text:
    GEORGE R. KOCA, Plaintiff-Appellee, v. JOHN GAVIN, Defendant-Appellant.
    First District (6th Division)
    No. 1—89—1048
    Opinion filed May 25, 1990.
    James J. Gavin, of Westchester, for appellant.

      Zenon Forowycz, of Forest Park, for appellee.
   PRESIDING JUSTICE LaPORTA

delivered the opinion of the court:

Plaintiff, George R. Koca, brought this action against defendant, John Gavin, to recover unpaid rent due under a lease agreement between plaintiff and defendant. Defendant denied liability for the unpaid rent under the theory of constructive eviction and brought a counterclaim seeking damages allegedly occasioned by the unhabitable condition of the leased premises. After a bench trial, the court ruled in favor of plaintiff and against defendant and entered a judgment in the amount of $1,515 for the unpaid rent. The court further entered judgment in favor of plaintiff and against defendant on his counterclaim. Defendant appeals, contending that (1) the trial court abused its discretion in allowing plaintiff to file an untimely and unsworn response to defendant’s request to admit facts, and (2) the court erred in finding that defendant was obligated under the lease to replace heating and air-conditioning units in the leased premises. We reverse and remand the cause for a new trial.

The record reflects that defendant had occupied the leased premises since February 1, 1979. Plaintiff and his wife purchased the building on August 1, 1985, subject to the lease agreement between defendant and the previous owner of the building. On December 9, 1985, plaintiff, plaintiff’s wife, and defendant executed a new lease for the subject premises in which defendant operated his law practice. The term of the lease ran from February 1, 1986, to January 31, 1987, and the monthly rent was $625, with a security deposit of $360.

Paragraph five of the lease provided as follows:

“Lessee has examined and knows the condition of the Premises and has received the same in good order and repair, and acknowledges that no representations as to the condition and repair thereof, and no agreements or promises to decorate, alter, repair or improve the Premises, have been made by Lessor or his agent prior to or at the execution of this lease that are not herein expressed.”

Paragraph six of the lease provided, in pertinent part, as follows:

“Lessee shall keep the Premises and appurtenances thereto in a clean, sightly and healthy condition, and in good repair, all according to the statutes and ordinances in such cases made and provided, and the directions of public officers thereunto duly authorized, all at his own expense, and shall yield the same back to Lessor upon the termination of this lease, whether such termination shall occur by expiration of the term, or in any other manner whatsoever, in the same condition of cleanliness, repair and sightliness as at the date of the execution hereof, loss by fire and reasonable wear and tear excepted. Lessee shall make all necessary repairs and renewals upon Premises and replace broken globes, glass and fixtures with material of the same size and quality as that broken and shall insure all glass in windows and doors of the Premises at his own expense.”

Paragraph one of the rider to the lease provided that defendant was responsible for the maintenance of the interior of the leased premises and all appurtenances therein.

There were two Remington heating and air-conditioning units in the wall of the leased premises, and defendant repaired and maintained those units from 1979 to 1985. On August 13, 1985, defendant wrote a letter to plaintiff’s wife advising her that one of the units was not functional, that it would cost $500 to repair the air-conditioning compressor, and suggesting that a new air-conditioner be purchased due to the age of the existing unit. Defendant also expressed an interest in expanding the leased space to accommodate his son, who was to join his law practice.

In early July 1986, defendant notified plaintiff that he had experienced a problem with one of the air-conditioners and that a repairman had indicated that it should be replaced at an estimated cost of $1,100. Defendant suggested that he split with plaintiff the cost of replacing the unit.

On July 23, 1986, defendant again wrote to plaintiff’s wife stating that the two Remington air-conditioners were broken and were beyond repair. Defendant agreed that it was his obligation to maintain the units, but asserted that he was not responsible for their replacement. He contended that the units were obsolete, that he could no longer obtain parts for' them, and that plaintiff was obligated to provide heating and air-conditioning units for the leased space. Finally, defendant stated that the weather had been intolerable and that because the windows were sealed, they could not be opened to provide ventilation. Defendant requested that plaintiff immediately replace the units in accordance with the terms of the lease. In the alternative, defendant claimed that plaintiff had breached the lease and that he would be required to look for other accommodations.

Plaintiff’s wife responded to defendant in letters dated July 24, 1986, and July 29, 1986. In these letters, she stated that defendant had accepted the condition of the units when he signed the lease. As a good-faith measure, plaintiff and his wife agreed to split with defendant the cost of replacing one air-conditioning unit. She reminded defendant that he had experienced problems with the units during the previous summer and indicated that he should have taken measures to repair them at that time. Plaintiff’s wife enclosed a copy of an estimate to replace one air-conditioning unit and requested that defendant furnish another estimate from his repairman.

After receiving these letters from plaintiff’s wife, defendant responded on July 30, 1986, indicating that because both units were obsolete and parts could not be found to repair them, they had to be replaced. Defendant stated further that he and his staff could not work under the conditions in the office. His secretary had been ill as a result of the heat and lack of ventilation. Defendant was unable to conduct interviews, depositions, real estate closings, and office meetings which were necessary to his practice. Defendant stated that he was concerned that the computer system would be damaged and malfunction because of the high temperature in the office, indicating that the thermometer in the office had registered in excess of 90 degrees. He indicated further that plaintiff’s refusal to replace the air-conditioning units had left him with no alternative but to vacate the premises. Defendant stated that he would move out of the leased premises within 10 days or as soon thereafter as he was able to find other office space. He indicated that he found plaintiff’s position unreasonable and to be a breach of the terms of the lease, but stated that he would not file any legal action for the breach.

In another letter dated August 12, 1986, defendant again stated his intention to vacate the leased premises and indicated that he would move as soon as he was able to find other facilities. In a letter dated October 23, 1986, defendant notified plaintiff that he would vacate the leased premises on or about November 10, 1986. He further advised plaintiff that there was a large opening under a window which would permit easy access into the office by a burglar or vandal. Defendant stated that because the weather had started to get colder, he had attempted to block the opening where there should have been a heating and air-conditioning unit, but indicated that inclement weather would thwart his attempts to protect his secretary and the computer equipment from the elements. He indicated further that he could not continue to operate his business under such circumstances, and he offered to sell plaintiff certain items of personalty used in his office which he would not require in his new office space. In a letter dated November 11, 1986, defendant confirmed that he would vacate the leased premises on November 12 and 13,1986.

Defendant paid plaintiff the rent due under the lease through October 1986. On June 16, 1987, plaintiff filed a complaint against defendant seeking recovery of the rent due under the lease for the months of November and December 1986 and January 1987. Defendant denied liability for the unpaid rent under the theory of constructive eviction and brought a counterclaim seeking damages, including moving expenses and lost business and profits, allegedly occasioned by the uninhabitable condition of the leased premises. Plaintiff answered defendant’s counterclaim, denying liability for the damages requested therein.

On July 15, 1988, defendant filed and served plaintiff with a document entitled “request for admission of facts and genuineness of documents and interrogatories directed to defendant.” Plaintiff filed an objection to this request, asserting, inter alia, that the request was improperly directed to the defendant rather than to the plaintiff. Defendant filed another request for admission of facts and genuineness of documents and interrogatories against plaintiff on August 26, 1988. On October 12, 1988, the trial court entered an order which granted defendant leave to withdraw the request for admission filed on July 15, 1988, and to refile instanter the request to admit filed on August 26, 1988. Plaintiff was granted 28 days to answer the request to admit, and the cause was continued to January 11, 1989, for trial.

The request to admit asserted, inter alia, that the two Remington heating and air-conditioning units in defendant’s office were inoperative, obsolete, and could not be repaired because parts were unavailable. The request also alleged that plaintiff was obligated under the lease to replace these units when they became inoperative. Plaintiff failed to respond to defendant’s request to admit by November 9, 1988, and did not bring a motion under Supreme Court Rule 183 (107 Ill. 2d R.183) for an extension of time to respond. On January 5, 1989, plaintiff served defendant by mail with unsworn answers to the request. Plaintiff’s answers to the request to admit included denials of many pivotal facts, including the approximate dates that the air-conditioning units became inoperative and were repaired by plaintiff.

When the case was called for trial on January 11, 1989, plaintiff answered that he was ready to proceed, but defendant requested a continuance and leave to substitute counsel. Over plaintiff’s objection, the court granted defendant’s requests and the trial date was continued to January 31, 1989. On that date, plaintiff filed with the court the unsworn answers to the request to admit, and defendant filed a motion to strike plaintiff’s answers because they were untimely and were not in compliance with Supreme Court Rule 216(c) (107 Ill. 2d R. 216(c)). The trial court denied defendant’s motion to strike plaintiff’s answers, finding that the delay in filing had not prejudiced the defendant.

At trial, plaintiff testified as to his relationship and dealings with defendant and about the correspondence between them regarding the heating and air-conditioning units in the subject premises. He stated further that although the units could be repaired, he had made an economic decision to replace them and that he purchased new units for defendant’s office after he learned that defendant was to vacate the leased space.

