’s motion to strike which maintained that section 3 — 606 provides against the unjustified impairment of collateral and the right of recourse a party may have against another. The Estate also filed an answer to the motion for summary judgment, which maintained that decedent had signed the note as an accommodation or guarantor and not as a principal obli-gor, that the question of capacity of a signature is one of fact that involves the issue of intent, that there was no proof that decedent had received any of the loan proceeds and that the motion for summary judgment did not include an affidavit setting forth material facts. Thereafter, the Estate’s answer to the claim was amended to state that decedent had signed the note as an accommodation party and not as a principal.

Subsequently, in support of the motion for summary judgment, the Bank filed the affidavit of William H. Sperling, a personal financial statement that had been completed by decedent and the two business notes that had been signed by Michael Zito and decedent. Sperling’s affidavit averred that he was a vice-president for the Bank, that he had participated in the loan transaction, that decedent had been a customer of the Bank prior to the loan, that the loan was made to Zito and decedent at the request of decedent, that decedent never stated that he was a guarantor or an accommodation party and that decedent had identified the loan as his personal obligation on a financial statement he had given to the Bank. Decedent’s personal financial statement listed the note to the Bank as a personal obligation. Both business notes were in the amount of $50,000, were unsecured and signed by Zito and decedent. One was dated March 3, 1981, and the other was dated April 23, 1982.

Upon considering the pleadings and hearing argument of counsel, the trial court entered an order granting the Bank’s motion for summary judgment.

We must now review the Estate’s contention that the trial court’s order granting summary judgment was erroneous because there were genuine issues of material fact as to whether decedent had signed the note as a maker, and whether decedent had been discharged from an obligation on the note when the Bank, without decedent’s consent, extended additional credit to Michael Zito. Summary judgment may be granted where there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. (Ill. Rev. Stat. 1987, ch. 110, par. 2— 1005.) A motion for summary judgment asks whether the nonmoving party has presented any evidence to raise a genuine issue of material fact. (Ralston v. Casanova (1984), 129 Ill. App. 3d 1050, 1056, 473 N.E.2d 444.) While the nonmoving party is not required to prove his case at this preliminary stage, he is required to present some factual basis which would arguably entitle him to judgment in his favor. (National Loss Control Service Corp. v. Dotti (1984), 126 Ill. App. 3d 804, 807-08, 476 N.E.2d 937.) Facts unrelated to the essential elements of the cause of action are immaterial, and no matter how sharply controverted, their presence in the record will not warrant denial of a motion for summary judgment. Equity General Insurance Co. v. Patis (1983), 119 Ill. App. 3d 232, 236, 456 N.E.2d 348.

In relevant part, section 3 — 606 of the Uniform Commercial Code provides:

“(1) The holder discharges any party to the instrument to the extent that without such party’s consent the holder
(b) unjustifiably impairs any collateral for the instrument given by or on behalf of the party or any person against whom he has a right of recourse.” Ill. Rev. Stat. 1987, ch. 26, par. 3-606(l)(b).

During trial court proceedings, the Estate had maintained that decedent had been discharged from any obligation on the note because he had signed as an accommodation party to the maker, Michael A. Zito. It is well settled that an accommodation party is one who signs in any capacity, including that of a maker, for purposes of lending his name to another generally. (Godfrey State Bank v. Mundy (1980), 90 Ill. App. 3d 142, 144, 412 N.E.2d 1131.) Further, the parties’ intention is the significant element in determining whether a party is an accommodation maker. (Holcomb State Bank v. Adamson (1982), 107 Ill. App. 3d 908, 911, 438 N.E.2d 635.) However, “against a holder in due course,” without notice of the accommodation, parol evidence is inadmissible “to give the accommodation party the benefit of discharges dependent on his character as such.” (Ill. Rev. Stat. 1987, ch. 26, par. 3 — 415(3).) Thus, as a matter of law the Estate was precluded from using oral testimony to establish the capacity in which decedent signed the note.

Further, a review of the instant record establishes that decedent’s signature appeared in three different locations on the note, i.e., adjacent to the word “payee,” under the statement warranting that the loan would be used for business purposes and at the foot of the page above the line where his name had been typed. Each of his signatures was in the place provided for the maker of the note, and there was no indication that decedent had signed in any other capacity. Additionally, decedent claimed the note as a personal obligation on a financial statement he submitted to the Bank. Further, it was uncontested that the loan was made at decedent’s request.

It is axiomatic that because the loan was unsecured, no collateral could have been impaired. Thus, the Estate’s argument that decedent was discharged as a result of the Bank’s impairment of collateral in violation of section 3 — 606 is fatally defective. Moreover, although the Estate on appeal suggests that the decedent signed the note as a surety and was discharged from any obligation on the note when the Bank renewed an unrelated secured loan to Michael Zito and his relatives, the Estate neglected to present this contention before the trial court and may not raise it for consideration on review. (Harbor Insurance Co. v. Arthur Andersen & Co. (1986), 149 Ill. App. 3d 235, 240, 500 N.E.2d 707; Mazikoske v. Firestone Tire & Rubber Co. (1986), 149 Ill. App. 3d 166, 180, 500 N.E.2d 622.) We also note that the Estate mistakenly relies on McHenry State Bank v. Y & A Trucking, Inc. (1983), 117 Ill. App. 3d 629, 454 N.E.2d 345, Watkins Products, Inc. v. Whiter (1973), 11 Ill. App. 3d 417, 296 N.E.2d 859, and First Arlington National Bank v. Stathis (1983), 115 Ill. App. 3d 403, 450 N.E.2d 833, to support this argument. The facts in those cases are distinguishable from those in the cause before this court. Watkins involved a separate contract for a private surety. McHenry and First Arlington involved separate contracts for guarantee. Under the circumstances, the trial court properly concluded that there are no genuine issues of material fact to preclude summary judgment.

For the reasons stated, the order for summary judgment is affirmed.

Judgment affirmed.

BUCKLEY and O’CONNOR, JJ., concur.