author: Mr. PRESIDING JUSTICE SULLIVAN

text:
    The People of the State of Illinois, Plaintiff-Appellant, v. Leroy Jefferson, Defendant-Appellee.
    (Nos. 60197-8 cons.;
    First District (5th Division)
    December 27, 1974.

      Bernard Carey, State’s Attorney, of Chicago (Patrick T. Driscoll, Jr., and William F. Linkul, Assistant State’s Attorneys, of counsel), for the People.
    No appearance for appellee.
   Mr. PRESIDING JUSTICE SULLIVAN

delivered the opinion of the court:

The State, pursuant to Supreme Court Rule 604(a)(1), appeals from .an order quashing a search warrant, contending there was a sufficient .showing of probable cause for the issuance of the warrant.

The complaint by the police officer for a search warrant describes the location as "6108 S. University Apt. 301 Chicago, Illinois” and the things to be seized as "control substance to-wit; heroin, marijuana, cocaine and any other narcotic paraphernalia.” The affidavit of the police officer states as follows:

“I am a Chicago police officer, assigned to the 03rd District Tactical Unit. On 10 January 1974, I received information from a citizen drat the above stated narcotics were being sold and used at the above location. I immediately initiated a surveillance of the premises. Between 1100 A.M.-100 P.M. I observed approximately ten male negro persons some of whom I have arrested in the past for narcotic violations enter the building at the above location. I followed several of these persons and observed them go tup to the third floor and enter apartment 301. On 11 January 1974 between 1100 A.M.-100 P.M. another surveillance was conducted on the subject premises. I observed four male negro subjects enter tire building. I followed them up to the third floor and observed them enter apartment 301. On 12 January 1974 between 900 P.M.-1030 P.M. I positioned myself in the hallway of the third floor where I could observe Apartment 301. At approximately 910 P.M. a male negro knocked on the door and had a conversation with a male negro at which time I observed the subject exchange U.S. currency for a tinfoil packet known to me in my experience as a police officer to be used for the transportation and sale of narcotics. At 930 P.M., I observed another male negro go to apartment 301 and knock on the door at which time I observed the subject exchange U.S. currency for a tinfoil packet. Based on the information, investigation and personal observation, I believe that narcotics are being sold on the said premises.”

The warrant was issued, the premises were searched, 174.7 grams of marijuana was seized and defendant was arrested.

At the hearing on the motion to quash and suppress, the only witness was the affiant police officer, who testified that he had a telephone call from a person he did not know and had never talked to before. He then placed the subject building under surveillance for a period of 3 days. During the first two days he observed a number of individuals, known to him to be narcotics users, entering the building. He followed several and observed that they entered apartment 301 on the third floor. On the third day, he positioned himself in the hallway across from apartment 301 and observed a couple of men exchange currency for a tinfoil packet with someone in the apartment. He admitted not having seen the person who gave the tinfoil packet and not having heard any of the conversation involved in the exchange at apartment 301.

Opinion

The sole question on appeal concerns the sufficiency of the showing of probable cause for the issuance of the warrant. Initially, we see that defendant has not filed a brief in this court, and although we may reverse pro forma (People v. Keeney, 96 Ill.App.2d 323, 238 N.E.2d 614), we believe that the facts here merit consideration of this appeal.

The issuance of search warrants is governed by section 108 — 3 of the Code of Criminal Procedure (Ill. Rev. Stat. 1973, ch. 38, par. 108 — 3), which provides in pertinent part:

“Upon the written complaint of any person under oath or affirmation which states facts sufficient to show probable cause and which particularly describes the place or person, or both, to be searched and the things to be seized, any judge may issue a search warrant # # # »

Probable cause exists where facts and circumstances within the knowledge of affiant are sufficient in themselves to warrant a person of reasonable caution to believe that the law is being violated and that evidence is on the premises to be searched. People v. George, 49 Ill.2d 372, 274 N.E.2d 26.

In tire instant case, the affiant police officer did not witness the sale or use of any narcotics. His information came from the informer and, as it was set forth in his affidavit, it was hearsay which, standing alone, would have been insufficient to establish probable cause. (Aguilar v. Texas, 378 U.S. 108, 12 L.Ed.2d 723, 84 S.Ct. 1509.) However, it appears to be well-settled following the decisions in Jones v. United States, 362 U.S. 257, 4 L.Ed.2d 697, 80 S.Ct. 725, and Aguilar that an affidavit based on the observations of one other than the affiant could be sufficient to establish probable cause where a substantial basis for crediting die hearsay is presented. See People v. Francisco, 44 Ill.2d 373, 255 N.E.2d 413.

Such basis for crediting hearsay may be presented in various ways and is not restricted to a showing of the previous reliability of an informer as measured by prior arrests and convictions or the like. (People v. Kopple, 105 Ill.App.2d 68, 73, 245 N.E.2d 134. See also People v. Marro, 4 Ill.App.3d 197, 280 N.E.2d 560.) Where the showing of prior reliability of an informer is inadequate, other averments corroborative of the hearsay may be considered to determine whether probable cause exists. Spinelli v. United States, 393 U.S. 410, 21 L.Ed.2d 637, 89 S.Ct. 584.

Parenthetically, we note that it would be incongruous to hold that an informers information would be sufficient to establish probable cause only where prior reliability was shown. Just as there must be a first for everything in life, so must there be a first time for an informer to give information. The prior reliability of a first informer could never be established by die productive result of prior knowledge received and might not, in the case of a repeating informer, unless corroborative information could be considered.

In the instant case reliability was not and could not be shown, because the police officer did not know and had never spoken to the informer before his telephone call. Thus, we are concerned with the question of whether the content of the officer s affidavit was sufficiently corroborative to constitute a substantial basis for crediting the hearsay of die informer. In his affidavit, the police officer states that after receiving the informer’s call he conducted a 3-day surveillance of the subject building, during which he observed a number of persons he had previously arrested for narcotics violations enter the building. He followed several of them and saw them entering apartment 301 in the building. He also viewed two persons separately knock on the door of apartment 301, hold a conversation with the occupant therein, and exchange currency for a tinfoil packet, which he knew from his experience as a police officer was used in the transport and sale of narcotics.

It is well-settled that affidavits for search warrants must be tested and interpreted in a commonsense and realistic fashion (People v. McGrain, 38 Ill.2d 189, 230 N.E.2d 699), and it is not required that there be a showing of guilt beyond a reasonable doubt. People v. Fiorito, 19 Ill.2d 246, 166 N.E.2d 606.

We have considered the content of the affidavit here in the light of the principles of law set forth above, and we conclude that the personal observations of the police officer during his surveillance are corroborative of and are adequate basis for crediting the hearsay information from the informer. See People v. Williams, 36 Ill.2d 505, 508, 224 N.E.2d 225.

For the reasons stated, we are of the opinion that there was a sufficient showing of probable cause for the issuance of the search warrant here, and we reverse the judgment of the trial court and remand this cause with directions to deny defendant’s motion to quash the search warrant.

Reversed and remanded with directions.

DRUCKER and LORENZ, JJ., concur.


source: Caselaw Access Project

author: Mr. JUSTICE GOLDBERG

license: Public Domain

text:
    Allstate Insurance Company, Plaintiff-Appellee, v. National Tea Co. et al., Defendants-Appellants.
    (No. 58311;
    First District (1st Division)
    January 6, 1975.