Plaintiff also called as a witness Gerald Lencki, an air-conditioning expert, who testified that he had been in the air-conditioning business for 25 years. He stated further that he was familiar with Remington heating and air-conditioning units and had inspected the two units in defendant’s office during the summer of 1985. Lencki testified that parts from various other types of units were available, could be obtained from three sources, and could be interchanged with Remington parts to make the units in defendant’s office functional. Although he was familiar with Remington heating and air-conditioning units of the type installed in defendant’s office, Lencki did not know the type or model of those units and did not know whether the units needed repair or replacement. In addition, he had not inspected the units in July 1986 and was not familiar with their condition at that time.

Defendant testified as to the conditions in his office during the summer of 1986, stating that the two air-conditioners were not functional and that the windows were sealed and could not be opened to provide ventilation. Defendant contacted the company that had serviced the units in the past, but was advised that the air-conditioners were approximately 20 years old, were obsolete, and could not be repaired because no parts were available. He stated further that the summer of 1986 was hotter than usual, and the temperature in the office sometimes exceeded 90 degrees. Defendant placed a fan in the middle of the office, but was required to cancel appointments and, on several occasions, to close the office in the afternoon. He was unable to conduct real estate closings, depositions, and client interviews in the office due to the heat.

Defendant stated that beginning in May 1986 he advised plaintiff and his wife on many occasions that the two units in his office had to be replaced. Yet, nothing was done until July 1986 when plaintiff had the two units removed, leaving two large holes which were covered by metal gratings in the lower wall at the front of the offices immediately contiguous to the sidewalk.

Defendant executed a lease for new office space on August 29 1986, and stated that the air-conditioning units had not been repaired or replaced at that time. Defendant acknowledged, however, that one of the air-conditioning units was operating in July 1986 and that both units were operating in August 1986. He also stated that he needed more office space because his son was practicing with him.

Defendant called as a witness Jessica Griffin, his former secretary, who also testified as to the conditions in defendant’s office during the summer of 1986. She stated that she was unable to operate the computer and word processing equipment for fear that it would overheat. Griffin testified further that although she received her full salary, she was unable to work on many occasions and had to leave the office early to avoid the extreme heat.

Plaintiff testified on rebuttal that when he purchased the building, there was a third air-conditioner near the south door of defendant’s office, but he did not know whether this air-conditioner was used by defendant or whether it was operational. Plaintiff believed that this unit was installed by defendant.

After closing arguments, the trial court found, inter alia, that defendant knew there was a problem with the air-conditioning in August 1985 prior to signing the lease with plaintiff; that under paragraph five of the lease, defendant stated that he had examined the condition of the premises and had received them in good repair; that under paragraph six of the lease, defendant was obligated to make necessary repairs and to replace fixtures; and that under paragraph one of the rider to the lease, defendant was obligated to maintain the interior of the premises.

The court held that there was no constructive eviction and that defendant had breached the lease. The court held further that rent in the amount of $1,875 was due and owing to plaintiff, with a credit for the $360 security deposit. Accordingly, the court entered a judgment of $1,515 in favor of plaintiff and entered judgment in favor of plaintiff and against defendant on the defendant’s counterclaim.

We initially consider defendant’s claim that the trial court abused its discretion in allowing plaintiff to file his answers to defendant’s request to admit. Defendant’s argument is predicated upon the fact that plaintiff’s answers to the request were unsworn and were untimely.

Supreme Court Rule 216(c) provides, in pertinent part, as follows:

“Each of the matters of fact *** of which admission is requested is admitted unless, within 28 days after service thereof, the party to whom the request is directed serves upon the party requesting the admission either (1) a sworn statement denying specifically the matters of which admission is requested or setting forth in detail the reasons why he cannot truthfully admit or deny those matters or (2) written objections on the ground that some or all of the requested admissions are privileged or irrelevant or that the request is otherwise improper in whole or in part.” 107 Ill. 2d R. 216(c).

Plaintiff has argued that the trial court properly allowed him to file his answers to the request to admit, citing some Illinois decisions which have held that a trial court has wide discretion with regard to requests to admit and may allow a late filing in order to prevent injustice. (See Kismer v. Antonovich (1986), 148 Ill. App. 3d 508, 499 N.E.2d 707; Perlman v. Time, Inc. (1985), 133 Ill. App. 3d 348, 478 N.E.2d 1132; Thomas v. Village of Westchester (1985), 132 Ill. App. 3d 190, 477 N.E.2d 49; Daleanes v. Board of Education of Benjamin Elementary School District 25, Du Page County (1983), 120 Ill. App. 3d 505, 457 N.E.2d 1382; Homer G. Dickson & Co. v. Barraza (1983), 115 Ill. App. 3d 5, 449 N.E.2d 990; Bluestein v. Upjohn Co. (1981), 102 Ill. App. 3d 672, 430 N.E.2d 580; Redmond v. Central Community Hospital (1978), 65 Ill. App. 3d 669, 382 N.E.2d 95.) We note, however, that in all of these cases the responding party filed sworn, albeit tardy, answers to the request to admit. Consequently, these cases are factually distinguishable from the instant case and are not controlling here.

We find more persuasive the cases which have held that a litigant’s failure to file a timely and sworn response to a request to admit results in an admission of the facts asserted in the request and that the court should properly strike the improper response. (City of Champaign v. Roseman (1958), 15 Ill. 2d 363, 155 N.E.2d 34; Johannsen v. General Foods Corp. (1986), 146 Ill. App. 3d 296, 496 N.E.2d 544; Chapman v. Foggy (1978), 59 Ill. App. 3d 552, 375 N.E.2d 865; Banks v. United Insurance Co. (1975), 28 Ill. App. 3d 60, 328 N.E.2d 167.) These cases have specifically noted that where the response is unsworn as well as untimely, it is tantamount to no response at all because it fails to comply with the requirement that denials, in whole or in part, be sworn to by the party answering the request. Johannsen, 146 Ill. App. 3d at 300, 496 N.E.2d at 546-47; Chapman, 59 Ill. App. 3d at 557-58, 375 N.E.2d at 869; Banks, 28 Ill. App. 3d at 62-63, 328 N.E.2d at 169-70.

In the instant" case, defendant has argued that he prepared for trial based upon the unanswered requests to admit, and because he had relied upon plaintiff’s admissions, he did not present the testimony of an expert witness to counter the evidence presented by plaintiff’s expert. Plaintiff has never filed a sworn statement, timely or otherwise, denying any of the facts asserted in defendant’s request to admit. Moreover, plaintiff did not bring a motion asserting good cause for an extension of time to respond under Supreme Court Rule 183 (107 Ill. 2d R.183). Consequently, the trial court should have granted defendant’s motion to strike plaintiff’s answers, and it was an abuse of discretion to allow the filing of an untimely and unsworn response.

Contrary to plaintiff’s assertion, defendant did not waive objection to the improper response to his request for admission. Although defendant presented evidence on the issues addressed in the request, he did so only after the trial court had already denied his motion to strike plaintiff’s untimely and unsworn response. Consequently, the court had ruled that plaintiff’s response to the request to admit could be considered, and defendant was compelled to introduce evidence in opposition thereto. Cf People ex rel. Reynolds v. Aldridge (1982), 107 Ill. App. 3d 679, 437 N.E.2d 1268; Welch v. City of Evanston (1980), 87 Ill. App. 3d 1017, 409 N.E.2d 450.

We must also reject plaintiff’s claim that defendant’s motion to strike was properly denied because defendant had not given him prior written notice of the motion. Rule 2.1 of the circuit court of Cook County clearly provides that written notice of motions must be given except in actions appearing on the daily trial call or during the course of trial. Because defendant made his motion to strike on the scheduled trial date and after the case had already been called for trial, he was not required to provide plaintiff with prior notice and a copy of the motion. In addition, we note that the trial court granted plaintiff leave to file his response to the request instanter on the day of trial. Defendant’s motion to strike was made immediately following the plaintiff’s filing of his unsworn answers to the request to admit. Thus, the unsworn answers were not before the court until moments before the motion to strike was made, and defendant had no opportunity to serve plaintiff with prior notice of the motion.

In light of our decision, we need not address the other issues raised by the parties.

For the foregoing reasons, the judgments of the circuit court of Cook County are reversed, and the cause is remanded for a new trial on the complaint and counterclaim.

Reversed and remanded.

McNAMARA and RAKOWSKI, JJ., concur.


source: Caselaw Access Project

author: JUSTICE McNAMARA

license: Public Domain

text:
    CHRISTOPHER N. STOLLER et al., Plaintiffs-Appellants, v. EXCHANGE NATIONAL BANK OF CHICAGO, Defendant-Appellee.
    First District (6th Division)
    No. 1—89—2399
    Opinion filed May 25, 1990.

      Ronald H. Balsón, of Chicago, for appellants.

      Schwartz, Cooper, Kolb & Gaynor, of Chicago (Narcisse A. Brown and Eric S. Rein, of counsel), for appellee.
   JUSTICE McNAMARA

delivered the opinion of the court:

Plaintiffs, Christopher N. Stoller and Bertha Stoller, appeal from the order of the circuit court of Cook County in favor of defendant, Exchange National Bank of Chicago (Exchange). Plaintiffs contend that the trial court improperly found that Exchange had a security interest in land trust number 31875; that the trial court improperly found that the transfer of property out of trust was fraudulent in law; and that the trial court’s judgment order was inconsistent and improperly adjudicated the rights of nonparties.

