text:
    BARTER EXCHANGE, INC., OF CHICAGO, et al., Plaintiffs-Appellants, v. BARTER EXCHANGE, INC., Defendant-Appellee.
    First District (3rd Division)
    No. 1—91—0499
    Opinion filed October 28, 1992.

      Frank M. Pawlak and Clinton J. Wesolik, both of Burke, Wilson & Mcllvaine, of Chicago, for appellants.
    Lee N. Abrams, John M. Touhy, Anne K. Lewis, and Beth Eiseman Grey, all of Mayer, Brown & Platt, of Chicago, for appellee.
   JUSTICE RIZZI

delivered the opinion of the court:

Plaintiffs, Barter Exchange, Inc., of Chicago (Chicago Barter Exchange), and T.A.H. Companies, Inc., d/b/a Louisville Barter Exchange (TAH), filed a complaint against defendant, Barter Exchange, Inc., of Texas (Texas Barter Exchange). Plaintiffs, by their complaint, sought to rescind their respective franchise agreements with defendant on the grounds that defendant failed to comply with provisions governing the registration and sale of franchises in the Franchise Disclosure Act of 1987 (Franchise Disclosure Act) (Ill. Rev. Stat. 1987, ch. 121½, pars. 1710, 1726), and the Sale of Business Opportunities Act (Ky. Rev. Stat. Ann. §367.805 (Baldwin 1987)). Defendant moved to compel arbitration pursuant to section 2(a) of the Uniform Arbitration Act (Ill. Rev. Stat. 1987, ch. 10, par. 102(a)). The trial court granted defendant’s motion and stayed the proceedings pending arbitration. Plaintiffs now appeal that order pursuant to Illinois Supreme Court Rule 307(a) (134 Ill. 2d R. 307(a)), and a notice of interlocutory appeal.

The issue before this court for review is whether the trial court properly granted defendant’s motion to compel arbitration. We reverse and remand.

On or about September 30, 1988, Chicago Barter Exchange and Texas Barter Exchange entered into a written franchise agreement (Chicago contract) whereby Texas Barter Exchange granted Chicago Barter Exchange the right to operate a franchise in the Chicago area selling certain services developed by Texas Barter Exchange. Texas Barter Exchange was registered with the State of Illinois, but it allowed its registration to lapse as of September 29, 1988. Texas Barter Exchange was not registered with the State of Illinois on or after September 30, 1988.

In count I of plaintiffs’ complaint, Chicago Barter Exchange sought to rescind the Chicago contract by bringing an action for a declaratory judgment seeking rescission and damages in an amount in excess of $50,000. Chicago Barter Exchange sought rescission of the Chicago contract on the basis that the contract was void and unenforceable due to Texas Barter Exchange’s failure to register the franchise with the Attorney General of Illinois as required by section 10 of the Franchise Disclosure Act. Ill. Rev. Stat. 1987, ch. 121½, par. 1710.

On or about September 18, 1989, Louisville Barter Exchange and Texas Barter Exchange entered into a franchise agreement (TAH contract), which was substantially similar to the Chicago contract. Texas Barter Exchange never registered with the Attorney General of the State of Kentucky. TAH, d/b/a Louisville Barter Exchange, brought an action to rescind the TAH contract pursuant to section 307.805 of the Sale of Business Opportunities Act (Ky. Rev. Stat. Ann. §367.805 (Baldwin 1987)), in count II of plaintiffs’ complaint on the basis that Texas Barter Exchange was not registered with the Attorney General of Kentucky to sell or offer to sell a franchise in Kentucky at the time the parties entered into the TAH contract, thus rendering the contract void and unenforceable.

On September 20, 1990, Texas Barter Exchange submitted a request to Chicago Barter Exchange demanding arbitration of the dispute. Chicago Barter Exchange refused the demand for arbitration. Texas Barter Exchange did not answer the complaint but instead filed a motion to compel arbitration and stay the proceedings as to count I, and to dismiss count II pursuant to section 2 — 619 of the Code of Civil Procedure. Ill. Rev. Stat. 1987, ch. 110, par. 2 — 619.

On November 7, 1990, TAH obtained a certificate of authority to transact business in Illinois from the Illinois Secretary of State. TAH was therefore entitled to bring suit in Illinois courts pursuant to section 13.70 of the Business Corporation Act of 1983. Ill. Rev. Stat. 1987, ch. 32, par. 13.70.

Although Texas Barter Exchange acknowledged that it failed to register with the Attorneys General of Illinois and Kentucky, it maintained that the trial court was still required to stay the proceedings and compel arbitration of the claims pursuant to article 12 of the Chicago and TAH contracts. Said article provides:

“Any controversy or claim arising out of or related to this Agreement or any breach hereof shall be submitted to binding arbitration before and in accordance with the rules of the American Arbitration Association ***. Any arbitration proceeding shall be conducted in Austin, Texas.”

On January 14, 1991, the trial court granted Texas Barter Exchange’s motion to compel arbitration as to both plaintiffs and stayed the proceedings pending completion of arbitration. The trial court stated as follows:

“[I]t is the belief of the court that in the instant case, *** the party seeking to avoid the contract apparently sought to avoid the contract only after the dispute had been in [progress] for a long period of time and after a relationship of a year and a half had taken place.
* * *
So I rule that the contract is voidable, not void, that not having exercised their right earlier, it seems to me that they are foreclosed now not to submit the dispute to arbitration as they originally agreed upon.”

On January 25, 1991, Texas Barter Exchange filed a demand for arbitration. On February 11, 1991, Chicago Barter Exchange and TAH moved to stay the January 14 order pending an interlocutory appeal pursuant to Illinois Supreme Court Rule 307(a). (134 Ill. 2d R. 307(a).) The trial court granted the motion, effectively staying the necessity of the parties proceeding to arbitration pending the resolution of this appeal.

Plaintiffs maintain that the trial court’s order compelling arbitration should be reversed and the cause remanded to the trial court. Plaintiffs allege that the trial court improperly granted defendant’s motion to compel arbitration because the trial court erroneously considered factors extraneous to the record, and because the issue of whether the parties entered into enforceable contracts is not arbitrable. Plaintiff Chicago Barter Exchange contends that it is entitled to have the trial court determine whether the Chicago contract is void and unenforceable pursuant to the Franchise Disclosure Act. (Ill. Rev. Stat. 1987, ch. 121½, pars. 1710, 1726.) Similarly, plaintiff TAH contends that it is entitled to have the trial court determine whether the TAH contract is void and unenforceable pursuant to the Sale of Business Opportunities Act. Ky. Rev. Stat. Ann. §367.805 (Baldwin 1987).

Defendant maintains that the trial court’s order compelling arbitration should be affirmed for the following reasons: (1) plaintiffs waived the issue of whether the two franchise agreements should be voided; (2) the question of whether the Chicago and TAH contracts are voidable is not a proper issue for this court to address since it goes to the merits of this case; (3) the trial court's decision may be affirmed by this court on any grounds; (4) a suit to rescind a contract does not automatically invalidate an arbitration clause contained in a contract; (5) public policy strongly favors arbitration and public policy does not oppose arbitration outside of the State of Illinois; (6) arbitration is appropriate in this case; and (7) plaintiffs’ allegation that the trial court considered matters extraneous to the record is improper and irrelevant.

As this is an interlocutory appeal, the sole issue before this court for review is whether there was a showing sufficient to sustain the order of the trial court granting defendant’s motion to compel arbitration. (See First Condominium Development Co. v. Apex Construction & Engineering Corp. (1984), 126 Ill. App. 3d 843, 850, 467 N.E.2d 932, 936.) We find that no such showing was made in the present case.

Initially, defendant alleges that plaintiffs waived their right to appellate review of the issues of whether the Chicago and TAH contracts should be voided. The doctrine of waiver is not applicable in this case. Defendant’s argument that the trial court did not consider the merits of the complaint ignores the factors which the trial court relied upon when it granted defendant’s motion to compel arbitration. Plaintiffs have brought an action to rescind their contracts on the basis that defendant violated section 10 of the Franchise Disclosure Act and section 367.805 of the Sale of Business Opportunities Act. (Ill. Rev. Stat. 1987, ch. 121½, par. 1710; Ky. Rev. Stat. Ann. §367.805 (Baldwin 1987).) The complaint itself calls into question the validity and the voidability of the contracts. The trial court’s decision to compel arbitration is based upon its finding that the contracts are voidable and not void. The trial court stated:

“I rule that the contract is voidable, not void, that not having exercised their right earlier, it seems to me that they are foreclosed now not to submit the dispute to arbitration as they originally agreed upon.”

In addition, the trial court’s conclusion that plaintiffs were “foreclosed” from objecting to arbitration on the basis of their course of performance subsequent to contracting with defendant demonstrates that the trial court considered plaintiffs’ right to rescind their respective contracts. The fact that the trial court considered plaintiffs’ right to rescission entitles them to review of the trial court’s ruling. We must determine whether there was a sufficient showing for the trial court’s order compelling arbitration, and this requires us to address the question of whether the contracts are void or voidable.

First, we will address plaintiffs’ allegation that the trial court erred when it granted defendant’s motion to compel arbitration because the court considered factors extraneous to the record. We find that the trial court erred when it considered factors extraneous to the record. Although neither plaintiffs’ complaint nor defendant’s motion to compel arbitration raised an issue concerning the course of performance under the Chicago contract, and defendant did not argue that the doctrines of laches and waiver apply with respect to this question, the trial court concluded that plaintiffs were “foreclosed” from objecting to arbitration, “not having exercised their right earlier,” because they sought to avoid the contract after a long dispute. The Franchise Disclosure Act does not limit a franchisee’s right to object to arbitration of a dispute with a franchisor. (Ill. Rev. Stat. 1987, ch. 121½, par. 1701 et seq.) Accordingly, we will not foreclose plaintiffs from invoking the statute.

We will now address plaintiffs’ allegation that the question of whether the parties entered into enforceable contracts is arbitrable. We acknowledge that arbitration is a favored method of dispute resolution in Illinois. (Ill. Rev. Stat. 1987, ch. 10, par. 102(a); Kilianek v. Kim (1989), 192 Ill. App. 3d 139, 142, 548 N.E.2d 598, 600; Diersen v. Joe Keim Builders, Inc. (1987), 153 Ill. App. 3d 373, 377, 505 N.E.2d 1325, 1327.) In addition, section 4 of the Franchise Disclosure Act permits arbitration in a forum outside of Illinois where the franchise agreement designates a jurisdiction or forum for arbitration outside of this State. Ill. Rev. Stat. 1987, ch. 121½, par. 1704.