      Kirkland & Ellis, of Chicago (Thomas M. Thomas, Donald J. Duffy and Gary M. Elden, of counsel), for appellants.
    Clausen, Hirsh, Miller & Gorman, of Chicago (John P. Gorman, Stephen D. Marcus and James T. Ferrini, of counsel), for appellee.
   Mr. JUSTICE GOLDBERG

delivered the opinion of the court:

This appeal presents a situation in which able counsel on both sides of a controversy strive to apply divergent legal theories to a case in which the material facts are virtually admitted. The matter involves liability of Allstate Insurance Company (plaintiff) upon two policies of fire insurance covering a building and its contents in Springfield, Illinois. The action was brought for declaratory judgment. (Ill. Rev. Stat. 1973, ch. 110, par. 57.1.) The defendants originally were: National Tea Co. (National), lessee of the building and operator of a supermarket therein; C. W. National Springfield, Ill., Inc. (C. W.), lessor and owner of the building; and also Franklin Life Insurance Company. The latter company, originally represented by separate counsel, owned a mortgage secured by the building. The parties in interest agreed that it has sustained no loss by virtue of the facts herein. It has not joined in this appeal. The two remaining parties defendant will be referred to collectively as “defendants.”

After hearing the evidence, the trial court sustained plaintiffs position and declared the policies void and of no force and effect from their inception “by virtue of the lack of a meeting of the minds between the parties herein * * Defendants appeal.

Prior to the events in question here, National had placed all of its nonsprinklered stores, pertaining to both buildings and contents, under blanket policies provided by insurance companies other than plaintiff. For some years prior thereto, National had been assisted in its insurance problems by an insurance counsellor or broker (Oliver Wheeler) with 30 years of experience in this field. In a written stipulation of fact, the parties agreed that this broker acted as agent of defendants in dealing with Allstate to procure proper and sufficient fire insurance coverage.

National maintained insurance coverage on more than 500 supermarket locations. Obtaining this for buildings without sprinkler systems was difficult. Lengthy negotiations concerning a new program were held during 1968 and 1969 between representatives of the parties including an account executive for plaintiff (Walter Mulvihill), plaintiff’s senior underwriter (Edwin Hoffman), National’s insurance manager (Frank Femyer), defendants’ broker and others. Plaintiffs representatives consistently took the position that they would not consider insurance on any nonsprinklered supermarket by itself and that they would consider placing the entire coverage on such properties only upon a retrospective premium formula together with a $100,000 deductible clause pertaining to each occurrence. On the contrary, policies would be issued upon an individual basis without these requirements for sprinklered locations. As a result of these negotiations, the conditions advanced by plaintiff became a firm' understanding. In due course Allstate provided National with fire insurance on seven locations equipped with automatic sprinkler systems but did not write any insurance on supermarkets not thus equipped.

As regards the subject premises, 920 North Grand Avenue East, in Springfield, Illinois, defendants’ broker called the senior underwriter of plaintiff during July of 1969 and stated that insurance was required upon a new store about to open. He did this at the specific request of National’s insurance manager. Hie broker was asked by the underwriter if this location was sprinklered and he replied affirmatively with the added statement that this was “a brand-new building.” This information was confirmed by a written memorandum sent to the underwriter by the broker on July 5, 1969, which described the subject premises as a “Sprinklered (Brick) Bldg.” In truth and in fact, the subject property was not provided with a sprinkler system. Two of National’s agents, its real estate manager and its construction superintendent, were familiar with construction of the store upon the premises. They knew that it had no sprinkler system.

In due course, plaintiff issued two insurance policies in the usual form. One policy, issued to C.W., covered the building in the amount of $314,000 and sprinkler leakage on the building in the amount of $35,000. This policy had a typewritten endorsement, “It is understood and agreed, rates and premiums are tentative, subject to establishment of final rates by the Illinois Inspection and Rating Bureau.” The other policy ran to National and covered contents in the amount of $400,000 and sprinkler leakage on the contents for $110,000. It contained a similar clause concerning rate adjustment. Both of these policies contained not only the sprinkler leakage coverage but also a provision requiring the insured, as a condition of the policy, to use due diligence to maintain the sprinkler system and water supply “in complete working order * * These policies also gave plaintiff the light to cancel on 5 days’ notice with or without cause.

The testimony of plaintiff’s senior underwriter is clear and definite that, at the time of his telephone conversation with defendants’ broker when the memorandum from the broker was received by him and when the policies dated July 5, 1969 were issued, he had no knowledge that the building in question was actually not provided with a sprinkler system. If he had such knowledge at that time, he would not have issued the policies. Similarly, the broker testified that he knew plaintiff would not write fire insurance on an individual basis on any property not provided with a sprinkler system and he knew the importance of his statements, verbal and written, that the premises in question were provided with a sprinkler system. The broker testified that the “pattern was such” that he believed the building had a sprinkler system.

These policies were received in due course by National’s insurance manager who had 11 years of experience in his position. He read the policies and noticed that they contained sprinkler leakage insurance for buildings and contents. He noted also that they required the insured to keep the sprinkler system and water supply “in operation.” He authorized payment of premiums on the policies. He was then aware that plaintiff would not accept a location without a sprinkler system. At that time, he did not know that the subject premises had no sprinklers. Tire subject property, if nonsprinklered, would have had automatic coverage on blanket policies held by National but he requested that the broker obtain coverage from plaintiff.

On July 14, 1969, about 2 weeks after the effective date of the policies, the senior underwriter for plaintiff wrote a letter to the Chicago office of the Illinois Inspection and Rating Bureau, now known as Insurance Service Office of Illinois. This office is a corporation which establishes rates for fire and other related insurance upon commercial buildings based upon structural characteristics and other pertinent details. It has offices in Springfield and in Chicago. It establishes insurance rates on properties with and without automatic sprinkler systems. This service is rendered at the request of insurance companies, agents and brokers. These rates are based upon a detailed physical inspection of the property. Sprinklered and nonsprinklered buildings are handled in separate departments. There is, however, no separate department in Springfield, where the subject property is located, for handling properties with automatic sprinklers. After a rate has been set, the information is placed upon a rate card. All of these cards are retained together, without differentiation based upon the presence of a sprinkler system.

The Service Office is actually operated by a number of member insurance companies. These companies choose a governing committee which is analogous to a board of directors. However, an insurance company need not be a member of the organization but, as a so-called subscriber, it may obtain the same service. Plaintiff was a subscriber to the organization and had no vote or voice in its operation or procedure.

The letter from plaintiff to the Service Office properly and correctly gave the street address of the subject building. It described the property as “a new, sprinklered supermarket building.” It requested inspection and rating. This request was brought to the attention of the assistant superintendent (Raymond Krause) of the Chicago department which dealt with sprinklered buildings. He has been associated with the organization for 25 years. Upon checking the files in his department, which pertained only to buildings equipped with sprinklers, he found a file for “902 South Grand Avenue” in Springfield. The file did not have a rate card thus indicating that the rate had not been established. In the file he found drawings for a sprinkler system being installed in a supermarket. He, therefore, on July 28, 1969, made a notation on the bottom of plaintiff’s letter stating that the property would be scheduled for inspection and a rate established as soon as a certificate of completion from the contractor had been received. He retained a copy of the letter with this notation and assumed that he returned the original to plaintiff. He “assumed” that he placed the copy in the file pertaining to “902 South Grand Avenue.”

He next had this situation directed to his attention on October 3, 1969. At that time, as a second request for the rate information, plaintiff caused to be sent to the Service Office a copy of the previous letter dated July 14, 1969, with a rubber stamp “Second Request” and the current date of October 3, 1969. This copy was forwarded to the Service Office. However, by October 1, 1969, a rate card for the subject premises (920 North Grand Avenue East) was on file in the Service Office in Springfield. By coincidence, that office had received a request for a rate on these premises from another insurance company effective June 9, 1969. The Springfield office did inspect the subject property for this purpose on September 12, 1969, and prepared a rate card which it held in its files with a copy to the Service Office in Chicago. The rate indicates that the subject building had no sprinkler system.