In 1974, Bertha and Russell Stoller purchased a parcel of property. They built a single-family residence on the property in 1975. Their son, Christopher Stoller, lived at that residence from April 30, 1975, until August 1984. On November 23, 1976, Bertha and Russell deeded the property into a land trust at Exchange, trust number 31875. The beneficiaries of the trust were Christopher and Bertha, as joint tenants with right of survivorship. Christopher held the written power of direction.

On November 15, 1977, Christopher executed a collateral assignment of beneficial interest in favor of Central National Bank (Central). The following day, Central agreed to loan Christopher $35,000. The loan was evidenced by a 90-day note. On April 10, 1978, Bertha executed a hypothecation agreement in favor of Central. The agreement provided that Central was to use Bertha’s interest in trust number 31875 as collateral for any agreements to make, renew or extend loans to Christopher and his wife, Bernice Stoller.

On April 30, 1979, Central extended a loan to Christopher and Bernice in the sum of $401,750. The loan was secured by a pledge of a continued security interest in certain properties, including a 100% assignment of the beneficial interest in Exchange trust number 31875. This loan was renewed on October 29, 1979. A second loan in the sum of $20,000, secured by the same properties, was made on November 13,1979.

Sometime prior to September 29, 1979, Central executed a release of the November 15, 1977, collateral assignment of beneficial interest under land trust number 31875. The release was signed by Patrick O’Malley, Central’s second vice-president. A photocopy of the release was placed in the land trust file at Exchange. A second document, entitled “Direction to Execute and Deliver Documents,” purported to release the same collateral assignment of beneficial interest. This document also was signed by O’Malley and was dated January 8, 1980. O’Malley left the employ of Central on November 2, 1979. Christopher testified that he did not recall when he received this document, but he did remember inserting the date in the document. The document was never lodged with Exchange as land trustee for trust number 31875, and Christopher still has possession of the original.

The two loans were due and payable on or about February 11, 1980, but plaintiffs failed to pay the amounts owing. On April 1, 1980, Central filed a lawsuit to recover the indebtedness due on the notes. In August 1982, Exchange and Central merged, and the resulting entity was named Exchange. For purposes of this appeal, Central and Exchange will be treated as the same entity with regard to the loan transactions, and all references will be to Exchange.

In March 1985, Bertha told Christopher that the property should be given back to her to protect Christopher’s children because of Christopher’s financial problems. On March 11, 1985, Christopher and Bertha executed a direction to convey the property out of trust number 31875 to Joanne M. Pievitz. Exchange, as land trustee, executed a trustee’s deed to that effect. This conveyance was not approved by Exchange in its capacity as lender. Also on March 11, 1985, Pievitz executed a quit claim deed in favor of Bertha. The conveyance out of trust was made without any money or property being paid or conveyed by Bertha to Christopher. On July 18, 1985, Christopher filed for relief under chapter 13 of the Bankruptcy Code.

On May 7, 1985, the trial court entered an order enjoining Christopher, Bernice and Bertha from transferring the property pending further order of court. This injunction was continued until the court’s disposition of the merits of the case. On December 8, 1986, in contravention of the injunction, Bertha sold and conveyed the property to Richard M. and Diana M. Bligh for $180,000.

On June 1, 1987, judgment was entered against plaintiffs and in favor of Exchange for the sum of $387,001.93 on the April 30, 1979, note, and for $27,653.86 on the November 13, 1979, note. Plaintiffs subsequently brought the present action, seeking to enjoin Exchange’s sale of the property. Exchange counterclaimed, alleging that the transfer of the property out of trust was a .fraudulent conveyance.

The trial court entered an order in favor of Exchange and against plaintiffs. The court found that Exchange had a valid and enforceable security interest in 100% of trust number 31875. The court further found that the second purported release was untrustworthy and therefore ineffectual. Finally, the court concluded that the conveyance out of trust number 31875 was for no consideration and was made while Christopher knew he was indebted to Exchange and had insufficient funds to pay the debt. Thus, the court determined that the conveyance was fraudulent in law, that the deeds to Pievitz and Bertha were void, and that Exchange had an unreleased security interest in 100% of the property, against which Exchange could satisfy its judgment against plaintiffs.

Plaintiffs first allege that the trial court erroneously concluded that Exchange, as the surviving entity of the Central-Exchange merger, had a valid and enforceable security interest in trust number 31875. In support of this allegation, plaintiffs assert that the release executed sometime prior to September 29, 1979, operated to destroy the existing assignment of beneficial interest. Thus, plaintiffs conclude that Exchange released its security interest in the April 30, 1979, note. Further, plaintiffs assert that the renewed note, as well as the second note, could not be secured by a 100% assignment of beneficial interest in trust number 31875 because that assignment had been released.

Plaintiffs correctly note that the September 29, 1979, release operated to release the security interest in trust number 31875 granted to Exchange by an assignment of the beneficial interest in that trust on November 15, 1977. The release, however, does not reflect when this assignment of beneficial interest was accepted by Exchange. Thus, there is no indication as to which lending transaction this assignment, and subsequent release of assignment, applied. Significantly, however, on November 16, 1977, the day after the creation of the assignment, Exchange agreed to loan plaintiffs $35,000 secured by a 100% assignment of beneficial interest in trust number 31875. In our view, it appears that the release was meant to apply to that lending transaction, rather than to the lending transaction under our consideration. Accordingly, we will consider the transaction, as did the trial court, without reliance on either the November 15, 1977, assignment or the September 29, 1979, release as neither is necessary to our resolution of this appeal.

The principles applicable to acquiring a security interest in the beneficial interest of an Illinois land trust are the same as those applicable to acquiring a security interest in personalty. (St. Charles Savings & Loan Association v. Estate of Sundberg (1986), 150 Ill. App. 3d 100, 501 N.E.2d 322.) The creation of a security interest in personal property is governed by Article IX of the Uniform Commercial Code. (Ill. Rev. Stat. 1979, ch. 26, par. 9—101 et seq.) A security interest is enforceable against a debtor or third parties with respect to the collateral and attaches when the following three steps have been taken:

“(a) the collateral is in the possession of the secured party-pursuant to agreement, or the debtor has signed a security agreement which contains á description of the collateral ***; and
(b) value has been given; and
(c) the debtor has rights in the collateral.” Ill. Rev. Stat. 1979, ch. 26, par. 9—203.

We believe that all three events specified by section 9—203 have occurred in the transaction under our consideration. Exchange possessed signed notes granting Exchange a security interest in a 100% assignment of beneficial interest in trust number 31875; Exchange gave value to plaintiffs by loaning various sums of money; and plaintiffs had rights in the collateral.

Plaintiffs argue that Exchange has failed to satisfy the first prong under section 9—203. Plaintiffs maintain that because the assignment of beneficial interest in the trust was released sometime prior to September 29, 1979, Exchange could not have a security interest in the trust because the collateral, in the form of the assignment, no longer existed. This argument, however, ignores the fact that on April 10, 1978, Bertha signed a hypothecation agreement which, we believe, was an effective assignment of the beneficial interest in the trust to Central. Thus, although the release bearing a photocopy stamp date of September 29, 1979, may have operated to release the assignment of beneficial interest acknowledged by Exchange on November 15, 1977, that release in no way effected the hypothecation agreement.

With respect to the hypothecation agreement, plaintiffs initially urge this court to find the hypothecation agreement invalid for purposes of our analysis of the security interest issue. Plaintiffs note that the trust agreement provides as follows:

“No assignment of any beneficial interest herein shall be binding on the trustee until the original or a duplicate of the assignment *** is lodged with the trustee, and every assignment *** which shall not have been lodged with the trustee shall be void as to all subsequent assignees or purchasers without notice.”

Although the hypothecation agreement was not lodged with the land trustee, our analysis does not involve the binding of the land trustee, an assignee, or a purchaser without notice. Thus the provision which plaintiffs cite is inapposite to the situation under our analysis and does not affect our interpretation of the hypothecation agreement.

A hypothecation agreement transfers the thing pledged to the debtor to enable the debtor to use the thing pledged as if it were the debtor’s own collateral. (See In re Horowitz Will (1952), 114 N.Y.S.2d 700; Moore v. Wardlaw (Tex. App. 1975), 522 S.W.2d 552.) The hypothecation agreement which Bertha executed provided in pertinent part as follows:

“In consideration of your making, renewing or extending a loan or loans to Christopher N. Stoller and Bernice Stoller hereinafter referred to as the ‘debtor’, for which the following property belonging to me has been rendered to you as collateral, to wit: Exchange National Bank Trust No. 31875 and for the purpose of enabling said debtor to obtain credit therefor, *** I do hereby assign, release and transfer unto said debtor all of my right, title and interest in and to said property, and hereby expressly authorize said debtor to pledge or hypothecate, all or any part of said property for the indebtedness aforesaid, and all renewals and extensions thereof, and also for any and all other indebtedness of the same debtor to you whether alone or with others, direct or indirect, absolute or contingent and howsoever acquired by you, created at any time before this authorization shall have been revoked in writing and all renewals and extensions thereof.”

Thus, the hypothecation contemplates more than one loan or renewal of loans and specifies that the hypothecation is to be effective unless “revoked in writing.” There is no such written revocation in the record and, accordingly, that agreement was effective at all times after April 10, 1978. In our view, the agreement operated to assign the beneficial interest in trust number 31875 to Exchange.