Sections 10 and 26 of the Franchise Disclosure Act (Ill. Rev. Stat. 1987, ch. 121½, pars. 1710, 1726), section 367.805 of the Sale of Business Opportunities Act (Ky. Rev. Stat. Ann. §367.805 (Baldwin 1987)), and Illinois case law, however, mandate that arbitration is not the appropriate means of resolving the dispute in the present case. The issue of whether the parties have entered into an enforceable contract is not arbitrable because the question of whether a contract existed is an issue of law determinable only by a court. Kilianeck, 192 Ill. App. 3d at 142-43, 548 N.E.2d at 600-01; Kaiser-Ducett Corp. v. Housewrights, Inc. (1977), 48 Ill. App. 3d 589, 592, 363 N.E.2d 97, 99.

Where a contract contains a condition precedent, the contract is neither enforceable nor effective until the condition precedent is performed or an agreed-upon contingency occurs. (Kilianeck, 192 Ill. App. 3d at 142-43, 548 N.E.2d at 601.) In the present case, the Franchise Disclosure Act must be deemed a part of the contract between the parties. (See Kilianeck, 192 Ill. App. 3d at 142, 548 N.E.2d at 600; Kaiser-Ducett, 48 Ill. App. 3d at 592, 363 N.E.2d at 99.) As such, sections 10 and 26 of the Franchise Disclosure Act, and section 367.805 of the Sale of Business Opportunities Act, are conditions precedent to the effectiveness and enforceability of the Chicago and TAH contracts. Section 26 of the Franchise Disclosure Act specifically authorizes a franchisee to sue a franchisor for rescission of a franchise agreement where the franchisor violates section 10 of the Franchise Disclosure Act. Section 10 of the Franchise Disclosure Act makes the following provision:

“§10. Registration and Annual Report. No franchisor may sell or offer to sell a franchise in this State if (1) the franchise is domiciled in this State or (2) the offer of the franchise is made or accepted in this State and the franchise business is or will be located in this State, unless the franchisor has registered the franchise with the Administrator by filing such form of application and disclosure statement as the Administrator may by rule or order require.” (Ill. Rev. Stat. 1987, ch. 121½, par. 1710.)

Section 26 provides as follows:

“§26. Private civil actions. Any person who offers or sells a franchise in violation of this Act shall be liable to the franchisee who may sue for damages caused thereby. In the case of a violation of Section 5, 6, 10, 11 or 15 of the Act, the franchisee may also sue for rescission.” (Emphasis added.) (Ill. Rev. Stat. 1987, ch. 121½, par. 1726.)

Similarly, section 367.805 of the Sale of Business Opportunities Act provides:

“§367.805 Registration of persons engaged in sale of business opportunities.
(1) It is unlawful for any person to engage in the sale of business opportunities unless prior to the offering the offeror has registered with the division ***.” Ky. Rev. Stat. Ann. §367.805 (Baldwin 1987).

The Chicago and TAH contracts were not binding upon plaintiffs, as the condition precedent of registration of the franchise was not performed or satisfied by defendant. Defendant concedes that it violated section 10 of the Franchise Disclosure Act by failing to keep its registration with the Illinois Attorney General current, and that it violated section 367.805 of the Sale of Business Opportunities Act by failing to register with the Attorney General of Kentucky. (Ill. Rev. Stat. 1989, ch. 121½, par. 1710; Ky. Rev. Stat. Ann. §367.805 (Baldwin 1987).) Plaintiff Chicago Barter Exchange is entitled to the remedy of rescission on the basis of defendant’s failure to maintain its registration with the Attorney General of Illinois pursuant to sections 10 and 26 of the Franchise Disclosure Act. (Ill. Rev. Stat. 1987, ch. 121½, pars. 1710, 1726.) Plaintiff TAH is entitled to rescission based upon the fact that section 367.805 of the Sale of Business Opportunities Act is a condition precedent to the enforceability of the TAH contract. The effect of the trial court’s decision was to deny plaintiffs the opportunity to obtain a statutory remedy to which they are entitled. The trial court therefore erred when it granted defendant’s motion to compel arbitration, because the issue of whether plaintiffs are entitled to rescission of their respective contracts on the grounds that the agreements are void and unenforceable is not arbitrable.

Furthermore, the present case is factually analogous to My Pie International, Inc. v. Debould, Inc. (7th Cir. 1982), 687 F.2d 919. Although My Pie International, Inc., is a Federal case which did not involve a motion to compel arbitration, we believe that the court’s treatment of the defendant’s violation of the Franchise Disclosure Act in that case is noteworthy and relevant to the present case. In My Pie International, Inc., the franchisor filed an action for breach of the franchise agreement against two of its franchisees. (My Pie International, Inc., 687 F.2d at 921.) Just as plaintiffs in the present case have cited defendant’s failure to comply with the Franchise Disclosure Act as grounds for rescission of the franchise agreements, the franchisees in My Pie International, Inc., argued that their franchise agreements were void on the basis of the franchisor’s failure to tender a franchise disclosure statement as required by the then effective Franchise Disclosure Act (Ill. Rev. Stat. 1981, ch. 121½, pars. 703, 704(2), 705, 721(2)). (My Pie International, Inc., 687 F.2d at 922.) The Seventh Circuit held that the franchisor’s failure to disclose the requisite statement violated the Franchise Disclosure Act, and that the franchisees were therefore entitled to rescind their franchise agreements. (My Pie International, Inc., 687 F.2d at 923.) The court further held that the franchisor had no rights under the contracts because the franchise agreements were “voidable and voided” as a result of defendant’s violation of the Franchise Disclosure Act. (My Pie International, Inc., 687 F.2d at 925.) Upon applying My Pie International, Inc., to the present case, we find that defendant’s failure to register in compliance with the Franchise Disclosure Act rendered the Chicago contract void. Defendant may not compel arbitration under a void contract.

Finally, as a matter of public policy, the trial court should not have ordered an arbitration panel in Texas to resolve a dispute arising out of a Texas corporation’s failure to comply with an Illinois law enacted for the purpose of protecting Illinois residents. (See Ill. Rev. Stat. 1987, ch. 121½, par. 1702.) The Franchise Disclosure Act was enacted in order to remedy the perceived evil of nondisclosure in franchise purchases, and as such, must be liberally construed in order to effectuate the legislature’s intent. (Salkeld v. V.R. Business Brokers (1989), 192 Ill. App. 3d 663, 672-73, 548 N.E.2d 1151, 1156-57.) If we allowed a franchisor to compel arbitration in a case such as this one, we would permit said franchisor to circumvent a statutory scheme enacted by our legislature. We therefore must require that defendant comply with the Franchise Disclosure Act. If we allowed defendant in the present case to prevail, we would create an incentive heretofore for unscrupulous franchisors to decline to register their franchises with the Illinois Attorney General, incorporate out-of-State arbitration clauses in franchise agreements, and then sell franchises to Illinois residents. Then, when a franchisee in plaintiff Chicago Barter Exchange’s position would seek to exercise its statutory right to rescind the franchise agreement, unscrupulous franchisors could invoke the arbitration agreement, compel arbitration, and remove the case to their home States for resolution. This would deny Illinois courts the opportunity to interpret, construe and apply the Franchise Disclosure Act to foreign franchisors. Accordingly, we conclude that the trial court erred when it granted defendant’s motion to compel arbitration as there was not a showing sufficient to sustain the trial court’s order.

For the aforementioned reasons, we reverse the judgment of the trial court and remand this cause for further proceedings consistent therewith.

Reversed and remanded.

TULLY and McCORMICK, JJ., concur.


source: Caselaw Access Project

author: JUSTICE McMORROW

license: Public Domain

text:
    MARSTON GUESE, Plaintiff and Counterdefendant-Appellant, v. FARMERS INTER-INSURANCE EXCHANGE, Defendant and Counterplaintiff-Appellee.
    First District (4th Division)
    No. 1—91—3848
    Opinion filed October 29, 1992.
    Raymond P. Carroll, of Chicago, for appellant.
    Querrey & Harrow, Ltd., of Chicago, for appellee.
   JUSTICE McMORROW

delivered the opinion of the court:

Marston Guese (Guese) was injured in an automobile accident resulting from the alleged negligence of Joseph Bluver (Bluver). Following settlement negotiations, Guese executed a general release in favor of Bluver for the remaining limits on Bluver’s automobile insurance policy. Thereafter, Guese filed an action to compel his own insurer, Farmers Inter-Insurance Exchange (Farmers), to arbitrate his right to underinsured insurance proceeds in a policy issued by Farmers. Farmers filed an answer and cross-complaint seeking a declaratory judgment that it had no duty to provide underinsured coverage to Guese. Farmers claimed that it had no obligation to provide such coverage because Guese had not obtained Farmers’ prior consent to the general release Guese had executed in favor of the tort-feasor, Bluver. The trial court entered summary judgment in favor of Farmers, and Guese appeals.

Upon review, we determine that the record does not establish, as a matter of law, that Farmers’ subrogation rights were prejudiced by Guese’s execution of the general release in favor of Bluver. As a result, we reverse and remand.

The pertinent facts of record in this appeal are as follows. On June 17, 1988, Guese was injured while he was a passenger in an automobile owned and operated by Bluver. At the time of the accident, Bluver had an automobile insurance policy with Worldwide Insurance Company (Worldwide) that provided limits of coverage at $50,000 per person and $100,000 per occurrence. Guese filed a claim with Worldwide seeking compensation for the injuries Guese had sustained in the Bluver auto accident.

At the time of the incident, Guese was an additional insured on an automobile insurance policy issued by Farmers to Guese’s spouse. On September 28, 1988, Guese’s attorney sent Farmers a letter advising Farmers of Bluver’s insurance policy -with Worldwide and the terms of that insurance coverage. The letter also advised Farmers of settlements that had already been made by Worldwide under the policy to others injured in the accident. In addition, the correspondence stated that Guese had suffered serious injuries from the incident and would probably require future medical treatment. The letter stated that it was “with these facts in mind that we are formally advising you that we intend to present a claim for Underinsured Motorist coverage upon resolution of matters pending with the insurance carrier for the driver responsible for [Guese’s] injuries.” The correspondence noted that “there are limits of $250,000 per person and $500,000 occurrence provided to [Guese] under the terms of your policy and [we] would appreciate your contacting this office upon receipt of this correspondence.” Farmers did not respond to this letter from Guese’s counsel.