However, the assistant manager of the Service Office in Chicago did not know of the existence of this rate card. Upon receiving the second written request from plaintiff, he again looked at the file concerning the sprinklered building at 902 Grand Avenue. Accordingly, on October 7, 1969, he sent plaintiff a handwritten note stating that his files showed a supermarket located at 902-906 South Grand Avenue and that “We feel this is the property in question.” He stated that the rate information would be available in about 2 months.

This communication was received by plaintiff’s senior underwriter. On October 15, 1969, he wrote another letter to the Service Office pointing out that there was apparently some confusion between the “two completely separate locations.” Three days later the Chicago branch of the Service Office wrote to Springfield, enclosed copies of the previous correspondence, and requested that the situation be reviewed. Four days later (October 22, 1969) the Springfield office wrote to its Chicago branch and advised that there had been a complete loss on October 17, 1969, regarding the “NCWsprinklered National Food Store at 920 North Grand East.”

This information proved all too true. The building upon the subject property was destroyed by fire on October 17, 1969. On October 18, defendants’ broker called plaintiff’s account executive and told him that the property had been destroyed by fire. Both were surprised by the total loss of a building which both believed was equipped with a sprinkler Systran. Thus, even very soon after the loss, neither party was aware of this mutual mistake. It was not until October 20 or 21 that any employee of plaintiff was actually informed that the premises had no sprinkler system. On October 24, 1969, plaintiff wrote to the defendants declining liability and tendering return of premiums. The letter stated that plaintiff had learned within the past week that there was no sprinkler system on the premises. Tire letter also stated that plaintiff would not have issued the policy if it had known that the property was not equipped with a sprinkler system. Defendants rejected the tender of premiums and the denial of liability.

It is also necessary to note that both policies contained the following provision:

“This entire policy shall be void if, whether before or after a loss, die insured has wilfully concealed or misrepresented any material fact or circumstance concerning this insurance or the subject thereof, or the interest of the insured therein, or in case of any fraud or false swearing by the insured relating thereto.”

In this court, defendants urge that plaintiff cannot avoid the policies for a nonwilful misrepresentation because these policies expressly authorize avoidance only for a wilful misrepresentation. Alternatively, defendants contend that by delaying action until after the loss, plaintiff waived and became estopped to assert any right to void the policies. In this regard, defendants urge that the Service Office was plaintiff’s agent and that this agent and the plaintiff had knowledge that the subject property did not have a sprinkler system. Defendants further urge that the files of the Service Office and the inspection of the property showed that the building had no sprinkler system and that plaintiff was charged with knowledge of these facts; and, accordingly, that plaintiff had constructive knowledge of facts which it should readily have learned by initiating an inquiry. Defendants finally contend that Allstate waived and is thus estopped to rely on any ground for forfeiture because of its delay and retention of prepaid premiums until after the fire.

In response, plaintiff takes the position that the pertinent facts are uncontradicted in that the minds of the parties did not meet so that no agreement was reached. In this regard, plaintiff contends that mutual mistake in a basic, underlying assumption is dispositive of defendants’ claims. Plaintiff also contends that no agreement, and thus no contract, was reached and that without a meeting of the minds the right to rescind for this material matter need not be expressly reserved in the contract. Plaintiff urges that defendants themselves created the circumstances of which they now complain so that the arguments of waiver and estoppel are factually and legally untenable; the Service Office was not plaintiffs agent; plaintiff’s authorization to the Service Office to establish rates has no bearing upon the failure of the parties to reach an agreement to insure; waiver or estoppel cannot extend or create coverage where none exists; and, finally, there is no basis for the claim of waiver because defendants created their own predicament.

The plethora of authorities cited in the briefs is most convincing evidence of the wisdom of the supreme court rule describing this practice as “not favored.” (Supreme Court Rule 341(e)(7), 50 Ill.2d R. 341(e) (7).) This is especially true in a situation as presented here where two sets of keen legal minds have each raised a valid issue of law. Our problem is in choosing which one of these disparate legal principles should properly be applied to the facts before us.

The contention of defendants is placed squarely upon policy language. These policies provide that they shall be void if “the insured has wilfully concealed or misrepresented any material fact or circumstance * * *.” As defendants point out, the Illinois Insurance Code provides that no “misrepresentation or false warranty shall defeat or avoid the policy unless it shall have been made with actual intent to deceive or materially affects either the acceptance of the risk or the hazard assumed by the company.” (Ill. Rev. Stat. 1973, ch. 73, par. 766.) In Campbell v. Prudential Insurance Co., 15 Ill.2d 308, 155 N.E.2d 9, the supreme court held that this statutory language must be construed with “or” as a disjunctive, in effect requiring a misrepresentation with intent to deceive, or, alternatively, one which materially affects the risk.

However, the policy provision here expressly requires wilful concealment or misrepresentation of a material fact as a prerequisite for avoidance of the policy. Defendants thus reason that the policy imposes a greater burden upon an insurer, such as plaintiff, who seeks to avoid it, than does the Insurance Code. Since we are dealing here with a standard form of fire policy, defendants contend that the proper authorities of the State of Illinois have purposefully caused the word “wilful” to be inserted into fire policies, including those here involved, and that this is the mandatory standard with which plaintiff must comply to avoid the policies here involved.

In this regard, defendants cite numerous authorities concerning the requirements placed upon insurers who wish to defend for breach of contract. This position is apparently legally sound, in conformity with clear policy language in the case before us. Defendants further urge that since the policies contain no express provision requiring the presence of a sprinkler system as a condition of validity, it follows necessarily that the absence of such sprinklers could not give rise to a right to avoid the policy without a wilful misrepresentation regarding their presence.

On the contrary, plaintiff takes the position that the decisive issue here does not depend upon the terms of the policy itself but the key to the situation lies in the relationship between the parties prior to the issuance of the formal contract. It is plaintiff’s theoiy that this is not a case involving fraud or misrepresentation but it is an action to rescind or avoid a contract because of a material mutual mistake made in connection with the subject matter so that the minds of the parties did not meet and thus a binding policy never actually came into legal existence.

There is ample authority to support this proposition. For example, in Strieker v. Umbdenstock, 200 Ill.App. 20, plaintiff ordered fire insurance on warehouse “A” from the insurer. The person who took the order in good faith placed the insurance on warehouse “D.” Plaintiff brought suit against the agent who had taken the order for the insurance. This court reversed a judgment in favor of plaintiff on the theory “that there was no contractual relation between the parties — their minds never met. Plaintiff’s mind was in warehouse ‘A,’ defendant’s in warehouse ‘D.’ ” 200 Ill.App. 20, 21.

In Hoops v. Fitzgerald, 204 Ill. 325, 68 N.E. 430, the parties proceeded upon the mistaken assumption that two additional stories could be added to a building which was to be the subject of a lease agreement between them. A covenant to that effect was included in the lease. It was later discovered that the original structure was too weak to support the proposed addition. The court held that the mutual mistake was material to the transaction and went to the heart thereof. It so affected the conduct of the parties that it prevented them from entering into a binding contract. The court therefore granted rescission.

In Boyd v. Aetna Life Insurance Co., 310 Ill.App. 547, 35 N.E.2d 99, plaintiff obtained a policy of insurance upon the life of her husband including a provision for payment of permanent total disability. She and her husband separated. After some time, she surrendered the policy, unaware that prior thereto the insured had become permanently and totally disabled. Citing Hoops, the court held that there was a material mutual mistake which affected the substance of the transaction so that plaintiff had the right to rescind the cancellation of the policy.

In Obartuch v. Security Mutual Life Insurance Co. (7th Cir. 1940), 114 F.2d 873, a beneficiary sued upon two life insurance policies. The proof showed that the deceased insured neither signed nor authorized the execution of the application for the insurance. The district court held that no valid contract of insurance was ever brought into existence and recovery was denied. This result was affirmed in the court of appeals. The case is notable because of the holding by tire court that the existence of an incontestable clause in the policy did not prevent proof that no contract had ever existed between the parties. As the court pointed out, the presence of the incontestable clause “presupposes a valid contract and not one void ab initio — it cannot be used as a vehicle to sanctify that which never existed. * * * Thus there was no meeting of the minds — a fundamental requisite of all contracts — the policies as issued were void and the incontestable clause without effect.” 114 F.2d 873, 878.