An assignment occurs when there is a transfer of some identifiable interest from the assignor to the assignee. (Klehm v. Grecian Chalet, Ltd. (1987), 164 Ill. App. 3d 610, 518 N.E.2d 187.) Generally, no particular form of assignment is required; any document which sufficiently evidences the intent of the assignor to vest ownership of the subject matter of the assignment in the assignee is sufficient to effect an assignment in equity. (Evangelical Slovak Women’s Union v. Papanek (1956), 8 Ill. App. 2d 298, 132 N.E.2d 20.) A valid assignment need only describe the subject matter of the assignment with sufficient particularity to render it capable of identification. Klehm v. Grecian Chalet, Ltd., 164 Ill. App. 3d 610, 518 N.E.2d 187.

The intent of the parties to an assignment is a question of fact to be derived not only from the instrument executed by the parties, but also from the surrounding circumstances. (Ill. Rev. Stat. 1979, ch. 26, par. 1—201(3); Klehm v. Grecian Chalet, Ltd., 164 Ill. App. 3d 610, 518 N.E.2d 187; Rivan Die Mold Corp. v. Stewart-Warner Corp. (1975), 26 Ill. App. 3d 637, 325 N.E.2d 357.) The hypothecation agreement here unequivocally shows that Bertha intended to assign the beneficial interest in trust number 31875 to Exchange in exchange for Exchange’s agreement to make, renew or extend loans to plaintiffs. Although it is true that where, as here, property is held in joint tenancy, all joint tenants must join in the indorsement if all the interest in the security is to be assigned or transferred (Walsh v. First National Bank (1986), 140 Ill. App. 3d 689, 489 N.E.2d 337), a review of the record reveals that Christopher did indorse the assignment by signing the loan agreement which reflected a 100% assignment of the beneficial interest in the trust. In fact, Christopher admitted that the November 13, 1979, note was secured by a collateral assignment of the beneficial interest in trust number 31875. Moreover, the documents in the record which portray the relationship between Exchange and plaintiffs indicate that the entire beneficial interest was continually used as security collateral.

In light of the hypothecation agreement, the surrounding documentation, and the testimony of Christopher, we find that the trial court properly determined that Exchange had an enforceable 100% security interest in the property. All of the requirements of section 9 — 203 were met. We note that plaintiffs had actual notice of the use of the assignment as collateral and, accordingly, are not prejudiced in any way by our interpretation of the transactions.

Plaintiffs next contend that the January 8, 1980, direction operated as a release of the security interest in trust number 31875. We believe, however, that the trial court properly concluded that the direction was untrustworthy and, therefore, ineffectual.

The direction was signed by O’Malley and was dated January 8, 1980. It is undisputed that O’Malley left the employ of Exchange two months prior to that date. Thus the document was not signed by a duly authorized agent of the bank. Moreover, O’Malley testified that the form was not the type he would have used to release collateral interests in trusts, and the language utilized is not the language he would have used to release such an interest. He stated that he would not have signed a document in that form. Significantly, the document contains two different styles of typeface. The “release” language and the date are in the same style of typeface. Christopher admitted that he filled in the date. In view of this evidence, we find that the trial court's conclusions with regard to the trustworthiness of the document were appropriate. The direction did not operate to release Exchange’s 100% security interest in the property.

Plaintiffs next contend that the transfer of the property out of trust number 31875 and the accompanying transfer of the property to Bertha was not a fraudulent conveyance.

Illinois statutory law operates to void conveyances which are “made with the intent to disturb, delay, hinder or defraud creditors.” (Ill. Rev. Stat. 1979, ch. 59, par. 4.) Illinois courts have divided these void transactions into two categories, fraudulent in law and fraudulent in fact. (See Harris v. Aimco, Inc. (1978), 66 Ill. App. 3d 60, 383 N.E.2d 631.) Our analysis will focus on fraud in law. Fraud in law will be found when a conveyance is made for inadequate or no consideration. (First Security Bank v. Bawoll (1983), 120 Ill. App. 3d 787, 458 N.E.2d 193.) Fraud is presumed in these circumstances (Harris v. Aimco, Inc., 66 Ill. App. 3d 60, 383 N.E.2d 631), and intent is immaterial. (Birney v. Solomon (1932), 348 Ill. 410, 181 N.E. 318; Anderson v. Ferris (1984), 128 Ill. App. 3d 149, 470 N.E.2d 518.) To prove fraud in law, there must be a voluntary gift, an existing or contemplated indebtedness, and a failure of the debtor to retain sufficient assets to pay the indebtedness. Mills v. Susanka (1946), 394 Ill. 439, 68 N.E.2d 904; First Security Bank v. Bawoll, 120 Ill. App. 3d 787, 458 N.E.2d 193.

All three requirements are satisfied here. First, the conveyance out of trust to Bertha was made without any money or property being paid or conveyed by Bertha to Christopher. Bertha told Christopher to give the property back to her to protect Christopher’s children because of Christopher’s financial problems. Christopher acknowledged that the transfer was made for no consideration. Plaintiffs argue that Bertha could not have received as a gift that which she already owned, and maintain that Christopher was named as a joint tenant merely for convenience or as a nominee. These contentions, however, are contrary to the evidence presented at trial. Christopher held himself out to Exchange, and to others, in his personal financial statement and in his 1980 bankruptcy petition as having a beneficial ownership in the property. He cannot protest now that his ownership interest was merely a convenience to his mother. The trial court properly concluded that the transfer of Christopher’s interest in the property was a voluntary gift to Bertha.

Additionally, the trial court properly concluded that the other elements necessary to prove fraud in law had been established. Exchange’s pending suit against plaintiffs clearly was a contemplated indebtedness. Further, Christopher admitted that he had no assets with which he could satisfy the indebtedness either before or after the conveyance. Thus, the elements required to show fraud in law have been proved.

Plaintiffs further argue, however, that Exchange cannot seek relief for a fraudulent conveyance because Exchange actively consented to and participated in the transfer by executing the trustee’s deed on March 11, 1985.

Equitable estoppel arises through a party’s voluntary conduct whereby it is precluded from asserting its rights against another who in good faith relied upon such conduct and was thereby led to change his position to his detriment. (Searcy v. Chicago Transit Authority (1986), 146 Ill. App. 3d 779, 497 N.E.2d 410.) Estoppel must be proved by clear, unequivocal evidence. Gary-Wheaton Bank v. Meyer (1984), 130 Ill. App. 3d 87, 473 N.E.2d 548.

Here, there is no evidence to support plaintiffs’ estoppel argument. Exchange, as land trustee, was ordered to convey the property out of trust. Christopher held the power of direction over the trust and, therefore, had the right to order the trustee to convey the property. (See Wachta v. First Federal Savings & Loan Association (1981), 103 Ill. App. 3d 174, 430 N.E.2d 708.) Exchange, as trustee, was obligated to follow this direction. Exchange, as lender, however, had nothing to do with the transaction. The record is devoid of any evidence that Exchange, as lender, ever approved, consented to, or authorized the conveyance of title out of trust number 31875. The trial court correctly determined that Exchange was not estopped from recovering for the fraudulent conveyance, and we will not disturb its finding of fraud and the subsequent setting aside of the conveyance.

Plaintiffs finally contend that the trial court erred in ordering that the property was subject to the payment of Exchange’s judgment. Plaintiffs note that the court found that the conveyance to Bertha was void, but additionally found that the Blighs “took title” to the property subject to Exchange’s claims. Plaintiffs argue that these findings are inconsistent. Plaintiffs additionally argue that the order itself is void and unenforceable as it adjudicates the rights of nonparties.

We do not believe that the trial court’s order was inconsistent. The judgment order provided that “third parties, Richard M. Bligh and Diana W. Bligh, took title subject to Exchange National Bank of Chicago’s lis pendens notice *** and they, therefore, took title subject to this court’s order.” Thus, the order properly reflects that the property was subject to application to the payment of Exchange’s judgment. (See DeMartini v. DeMartini (1943), 385 Ill. 128, 52 N.E.2d 138.) A fraudulent transfer of property is void only as against creditors, and only to the extent to which it may be necessary to deal with the conveyed estate for the creditor’s satisfaction. (DeMartini v. DeMartini, 385 Ill. 128, 52 N.E.2d 138.) The trial court’s order was not erroneous.

Moreover, the trial court properly determined that the Blighs were not necessary parties to this action. Initially we note that plaintiffs are not the proper parties to raise this contention. An appellant can only assign as error those rulings prejudicial to him. (Gordon v. Gordon (1955), 6 Ill. 2d 572, 129 N.E.2d 706.) The trial court’s ruling with respect to the Blighs does not affect plaintiffs and thus cannot serve as a basis of their appeal. Moreover, the record shows that Exchange filed a lis pendens notice of its claim. Upon the filing of a lis pendens notice, anyone who acquires a right or interest in property during the pendency of a suit concerning that property is charged with constructive notice of the suit and is bound by the result of that proceeding. Ill. Rev. Stat. 1989, ch. 110, par. 2—1901.

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

Judgment affirmed.