On April 27, 1989, Guese’s attorney sent a letter to Bluver’s insurer, Worldwide, demanding the balance available under the insurer’s policy with Bluver. In this correspondence, Guese’s counsel responded to Worldwide’s representations that it questioned the nature and extent of Guese’s injuries. In this regard, the letter specified the various medical treatments Guese had required to date. Guese’s counsel advised Worldwide that it had already been sent the pertinent documents to substantiate that these treatments had been required. The attorney also stated that Worldwide was “aware that [Guese’s] acceptance of any sum less than the amount available on Mr. Bluver’s policy will preclude [Guese’s] pursuit of an underinsured motorist case against his own carrier.” The correspondence demanded that Worldwide settle the cause for the limits remaining on its insurance policy with Bluver.

Following the receipt of this correspondence, Worldwide agreed to pay Guese the outstanding balance on its insurance policy issued to Bluver. On approximately May 22, 1989, Guese executed a general release discharging Bluver from any liability for Guese’s injuries, in exchange for the sum of $43,500. It is undisputed that this amount was the balance available under the insurance coverage provided by Bluver’s insurer, Worldwide, because of previous settlements paid by the insurer to others also injured in the accident.

Guese then applied to Farmers for underinsured insurance coverage pursuant to the policy Farmers had issued to Guese’s spouse. The record reveals that Farmers’ insurance policy covering Guese stated that Farmers would provide uninsured motorist coverage only after exhaustion of the limits of liability under any other applicable bodily injury liability insurance policy. Farmers’ policy also provided that uninsured motorist coverage did not apply to a bodily injury sustained by an insured if the insured made any settlement without Farmers’ written consent. In addition, Farmers’ policy preserved its subrogations rights in the event that Farmers made any payment under its policy, and obligated the insured to “sign and deliver to [Farmers] any legal papers relating to that recovery [from another], do whatever else is necessary to help [Farmers] exercise [its subrogation] rights and do nothing after loss to prejudice [Farmers’ subrogation] rights.”

It is undisputed that Guese did not formally notify his insurer, Farmers, of the settlement offer made by Worldwide on Bluver’s behalf. It is also undisputed that Guese did not formally advise Farmers of his intention to execute the general release in favor of Bluver in exchange for settlement in the amount of $43,500. Because it had not consented to the settlement, Farmers refused to consider Guese’s claim for underinsured motorist coverage and declined to submit the matter to arbitration.

Guese then filed an action in the circuit court of Cook County to compel Farmers’ arbitration of Guese’s claim. Farmers filed an answer to Guese’s complaint and also filed a countercomplaint against Guese. In its countercomplaint, Farmers alleged that it was not obligated to provide underinsured coverage to Guese, because Guese had not obtained Farmers’ consent to his settlement of his claims with Bluver and Bluver’s insurer, Worldwide. Guese filed an answer to Farmers’ cross-complaint in which Guese alleged inter alia that Farmers had not been prejudiced by the general release because Bluver and Worldwide were aware of Guese’s intent to pursue under-insured motorist coverage from Farmers upon execution of the release. Both Guese and Farmers filed motions for summary judgment with regard to their respective positions. Following briefing and argument, the trial court entered summary judgment in favor of Farmers and against Guese. This appeal followed.

Upon review, Farmers argues that summary judgment was properly entered in its favor because Guese did not obtain Farmers’ consent to his settlement with Bluver. In this regard, Farmers relies upon section 143a—2 of the Illinois Insurance Code (Ill. Rev. Stat. 1989, ch. 73, par. 755a—2), which provides:

“Subrogation against underinsured motorists. No insurer shall exercise any right of subrogation under a policy providing additional uninsured motorist coverage against an underinsured motorist where the insurer has been provided with written notice in advance of a settlement between its insured and the underinsured motorist and the insurer fails to advance a payment to the insured, in an amount equal to the tentative settlement, within 30 days following receipt of such notice.” Ill. Rev. Stat. 1989, ch. 73, par. 755a—2(7).

Farmers claims that because it was not notified of Guese’s intent to settle with Bluver, Farmers was deprived of the opportunity to advance the sum tentatively offered by Bluver and his insurer, Worldwide. Farmers argues that because it could not make such an advance, it cannot now seek subrogation from Bluver in the event that Farmers pays Guese under its underinsured motorist provision.

In our view, Farmers’ argument misconstrues the plain terms of section 143a—2(7). The section specifically applies where the “insurer has been provided with written notice in advance of a settlement between its insured and the underinsured motorist.” (Ill. Rev. Stat. 1989, ch. 73, par. 755a—2(7).) The purpose of this section is to impose an additional burden on an insurer’s preservation of its subrogation rights, by requiring that the insurer match any settlement offer tendered by the underinsured motorist when the insurer has been provided with advance written notice of the settlement offer. (See Boyd v. Madison Mutual Insurance Co. (1987), 116 Ill. 2d 305, 310, 507 N.E.2d 855.) Since it appears that Farmers did not formally receive such advance written notice, the section would not apply to Farmers and would not terminate Farmers’ subrogation rights as against Bluver.

Farmers also contends that its subrogation rights were prejudiced by Guese’s execution of the general release in favor of Bluver, because the record does not demonstrate that Bluver’s insurer, Worldwide, had knowledge of Farmers’ subrogation rights when the release was executed. As Farmers acknowledges, a general release executed by an insured injured party does not extinguish the subrogation rights of the injured party’s insurer, where the tort-feasor or the tortfeasor’s insurer had knowledge of the subrogation rights of the injured party’s insurer. See Home Insurance Co. v. Hertz Corp. (1978), 71 Ill. 2d 210, 375 N.E.2d 115; International Union of Operating Engineers Local 841 Health & Welfare Fund v. Hickman (1989), 190 Ill. App. 3d 658, 663, 546 N.E.2d 1056; Mulholland v. State Farm Mutual Automobile Insurance Co. (1988), 171 Ill. App. 3d 600, 527 N.E.2d 29; Gattorna v. American States Insurance Co. (1984), 122 Ill. App. 3d 582, 589, 461 N.E.2d 675.

Farmers argues that the correspondence from Guese’s counsel to Worldwide, in which it was stated that Worldwide “was aware that [Guese’s] acceptance of any sum less than the amount available on Mr. Bluver’s policy will preclude [Guese’s] pursuit of an underinsured motorist case against his own carrier,” was insufficient to place Worldwide on notice of the subrogation rights of Farmers as Guese’s insurer. We find this argument insufficient basis to sustain the trial court’s entry of summary judgment in favor of Farmers.

In our opinion, reasonable minds could differ with respect to the interpretation to be accorded to this letter from Guese’s counsel to Bluver’s insurer, Worldwide. (See Mulholland, 171 Ill. App. 3d at 606-07 (letter from injured party’s counsel to tort-feasor’s insurer, including copy of injured party’s automobile insurance policy, sufficient to place tort-feasor’s insurer on notice of subrogation rights of injured party’s insurer).) In addition, we note that Farmers has provided no evidence with regard to whether Bluver had knowledge of Farmers’ subrogation rights. On a motion for summary judgment, it is the movant’s burden to present matters demonstrating that there are no genuine issues of material fact and that the movant is entitled to judgment as a matter of law. (See Ill. Rev. Stat. 1991, ch. 110, par. 2—1005.) Consequently, it was Farmers’ burden to provide matters in support of its motion for summary judgment showing, as a matter of law, that Worldwide or Bluver did not have knowledge of Farmers’ subrogation rights. As the court noted in Gattorna v. American States Insurance Co. (1984), 122 Ill. App. 3d 582, 461 N.E.2d 675:

“Since the instant defendant [insurer] did not attach any matters to its motion [for summary judgment] which bore on the key issue of the tortfeasor’s knowledge, the trial court was not in a position to resolve *** the question of whether the defendant’s subrogation rights were actually prejudiced by the settlement. Since a question of fact remained on the issue of prejudice to those rights, the award of summary judgment cannot be sustained on the basis of plaintiff’s alleged violation of the subrogation clause. See Marsh v. Prestige Insurance Group (1978), 58 Ill. App. 3d 894.” Gattorna, 122 Ill. App. 3d at 589.

Similarly, in the case at bar, Farmers did not include in its motion for summary judgment any evidence to establish that Worldwide and Bluver did not have knowledge of Farmers’ subrogation rights. As a result, a question of fact remains as to this issue, and the award of summary judgment in favor of Farmers was in error. The decision of Standard Mutual Insurance Co. v. Petreikis (1989), 183 Ill. App. 3d 272, 538 N.E.2d 1327, is factually inapposite to the instant cause, as the Petreikis court did not consider the question of whether the tortfeasor or his insurer had knowledge of the subrogation rights of the injured party’s insurer. The decision of Farmers Automobile Insurance Association v. Suligoy (1989), 180 Ill. App. 3d 896, 536 N.E.2d 1003, is also distinguishable, as the injured party in that case did not make a timely allegation that the tort-feasor or his insurer had knowledge of the subrogation rights of the injured party’s insurer. In the instant cause, Guese made allegations to show such knowledge on the part of Bluver and his insurer, Worldwide, and came forward with correspondence in support of his allegations.

For the reasons stated, the judgment of the circuit court of Cook County is reversed, and the cause remanded for further proceedings consistent herewith.

Reversed and remanded.

JIGANTI, P.J., and LINN, J., concur.


author: PRESIDING JUSTICE McCULLOUGH

text:
    CHICAGO TRANSIT AUTHORITY, Appellant, v. THE INDUSTRIAL COMMISSION et al. (Ronald Seno, Appellee).
    First District (Industrial Commission Division)
    No. 1—91—3690WC
    Opinion filed October 30, 1992.
    Rehearing denied December 16,1992.
    Bruce J. Talaga, of Chicago Transit Authority, of Chicago, for appellant.
    Joseph A. Vitell & Associates, Ltd., of Chicago (Joseph A. Vitell and Edward Spitz, of counsel), for appellee.
   PRESIDING JUSTICE McCULLOUGH

delivered the opinion of the court:

Plaintiff filed separate applications for adjustment of claim against respondent for two different injuries. Although a single arbitration hearing was held, both the arbitrator and the Industrial Commission (Commission) issued separate written decisions in each case. Respondent, nevertheless, sought review by filing a single request for issuance of summons in the circuit court incorporating both Commission proceedings. On claimant’s motion, the circuit court dismissed the entire cause for lack of subject-matter jurisdiction, concluding that respondent had to file separate requests for issuance of summons for each individual Commission decision. Respondent appeals.

The facts are not in dispute. Claimant sought benefits for two separate injuries by filing two separate applications of adjustment of claim against respondent. An arbitration hearing was held on both claims wherein the arbitrator noted at the outset that “these cases are consolidated for the purposes of file [sic].” Following arbitration, separate memorandums of decision were issued in each case. Claimant sought further review in the Commission by filing separate petitions for review and the Commission ultimately issued separate decisions on each case on the same date. Respondent then sought review in the circuit court by filing a single request for summons incorporating both Commission case numbers and requesting that the circuit clerk issue a single summons to the appropriate parties.