Neither of the parties here denies that the contention advanced by the other may be true as a theoretical proposition. They differ sharply as to which of these propositions should be applied to the case before us. In our opinion, the evidence shows with total clarity that there was no wilful misrepresentation by defendants in connection with the placing of the insurance. Undoubtedly defendants and their individual agents were in complete good faith when they advised plaintiff that the subject premises did include a sprinkler system. When the broker, acting in behalf of defendants, represented verbally and in writing that the building included a sprinkler system, he had no knowledge to the contrary and was acting in a mistaken manner. Similarly, this erroneous information was accepted by plaintiff with complete good faith and acted upon in the same manner.

Tims, we have here a situation in which a mistake was made by one party and accepted by the other, both in good faith, with the result that the ensuing conduct of both parties was based upon a mutual mistake of fact. The evidence shows the materiality of this mistake. If defendants had not been mistaken, they would have known that the risk would be rejected by plaintiff. They knew that plaintiff would not accept an individual building without a sprinkler system and they knew that this type of structure should have been covered by their blanket policies then in existence. In precisely the same manner, if plaintiff had not been mistaken as to the central fact of existence of a sprinkler system, it would not have accepted the risk and issued the policies. It follows necessarily that the mistake thus made by one party, and perpetuated and acted upon by the other, was a mutual material mistake of fact which operated to prevent the existence of a valid contract.

Nor does the question of diligence enter into the matter. This does not mean that parties to a transaction may close their eyes and act with complete lack of care. In the case before us, we cannot say that the evidence showed that either of these parties lacked reasonable diligence in the transaction of their business. It is true that either party could conceivably, by investigation or inquiry, have ascertained the facts. However, “it is not enough to prevent relief in case of a mutual mistake that the party complainant might, had he done all within his power, have ascertained the truth.” (Hoops v. Fitzgerald, 204 Ill. 325, 330, 68 N.E. 430.) In our opinion, plaintiff had the right to rely upon the oral and written material representations made to it by the authorized agent of defendants. It had no duty to exercise greater diligence than it did. It had no duty to attempt independent verification of the information thus provided by defendants. In fact, ascertainment of the true condition of the building was more readily available to defendants than. it was to plaintiff.

We cannot accept the contention of defendants that plaintiff is strictly bound by the language of the contract so that it cannot obtain relief without proof of a wilful misrepresentation. The contention of plaintiff goes deeper than the terms or language of the contract itself and depends upon the ancient but potent principle of contract law that the formation of a binding contract is a matter of intent so that a valid contract can result only when there is a “meeting of the minds” of the respective parties. To hold otherwise would mean either that no contract could ever be rescinded for mutual mistake, or, alternatively, that no contract could be rescinded unless the parties so specifically provided in the agreement itself. It would seem manifestly impossible for parties to operate under a mutual mistake of fact but yet to provide against such a mistake by a specific contract provision.

It remains, however, to consider the alternative arguments advanced by defendants as to whether the relationship and dealings between these parties with reference to the activities of the Service Office and otherwise have created a defense based upon waiver or estoppel.

The classic definition of “waiver” is “the intentional relinquishment of a known right.” (Slavis v. Slavis, 12 Ill.App.3d 467, 474, 299 N.E.2d 413, citing Vermilion County Production Credit Association v. Izzard, 111 Ill.App.2d 190, 195, 249 N.E.2d 352.) In the field of insurance law, waiver is generally “not expressed or intentional, but rather it is implied from the conduct of the insurer or its agents.” (Van Hulle v. State Farm Mutual Automobile Insurance Co., 44 Ill.2d 227, 230, 254 N.E.2d 457.) Waiver differs from estoppel in that the former considers only one’s own conduct “without regard to its effect upon the party benefiting from the waiver.” National Bank v. Newberg, 7 Ill.App.3d 859, 868, 289 N.E.2d 197.

Estoppel has been variously defined. The word may have reference “to a situation where, because of something which he has done or omitted to do, a party is denied the right to plead or prove an otherwise important fact.” (Jennings v. Bituminous Casualty Corp., 47 Ill. App.2d 243, 249, 197 N.E.2d 513.) Other definitions include in substance the concept of reliance by one party, to the extent of a change of position to his detriment in good faith, upon the conduct of the other as a result of which that other party will not be permitted to raise a contention inconsistent with his misleading conduct. (See Hickey v. Illinois Central R. R. Co., 35 Ill.2d 427, 447, 220 N.E.2d 415, cited in Slavis v. Slavis, 12 Ill.App.3d 467, 473.) In this regard, it has been stated that the party claiming the benefit of estoppel “must have relied upon the actions or representations of the other and must have had no knowledge or convenient means of knowing the true facts.” Levin v. Civil Service Com., 52 Ill.2d 516, 524, 288 N.E.2d 97; Dill v. Widman, 413 Ill. 448, 455, 456, 109 N.E.2d 765.

Since waiver, as used in insurance matters, can generally be described as implied rather than expressed, it may be more closely related to estoppel in such cases than in many other situations. In any event, determination of issues of estoppel must necessarily depend upon the facts of the specific case being considered. (Forest v. Forest, 9 Ill. App.3d Ill, 115, 291 N.E.2d 880.) In all situations, the party who asserts the existence of estoppel “has the burden of proving it, and the proof must be clear, precise and unequivocal.” Jennings v. Bituminous Casualty Corp., 47 Ill.App.2d 243, 249, 197 N.E.2d 513.

The first question encountered here is whether the Service Office was the duly authorized agent of plaintiff in connection with the subject matter before us. Existence of an agency is initially a question of fact to be decided by the court or jury. (Yuhas v. Allis-Chalmers Distribution Service Corp., 12 Ill.App.3d 814, 821, 822, 823, 299 N.E.2d 166.) It has been generally held that the test of agency is existence of the right to control the method or manner of the accomplishment of a task by the alleged agent. In differentiating between an agent and an independent contractor, the Supreme Court of Illinois held in Hartley v. Red Ball Transit Co., 344 Ill. 534, 539, 176 N.E. 751, quoting from Nelson Bros. & Co. v. Industrial Com., 330 Ill. 27, 161 N.E. 113, which in turn had quoted from Decatur Ry. & Light Co. v. Industrial Board, 276 Ill. 472, 114 N.E. 915:

“The right to control the manner of doing the work is the principal consideration which determines whether the worker is an employee or an independent contractor.”

In the case before us, plaintiff had no right to control the method or manner of performance of the task it had requested from the Service Office. Plaintiff was merely a subscriber to the Office, as distinguished from a member thereof. It had no voice in the management or operation of the office. Similarly, plaintiff neither exercised nor had the right to control the employees of the Service Office regarding the method or manner of inspection of the subject property. Plaintiff expected merely to be advised as to the premium rate to be applied to the policies in question.

It is true, as defendants urge, that the policies expressly contemplated inspection of the property by the Service Office. However, it is clear from the language of the policies that this inspection was necessary for the establishment of final premium rates. The policies expressly provided that rates and premiums were tentative and subject to establishment of final rates by the Service Office. The function and authority of the Office were limited to this subject. Defendants had their own agents and employees who had a closer relationship to the subject property regarding the existence or absence of a sprinkler system than plaintiff or the Service Office. Thus, defendants had far greater opportunity, and even the duty, to determine this fact with complete accuracy.