EGAN and RAKOWSKI, JJ., concur.


author: PRESIDING JUSTICE COCCIA

text:
    CONTINENTAL ILLINOIS NATIONAL BANK AND TRUST COMPANY OF CHICAGO, as Cotrustee, Petitioner, v. SAMUEL WILLIAM SAX et al., Indiv. and as Cotrustees, et al., Respondents (Edward L. Sax et al., Counterplaintiffs-Appellants; Continental Illinois National Bank and Trust Company of Chicago, Cotrustee, Counterdefendant-Appellee).
    First District (5th Division)
    No. 1—88—3367
    Opinion filed May 25, 1990.
    Rehearing denied July 18, 1990.

      Joyce & Kubasiak, P.C., of Chicago, for appellants.
    Mayer, Brown & Platt, of Chicago, for appellees.
   PRESIDING JUSTICE COCCIA

delivered the opinion of the court:

INTRODUCTION

This appeal arises from appellee Continental Bank, N.A.’s administration of two trusts. Appellants Edward L. Sax and George J. Sax filed a counterclaim against appellee, which the circuit court dismissed. Subsequently, the circuit court awarded appellee regular trustee fees, as well as extraordinary trustee fees and attorney fees for defending against the counterclaim. For the following reasons, we affirm the circuit court’s dismissal of appellants’ counterclaim, and affirm its award of regular trustee fees to appellee, but vacate the award of extraordinary trustee fees and remand for further proceedings.

BACKGROUND

The will of George D. Sax (settlor) was admitted to probate in 1974. Settlor’s will provided for the creation of a family trust and a marital trust. The cotrustees of both trusts were Rhoda Sax, settlor’s wife, and Samuel W. Sax, his son. Exchange National Bank was the corporate trustee. The family trust was to pay Rhoda income for life. Upon her death, its assets were to be divided into separate, equal trusts for her children. The marital trust was to pay Rhoda income for life; she was also given a power of appointment, to distribute that trust’s assets. In October of 1977, appellee succeeded Exchange as corporate trustee.

Rhoda died in December of 1977. She was survived by three sons: Samuel, Edward, and George. Rhoda exercised her power of appointment by will in favor of Edward and George, to the exclusion of Samuel. Upon his mother’s death, Edward became a cotrustee of the family and marital trusts, joining Samuel and appellee.

Following Rhoda’s death, disputes arose between the Sax brothers regarding the trusts. Edward and George were aligned upon one side of the quarrel, with Samuel upon the other side. Appellants requested that appellee make distributions from the trusts, but Samuel opposed them. In addition, he challenged the distribution of assets between the marital and family trusts, claiming that the family trust should have a larger share allotted to it. Samuel likewise challenged Rhoda’s will, calling into question his mother’s exercise of her power of appointment.

In July of 1978, appellee filed a petition for instructions in chancery, requesting the circuit court’s guidance in exercising its administrative responsibilities under the trusts. Appellee alleged that orderly trust administration was frustrated by the Sax brothers’ quarrel. Matters were also complicated, appellee averred, by the fact that the trusts were defendants in lawsuits brought by Exchange’s shareholders (settlor had been an officer of that bank).

By way of answer to the petition, appellants asserted that appellee breached its fiduciary obligations to them by not making distributions from the trusts. And, at a hearing held on December 8, 1978, appellants’ counsel stated that they were considering a counterclaim against appellee.

After Rhoda’s will withstood Samuel’s challenge, appellants renewed their demand for distributions. Appellee filed a supplemental petition for instructions on November 27, 1978. On December 11, 1978, over Samuel’s objection, the circuit court ordered $333,879.94 distributed from the marital trust to appellants. The circuit court also prescribed a formula for future distributions of the trusts’ income that was not in dispute. But as the brothers’ disagreements continued, the circuit court continued to supervise administration of the trusts.

On May 7, 1985, however, the Sax brothers apparently reconciled their differences in the jury room of Judge Harold Siegan’s court. A handwritten document entitled “Points of Settlement” was drafted. This document (draft order) provided:

“In the matter of Continental Bank v. Sam Wm. Sax et al, the parties agree to the following outline of settlement:
1. $300,000 cash shall be paid to the Samuel Wm. Sax trust under the Family Trust.
2. $100,000 shall be paid to the principal of the Edward Sax Trust, and $100,000 shall be paid to the principal of the George Sax Trust.
3. The balance of all assets of both the Marital and the Family Trusts shall be added to the Marital Trust to be distributed as provided therein.
4. The parties agree to resign or decline to act as follows:
a) as to the Samuel Sax Trust Ed Sax shall resign and George Sax shall decline to act.
b) As to the Ed Sax Trust, Sam shall resign.
c) As to the George Sax Trust, Sam shall resign.
5. The Trustees shall set aside $100,000 for the payment of fees. Amounts from this sum not so expended shall be divided in 3 equal portions to be added to the Sam Sax Trust, the Ed Sax Trust and the George Sax Trust.
6. All attorneys shall submit petitions for attorneys fees on or before May 21,1985.
7. If the total assets (including for this purpose the State and Randolf [sic] note to the estate at face amount of $360,000) shall exceed $1,900,000, then xk of the excess over that amount shall be paid to the Sam Wm. Sax Trust.
8. This agreement is intended to resolve the probate court proceedings in this matter as well.” (Emphasis added.)

The draft order was signed by the Sax brothers and their attorneys.

Appellants’ counsel then drafted an agreed order (agreed order) implementing the draft order. After negotiations among the parties— including appellee — the agreed order was entered on June 13, 1985. The agreed order includes the provisions of the draft order, set forth in greater detail. The former also includes many terms not found in the latter, such as:

“12. This court will consider the request of CONTINENTAL ILLINOIS NATIONAL BANK AND TRUST COMPANY OF CHICAGO [now appellee] for leave to resign as Co-Trustee of the various trusts created under the Last Will of George D. Sax immediately following the approval, if any, of the Co-Trustees’ accounts; THAT
* * *
16. Each of the parties hereto expressly AGREES to, and does hereby, WAIVE, his, her, or its right to appeal this Order;
AND THAT:
17. The matters in controversy between the parties having been resolved by the aforesaid settlement, there is no further need for a guardian ad litem in this cause, and HOWARD KORENGOLD, previously appointed as guardian ad litem, is hereby discharged.
IT IS SO STIPULATED AND AGREED ***.”

The agreed order was signed not only by the Sax brothers, but also by appellee and the guardian ad litem, who had been appointed by the court to protect the interests of minor beneficiaries and unborns.

Appellee filed its final accounting and moved for approval on August 1, 1985. On July 25, 1985, the firm of Joyce and Kubasiak, P.C., moved for leave to appear as appellants’ additional counsel, stating that they had been retained for the purpose of determining whether to raise objections to appellee’s accounts. On October 1, 1985, Joyce and Kubasiak filed a document labelled “Objection to Accounting And Counterclaim To Surcharge Co-Trustee For Damages For Breach Of Trust” (counterclaim) on behalf of appellants, naming appellee as counterdefendant. In count I, appellants charged appellee with breach of the duty of good faith; count II pleaded breach of the duty of impartiality; count III alleged breach of the standard of care over investments; and count IV averred breach of the duty of loyalty. They prayed for $30 million in compensatory damages, and $60 million in punitive damages. Although appellants did not name Samuel as a counterdefendant, the counterclaim called their brother’s conduct into question. For example, appellants claimed that appellee’s actions favored Samuel’s “malicious self-interest.” They further claimed that Samuel’s interests were adverse to theirs, and that he could not have been expected to act in good faith for their best interests, notwithstanding his fiduciary duties to them as cotrustee.

Appellee moved to dismiss appellants’ counterclaim, pursuant to section 2—619 of the Code of Civil Procedure (Ill. Rev. Stat. 1985, ch. 110, par. 2—619). Appellee argued that the counterclaim was barred by the agreed order, since it recited that all matters in controversy had been settled, and since it included a waiver clause. The circuit court granted appellee’s motion on June 24,1987, for those reasons.

On July 22, 1987, appellants moved to reconsider the dismissal order. Along with their motion, they presented the affidavits of eight persons present at the negotiations that resulted in the draft order, in order to bolster their argument that the agreed order did not bar their counterclaim. The circuit court denied appellants’ motion on December 23, 1987.

Appellants then sought the entry of an immediately appealable order, and appellee sought approval of its accounts, as well as extraordinary trustee fees and attorney fees for defending against the counterclaim. On August 8, 1988, the circuit court entered an order denying appellants’ request for an immediately appealable order. This order also stated that, so as to expedite the entry of an appealable order, appellants waived the right to conduct discovery and to present evidence concerning the approval of appellee’s accounts and its request for extraordinary trustee and attorney fees. The order likewise provided that in the event such fees were awarded, appellants and appellee acknowledged that they would not be borne by or paid from Samuel’s trust.

On October 12, 1988, the circuit court entered several orders that resolved all matters pending. Specifically, the circuit court awarded appellee $12,293.27 in extraordinary trustee fees, $135,523.75 in attorney fees, and $9,428.11 in expenses. The circuit court approved appellee’s accounts from January of 1978 to June 13, 1985, “in all respects,” and it approved appellee’s accounts for the period from June 14, 1985, to April 28, 1988. Appellants have taken their appeal from these orders.