Claimant filed a motion to dismiss contending that respondent was required to file separate and distinct petitions for review for each case and the failure to do so deprived the circuit court of subject-matter jurisdiction. By separate motion, respondent argued that the cases were properly consolidated and only a single request for summons was required. Alternatively, respondent requested that the court sever the two Commission cases, dismiss one of them, and then allow review to proceed on the remaining case.

The circuit court, however, found that the filing of a single request for summons was improper and since only one request for judicial review was filed, it was impossible to determine which of the two cases could properly be reviewed. Accordingly, the entire case was dismissed for want of subject-matter jurisdiction.

The question before us is whether, as a matter of law, a party is prohibited from filing a single request for summons to review more than one Commission decision when the Commission cases have not been formally consolidated prior to the time review in the circuit court is sought. In dismissing the case, the circuit court found that section 19(f) of the Workers’ Compensation Act (Act) (Ill. Rev. Stat. 1991, ch. 48, par. 138.19(f)) did not permit the filing of a joint request for summons. In support, the court relied upon a line of older authority suggesting that it is improper to attempt to appeal separate judgments by means of a single notice of appeal.

There is authority which states that two separate judgments, decrees, or orders cannot be brought for appellate review upon one writ of error or one appeal. (See Belleville Enameling & Stamping Co. v. Carbine (1927), 244 Ill. App. 234; Metz v. Doss (1969), 114 Ill. App. 2d 195, 252 N.E.2d 410; 3 C.J. Appeal & Error §109, at 355 (1915).) The genesis of this rule is apparently the common law. Our supreme court long ago stated:

“The practice of the common law in regard to the appellate review of trial courts by writ of error is well established. It makes no provision for the review of separate judgments against different defendants for distinct offenses in a single writ of error. No statute has conferred such right. To recognize agreements of litigants to present for review in a single transcript different judgments for separate and distinct causes of action or offenses would be to introduce a change in the law and to authorize the establishment by such agreements of rules of procedure in this court which would lead to great confusion.” People v. Mahan (1928), 329 Ill. 217, 220, 160 N.E. 134, 135.

Despite the rule, the supreme court had occasion to revisit this issue over three decades later in the case of People v. De Cola (1959), 15 Ill. 2d 527, 155 N.E.2d 622. In that case, defendant was convicted and sentenced on three separate indictments for unrelated offenses. By a single writ of error, he sought to reverse the judgment of conviction in all three cases. Noting that “orthodox procedure” permitted only the judgment of a single cáse to be reviewed upon a single writ of error, the supreme court, nevertheless, agreed to review all three convictions in the same appeal. In commenting on this question, Justice Schaefer observed:

“If the three judgments were before the court upon separate writs of error, efficient and economical judicial administration would dictate that they be consolidated for hearing and disposition. The State has not objected to the method by which the judgments were brought on for review. No useful purpose would be served by requiring that the same records that are now before the court in all three cases be brought here again in another form. For these reasons, and without intending to indicate a general relaxation of the usual rule, we have decided to consider the three cases on this writ of error.” De Cola, 15 Ill. 2d at 529, 155 N.E.2d at 623.

See also People v. Davis (1965), 33 Ill. 2d 134, 210 N.E.2d 530 (reaching the same result).

Consideration of this older authority leads to the conclusion that the common law procedural rule obstensibly prohibiting the unilateral consideration of separate judgments in a single appeal does not implicate subject-matter jurisdiction at the appellate or supreme court level and may be relaxed in the interest of judicial efficiency and economy or, presumably, when there is no prejudice to the parties. We also note that the rule described in Mahan applied to an attempted review of separate judgments against different defendants, which is not the case here. In addition, common law pleading is no longer part of the procedural jurisprudence in Illinois. We also observe that, generally speaking, the Code of Civil Procedure (see Ill. Rev. Stat. 1991, ch. 110, par. 1—101 et seq.) and supreme court rules do not apply to workers’ compensation cases. Chambers v. Industrial Comm’n (1985), 132 Ill. App. 3d 891, 893, 478 N.E.2d 498, 499.

While we do not find the authority upon which claimant relies controlling, the question remains whether the procedure employed by respondent in this case was sufficient to confer subject-matter jurisdiction upon the circuit court. The general rule is that a circuit court’s jurisdiction to review a decision of the Commission is a special statutory power. (Daugherty v. Industrial Comm’n (1983), 99 Ill. 2d 1, 5, 457 N.E.2d 381, 383.) While circuit courts are courts of general jurisdiction and enjoy a presumption of subject-matter jurisdiction, this presumption is not available in compensation cases. Strict compliance with the statutory requirements for the issuance of summons must affirmatively appear in the record. Arrington v. Industrial Comm’n (1983), 96 Ill. 2d 505, 508, 451 N.E.2d 866, 867.

Section 19(f)(1) of the Act requires that “[a] proceeding for review shall be commenced within 20 days of the receipt of notice of the decision of the Commission.” (Ill. Rev. Stat. 1991, ch. 48, par. 138.19(f)(1).) Claimant observes that the statute speaks of taking a review from a decision of the Commission which is used in its singular form. From this claimant argues that the statute does not permit the unilateral consolidation of multiple Commission decisions into a single request or summons. As a matter of “orthodox” procedure claimant appears to be correct. The supreme court has stated that there can be no joint appeal unless authorized by statute. (Legro v. Drainage Com missioners of Ashkum Drainage District No. 1 (1921), 297 Ill. 155, 130 N.E. 369.) Nevertheless, claimant makes no allegation that he has suffered any prejudice due to the filing of a single request for review of these two cases especially when, as here, they involve the same parties and were subject to a single arbitration hearing which produced a single transcript of proceedings.

Although respondent contends that the cases were actually consolidated before the Commission, the record does not support this contention. Although a single arbitration hearing was held on these separate claims, both the arbitrator and Commission issued separate decisions and no motion to consolidate the cases for all purposes was ever filed. While the Commission had the authority to consolidate the cases had such a request been made (see Black Hawk Motor Transit Co. v. Illinois Commerce Comm’n (1943), 383 Ill. 57, 48 N.E.2d 341), the plain fact is that the Commission did not do so.

In substance, it is claimant’s contention that since section 19(f) does not specifically indicate it is possible to consolidate two separate matters into a single request for review in the circuit court, the unilateral attempt to do so does not strictly comply with the Act. Citing the lack of any prejudice, respondent contends that it has substantially complied with the requirements of section 19(f) of the Act.

The supreme court has indicated that in limited circumstances, substantial compliance is sufficient to invoke the circuit court’s jurisdiction. In Bethlehem Steel Corp. v. Industrial Comm’n (1968), 41 Ill. 2d 40, 241 N.E.2d 444, the supreme court found substantial compliance even though the praecipe prepared by respondent failed to mention the name of the firm of the attorneys of record for claimant. The error was excused because an attorney appeared on behalf of the firm prior to oral argument before the Commission and did not deny that service was properly made upon him or that he conducted proceedings as an agent of the law firm and on behalf of claimant before both the Commission and the circuit court.

Similar results have obtained in Chambers v. Industrial Comm’n (1991), 213 Ill. App. 3d 1, 571 N.E.2d 1001 (request for summons failed to designate a return date and did not include the name of the attorney of record and the addresses of the parties in interest), Chadwick v. Industrial Comm’n (1987), 154 Ill. App. 3d 859, 507 N.E.2d 878 (praecipe failed to include party address although address was stated on certificate of mailing), and Advance Transportation Co. v. Industrial Comm’n (1990), 202 Ill. App. 3d 449, 559 N.E.2d 1038 (request for summons failed to designate a return date sufficient in the absence of prejudice).

Substantial compliance has not been shown to exist, however, when the offending party has omitted some essential step in the review process. Whitmer v. Industrial Comm’n (1989), 187 Ill. App. 3d 409, 549 N.E.2d 353 (party failed to file a written request for summons); Daugherty, 99 Ill. 2d 1, 457 N.E.2d 381 (claimant failed to name all parties in interest); Arrington, 96 Ill. 2d 505, 451 N.E.2d 866 (party failed to prove payment of the probable cost of the record as a prerequisite to issuance of summons).

We conclude that the facts of this case more nearly resemble the line of authority represented by the decision in Bethlehem Steel Corp. In this case, respondent did not completely omit some requirement of section 19(f) of the Act. At worst, respondent complied imperfectly by filing a single request for summons instead of two requests. In addition, as stated heretofore, the section 19(f) request involved the same claimant, the same employer, consolidated hearings before the arbitrator and Commission, and one transcript.

Although we conclude that substantial compliance was demonstrated under the facts of this case, we caution that our decision should not be interpreted as establishing a blanket rule permitting the unilateral consolidation of multiple Commission cases into a single petition for review. We have no difficulty in envisioning certain instances in which this practice could result in unwarranted prejudice to one or more of the parties defending the claim in the circuit court.

The single request for summons substantially complied with the requirements of section 19(f) and for that reason we reverse the judgment of the circuit court of Cook County dismissing the cause for lack of subject-matter jurisdiction. The case is remanded for hearing on the merits of the appeal.

Reversed and remanded.

RAKOWSKI, WOODWARD, STOUDER, and H. LEWIS, JJ., concur.


author: PRESIDING JUSTICE EGAN

text:
    JAMES DUMENRIC, Plaintiff, v. UNION OIL COMPANY OF CALIFORNIA, Defendant and Third-Party Plaintiff-Appellee and Cross-Appellant (Aetna Life and Casualty Company, Third-Party Defendant-Appellant and Cross-Appellee; Mid-State Mechanical Corporation et al., Third-Party Defendants).
    First District (6th Division)
    No. 1—90—2490
    Opinion filed October 30, 1992.

      Cassidy, Schade & Gloor, of Chicago (Timothy J. Ashe, Martha A. Pagliari, and Lynn D. Dowd, of counsel), for appellant.
    Querrey & Harrow, Ltd., of Chicago (Eric L. Samore and Ellen S. Martin, of counsel), for appellee.
   PRESIDING JUSTICE EGAN

delivered the opinion of the court:

Aetna Life and Casualty Co. (Aetna) appeals from an order granting summary judgment in favor of Union Oil Company of California (Union). The trial judge held that Aetna was estopped from denying insurance coverage to Union for an occurrence in which James Dumenric was injured while working on an oil storage tank owned by Union. Aetna contends that the record establishes, as a matter of law, that Aetna was not estopped to deny coverage to Union or, alternatively, that fact questions exist that would bar summary judgment.