Similarly, the policies provided that the Service Office was to be notified in event of any change in the sprinkler system. The use of this provision does not, in our opinion, establish an agency here but serves only to strengthen the fact that both parties to this controversy proceeded upon the basis of the mistaken and material notion that the subject property was improved with a sprinkler system.

It will be recalled that on October 1, 1969, a completed rate card for the subject property was in the possession of the Service Office at its Springfield and Chicago branches in connection with a request made by an insurance company other than plaintiff. However, the assistant manager of the Service Office, who was handling plaintiff’s request for rate establishment upon the subject premises, had no actual knowledge of the existence of this information in his employer’s files. The additional rate card was not made known by the Service Office to plaintiff at any time material to this litigation. In a situation of this type, without actual knowledge of tire information on the rate card, no notice or knowledge thereof can be imputed to plaintiff. Not only does this record thus show complete lack of agency between plaintiff and the Service Office, it also shows that the additional card was obtained by the office as a result of a request made to it by a different insurance company for a separate transaction. Compare Burton v. Berry, 146 Ill. 71, 118, 119, 34 N.E. 60.

Counsel for defendants raise a detailed argument concerning the dealings between plaintiff and the Service Office in this transaction. The point is raised that a number of mistakes were made by plaintiff and the Service Office in connection with the processing and handling of the request by plaintiff for rate establishment. It is not our function to pass upon the manner in which the Service Office handled the request. There is nothing in this course of dealings which demonstrates that mistakes were made by plaintiff in this regard. In the absence of proof of the existence of an agency relation between plaintiff and the Service Office, acts or omissions of the latter did not bind plaintiff, and notice to the office did not constitute notice to plaintiff. This entire course of dealings between plaintiff and the Service Office would never have transpired were it not for the honest mistake made by defendants in submitting this risk to plaintiff in the guise of insurance upon a building equipped with a sprinkler system.

It would seem to follow necessarily that the defense of waiver is not available. Certainly there was no express waiver of any kind by plaintiff nor was there any conduct by any agent of plaintiff which should be construed to constitute waiver by implication. On the contrary, this mistake was first made by defendants in good faith, and it was then adopted in the same good faith and perpetuated by plaintiff. We cannot gather intentional or knowing waiver of any rights by plaintiff, either expressly or by implication. As above shown, plaintiff had no actual knowledge of tire absence of the sprinkler system until after the loss.

Defendants also press upon us the generally accepted proposition that “waiver of a forfeiture has been upheld under certain circumstances where the insurer, with knowledge of an intervening loss, accepts a premium tendered for the purpose of covering the loss.” (Van Hulle v. State Farm Mutual Automobile Insurance Co., 44 Ill.2d 227, 230, 254 N.E.2d 457.) In Van Hulle, as in other cases which apply this principle, the facts are quite different from the instant case. There, the proof showed a loss on the policy of which the company’s agent had “immediate notice.” The premium check was actually written before the loss and the insured advised the agent that, if there was to be no coverage, the check should be returned. This information was given to the company by the agent, yet the insurer deposited the check. Consequently the court found that there was a knowing waiver by the company.

Defendants further contend that an insurer and its agents cannot blindly rely on facts innocently misstated by an insured when the true facts are within easy reach of the insurer’s agents. They claim that this principle is brought out in Storment v. Hartford Fire Insurance Co., 215 Ill.App. 287. The court there dealt with a building in a small village. “[T]here was no other building of that kind or character in the village * * (215 Ill.App. 287, 292, 293.) The court therefore concluded that the insurer “could not have in fact been misled as to the building or its location.” (215 Ill.App. 287, 293.) In the case before us, plaintiff was actually misled as to the material fact of the existence of a sprinkler system upon the premises. Plaintiff actually had no knowledge regarding this fact and no easy or convenient means of ascertaining it. Defendants, as owners and lessees of the property, certainly had far better means of knowing tire situation regarding this fact. Yet, they were mistaken, and by their conduct they innocently caused existence o£ the same mistaken idea to be planted in the minds of plaintiff’s agents.

As regards the issue of estoppel, the same conclusion must necessarily be reached. None of the elements of estoppel appear to be presented by this record. There is no reliance by defendants upon conduct of plaintiff. Each and every act performed by plaintiff, including issuance of the policies and plaintiff’s very failure to take steps to rectify the situation, is patently and completely based upon the same mistaken belief that activated the agents of defendants when they made their mistaken verbal and written representations to plaintiff regarding existence of the sprinkler system. We find here no change of position by defendants to then detriment caused by any act or failure to act by plaintiff. On the contrary, the unfortunate result here reached had its origin in the mistake made in good faith by defendants’ own people.

We cannot accept the argument so skillfully advanced by the defendants that delay by plaintiff caused the loss. As shown, the fact of nonexistence of the sprinkler system should have been known and could have been ascertained with at least equal or perhaps better ease and facility by defendants than by plaintiff. Then, armed with this information, mere inaction by defendants would have resulted in coverage of the building and contents by their existing blanket insurance policy. Therefore, we reject the contention of defendants that delay in inspection of the premises by the Service Office is sufficient basis upon which to predicate estoppel of plaintiff. Aside from the most important fact that no agency existed between plaintiff and the Service Office, the record does not justify the statement that such delay “prevented” defendants from obtaining coverage under substitute insurance. The lack of this type of coverage is not traceable to any conduct or even to any inaction or delay by plaintiff or by the Service Office. On the contrary, reliance upon substitute insurance coverage was discarded intentionally by defendants as a result of their own initial mistake regarding a physical fact concerning property which they themselves owned and leased.

Nor can we accept the contention of defendants that delay or silence by an insurer constitutes waiver or estoppel when there has been an intervening loss. We have already noted that Van Hulle v. State Farm Mutual Automobile Insurance Co., 44 Ill.2d 227, 254 N.E.2d 457, cited for this point by defendants, is not applicable here. In the same classification are cases such as Reinhardt v. Security Insurance Co., 312 Ill.App. 1, 38 N.E.2d 310. The court there found a waiver by implication regarding an increase in hazard in fire insurance due to a change in occupancy and use of the property. This was predicated upon the general proposition that the company had "knowledge of the breach, through its agent * * (322 Ill.App. 1, 12) but still remained silent and retained the premium. The lack of agency and also the lack of delay after ascertainment of knowledge by plaintiff in the case at bar render that decision also inapplicable.

As we have already pointed out, both sides of the controversy have made elaborate contentions in support of their respective positions. Both sides have cited so many authorities that it would be impossible to consider each of them in any opinion of reasonable length. Upon the above analysis we conclude that the defenses of waiver and estoppel are not available to defendants, and their alternative argument therefore fails.

Generally speaking, it should finally be noted that the alternative arguments thus advanced by defendants deal with the issue of attempted avoidance of a completed and binding contract of insurance. Plaintiff’s position is far deeper and convinces us that mutual material mistake motivated this entire transaction so that no binding agreement was ever actually entered into between these parties.

In our opinion, the judgment of the trial court; in avoiding the policies is in accordance with the facts and the law and should be and is affirmed.

Judgment affirmed.

BURKE, P. J., and EGAN, J., concur.


author: Mr. JUSTICE LORENZ

text:
    George F. Mueller & Sons, Inc., Plaintiff-Appellant, v. Juan Morales, d/b/a The Swinging Door Lounge et al., Defendants-Appellees.
    (No. 60765;
    First District (5th Division)
    December 27, 1974.

      Rehearing denied February 18, 1975.

      J. Edward Jones, of Blue Island, for appellant.
    Sherman & Lewis, of Chicago (Irving S. Abrams and Maurice L. Lewis, of counsel), for appellees.
   Mr. JUSTICE LORENZ

delivered the opinion of the court:

Plaintiff appeals from the denial of its motion for a temporary injunction to enforce the negative covenant contained in a vending machine contract with defendant Juan Morales, and to enjoin Tops Vending, Inc.’s, alleged interference with the contract and from the order of the court transferring the case to the law division. Plaintiff essentially contends that the trial court erred, because: (1) negative covenants should be enforced regardless of the existence of an adequate remedy at law, (2) the contract stipulation that this is a service contract and that there is no adequate remedy at law is binding on the court, and (3) a contractual provision for liquidated damages is not an adequate remedy at law.