ANALYSIS

THE SETTLEMENT ISSUE

The parties are in agreement regarding the law that governs the interpretation of the draft and agreed orders: the law of settlements and releases. Their principal disagreement concerns which order is dispositive. Appellee takes the position that the agreed order, to which it was a party, included a settlement of the case it commenced, as well as a release of appellants’ mismanagement claims. In contrast, appellants argue that the earlier draft order, to which appellee was not a party, represented a settlement of the brothers’ quarrel only and that they did not release their claims against appellee.

In particular, appellants contend that they did not settle with appellee or release it, because their mismanagement claims aligned all beneficiaries against it; because they had filed no claim against appellee before the settlement conference, and no reference to their claims is made in either the draft or agreed orders; because they did not intend to release appellee; and because appellee could not be discharged until its accounts had been approved. Appellants’ contentions fail to convince us that the circuit court erred in ruling that their counterclaim was barred by the agreed order.

Addressing these points in the foregoing order, we cannot say that the counterclaim aligned all beneficiaries — appellants as well as Samuel — against appellee. Edward and Samuel were not merely co-beneficiaries. They were also cotrustees who disagreed with each other regarding administration of the trusts. Appellants inaccurately portray this case as one in which the Sax brothers were pitted against appellee, when the dispute between the beneficiaries sent appellee to court in the first place. More importantly, a reading of appellants’ counterclaim reveals that it necessarily called the conduct of their brother and cobeneficiary, Samuel, into question. Among other things, the counterclaim implicitly — but unmistakably — accuses Samuel of breaching fiduciary duties to further his “malicious self-interest.” If appellants’ counterclaim were reinstated, appellee would almost certainly be required to implead Samuel in order to protect its interests. That is, if Samuel’s conduct as cotrustee caused appellee to breach its fiduciary duties to appellants, a rational trustee in appellee’s position would look to him. As a result, were we to accept appellants’ portrayal of the settlement as one between the Sax brothers only, it would have been scuttled nonetheless by the counterclaim.

The facts that no counterclaim had been filed before the settlement conference and that the draft and agreed orders make no reference to the mismanagement claims are of no moment. Appellants were undeniably unhappy with appellee’s conduct long before the May 1985 conference. As stated above, they accused it of breach of fiduciary duties as early as 1978; that same year they also threatened to bring a counterclaim. Moreover, in Rakowski v. Lucente (1984), 104 Ill. 2d 317, 320, 472 N.E.2d 791, 793, our supreme court rejected the notion that a release does not cover claims not yet in existence unless they are specifically mentioned. Indeed, an attempt to list particular types of actions in a broadly worded release — such as the agreed order at issue here — can detract from its general scope. See Rakowski, 104 Ill. 2d at 323, 472 N.E.2d at 794.

Likewise, we are not moved by appellants’ assertion that it was their expressed intent, both during and after the May 1985 negotiations, not to release appellee. Where a release is clear and explicit, a court must enforce it as written. (See Rakowski, 104 Ill. 2d at 323, 472 N.E.2d at 794.) The agreed order plainly states that all matters in controversy, apart from the final accounting, have been resolved, and that all parties waive their rights to appeal. Both an instrument’s meaning and the parties’ intent must be gathered from its face, without the assistance of parole evidence or other extrinsic aids. (See Rakowski, 104 Ill. 2d at 323, 472 N.E.2d at 794.) In Rakowski, counterplaintiff submitted an affidavit in opposition to counterdefendant’s motion to dismiss his counterclaim, alleging that he did not intend to release his claim. Yet the supreme court upheld the circuit court’s dismissal of the counterclaim. We take a similarly dim view of appellants’ eight affidavits, which they submitted in support of their motion to reconsider the circuit court’s dismissal of their counterclaim. Rakowski also stands for the proposition that a unilateral or self-induced mistake is not a valid ground for setting aside an unambiguous release; rather, such a result can only be achieved if a mutual mistake, material to the transaction and affecting its substance, is clearly and convincingly established. (104 Ill. 2d at 324, 472 N.E.2d at 794.) Thus, were we to assume for argument’s sake that appellants did not intend to release appellee — which is the gist of their affidavits — the circuit court’s ruling would still be correct, since the agreed order is unambiguous, and since there is no evidence of mutual mistake. It is also important to keep in mind the fact that appellants’ original counsel drafted the agreed order and that he played a leading role in the subsequent negotiations which resulted in its entry. Compare Barth v. Reagan (1986), 146 Ill. App. 3d 1058, 1067-68, 497 N.E.2d 519, 525-26 (where party’s attorney submitted a stipulation stating that all claims were settled, appellate court construed language against that party).

The fact that no trustees could be discharged until final accounts were approved does not lead us to the conclusion that the circuit court improperly dismissed appellants’ counterclaim. Simply stated, a final accounting had not been completed as of June 1985. Legitimate questions might have arisen, for instance, as to whether the trusts’ assets had been properly divided. While the counterclaim filed by Joyce and Kubasiak was also styled as an “Objection” to appellee’s accounts, it can more accurately be described as an attempt to avoid the agreed order’s consequences. In fact, the counterclaim makes no mention of appellee’s accounts. We repeat that the counterclaim did not merely call appellee’s conduct into question. It similarly called into question the conduct of appellee’s cotrustee, and appellants’ cobeneficiary, Samuel. We think the circuit court saw the counterclaim for what it truly was: an attempt to present mismanagement claims in the guise of an objection.

In Rakowslci, the supreme court identified policy concerns that are also relevant to our case:

“As a matter of public policy the settlement of claims should be encouraged. *** Holding the parties to the language of their release has the advantage of providing certainty and thereby encouraging settlement.” (104 Ill. 2d at 325, 472 N.E.2d at 795.)

After reading the agreed and draft orders together we cannot say that the circuit court erred in ruling that the agreed order barred appellants’ counterclaim, on the grounds that it settled all matters in controversy and that the parties who executed it waived their appeal rights. The agreed order was typewritten, it was signed by all parties, it incorporated the provisions of the draft order in greater detail (7 pages and 17 paragraphs when compared to two pages and eight paragraphs of the draft order), and it explicitly recited that all matters in controversy were resolved and that all parties waived their right to appeal. The earlier draft order was handwritten, it was signed by fewer than all parties, and its plain language stated that it was merely an “outline of settlement.” The Sax brothers had to work out their differences initially, before the other parties — including appellee — could join in the settlement negotiations; after all, it was the brothers’ quarrel that prompted appellee to petition the circuit court for instructions in the first instance. In brief, this case has been pending in the courts for nearly 12 years, and tens of thousands of dollars in fees have been incurred. The parties agreed to terminate this litigation in June 1985, and we shall hold them to that agreement.

We close our discussion of this question by noting, again, that the parties in this case joined issue over the law which governs settlements and releases. The terms of the agreed order provide that the parties settled the case commenced by appellee, and that appellants released their mismanagement claims. But the agreed order can also be analyzed, perhaps more accurately, in light of principles drawn from cases construing such orders. These cases define an agreed order as a recordation of an agreement between the parties, rather than a judicial determination of their rights. (See, e.g., Cooper v. Bi-State Development Agency (1987), 158 Ill. App. 3d 19, 22, 510 N.E.2d 1288, 1290.) Such an order is not generally subject to appellate review; it is conclusive upon the parties and can be amended or set aside only on a showing that it resulted from fraudulent misrepresentation, coercion, incompetence of one of the parties, gross disparity in the parties’ position or capacity, or newly discovered evidence. (See In re Haber (1981), 99 Ill. App. 3d 306, 309, 425 N.E.2d 1007, 1009.) No such showing has been made in this case, so the agreed order must stand. Indeed, at the time the agreed order was drafted, negotiated, executed, and entered, all parties were represented by counsel.

THE FEES ISSUES

Concerning the fees awarded by the circuit court, appellants contend that appellee should have been surcharged for the investment management fees it charged the trusts for the period between June 1985 and April 1988. Appellants additionally contend that the circuit court erred in awarding appellee extraordinary trustee fees and attorney fees for defending against their counterclaim. While we are of the opinion that the circuit court properly refused to surcharge appellee, we are also of the opinion that it erred in awarding the other fees.

Turning first to the award of regular trustee fees, we observe that appellants have cited no authority in support of the proposition that appellee was not entitled to investment management fees, or that the circuit court erred in awarding such fees. The essence of appellants’ complaint appears to be that appellee did nothing to manage the trusts’ investments; instead, it acted only as a custodian of the trusts’ assets. Appellee replies that it performed numerous services, including the preparation and distribution of quarterly cash statements and investment reviews, and the coordination of stock purchases at appellants’ insistence.

It has been held that a trustee should not be surcharged for matters as to which there is no fault or liability on its part, or no loss or damage suffered by the estate or beneficiaries. (See First Midwest Bank v. Dempsey (1987), 157 Ill. App. 3d 307, 315, 509 N.E .2d 791, 797.) Appellee cannot be faulted for its management of the trusts from June of 1985 until April of 1988, as its hand was forced by appellants’ conduct in pressing the counterclaim. In addition, we have seen no evidence that the beneficiaries suffered any loss or damage as a result of appellee’s conduct during this period. Therefore, we cannot say that the circuit court abused its discretion in awarding regular trustee fees or refusing to surcharge appellee. See Durdle v. Durdle (1986), 141 Ill. App. 3d 12, 15, 489 N.E.2d 1142, 1145.