Union entered into an agreement with Mid-State Mechanical Corporation (Mid-State) under which Mid-State was to perform certain pipe-fitting work at Union locations. The agreement provided that the work would begin on October 21, 1984; the estimated time of completion was given as October 21, 1985. Mid-State was to provide general liability insurance, with Union named as an additional insured; this was Union’s company policy at that time.

A certificate of insurance was issued by Daniel Bennett, an insurance broker, to Mid-State on October 18, 1984. The certificate was sent to and reviewed by Union on approximately October 24. The certificate provided that Union was an additional insured on an Aetna insurance policy issued to Mid-State and that Union would be given 10 days’ notice of any cancellation of the policy. The certificate provided that the policy was to run until October 21, 1985. In reliance on this insurance certificate, Union did not require Mid-State to seek other insurance coverage nor did it seek alternative coverage itself.

James Dumenric, an employee of Mid-State, filed suit against Union for injuries incurred while working on Union facilities. Dumenric alleged that he had been injured on December 11, 1984. Union sought coverage for the complaint of Dumenric by tendering the complaint to Bennett. Union specifically referred to the certificate of insurance that had been provided by Bennett.

Aetna informed Union that Bennett had forwarded Union’s claim of coverage to Aetna; Aetna had reviewed the matter and determined that Aetna had not insured Mid-State since November 21, 1984, which was before the date of the alleged injuries. Union also tendered to Aetna the defense of another lawsuit filed by another employee of Mid-State, Robert Smith. Aetna denied coverage in the Smith case also.

Union filed a third-party complaint, later amended, against Mid-State, Aetna, Bennett and another insurance company. Only Aetna is involved in this appeal.

Count I of the amended complaint, captioned “Estoppel,” sought a declaration that Aetna should be estopped from denying a defense and should indemnify Union up to $500,000 against the Dumenric lawsuit. Amended count I also sought costs, expenses and attorney fees incurred in defending the Dumenric action. Amended count IV, captioned “Breach of Contract,” sought the same relief as amended count I. Union and Aetna both filed motions for summary judgment. The trial judge granted Union’s motion for summary judgment on count I and denied Union’s motion for summary judgment on count IV. The judge also denied Aetna’s motion for summary judgment.

Aetna appeals from the order granting Union’s motion for summary judgment as to count I and denying Aetna’s own motion for summary judgment. Union has filed a cross-appeal of the order denying its motion for summary judgment on count IV. Aetna has filed a motion to strike Union’s cross-appeal.

This case hinges principally on the relationship between Bennett and Aetna. It is Aetna’s position that it issued a policy of insurance to Mid-State only; that Aetna never issued the certificate of insurance to Union; and that Bennett was an agent of Mid-State and not of Aetna. The trial judge found, as a matter of law, that Bennett was an agent, or an apparent agent, of Aetna and that Bennett bound Aetna to provide insurance coverage to Union. He held that, if Bennett exceeded his authority, Aetna should proceed against Bennett.

The motions for summary judgment were based on the pleadings and the depositions of Daniel Bennett, Michael Hoder and Benjamin King. Our discussion necessarily begins with the deposition of Daniel Bennett.

Bennett testified that he had been a practicing insurance broker since 1962 and during that time he had worked for numerous insurance companies and agencies. In 1982, Bennett formed his own insurance agency. For the two years following the opening of his own company, Bennett had agreements with, and placed property insurance for, three or four different insurance companies, including Aetna. He considered himself an agent and a broker, sometimes acting on behalf of the company and sometimes on behalf of the insured.

Bennett received commissions from Aetna at a rate of about 16%. He followed a “written set of procedures,” but did not say what these procedures were or who required them. He received various manuals from Aetna which detailed which risks or insurance Aetna would be interested in. He did not receive any training from Aetna.

His agreement with Aetna, entitled “Agency Agreement,” provided as follows:

“1. Authority of Agent During Term of Agreement
The Agent is authorized, subject to the underwriting rules and practices of the Company as they are from time to time constituted, to solicit proposals, and to collect and receipt premiums, and to bind and execute contracts for the kinds of insurance for which a commission is specified in the Commission Schedules issued by the Company to the Agent.
* * *
2. Notification to the Company
The Agent agrees to forward to the Company copies of all binders, policies, certificates and endorsements issued by the Agent, or to otherwise notify the Company of all liability accepted within three business days following the issuance or acceptance by the Agent.”

Bennett issued certificates of insurance. He testified that he did not have to contact Aetna before signing a certificate of insurance “on a risk of this kind.” He could just inform the underwriter by calling or sending a copy of the certificate. The policy for issuing certificates varied from company to company.

Bennett stated that he contacted and met with a Mid-State representative a couple of times about Mid-State’s insurance needs. He gathered information from Mid-State and then filled out an application for Mid-State which was submitted to Aetna. He met with a Mid-State representative in 1983 and told him that he was duplicating some of Mid-State’s current insurance coverage with another carrier. He was attempting to get Mid-State a better price on its insurance.

Bennett determined that insurance from Aetna would best suit Mid-State’s needs. He procured a policy from Aetna. Aetna told Bennett that it was not going to renew Mid-State’s insurance policy but agreed to extend its insurance coverage of Mid-State for one month, until November 21, 1984. He was told by Mid-State that it needed a certificate for Union because Mid-State was going to do some work for Union. Bennett asked a woman at Mid-State to type the certificate. The certificate of insurance was dated October 18, 1984, and stated that it would expire on October 21, 1985. The certificate named Union as an additional insured and showed that Bennett signed as an agent for Aetna. Bennett believed that Union was an additional insured under the Aetna policy when he issued the certificate. Union was not named as an additional insured on the insurance policy. An endorsement policy was never sent to Union.

Bennett told the secretary to type the certificate to show the expiration date of November 21, 1984, instead of October 21, 1985. The inaccurate date was a typographical error. Bennett told the secretary at Mid-State that the coverage was only going to be extended for one month. He made out the certificate without calling Aetna; on a risk of this kind, he had the authority to issue the certificate. His authority was based on an understanding between the agents and the underwriters.

Bennett was not sure whether he sent or delivered the policy, but was sure he did one or the other. Generally a policy endorsement was issued when a certificate of insurance was issued. There was a procedural mess at Aetna during this time and policies of endorsement were not being issued after certificates of insurance were submitted.

He had some contact with Mid-State in November of 1984 concerning Mid-State’s insurance needs, but Mid-State eventually decided to obtain its insurance from another agency.

Around March 6, 1985, Bennett was contacted by a Union representative, Mike Hoder. When asked whether he was still providing insurance for Mid-State, Bennett responded that he was no longer providing coverage for Mid-State; Bennett sent Union a letter to this effect.

Mike Hoder, Union’s supervisor of purchasing, testified that in dealing with a contractor for the first time, Union would generally send a request for an insurance certificate and a form copy of a Union certificate directly to the contractor. The insurance broker would then send back the certificate to Union. He received the certificate from Bennett.

Hoder also received a certificate of insurance from Swank Insurance on October 29, 1984. This certificate stated that they were insuring Mid-State. The insurance coverage provided by Swank was different from the coverage indicated on the certificate provided by Bennett in that (1) Union was not listed as an additional insured; (2) the certificate did not contain a cross-liability clause; and (3) it did not address the waiver of subrogation. Hoder did not investigate this new certificate because he had proper insurance from Aetna on file. Sometime later, Union became aware that an insurance problem existed.

Benjamin King, Jr., the president of Mid-State, testified that in the early fall of 1984, he switched insurance brokers from Bennett to Swank, because Aetna had “dropped” Mid-State “due to the amount of refinery work.” Swank acquired coverage for Mid-State through another insurance carrier.

Aetna’s notice of cancellation of the Mid-State policy was sent to Mid-State and Bennett but not to Union.

To establish estoppel in an insurance context, the insured must show: (1) that he was misled by the acts or statements of the insurer or its agent; (2) reliance by the insurer on those representations; (3) that such reliance was reasonable; and (4) detriment or prejudice suffered by the insured based on the reliance. (Allstate Insurance Co. v. Tucker (1989), 178 Ill. App. 3d 809, 533 N.E.2d 1004.) An intent to mislead the relying party is not necessary for recovery. Gary-Wheaton Bank v. Meyer (1984), 130 Ill. App. 3d 87, 473 N.E.2d 548.

Aetna contends that whether Bennett was an agent of Aetna is a fact question that may not be decided by summary judgment and that any reliance by Union on the representations of Bennett was unreasonable.

Both parties have argued extensively and have cited many cases on the issue of whether Bennett was in fact an agent of Aetna. Citing Krause v. Pekin Life Insurance Co. (1990), 194 Ill. App. 3d 798, 551 N.E.2d 395, Aetna contends that in determining whether an agency relationship exists, a court is to apply a four-prong test, which, for the sake of brevity, we will not repeat. Aetna also cites two opinions from the Seventh Circuit Court of Appeals which held that the four-prong test is applicable even where an agency agreement exists between a broker and an insurer. (Lazzara v. Howard A. Esser, Inc. (7th Cir. 1986), 802 F.2d 260; American Insurance Corp. v. Sederes (7th Cir. 1986), 807 F.2d 1402.) Union has cited the very recent case of Zannini v. Reliance Insurance Co. of Illinois, Inc. (1992), 147 Ill. 2d 437, 590 N.E.2d 457, as authority for the proposition that the four-prong test is not applicable where an agency agreement exists between a broker and an insurer. Aetna has sought to distinguish Zannini and argues further that Zannini did not hold that an agency relationship existed as a matter of law.

We have determined that we need not, and should not, decide the question of whether Union has established, as a matter of law, that Bennett was Aetna’s agent in fact when the certificate was signed. During oral argument one of the members of this court pointed out that Aetna had instructed Bennett that it intended to cancel Mid-State’s policy and agreed to an extension of the policy only until November 21, 1984. Through the negligence of Bennett, the certificate of insurance was issued showing that the policy termination date was October 21, 1985. Thus, the agent acted in contravention of the express direction of his principal. In substance, therefore, under the terms of the agency agreement, upon which Union relies, Bennett had authority to bind Aetna, but the agreement provided that his authority was “subject to the underwriting rules and practices” of Aetna. The evidence shows that Aetna, exercising its rights under the agreement, limited Bennett to binding Aetna only until November 21, 1984. The legal effect of that limiting instruction by Aetna has not been briefed or argued either in the circuit court or in this court. Consequently, we do not feel that we should pass on the question, particularly because we have determined that the trial judge correctly found that Bennett had apparent authority as a matter of law.