The complaint in pertinent part alleges that plaintiff in the contract entered on April 18, 1974, was granted the “exclusive right to sell the products and services sold by said machine, * * * and [Morales] would not allow or permit any person other than the operator [Plaintiff] to install or operate said machines .and equipment on said premises * * that plaintiff would pay defendant 4 cents per pack of cigarettes sold and 50% of the receipts of the juke box and other games; that on April 30, 1974, defendant requested plaintiff to remove the vending machines, refusing to allow plaintiff to maintain them and that plaintiff believes Tops Vending, Inc., has induced this breach by offering a higher commission to Morales if he would use their machines; that in the first 20 days of operations Morales earned commissions in the amount of $108.17 from cigarettes, $90 from the juke box, $144.50 from the pool table and $20 from the shuffieboard game; and that if the contract is not enforced plaintiff will lose large revenues which cannot accurately be measured.

Plaintiff further alleges that it has elected to pursue its equitable remedies as provided in the contract rather than seek a “lesser amount in liquidated damages.” Plaintiff sets forth the following clause of the contract in support of its claimed entitlement to equitable relief:

“a. The non-offering party may apply to a Court of Chancery for an injunction to compel the party breaching this contract to perform its terms as agreed herein and all parties agree that this is a service contract and that damages for breach thereof cannot be measured and that an action of law is inadequate.”

Defendants filed answers denying specific allegations and particularly that there was no adequate remedy at law. The contents of these answers are not involved in this determination and need not be set forth. The trial court denied plaintiffs motion for a temporary injunction on the ground that there was an adequate remedy at law.

Opinion

Plaintiff first contends that negative covenants should be enforced regardless of the existence of an adequate remedy at law.

An action seeking to enforce the negative covenants of a contract is in substance an action for specific performance (Peru Wheel Co. v. Union Coal Co., 295 Ill.App. 276, 14 N.E.2d 998) and the grounds for granting it are generally the same as those governing the granting of specific performance. Dr. Allison, Dentist, Inc. v. Allison, 360 Ill. 638, 196 N.E. 799.

Specific performance will not be granted where there is an adequate remedy at law (Owens-Illinois Glass Co. v. McKibbin, 385 Ill. 245, 52 N.E.2d 177), such as money damages (Ingram v. Hammer Brothers White Lead Co., 269 Ill.App. 87), or where there is a contract relating to personal property, unless there is some element or feature to show that the relief at law might not be adequate such as where the measure of damages resulting from non-performance of the agreement is uncertain or difficult to ascertain, or where the subject contracted for has some intrinsic or special value to the complainant. Cohn v. Mitchell, 115 Ill. 124, 3 N.E. 420; Ingram v. Hammer Brothers White Lead Co., 269 Ill. App. 87.

In the instant case plaintiff is seeking specific performance of a contract related to personal property; that is, the opportunity to install its vending machines in order to sell products. The damage it will sustain is the loss of sales from these machines for which there is adequate relief at law. Plaintiff has indicated that it does not seek the liquidated damages provided for in the contract. In light of the sales figures alleged in plaintiff’s complaint there is a basis for ascertaining damages. There is also nothing unique or of intrinsic value in this contract to warrant the issuance of the injunction sought in this action, since a temporary injunction should only be granted if the complaint shows that the right to ultimate relief is probable. (Bohomolec v. Gieblewicz, 3 Ill.App.3d 16, 278 N.E.2d 202.) We agree with the trial courts denial of plaintiffs motiqn on the ground that there is an adequate remedy at law.

Plaintiff has referred to numerous cases where courts have granted injunctions to enforce negative covenants contained in leases and contracts. (The Southern Fire Brick and Clay Co. v. Garden City Sand Co., 223 Ill. 616, 79 N.E. 313; Anheuser-Busch Brewing Ass’n v. Dwyer, 150 Ill.App. 315; Peter Schoenhofen Brewing Co. v. Welbourn, 166 Ill.App. 229.) It should be noted that in all of these cases the contract dealt with the use of real property, and there was a negative covenant concerning either the use of the land or the use of only a certain product on the land. The principle expressed in these cases that a negative covenant contained in contracts or leases related to real property will be enforced by courts of equity by injunction although the same will occasion no substantial injury or even though the injury, if any, be recoverable at law is not applicable to the case at bar since no real property is involved.

Plaintiff next contends that the contract stipulation that this is a service contract and that there is no adequate remedy at law is binding on the court. It is sufficient to state in answer to this contention that parties to an action cannot vest a court with jurisdiction by consent or stipulation, but rather the court must look to the pleadings and facts of a particular case to determine whether it has jurisdiction to act in the particular situation.

Plaintiff lastly contends that liquidated damages are not an adequate remedy. It arrives at this conclusion by arguing that the liquidated damages as provided are "compromised damages” which are less than actual damages sustained and thus not adequate. No cases have been cited in support of this argument. We find it unnecessary to discuss this issue since there is, as previously discussed, an adequate remedy at law, and the validity or applicability of the liquidated damages clause can be determined in an action seeking the remedy at law.

For the reasons above stated the order of the circuit court denying plaintiffs motion for a temporary injunction and transferring the case to the law division is affirmed.

Affirmed.

SULLIVAN, P. J., and DRUCKER, J., concur.


author: Mr. PRESIDING JUSTICE BURKE

text:
    The Fair Employment Practices Commission, Petitioner-Appellant, v. Thomas Tenerovitz et al., Defendants-Appellees.
    (No. 60015;
    First District (1st Division)
    January 6, 1975.

      William J. Scott, Attorney General, of Chicago (Robert G. Epsteen, Assistant Attorney General, of counsel), for appellant.
    Ruff and Grotefeld, Ltd., of Chicago (Stephen L. Ruff, Jr., and John T. Mehigan, of counsel), for appellees.
   Mr. PRESIDING JUSTICE BURKE

delivered the opinion of the court:

This is an action by the Fair Employment Practices' Commission of Illinois (hereinafter the Commission) to have the circuit-court of Cook County order the defendants to obey certain subpoenas issued by the Commission. Three of the defendants are the agents- of several hospitals, which are associated with the fourth defendant, Missionary Sisters of the Sacred Heart. The subpoenas were issued by the Commission in connection with certain investigations into chárges. of unfair employment practices in vioíátion of section 3(a) of the Fair Employment Practices Act (Ill. Rev. Stat. 1971, ch. 48, par. 853(a)) which allegedly took place at the hospitals with which the defendants were associated. • The court dismissed the Commission’s petition to- have the subpoenas enforced on the ground that the defendants were exempt from the Act’s provisions due to their religious affiliation as provided in section 2(d). of the Act. (Ill. Rev. Stat. 1971, ch. 48, par. 852(d).) The Commissions later motion to vacate this order was also denied by the court. The Commission appeals from these two orders, contending that the defendants are not exempt under the Act.

Certain charges were filed with the Commission in 1971 and 1972 concerning alleged unfair employment practices that took place at Columbus and St. Francis Xavier Cabrini Hospitals. The charges alleged that these hospitals had discriminated either on the basis of race or national origin and ancestry in the advancement, reinstatement, hiring or termination of the complainants. The Commission then issued subpoenas to the defendants requiring their appearance and their production of personnel records concerning the charges. The defendants did not comply with the subpoenas, contending that they were exempt from the provisions of the Act. The Commission, therefore, petitioned the circuit court of Cook County in accordance with section 9(d) of the Fair Employment Practices Act (Ill. Rev. Stat. 1971, ch. 48, par. 859(d)) for an order requiring the defendants to comply with the subpoenas. The defendants then made a motion to dismiss the Commission s petition on the ground that they were exempt under section 2(d) of the Act. (Ill. Rev. Stat. 1971, ch. 48, par. 852(d)) because the two hospitals were owned and operated by a religious order of nuns of the Roman Catholic Church.