Finally, we come to the more complex question of the extraordinary trustee fees and attorney fees awarded by the circuit court. The parties agree that the resolution of this issue is governed by a line of cases which can be traced to Patterson v. Northern Trust Co. (1919), 286 Ill. 564, 122 N.E. 55. Patterson says that a trustee not at fault is entitled to be reimbursed for all expenses properly incurred in administration of the trust. (286 Ill. at 567, 122 N.E. at 56.) Appellants reason that the award cannot stand, because the circuit court did not explicitly find appellee to be without fault. Appellee replies that the circuit court implicitly found it to be without fault, by approving its accounts “in all respects”; in other words, we should not give talismanic importance to the phrase “without fault.”

Regrettably, the parties’ arguments overlook the fact that, as previously stated, they agreed in the circuit court that Samuel would not be liable for any fees that might be awarded as a result of appellee’s defense against the counterclaim. This is a matter of no small importance, because Illinois courts appear to apply different rules depending upon whether all beneficiaries, or only some, will be taxed for such fees. As Patterson declares:

“Where a beneficiary brings a suit against his trustee which is groundless, the solicitor’s fees and expenses of the trustee in defending the charge are to be paid out of the share of the complainant in the trust estate and not charged against the estate generally nor a general fund by which co-beneficiaries would have to contribute. The suit by Patterson [complainant] was frivolous, oppressive and a wrongful attempt to relitigate matters already decided, and the rule that his share of the trust estate should pay the expenses applies with all its force.” (286 Ill. at 567,122 N.E. at 56-57.)

This rule was cited with approval in Webbe v. First National Bank & Trust Co. (1985), 139 Ill. App. 3d 806, 809-11, 487 N.E .2d 711, 713-14; see also Brown v. Commercial National Bank (1968), 94 Ill. App. 2d 273, 280-81, 237 N.E .2d 567, 571, aff’d (1969), 42 Ill. 2d 365, 247 N.E.2d 894.

Hamilton v. Nielsen (7th Cir. 1982), 678 F.2d 709, contains a thought-provoking discussion of Illinois law on this question. Judge Posner reasoned that if the litigating beneficiary prevails, the other beneficiaries might benefit from a ruling that the trustee has been guilty of mismanagement and is liable for a surcharge. Under this scenario, the litigating beneficiary would receive only a fraction of the total benefits conferred by such efforts. An asymmetry results if, in the event the litigating beneficiary loses, there is a levy against that beneficiary’s share. Such a rule might dissuade beneficiaries from attempting to enforce legitimate claims against trustees. See Hamilton, 678 F. 2d at 715.

Be that as it may, we need not inquire into the justice of applying this rule in our case, because the parties have conceded that Samuel’s share will not be taxed for the extraordinary trustee fees or attorney fees. In other words, since the parties have, in effect, agreed about which rule is to be applied, they shall not be heard to complain of its consequences. It is clear, however, that the circuit court did not apply the standard set forth in Patterson and its progeny, which obtains when only the litigating beneficiaries’ shares are to be taxed. Consequently, while the circuit court may not have committed an abuse of discretion per se, reversal is required since it did not apply the correct legal standard in reaching a discretionary ruling. (See Eisenberg, Appellate Review of Discretionary Judicial Determinations, 2 Appellate Law Review 8, 12 (1990).) We conclude, then, that on remand the circuit court must decide whether appellants’ counterclaim met the standard annunciated in Patterson and its progeny for taxing the shares of litigating beneficiaries. If so, appellee is entitled to extraordinary trustee fees and attorney fees in the amounts previously determined by the circuit court, as appellants waived their right to conduct discovery or to present evidence regarding the amount of those fees. But if the relevant standard is not satisfied, appellee is not entitled to such fees.

CONCLUSION

In sum, we hold that the circuit court correctly dismissed appellants’ counterclaim on the grounds that it was barred by the agreed order. Additionally, we hold that the circuit court properly awarded appellee regular trustee fees and properly refused to surcharge it. But we vacate the award of extraordinary trustee fees and attorney fees and remand for further proceedings consistent with this opinion.

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

LORENZ and MURRAY, JJ, concur.

       Justice R. Eugene Pincham participated in this case prior to his resignation. Since that time, Justice James C. Murray was designated the third member of the panel and has read the record and briefs and has listened to the oral argument tapes.


author: JUSTICE BILANDIC

text:
    ARLINGTON PARK RACE TRACK CORPORATION et al., Respondents-Appellants, v. THE HUMAN RIGHTS COMMISSION et al., Petitioners-Appellees.
    First District (2nd Division)
    No. 1—88—2240
    Opinion filed May 29, 1990.
    Rehearing denied July 3, 1990.

      LeMoine D. Stitt, of Stitt, Klein & Daday, of Inverness, for petitioner.
    Colleen K. Connell, of Roger Baldwin Foundation of American Civil Liberties Union, Inc., and Bret A. Rappaport, of Schwartz, Cooper, Kolb & Gayrior, Chartered, both of Chicago, for respondents.
   JUSTICE BILANDIC

delivered the opinion of the court:

Arlington Park Race Track Corporation (Corporation) and Arlington Park Racetrack, Ltd. (Limited), respondents, request this court to review an order of the Illinois Human Rights Commission (Commission), petitioner. The principal effect of the order of the Commission results in the application of the Illinois Human Rights Act to the respondents. Ill. Rev. Stat. 1981, ch. 68, par. 3—104(A).

Since 1982, this litigation has been before the Commission, the circuit court of Cook County, and this court. The prior history is set out in People ex rel. Department of Human Rights v. Arlington Park Race Track Corp. (1984), 129 Ill. App. 3d 584, 472 N.E.2d 547, and People ex rel. Illinois Department of Human Rights v. Arlington Park Race Track Corp. (1984), 122 Ill. App. 3d 517, 461 N.E.2d 505.

The underlying action originated on May 6, 1982, with the filing of charges with the Illinois Department of Human Rights (Department) by certain backstretch workers alleging that the Corporation’s policy of prohibiting children of backstretch workers under the age of 14 from residing in the backstretch area violates section 3—104(A) of the Illinois Human Rights Act (the Act) (Ill. Rev. Stat. 1981, ch. 68, par. 3—104(A)). Shortly thereafter, the Department filed a complaint with the Illinois Human Rights Commission.

The complainants are backstretch workers who live in an area set aside for them on the grounds of the Arlington Park Race Track. At the time of the events which gave rise to the complaint, the race track and the property surrounding it was owned by respondent Corporation. Respondent Limited currently holds the legal title to the real property which contains the housing at issue in this case, and Limited has been found to be the successor or assignee of the Corporation.

The race track, which is located within the village limits of Arlington Heights, operates from May through September of each year and has traditionally provided dormitory housing facilities in an area of the track commonly known as the backstretch for certain employees of trainers who have horses stabled at the track during the five-month racing season. The dormitories consist of more than 600 rooms ranging in size from 80 to 206 square feet, the larger rooms being designated for double occupancy, and the smaller for single occupancy. None of the rooms are equipped for cooking, and most are served by communal washroom and shower facilities. The rooms were allocated, without cost except for a refundable $75 damage deposit, to the trainers, who in turn assigned them, also without cost, to persons employed by them to care for the horses. The track also maintained 16 two-bedroom trailers in an area removed from the backstretch, ostensibly for rental at a rate of $300 per month to those employees who were accompanied to the track by their families. For a number of racing seasons prior to 1982, an average of 20 to 30 families, including 30 to 40 young children, lived in the dormitories on the backstretch, allegedly because offtrack housing and on-track trailer-housing was either unaffordable or unavailable.

Although it appears that for several years the Corporation was aware that children were living in the dormitories on the backstretch, it took no action to remove or bar them therefrom until April 1982, when it notified the trainers that no children would be permitted to reside there during the 1982 racing season. 129 Ill. App. 3d at 586-87.

Complainants allege that they have been adversely affected by the Corporation’s decision because the exclusion of children from the facilities violates section 3—104 of the Act. (Ill. Rev. Stat. 1981, ch. 68, par. 3—104.) That section provides as follows:

“§3 — 104. Exclusion of Children in the Rental of Real Estate. It is a civil rights violation for the owner or agent of any housing accommodation to:
(A) Require, as a condition precedent to the rental of a housing accommodation, that the prospective tenant shall not have, at the time the application for rental is made, one or more children under the age of 14 years residing in his or her family; or
(B) Insert in any lease or agreement for the rental of any housing accommodation a condition terminating the lease if there shall be one or more children under the age of 14 in the family of any person holding the lease and occupying the housing accommodation.
Any agreement or lease which contains a condition of the type described in this Section is void as to that condition.” (Ill. Rev. Stat. 1981, ch. 68, par. 3—104.)

In defense, respondents primarily allege that the facilities are not “housing accommodations” within the meaning of section 3—104 of the Act, and that the terms and conditions under which backstretch workers obtain occupancy of the facilities do not constitute “rental of housing accommodations” under section 3—104.

Respondents also argue that children are prohibited from living in these facilities by the housing code of the Village of Arlington Heights, and by the rules of the Hlinois Racing Board. Since the respondents must comply with both the Arlington Heights housing code and the Racing Board rules, they argue that it was a legitimate, nondiscriminatory"reason to exclude children from the facilities.