In State Security Insurance Co. v. Burgos (1991), 145 Ill. 2d 423, 583 N.E.2d 547, the court enunciated the principles of apparent authority:

“Apparent authority arises where a principal creates, through words or conduct, the reasonable impression that the putative agent has been granted authority to perform certain acts. [Citations.] Apparent authority is that authority which a reasonably prudent person, in view of the principal’s conduct, would naturally suppose the agent to possess. [Citation.] The principal, having created the appearance of authority, is estopped. to deny it to the detriment of a third party. [Citation.]
* * *
*** It is not necessary that the insurer be aware of the particular acts being performed by the broker; once the insurer has created the appearance of authority, the insurer is estopped to deny it, even though the insurer may be ignorant of its exercise. [Citation.] Fairness mandates such a result because, where the insurer has created the appearance of authority in the broker, the loss must fall upon the insurer, rather than upon the innocent insured. [Citation.]” 145 Ill. 2d at 431-33.

We judge that the evidence establishes, as a matter of law, apparent authority on the part of Bennett to bind Aetna. Most important is the agreement itself between Aetna and Bennett. To illustrate the weight to be given the agreement, we refer to Zannini, in which the supreme court held that the existence of the agency agreement between the broker and the insurer rendered unnecessary resort to the four-prong test enunciated in Krause v. Pekin Life Insurance Co. (1990), 194 Ill. App. 3d 798, 551 N.E.2d 395. The Zannini court distinguished Krause:

“Unlike the procurer of insurance in Krause, Nesslar [the broker] had an agency-company agreement with Reliance [the insurer], the company with which he placed coverage. The agreement gave Nesslar power to bind Reliance. The weight of the evidence shows that Nesslar was an agent of Reliance, expressly authorized to bind coverage on behalf of Reliance.” (Zannini, 147 Ill. 2d at 454.)

A reasonable argument could be made that Zannini held that the existence of the agency agreement constituted the manifest weight of the evidence that the broker was the agent of the insurer. In any event, in determining the issue of apparent authority, the agreement must be given great weight.

There is no doubt that the agreement gave Bennett the right to bind Aetna, which included the issuance of certificates of insurance. Bennett did issue certificates of insurance. He testified that he did not have to get prior approval before signing certificates. Most important, there is nothing expressed in the written agreement that would require Bennett to get prior approval by Aetna. The only requirement is that Bennett was to forward copies of certificates to Aetna, “or to otherwise notify” Aetna within three days after the issuance of the certificate. Regardless of how Aetna may seek to deprecate Bennett’s testimony, his testimony was not rebutted by Aetna, which was in a position to do so.

Union has cited Burgos as an example of a reviewing court finding apparent authority as a matter of law. Aetna seeks to distinguish Burgos from this case and argues that factually Burgos was much stronger for the insured than is this case. The issue is not whether this case is factually as strong as Burgos-, the issue is whether it is strong enough to support summary judgment. We conclude that it is. We note further that this case is factually stronger than Burgos in an almost decisive aspect. The supreme court held that Burgos established apparent authority as a matter of law even in the absence of a written agency agreement, which is present here.

Aetna also contends that Union did not reasonably rely on the certificate of insurance or, alternatively, an issue of material fact exists whether Union could reasonably rely on the certificate. The principal basis of Aetna’s position is the fact that Union received a revised certificate of insurance issued by Swank five days after the Bennett certificate was issued. Aetna concludes, “Union Oil[, after receiving the Swank certificate,] chose to take no action whatsoever.” Aetna has not suggested just what “further action” Union should have taken. Hoder testified that it was part of his job to review insurance. He also testified that he relied on Bennett’s certificate.

In substance, Aetna’s argument is that the Swank certificate provided duplicative coverage and that Hoder should have wondered why. Hoder explained that it was not duplicative coverage: the certificate did not contain a cross-liability clause; it did not address the waiver of subrogation; and most important, it did not list Union as an additional insured, as did the certificate from Bennett. Under these circumstances, we believe that the evidence establishes, as a matter of law, that Union’s reliance on the Bennett certificate was reasonable.

We repeat the observation of the supreme court in Burgos that fairness requires that the loss must fall upon the insurer rather than upon the innocent insured where the insurer has created the appearance of authority in a broker. We think that the result of Burgos, which involved a third party, the insured, is even more compelled in this case where an innocent fourth party relied upon the apparent authority of the agent.

For these reasons, we conclude that the trial judge properly entered summary judgment on behalf of Union. In view of our holding, we need not decide whether the evidence established that Aetna ratified the actions of Bennett.

Union has cross-appealed from the denial of its motion for summary judgment on count IV. We had previously denied Aetna’s motion to dismiss the cross-appeal. Aetna has renewed its motion to dismiss in its brief. We adhere to the ruling denying the motion to dismiss. (See People v. American National Bank & Trust Co. (1965), 32 Ill. 2d 115, 203 N.E.2d 897; Handley v. Unarco Industries, Inc. (1984), 124 Ill. App. 3d 56, 463 N.E.2d 1011.) We do, however, affirm the denial of Union’s claim on a breach of contract basis. Union asks that this case be affirmed “either on an estoppel or a breach of contract theory.” Implicitly, Union recognizes that a party may not recover on both. (Cf. Wagner Excello Foods, Inc. v. Fearn International, Inc. (1992), 235 Ill. App. 3d 224.) Because we have determined that the evidence, as a matter of law, establishes that Union is entitled to recover under an estoppel theory, it necessarily follows that it cannot also recover under a breach of contract theory. For that reason, the order denying summary judgment to Union on count IV is also affirmed. For these reasons, the judgment of the circuit court is affirmed.

Judgment affirmed.

McNAMARA and RAKOWSKI, JJ., concur.

       Justice Rosemary LaPorta participated in oral argument before her death. Justice Daniel McNamara was substituted on the panel. He has listened to the oral argument tape and has read the briefs.


author: JUSTICE McNAMARA

text:
    SHERRY DENISE O’BRIEN, Plaintiff-Appellant, v. KEVIN HERTL, Defendant-Appellee.
    First District (6th Division)
    No. 1—92—0757
    Opinion filed October 30, 1992.
    Rehearing denied December 10,1992.

      Sheldon Hodes & Associates, of Chicago (Leonard D. Litwin, of counsel), for appellant.

      Thomas H. Riley III, of Chicago, for appellee.
   JUSTICE McNAMARA

delivered the opinion of the court:

Plaintiff, Sherry Denise O’Brien, filed a negligence action for injuries she received while riding as a passenger in a vehicle driven by defendant, Kevin Hertl. The jury returned a verdict in favor of defendant, and the trial court entered judgment on the verdict. The trial court denied plaintiff’s motion for judgment n.o.v. and motion for a new trial. Plaintiff appeals, contending that the jury verdict was against the manifest weight of the evidence; plaintiff’s motion for a directed verdict and for judgment n.o.v. should have been allowed; the trial court improperly refused plaintiff’s proffered jury instructions; improperly denied plaintiff’s motion in limine prohibiting testimony concerning her alcohol consumption; and erred in not allowing a photographic exhibit to go to the jury.

The following relevant facts were adduced at trial. On May 9, 1985, plaintiff, age 17, was a front-seat passenger in a four-wheel-drive jeep driven by defendant. Defendant was test driving the vehicle owned by Dennis Frye in a wooded public area known as the William Powell Conservation Area. Defendant had driven in this area, which consisted of a number of trails, on prior occasions. He was aware of the presence of ditches near the trails.

The facts of the accident, which occurred at 11:30 p.m., are undisputed. Defendant, Frye, plaintiff, and another passenger, Vicki Czubak, were in the vehicle when defendant went off a trail into a concrete area. Defendant sighted the next trail he intended to traverse and began driving the jeep in that direction. Operating headlights were illuminating the area in front of defendant’s vehicle. Defendant began to travel over a grassy area at a speed of 15 to 25 miles per hour when he entered a ditch. Defendant stated that he did not see the ditch because it looked to him as though he were entering a level area, and that the grass was growing and made it appear as though it were an even patch of grass. None of the other passengers, including plaintiff, saw the ditch before impact.

Plaintiff testified that when she first entered the jeep, she stood in the back and held onto a roll bar. Plaintiff estimated that defendant was driving approximately 20 miles per hour. She later moved to the front passenger seat because she felt that defendant was driving too fast for the terrain. Plaintiff saw a tree and screamed prior to the moment of impact. Plaintiff sustained injuries to her face and mouth as a result of the accident.

Prior to trial, plaintiff filed a motion in limine to preclude any testimony concerning evidence of consumption of alcohol by any of the parties or witnesses. The trial court denied plaintiffs motion, and permitted the introduction of evidence as to the consumption of alcohol by plaintiff and Czubak for the purpose of impeaching their ability to remember and recall the events which occurred on the night of the accident.

Plaintiff testified that she had consumed 3½ cans of beer prior to the accident; however, she did not consider herself intoxicated. Czubak also drank approximately the same amount of alcohol on the night of the accident. Defendant stated that plaintiff was “kind of stumbling, giggling, [and] smelled of alcohol.” Defendant also saw plaintiff drink a can of beer. Defendant testified that in his opinion, plaintiff was intoxicated. Defendant also testified that Czubak smelled of alcohol, her eyes were red, and that she was also intoxicated. Plaintiff did not object to defendant’s opinion testimony that he considered plaintiff and Czubak intoxicated.

Plaintiff’s first argument on appeal posits that the evidence in this case required the trial court to grant her motion for a directed verdict or, alternatively, for judgment n.o.v. Plaintiff correctly cites Pedrick v. Peoria & Eastern R.R. Co. (1967), 37 Ill. 2d 494, 229 N.E.2d 504, for the proposition that verdicts ought to be directed and judgments n.o.v. granted in cases where all of the evidence viewed in the aspect most favorable to the opponent so overwhelmingly favors the movant that no contrary verdict based on the evidence could ever stand.

Plaintiff argues that defendant failed to keep a proper lookout for the ditch despite his knowledge that ditches existed in the area. Plaintiff also contends that since the accident involved only the jeep being driven by defendant, there must have been negligence on defendant’s part unless the occurrence could be deemed an unavoidable accident.

As support for her position, plaintiff relies upon Williamson v. City of Springfield (1984), 125 Ill. App. 3d 361, 465 N.E.2d 1035, which holds that the law does not permit the driver of an automobile to blindly proceed down a roadway and then claim that he looked and did not see. We find, however, that the present case is factually distinguishable from Williamson, because in that case the 82-year-old plaintiff was struck in an intersection by the defendant’s automobile during the morning hours. The court noted that the evidence established the road upon which defendant was travelling was straight and level; his view was apparently unobstructed; and he did not see the plaintiff in time to avoid the accident.