Section 3(a) of the Fair Employment Practices Act (Ill. Rev. Stat. 1971, ch. 48, par. 853(a)) provides that it is an unfair employment practice:

“For any employer, because of the race, color, religion, sex, national origin or ancestry of an individual to refuse to hire, to segregate, or otherwise to discriminate against such individual with respect to hire, selection and training for apprenticeship in any trade or craft, tenure, terms or conditions of employment.”

Section 2(d) of the Act (Ill. Rev. Stat. 1971, ch. 48, par. 852(d)) then states that:

“The term ‘employer does not include any not for profit corporation or association organized for fraternal or religious purposes, nor any school, educational or charitable institution owned and conducted by, or affiliated with, a church or religious institution, nor any exclusively social club, corporation or association that is not organized for profit.”

The defendants contend that section 2(d) exempts their hospitals from the provisions of the Act.

Section 2(d) defines three categories of organizations which are not included in the term “employer.” They are: (1) “any not for profit corporation or association organized for fraternal or religious purposes,”; (.2,) “any school, educational or charitable institution owned and conducted by, or affiliated with, a church or religious institution,”; and (3) “any exclusively social club, corporation or association that is not organized for profit.” The motions presented and hearings held in the lower court primarily concerned whether the hospitals were within the second category under the designation of a “charitable institution owned and conducted by, or affiliated with, a church or religious institution.”

The defendants attached to their motion to dismiss an affidavit which stated that Columbus and St. Francis Xavier Cabrini Hospitals were owned and operated by a corporation known as the Missionary Sisters of the Sacred Heart. The corporation, stated the affidavit, was solely owned by a religious order of nuns of the Roman Catholic Church. The function of this corporation was to operate hospital facilities on a religiously oriented, not-for-profit basis and also to train nurses.

None of these contentions was disputed by the Commission at a hearing held before the court subsequent to the defendants’ motion. The Commission’s attorney during the hearing agreed that the hospitals were operated on a not-for-profit basis and the Missionary Sisters were affiliated with the Roman Catholic Church. In response to an inquiry into where any excess funds from the hospital operations would go, the defendants’ attorney stated that they were plowed back into the hospital operation. Upon this evidence the court granted the defendants’ motion to dismiss the Commission’s petition. The court found that the defendants were exempt under section 2(d) of the Act.

A month thereafter the Commission filed a motion to vacate the order granting the defendants’ motion to dismiss the Commission’s petition. The motion alleged that there had been since January 5, 1973, four separate corporations with an interest in the hospitals rather than only one as alleged in the defendants’ prior motion to dismiss. The Commission attached to its motion the articles of incorporation for these four corporations. The four corporations were: (1) Columbus-Cuneo-Cabrini Medical Center, Inc.; (2) Missionary Sisters of the Sacred Heart, Inc.; (3) Missionary Sisters of the Sacred Heart — Midwest Province, Inc.; and (4) Cohimbus-Cuneo-Cabrini Medical Foundation, Inc. The Medical Center was incorporated in 1903, while the other three corporations were all incorporated on January 5, 1973. The Commission’s motion contended that because the medical center which now operated the hospitals was a separate corporation from the Missionary Sisters, therefore the hospitals were no longer entitled to an exemption under section 2(d) of the Act.

A letter was sent by the defendants’ attorney to the Commission’s attorney which explained the relationship of these four corporations. The Commission then attached this letter to a motion for summary judgment later presented to the court. The letter and the articles of incorporation of the four corporations were the primary focus of discussion at a subsequent hearing held before the court.

Prior to January 5, 1973, there was only one corporation, the Missionary Sisters of the Sacred Heart, which was incoiporated in 1903. The articles of incorporation stated that the purpose of this corporation was to establish and maintain hospitals and training schools for nurses all of which is “for charitable purposes and not for pecuniary profit.” Nowhere in the proceeding below did the Commission dispute the fact that prior to January 5, 1973, this corporation in fact has operated the hospitals in question on a not-for-profit basis.

On January 5, 1973, an amendment was filed to the articles which changed the corporations name to Columbus-Cuneo-Cabrini Medical Center. It is agreed by both parties that the Medical Center Corporation has the day-to-day operational control of the defendant hospitals.

Three new corporations were incorporated on January 5, 1973. The first was the Missionary Sisters of the Sacred Heart whose stated purposes were to establish and maintain hospitals and to assist the Medical Center corporation through gifts and loans of money. The Missionary Sisters of the Sacred Heart — Midwest Province was incorporated the same day for identical purposes. The third corporation incorporated that day was the Columbus-Cuneo-Cabrini Medical Foundation which was organized for the purpose of raising funds for the use and benefit of the Medical Center. All the above corporations were to be operated on a not-for-profit basis, and no provisions were made for the issuance of stock.

The Commission attached to tire motion for summary judgment the letter written to the Commission’s attorney by the defendants’ attorney in which the defendants explained the nature of tírese corporations and answered certain questions put to them by the Commission. The letter states that the Missionary Sisters of the Sacred Heart, an order of nuns of the Roman Catholic Church, formed a corporation in 1903 to carry out their business concerning the hospitals in question. The name of the original corporation was changed to the Columbus-Cuneo-Cabrini Medical Center and the three above-named corporations were formed. The letter states that the Medical Center corporation owns all the hospital property and conducts the day-to-day administration of the hospitals. However, all the members and officers of the Medical Center corporation are members of the religious order of the Missionaiy Sisters of the Sacred Heart.

At a subsequent hearing, the Commission contended that the letter and the articles of incorporation for the four corporations showed that the defendants did not fall under the Act’s exemption provisions. A discussion ensued as to whether the hospitals admitted non-paying patients. The defendants’ attorney stated that the hospitals admitted orphans and also offered to inform the Commission of the number of “free patients” the hospitals had admitted. The hearing brought out very little new evidence not already contained in the letter and the articles of incorporation. Upon the above evidence the court denied the Commission’s motion to vacate its prior order dismissing the Commission’s petition.

The Commission’s first contention on appeal is that the defendants are not an organization which falls within one of the exemptions provided by section 2(d) of the Act. (Ill. Rev. Stat. 1971, ch. 48, par. 852(d).) The second category of organizations listed under section 2(d) includes any “charitable institution owned and conducted by, or affiliated with, a church or religious institution.” This category makes two. requirements: that the organization be a “charitable institution” and that it be either “owned and conducted by, or affiliated with, a church or religious institution.” The Commission contends the hospitals in question meet neither of these two requirements.

The term “charitable institution” has not yet been construed under the Fair Employment Practices Act by any court of this state. However, the term “charitable organizations” used in section 19.7 of the Revenue Act of 1939 (Ill. Rev. Stat. 1971, ch. 120, par. 500.7) which grants tax exemptions to such organizations has been construed a number of times. The cases construing section 19.7 have developed a number of characteristics to look at to decide whether an organization is a charitable organization. The characteristics of a charitable organization include: (1) the absence of stock, shareholders and dividends; (2) the acquisition of funds through donations and charity; (3) the use of those funds for charitable purposes; (4) the dispensing of charity to those who need and apply for it; and (5) the absence of any profits which accrue to private benefit rather than being applied to the charitable purpose. (Methodist Old Peoples Home v. Korzen, 39 Ill.2d 149, 233 N.E.2d 537; American College of Surgeons v. Korzen, 36 Ill.2d 340, 224 N.E.2d 7). Relieving persons of disease and suffering, an activity pursued by hospitals, is a charitable purpose. (American College of Surgeons v. Korzen, 36 Ill.2d 340, 224 N.E.2d 7.) Cases which have found certain hospitals to be charitable institutions have utilized the same characteristics as the above cases. Sisters of the Third Order of St. Francis v. Board of Review, 231 Ill. 317, 83 N.E. 272; People ex rel. Cannon v. Southern Illinois Hospital Corp., 404 Ill. 66, 88 N.E.2d 20.

While we are not bound by the tests utilized under section 19.7 of the Revenue Act which determine what a charitable organization is, we feel they offer a good basis for defining the meaning of tire term “charitable institution” as used in section 2(a) of the Fair Employment Practices Act.

The hospitals in the instant case meet each of these tests. The corporation which owns the hospitals has neither issued stock nor paid out dividends nor does it have the power to do so. The charters of the Medical Foundation and the Missionary Sisters corporations stated that among their coiporate purposes is the raising of funds, loans and gifts for the use and benefit of the Medical Center corporation which operates the hospitals. All the funds raised for and profits accrued from the hospitals are applied to the operation of the hospitals. No profits accrue to the private benefit of any individual or organization. Finally, the hospitals admit a number of free patients who are unable to pay. Even if patients who are able to pay are required to do so, the hospitals still would remain eligible for the status of a charitable organization under section 19.7. (Sisters of the Third Order of St. Francis v. Board of Review, 231 Ill. 317, 83 N.E. 272; People ex rel. Cannon v. Southern Illinois Hospital Corp., 404 Ill. 66, 88 N.E.2d 20.) We are of the opinion that the hospitals and tlie Medical Center corporation which operates them are charitable institutions within the meaning of section 2(d) of the Fair Employment Practices Act.

The second requirement for the defendants to qualify for an exemption under the Act is that their institutions must be “owned and conducted by, or affiliated with, a church or religious institution.” (Ill. Rev. Stat. 1971, ch. 48, par. 852(d).) Prior to January 5, 1973, the hospitals were owned and operated by a corporation known as the Missionary Sisters of the Sacred Heart. This corporation was the legal entity under which an order of nuns of the Roman Catholic Church conducted their business concerning the hospitals in question. We are of the opinion that there is no question that this religious order owned and operated the hospitals prior to January 5, 1973. The hospitals are therefore exempt under the Act.

The Commission, however, contends that we must examine the legal structure of this corporation after January 5, 1973, and the other three corporations which were created on January 5, 1973. It must be noted drat all the unfair employment practices the defendants were charged with were alleged to have taken place prior to January 5, 1973. We are of the opinion that the hospitals’ status at the time the alleged unfair employment practices took place determines whether the defendants are exempt. However, even if the unfair employment practices were of a continuing nature which would extend beyond January 5, 1973, we do not find that the hospitals’ status has changed so as to remove the defendants from the exemption. Nothing relating to their status as a charitable institution was changed on January 5, 1973. The hospitals also remained affiliated with the religious order of the Missionary Sisters of the Sacred Heart. All the members and officers of the Medical Center corporation which operates the hospitals are members of this religious order, and the two separate corporations under the name of the Missionary Sisters have as one of their stated corporation purposes, the maintenance of these hospitals. Whether a court examines the hospitals’ status prior to January 5, 1973, or subsequent to that date, there is sufficient evidence to find that the hospitals are charitable institutions affiliated with a religious institution.

The Commission contends that the hospitals do not fulfill a religious purpose. However, even if this be true, there is no requirement under the second exemption that they fulfill a religious purpose. The Commission also contends that the Medical Center and the Missionary Sisters are separate corporate entities. This may now be true, but the statute only requires that the charitable institution be affiliated with a religious institution, not that it be the same corporate entity.

The Commission further contends that even if the hospitals are religiously affiliated charitable institutions, tire legislature only intended to exempt such religiously affiliated institutions from religious discrimination in such cases. They contend the legislature did not intend to exempt such institutions from charges of racial or national origin discrimination as are charged in the instant case. The Commission, therefore, asks this court to construe the statute to limit the exemption to only religious forms of discrimination.

When the language of a statute is clear and unambiguous, the courts must ascertain the statute’s intent in accordance with the language used. In such a case the courts must not restrict or enlarge the plain meaning of the statute. (Bovinette v. City of Mascoutah, 55 Ill.2d 129, 302 N.E.2d 313; Caterpillar Tractor Co. v. Industrial Com., 33 Ill.2d 78, 210 N.E.2d 215.) Section 3(a) of the Act (Ill. Rev. Stat. 1971, ch. 48, par. 853(a)) states that it is an unfair employment practice for “any employer” to discriminate on the basis of “race, color, religion, sex, national origin or ancestry” in respect to an individual’s employment. Section 2(d) (Ill. Rev. Stat. 1971, ch. 48, par. 852(d)) then states that the term “employer” does not include any “charitable institution owned and conducted by, or affiliated with, a church or religious institution.” Clearly section 2(d) has exempted such organizations from the provisions of the Fair Employment Practices Act listed in section 3(a) includes discrimination on the basis of race, color, national origin and ancestry. If the legislature intended to make such an organizations exemption more limited, it could have so stated.

The Commission cites Kings Garden, Inc. v. F.C.C. (D.C. Cir. 1974), 498 F.2d 51, for the proposition that a statute which permits a religiously affiliated organization to discriminate on a basis unrelated to religion violates the United States constitution. They also contend that a statute which allows such an organization to discriminate on the basis of race or national ancestry violates the Illinois constitution. Therefore, the defendants contend this court should construe the statute so as to avoid such unconstitutionality and cite Continental Illinois National Bank & Trust Co. v. Illinois State Toll Highway Com., 42 Ill.2d 385, 251 N.E.2d 253, to support their contention.

The Continental Bank case states: “It is our duty to construe acts of the legislature so as to affirm their constitutionality and validity, if it can reasonably be done, and further if their construction is doubtful, the doubt will be decided in favor of the validity of the law challenged.” (42 Ill.2d 385, 389, 251 N.E.2d 253, 257.) After examining the statute we can find no ambiguity or doubtful construction involved. The Commission’s suggested construction goes against the clear intent of the statute. The construction the Commission desires cannot be reasonably done.

Whether the statute as we construe it is constitutional or not, we do not decide. The constitutionality of a statute may not be raised on appeal if it was never raised at the trial court level. (City of Chicago v. Birnbaum, 49 Ill.2d 250, 274 N.E.2d 22; People v. Amerman, 50 Ill.2d 196, 279 N.E.2d 353.) The Commission ever raised the constitutional issue at the trial level.

The defendants, in addition to contending that they are exempt from the Act’s provisions, have contended that the Commission’s failure to file a complaint within 180 days of the filing of the charges defeats the Commission’s right to proceed in the matter. We have already decided to affirm the trial court’s decision on the basis of the defendants’ exemption from the Act. It is therefore unnecessary to consider the contention related to the filing of a complaint.

For the reasons stated the orders of the circuit court dismissing the Commission’s petition and refusing to vacate that dismissal are affirmed.

Orders affirmed.

GOLDBERG and EGAN, JJ., concur.


author: PER CURIAM.

text:
    The People of the State of Illinois, Plaintiff-Appellee, v. Ollie Mae Applewhite, Defendant-Appellant.
    (No. 58503;
    First District (1st Division)
    January 6, 1975.

      Edward M. Genson and Arthur L. Belkind, both of Chicago, for appellant.
    Bernard Carey, State’s Attorney, of Chicago (Patrick T. Driscoll, Jr., Thomas D. Rafter, and Richard H. Robinson, Assistant State’s Attorneys, of counsel), for the People.
   PER CURIAM.

SIMON, J., took no part.