Moreover, questions of proper lookout and speed appropriate to conditions are generally questions for the jury to decide. (Chevrie v. Gruesen (1991), 208 Ill. App. 3d 881, 567 N.E.2d 629; Toney v. Mazariegos (1988), 166 Ill. App. 3d 399, 519 N.E.2d 1035.) In this case, we find the clear presence of a question for the jury as to whether defendant’s entry into the ditch was an act of negligence. (Thomas v. Northington (1985), 134 Ill. App. 3d 141, 479 N.E.2d 976; Zerbenski v. Tagliarino (1978), 67 Ill. App. 3d 166, 384 N.E.2d 753.) Questions of negligence, due care and proximate cause are ordinarily questions of fact for a jury to decide, and become questions of law only when the facts are not only undisputed but are also such that there can be no difference in the judgment of reasonable men as to the inferences to be drawn from them. Ney v. Yellow Cab Co. (1954), 2 Ill. 2d 74, 117 N.E.2d 74.

In this case, defendant testified that he did not see the ditch, because it looked to him as though he were entering a level area and that the grass growth made it appear as though it were an even patch of grass. The headlights of the vehicle were operating, and it does not appear as though defendant was travelling at an excessive speed when he entered the ditch. We also note that none of the other passengers, including plaintiff, saw the ditch prior to impact. Thus, we cannot say that the inferences which might reasonably be drawn from this evidence so overwhelmingly favor the plaintiff that no contrary verdict could ever stand. (Pedrick v. Peoria & Eastern R.R. Co., 37 Ill. 2d 494, 229 N.E.2d 504.) Accordingly, plaintiff’s motion for a directed verdict or a judgment n.o.v. was properly denied.

Plaintiff next contends that the trial court erred in denying her motion for a new trial. Plaintiff essentially repeats her earlier argument that characterizes defendant’s testimony as self-serving and unrealistic in view of the fact that he had driven in the area on previous occasions and was generally aware of the presence of ditches.

It is within the sound discretion of the trial court whether to grant a motion for a new trial, and absent a clear abuse of that discretion, its decision will remain undisturbed. (Villa v. Crown Cork & Seal Co. (1990), 202 Ill. App. 3d 1082, 560 N.E.2d 969.) The relevant inquiry, when such a motion is presented, is whether the verdict rendered is against the manifest weight of the evidence. (Mizowek v. De Franco (1976), 64 Ill. 2d 303, 356 N.E.2d 32.) A verdict is against the manifest weight of the evidence where the opposite conclusion is clearly evident or where the findings of the jury are unreasonable, arbitrary and not based upon any of the evidence. (Monier v. Winkler (1987), 158 Ill. App. 3d 724, 511 N.E.2d 246.) Upon review of the record, we find sufficient evidence exists to support the jury’s verdict and that the trial court properly denied plaintiff’s motion for a new trial.

Plaintiff next contends that the trial judge erred in refusing to give plaintiff’s proffered jury instructions. Specifically, plaintiff complains that Illinois Pattern Jury Instructions, Civil, No. 20.01 (Supp. 1989) (hereinafter IPI Civil 2d No. 20.01 (Supp. 1989)), which instructs the jury on plaintiff’s theory and contained the term “joy riding,” should have been given; and that Illinois Pattern Jury Instructions, Civil, No. 70.01 (Supp. 1990) (hereinafter IPI Civil 2d No. 70.01 (Supp. 1990)) defining the duty of every driver using a public highway to exercise ordinary care should have been allowed.

The purpose of jury instructions is to advise the jury of the correct principles of law to be applied to the evidence admitted at trial. (Brandt v. Uptown National Bank (1991), 212 Ill. App. 3d 621, 571 N.E.2d 531; La Salle National Bank v. City of Chicago (1985), 132 Ill. App. 3d 607, 478 N.E.2d 417.) While the trial court has considerable discretion in determining the form of the instruction to be given, the instructions given must be supported by some evidence in the record, they must correctly state the law, and they must not overemphasize any particular matter. (Ramos v. Pankaj (1990), 203 Ill. App. 3d 504, 561 N.E.2d 744.) Moreover, a reviewing court will not reverse a trial court for erroneously refusing an instruction unless prejudice has resulted. Malek v. Lederle Laboratories (1984), 125 Ill. App. 3d 870, 466 N.E.2d 1038.

Review of the jury instructions reveals that the jury was adequately apprised of the issues in this case. IPI Civil 2d No. 20.01 (Supp. 1989) stated plaintiff’s allegation that defendant traveled at a rate of speed greater than proper with regard to conditions; that he failed to keep his vehicle under control; and failed to keep a proper lookout. We do not find that the court’s exclusion of the term “joy riding” unduly prejudiced plaintiff. We also find that the court correctly decided that the accident did not occur on a public highway, since the evidence adduced at trial established that the accident took place in a wooded public area and therefore did not comport with the definition of a “public highway.” IPI Civil 2d No. 70.01 (Supp. 1990).

Plaintiff also contends that the court erred in permitting evidence of consumption of alcohol by plaintiff and Czubak. Plaintiff relies upon Gilberto v. Nordtvedt (1971), 1 Ill. App. 3d 677, 274 N.E.2d 139, wherein this court held that when intoxication was not an issue, the portion of a deposition in which a witness stated that defendant’s decedent had one can of beer at a party just prior to an accident should have been stricken as irrelevant evidence. Plaintiff also cites Warp v. Whitmore (1970), 123 Ill. App. 2d 157, 260 N.E.2d 45, where this court held that a motion to strike evidence bearing on intoxication was properly allowed where plaintiff passengers injured in a collision with defendant’s automobile did not introduce any evidence of intoxication apart from evidence that defendant admitted to having one drink. We find these two cases to be factually distinguishable from the present case, however, for in each instance, it was the defendant drivers, and not the plaintiffs’ intoxication, who were at issue. We also note parenthetically that in each instance, the court held that the introduction of such irrelevant evidence was insufficient cause for reversal.

It is well established that after a proper foundation has been established, a witness can testify as to his opinion regarding the state of intoxication of another person. (Tate v. Coonce (1981), 97 Ill. App. 3d 145, 421 N.E.2d 1385; Grant v. Paluch (1965), 61 Ill. App. 2d 247, 210 N.E.2d 35; Vandeveer v. Preston (1957), 13 Ill. App. 2d 29, 140 N.E.2d 521.) It is within the discretion of the trial court as to what constitutes a sufficient basis for a nonexpert to render an opinion based on intoxication. (Tate v. Coonce, 97 Ill. App. 3d 145, 421 N.E.2d 1385.) In the present case, both plaintiff and Czubak admitted to drinking over three cans of beer on the night of the accident. Defendant drove around with plaintiff for approximately 45 minutes to 1 hour prior to the accident, and testified that she was stumbling, giggling, smelled of alcohol, and also that he saw her drink a can of beer. Thereafter, defendant testified that, in his opinion, plaintiff was intoxicated. We find that the facts in this case indicate that defendant had ample opportunity to observe plaintiff, and therefore, his opinion testimony was proper.

Moreover, as the trial judge stated, evidence of consumption of alcohol is relevant for the purpose of impeaching plaintiff’s ability to accurately recall the events surrounding the accident. Each party is entitled to present evidence which is relevant to his theory of the case, as well as evidence which tends to show conduct inconsistent with his opponent’s theory. (Dayan v. McDonald’s Corp. (1984), 125 Ill. App. 3d 972, 466 N.E.2d 958.) The determination of relevancy of evidence is largely within the discretion of the trial court, and reversal of its decision is not warranted absent abuse of that discretion. (Chapman v. Brokaw (1992), 225 Ill. App. 3d 662, 588 N.E.2d 462.) We do not find that the trial court abused its discretion in admitting evidence of the consumption of alcohol by plaintiff and Czubak.

Plaintiff finally contends that the court erred in not permitting plaintiff’s photograph of the ditch to accompany the jury into deliberations. The photograph was introduced into evidence and was viewed by the members of the jury during closing arguments. While Czubak testified that the ditch depicted in the photograph was in fact the ditch where the accident occurred, she testified that the length of the grass was not the same as it looked on the night of the accident. Defendant testified that the photograph did not portray the subject ditch. There was no other testimony by any of the witnesses to indicate that it was the specific ditch as it appeared on the night of the accident. As such, we find that the trial court did not commit error in refusing to permit the photograph to go to the jury during their deliberations.

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

Judgment affirmed.

EGAN, P.J., and RAKOWSKI, J., concur.


author: JUSTICE RAKOWSKI JUSTICE STOUDER,

text:
    CHICAGO TRANSIT AUTHORITY, Appellant, v. THE INDUSTRIAL COMMISSION et al. (Joshua Chism, Appellee).
    First District (Industrial Commission Division)
    No. 1—91—4085WC
    Opinion filed October 30, 1992.
    Rehearing denied December 29,1992.

      STOUDER, J., dissenting.
    Bruce J. Talaga, of Chicago Transit Authority, of Chicago, for appellant.
    Gaines & Gaines, of Chicago (Lewis P. Gaines, of counsel), for appellee.
   JUSTICE RAKOWSKI

delivered the opinion of the court:

The employer, Chicago Transit Authority, appeals the circuit court’s confirmation of the Industrial Commission’s (Commission’s) decision which held that claimant Joshua Chism was injured in the course of his employment and awarded benefits to claimant. We affirm.

The pertinent facts follow. Claimant, age 27, testified that he was employed as a bus driver for the employer in 1984. Prior to working for the employer, claimant, who had played basketball at Southern Illinois University for four years, played basketball at King Boys Club. On one occasion, claimant was approached by Arliss Jones, who told claimant that talented basketball players were hired by the employer as bus drivers. Subsequently, claimant was hired as a bus driver for the employer at the Kedzie Bus Station in Chicago.

Claimant further testified that the number of hours he worked each week depended on the number of games the team had. He played basketball on the employer’s team when the season started in October of 1985. He apparently had quit the team for awhile in 1984 and rejoined it. According to claimant, he “practiced all year-round with the team.” Sometimes games and practices were scheduled during work hours, when claimant was supposed to be driving a bus. Clark Carter, claimant’s boss, told claimant that the superintendent would arrange for claimant to be off work during game time. Accommodation for the basketball team was the only time claimant’s schedule was adjusted.

Claimant stated that the employer paid claimant for the days that he did not drive the bus and was instead playing basketball. When asked when this occurred, though claimant indicated it was more than once, he could not say how many times this occurred. He did testify that playing basketball was his “work assignment” and that there were times when he drove a bus less than he was required and got paid because he practiced. The uniforms the team wore were supplied by the employer and were given to the players at work. The employer paid for the uniforms, and the players travelled by bus to the game sites. Spectators at the games were charged admission, with the proceeds going to the employer’s Welfare Fund, which supported basketball and other recreational activities.

Claimant testified that all of the team players were bus drivers for the employer, and the coaches were co-employees.

He further testified that before working for the employer, he spoke with Clark Carter, Ronald Coleman (who coached the team and whose actual name is Curtis Coleman, “Ronald” appearing to be a nickname) and Arliss Jones. According to claimant, Carter told him that because he was talented, he was being hired to play basketball. However, claimant did go through the routine hiring procedures with the employer’s personnel department. Basketball was not mentioned. Claimant practiced basketball every morning in the summer of 1985 in a gym which the employer rented for its employees. Claimant was injured during a game on November 19,1985.

Clark Carter, who was the superintendent of the Kedzie Bus Station in 1985, testified that the employer conducted a basketball league. Carter’s role was to make time available for the employees to play in the league as manpower permitted and to adjust schedules accordingly. In 1985, Carter had 700 employees, 15 of whom played on the team. All of the players were bus drivers and they practiced at the Chicago Park District and the King Boys Club. Claimant was under Carter’s supervision in 1985 and played on the team.

Carter could not recall giving claimant any specific route or hours so that claimant could play basketball in 1985, although Carter did recall that after claimant was injured playing basketball, claimant’s name was placed in the Kedzie Garage sick book. The league was in existence by agreement of the union and the employer, and it was Arliss Jones’ responsibility to schedule practices. Carter’s role as superintendent included attending occasional games, and he attended award dinners and banquets for the basketball league.

Carter was present at the organizational meeting for the team, and bylaws were established. When an employee was injured during league activity, the employee would go on the employer’s “sick book.” Carter, when asked how an injured employee’s medical and hospital bills were paid, replied: “Whatever the insurance, they will compensate him in accordance with his injuries.” He was asked which insurance paid for these expenses and stated: “I don’t know. We have various carriers *** I do not know which one he would be with.” When an employee was injured, he was to give the bills to “the medical department to the insurance. He would make a claim on a regular CTA claim form and give those bills to the CTA insurance company.”

Carter’s testimony was consistent with claimant’s regarding the vending machine proceeds going to the Welfare Fund and the Welfare Fund funding the basketball league. There may have been a recruiting committee to enlist present employees in the sports leagues, and circulars advertising the leagues were sent out. Carter denied hiring claimant specifically for the purpose of claimant’s participating in the basketball league.

William Beutoe, manager of the treasury of the employer, also testified. He was also the treasurer of the Welfare Fund and was in charge of the employer’s monies and the control of the vending machines. He also testified that the vending machine proceeds go to the Welfare Fund, which funds the employer’s sports leagues. Further, the Welfare Fund funded award dinners and banquets for the employer. The Welfare Fund funded 75% of the costs of the employer’s sports programs and paid 75% of coordinators’ fees. Fifty percent of. the Welfare Fund’s disbursements went to the employer’s sports programs. The Welfare Fund also paid for uniforms and some equipment. The most the Welfare Fund has spent in one year is $40,000.

Arliss Jones, the employer’s transportation program analyst, was the employer’s sports coordinator in 1985. For his duties of coordinating sports in 1985, he was paid an additional $200 by the employer. He acknowledged that an employee on a team would go to the superintendent to have his bus hours rescheduled. Jones testified that he used the employer’s office machines for sports league business. Jones denied having anything to do with hiring claimant and testified that employees joined the basketball team on a purely voluntary basis.

Curtis Coleman, the coach of the team for which claimant played, testified that claimant played on the team in 1985. According to Coleman, he gave the players schedules and collected $25 to $50 per player, which went towards the costs of the league. Coleman was at the game where claimant was injured. According to Coleman, claimant knew that his medical bills would be paid given that claimant was on duty at the time he was injured. Coleman was aware that individuals injured in that manner were paid when off of work. Coleman denied having anything to do with hiring bus drivers in 1984 and 1985.

The arbitrator ruled that claimant was ineligible for benefits. The Commission, however, set aside that finding, ruling that claimant was in the course of his employment and awarded benefits (the extent of which is not at issue). Upon review, the circuit court confirmed the decision of the Commission.

The issue presented for review is whether the Commission’s finding that claimant was injured in the course of his employment was against the manifest weight of the evidence.

The governing statutory provision is section 11 of the Illinois Workers’ Compensation Act (the Act) (Ill. Rev. Stat. 1985, ch. 48, par. 138.11), which provides:

“Accidental injuries incurred while participating in voluntary recreational programs including but not limited to athletic events, parties and picnics do not arise out of and in the course of the employment even though the employer pays some or all of the cost thereof. This exclusion shall not apply in the event that the injured employee was ordered or assigned by his employer to participate in the program.”

As we observed in Cary Fire Protection District v. Industrial Comm’n (1991), 211 Ill. App. 3d 20, 25, 569 N.E.2d 1338, a case which addressed the same issue as that presented subjudice:

“The Commission’s findings of fact are not to be set aside by a reviewing court unless contrary to the manifest weight of the evidence. [Citation.] Its determinations will not be set aside if they are supported by credible evidence in the record. [Citation.] Even though the facts are undisputed, where such facts permit more than one reasonable inference, then a question of fact is presented, and the conclusion of the Commission on the fact will not be disturbed by a reviewing court unless it is against the manifest weight of the evidence. [Citation.] A reviewing court will not overturn the Commission’s findings simply because different inferences could be drawn, or otherwise substitute its judgment for that of the Commission. [Citation.]”

In the present case, it is clear that the employer funded many of the costs of the basketball league, the employer may have benefitted from claimant’s participation in the league, and the employer actively organized and ran the league. Under section 11, however, such funding and organization are not sufficient, in and of themselves, to bring claimant’s injury within the course of his employment.

In both Kozak v. Industrial Comm’n (1991), 219 Ill. App. 3d 629, 579 N.E.2d 921, and Cary, we held that the Commission’s determination of whether the claimants were excluded under section 11 was not against the manifest weight of the evidence. In Law Offices of William W. Schooley v. Industrial Comm’n (1987), 151 Ill. App. 3d 1069, 503 N.E.2d 1186, we reversed the Commission’s finding that the claimant was not in the course of his employment when injured while playing on his employer’s softball team. We observed:

“Accidental injuries incurred by an employee while participating in a voluntary recreational program are excluded by section 11 ***. However, the exclusion does not apply if the employee was ordered or assigned to participate in the ‘program.’ ” 151 Ill. App. 3d at 1074.

We believe the meaning of section 11 is clear that while voluntary participation in a recreational activity generally does not lend itself to the Act’s benefits and protections, where an employee is ordered or assigned to participate in the activity, there exists an exception to the section 11 exclusion. In the case sub judice, while claimant’s participation may have been voluntary in the sense that he wished to participate in the basketball league, there exists ample evidence in the record to support the Commission’s determination that claimant was assigned to participate on the team.

The employer’s witnesses, Carter, Jones and Coleman, testified to the effect that claimant’s participation was voluntary and that he was not hired for the purpose of playing in the basketball league. Claimant, on the other hand, related that the employer’s agents did hire him due, at least in part, to his basketball abilities and that the employer went to significant lengths to accommodate his basketball activities. He also said that at times basketball was his work assignment. Importantly, the employer does not dispute that if, indeed, its agents did expressly recruit and hire claimant to play basketball and accommodate his schedule to the lengths that claimant testified, claimant would fall within section ll’s ordering or assigning exception. Rather, the employer’s argument is that claimant’s testimony is unworthy of belief.

While the employer does indicate some areas where claimant’s testimony was inconsistent or impeached, it is well settled that it is the function of the Commission to judge the credibility of witnesses. (See O’Dette v. Industrial Comm’n (1980), 79 Ill. 2d 249, 253, 403 N.E.2d 221.) Given the Commission’s resolution of the credibility issue, coupled with the obvious benefits to the employer and the regular and systematic organization the employer engaged, we hold that the Commission’s determination that claimant was assigned to play in the league was not against the manifest weight of the evidence, and claimant was excepted, therefore, from the section 11 exclusion.

Accordingly, the judgment of the circuit court is affirmed.

Affirmed.

McCULLOUGH, P.J., and WOODWARD and H. LEWIS, JJ., concur.

JUSTICE STOUDER,

dissenting:

Respectfully, I must dissent.

I am troubled by the course the majority has taken in this case with its affirmation of the Commission’s decision. It appears to me that the majority has given its blessing to the Commission’s decision to ignore the plain language of the statute. The wording of the disputed statute in this case could not be more clear. Injuries incurred in the course of recreational activities are not compensable unless the employee was ordered or assigned by the employer to participate in the recreational activity. The majority initially engages in an irrelevant discussion on the funding of the basketball league by the CTA. The statute itself makes funding by the employer a nonissue.

The majority then goes on to say that the claimant was assigned to play basketball for the CTA. The majority’s decision seems to imply that there is a difference between “ordering” and “assigning.” I do not believe that there is an important difference between these two words; they both have the same implication — lack of voluntary behavior. The words seem to be interchangeable in describing an absence of voluntary participation. Support for this position is found in our previous decision Cary Fire Protection District v. Industrial Comm’n (1991), 211 Ill. App. 3d 20, 25, 569 N.E.2d 1338, 1342, wherein we stated “[i]t is undisputed that the claimant was not ordered to participate in the tournament; accordingly, his participation was voluntary.” Similarly, in this case the claimant was not ordered to participate in the basketball league. This was a voluntary undertaking. Players had to try out for the league and win a spot on one of the teams; they were not ordered or assigned to do so. The CTA certainly accommodated the players by arranging their schedules so that they could play in the games, but this does not in any way show that participation was required of anyone.

I am troubled by the precedent we are setting with this decision. In my opinion, the majority’s view does violence to the plain meaning of section 11. If we are willing to ignore so flagrantly the express language of the statute, I am uncertain as to what meaning the statute will have after this decision. It appears to me that we have rendered section 11 meaningless. There is no rule of construction authorizing a court to declare that the legislature did not mean what the plain language of the statute imports." (County of Du Page v. Graham, Anderson, Probst & White, Inc. (1985), 109 Ill. 2d 143, 485 N.E.2d 1076.) Because I believe the Commission’s decision to award benefits to the claimant was patently in violation of section 11, I would reverse the circuit court’s confirmation of the Commission’s decision and reinstate the ruling of the arbitrator.

For the foregoing reasons, I dissent.