The recommended order and decision by the administrative law judge was issued on February 20, 1985. It required the Corporation and Limited to cease and desist from refusing to provide housing to backstretch workers because they have children; to pay $2,000 to each of two complainants for damages suffered; and to pay complainants’ attorney fees. On March 30, 1988, the Commission affirmed the recommended decision and ruled that backstretch facilities at the race track were a “rental of housing accommodations,” and that the policy of the Corporation and its successor, Limited, of excluding children from that housing violated section 3—104 of the Act. This appeal followed.

I

We are required to sustain the Commission’s findings of fact unless “such findings are contrary to the manifest weight of the evidence.” (Ill. Rev. Stat. 1987, ch. 68, par. 8—111(A)(2).) After a careful review of the record, we conclude that the Commission’s finding are supported by the evidence. In addition, there is no significant factual dispute. The assignments of error deal with the Commission’s interpretation and application of the Act.

Illinois was among the first States to respond to the widespread national problem of the exclusion of families with minor children in the rental of housing by enacting the Illinois Human Rights Act (Ill. Rev. Stat. 1987, ch. 68, par. 101 et seq.).

In 1982, when the alleged housing discrimination occurred, there was a Federal statute dealing with housing discrimination on the basis of race, color, religion, or national origin. (The Fair Housing Act of 1968, Pub. Law 90-284, 82 Stat. 81 (codified at 42 U.S.C. §§3601 through 3631 (1976)).) The Federal Act did not specifically address discrimination against minor children. This resulted in conflicting interpretations of the Federal statute regarding its application where children were involved. Because of this conflict, complainants elected to pursue their remedy under the Illinois Act, rather than by way of a Federal action.

Since 1982, all doubt about the applicability of the Federal statute was removed with the enactment of the Fair Housing Act of 1988, which specifically included children. (42 U.S.C. §3606 (1976).) Now there is a uniform policy prohibiting discrimination against children in the rental of housing accommodations under both Hlinois and Federal law.

It is apparent that the Illinois Human Rights Act is remedial legislation. In fashioning the remedy, the legislature provided for certain exemptions. (Ill. Rev. Stat. 1981, ch. 68, par. 3—106.) The backstretch facilities at issue in this case do not come within any exemption. Respondents did not assert any exemption before the Commission or before this court. Since the Act is remedial legislation, it must be construed liberally to give effect to its purposes. See Rackow v. Hu man Rights Comm’n (1987), 152 Ill. App. 3d 1046, 1059, 504 N.E.2d 1344, appeal denied (1987), 115 Ill. 2d 550.

Section 3—104 of the Human Rights Act prohibits discrimination against families with children under the age of 14 with respect to the rental of “housing accommodations.” The term “housing accommodations” is defined in section 3—101(C) of the Act as follows:

“(C) Housing Accommodations. ‘Housing accommodation’ includes any improved or unimproved real property, or part thereof, which is used or occupied, or is intended, arranged or designed to be used or occupied, as the home or residence of one or more individuals.” Ill. Rev. Stat. 1981, ch. 68, par. 3—101(C).

Respondents contend that the backstretch facilities are not “housing accommodations” within the purview of the Act. Even if this court determines that the facilities are “housing accommodations,” their occupancy by the backstretch workers with children under 14 did not constitute the “rental of a housing accommodation” under section 3— 104(A). Respondents conclude that the Commission’s order to the contrary is erroneous and requires reversal. We disagree.

A

It is important to note that the definition of “housing accommodation” is in the alternative. It includes property which is “used or occupied *** as the home or residenceor, in the alternative, property which is “intended, arranged or designed to be used or occupied, as the home or residence of one or more individuals.” (Emphasis added.) Ill. Rev. Stat. 1981, ch. 68, par. 3-101(C).

The record reveals that the backstretch facilities, from the very outset of the track operation, were designed, arranged and used as a place for backstretch workers to live. They were not designed or used as a barn, stable, or storage area. During the racing season, the workers “used” or “occupied” the facilities with their children as their “home.” When the respondents prohibited children in 1982 and expressed a preference for families without children, they came in conflict with section 3 — 104.

Respondents’ reliance on cases defining the term “residence” is misplaced. It ignores the fact that the Act applies to a “home or residence.” In addition, all of the cases cited deal with other statutes with different compelling governmental purposes, such as voting rights, divorce or eligibility for employment as a police officer. Clearly, they do not apply to effectuate the purposes of the Human Rights Act.

Neither party has been able to cite a case dealing with the specific interpretation of the Human Rights Act at issue in the case at bar. The only case which we were able to find is Serpas v. Schmidt (7th Cir. 1987), 827 F.2d 23, cert. denied (1988), 485 U.S. 904, 99 L. Ed. 2d 234, 108 S. Ct. 1075. That case involved backstretch workers who lived in the backstretch facilities of Arlington Park which, by coincidence, are the same facilities that are involved in the case at bar. The backstretchers sought to enjoin the Dlinois Racing Board from conducting a warrantless search of their living quarters. In affirming the district court’s injunction, the court of appeals stated:

“We agree with the district court that these on-track dormitory rooms must be considered the backstretchers’ ‘homes’ for Fourth Amendment purposes. Appellants point out that the rooms are very small and located either adjacent to or above the stables in the backstretch of the track. Further, they are only temporary lodgings and are accessible to track authorities by a master key. Nonetheless, they are exclusively residential, and lodgings as cramped, inhospitable or temporary have been considered residences by the courts. [Citations.] *** Given the legal protection historically afforded the home by the Fourth Amendment, see e.g., United States v. United States District Court, 407 U.S. 297, 313, 92 S. Ct. 2125, 2134, 32 L. Ed. 2d 752 (1972) (‘physical entry of the home is the chief evil against which the wording of the Fourth Amendment is directed’), we will not assume that the Dlinois legislature meant to authorize warrantless residential searches unless it clearly stated this intention.” 827 F.2d at 28-29.

Horse racing is one of the most regulated industries in this State. The legislature is keenly aware of its operations and the fact that backstretch workers are an integral part of a track operation. If the legislature wanted to exclude the housing facilities provided at the track from the Human Rights Act, it could have easily accomplished that purpose.

We therefore conclude that the legislature intended to include these facilities as “housing accommodations” under the Act, and that backstretch facilities are “housing accommodations” under the Act.

B

Having determined that the backstretch facilities are “housing accommodations” under the Act, we now consider respondents’ fail-back position that there was no “rental” of housing accommodations within the purview of section 3—104.

The term “rental” is not defined in the Human Rights Act or in any case interpreting the Act. However, the Federal Fair Housing Act of 1968, which is the Federal counterpart of our Act, provides some direction, although not binding on this court:

“(e) ‘To rent’ includes to lease, to sublease, to let and otherwise to grant for a consideration the right to occupy premises not owned by the occupant.” 42 U.S.C. §3602 (1976).

In the traditional sense, rent is compensation paid for the use of land, or consideration paid for the use or occupancy of property. See Cottrell v. Gerson (1939), 371 Ill. 174, 181, 20 N.E.2d 74.

Respondents contend that there is no privity between the backstretch workers and the track because the track deals directly with the trainers. It is the trainers who deal directly with the backstretch workers. Therefore, there can be no “rental.”

However, the findings of the administrative law judge, which were adopted by the Commission, clearly demonstrate the flaw of this reasoning.

These housing accommodations were built and are maintained by the track for occupancy by backstretch workers and their families. This continued practically from the time the track was built, until the track changed its policy about children in 1982. Limited, the successor to the Corporation, plans to continue the same policy. Although the track deals directly with the trainers, it is with the express knowledge and direction of the track that the housing accommodations are to be allocated by the trainers to their backstretch employees according to a formula based on the number of horses brought to the track by the trainer. The trainer does not pay any money to the track for these facilities and, in turn, the workers do not pay any money to the trainers. Nevertheless, in each case, it is considered compensation. Trainers do not personally live in the facilities nor are they available to the general public. The facilities are used only during the five-month racing meet and only by backstretch workers and their families. The backstretchers work seven days a week during the entire meet. It would be difficult, if not impossible, to conduct a racing meet without having backstretch workers living at the track in these housing accommodations.

Under the facts of this case, we conclude that there is privity between the backstretch workers and the track in the nature of an assignment or sublease from the trainers to the backstretch workers, with the knowledge and consent of the respondents. The liberal construction of the Act, to effectuate its legislative purposes, requires this result. See Rackow v. Human Rights Comm’n (1987), 152 Ill. App. 3d 1046, 1059, 504 N.E.2d 1344, appeal denied (1987), 115 Ill. 2d 550.

Respondents do not deny that it is their policy to refuse to allow children to occupy the backstretch housing facilities. The order of the Commission determining that respondents’ conduct, under the facts of this case, constitutes a civil rights violation under the Act is correct.

II

Next, respondents argue that even if the facts constitute a violation of the Act, no liability should be imposed because the respondents demonstrated a legitimate, nondiscriminatory reason for refusing to allow children to live in the backstretch housing.

Respondents’ argument appears to be based upon the Supreme Court’s decision in McDonnell Douglas Corp. v. Green (1973), 411 U.S. 792, 36 L. Ed. 2d 668, 93 S. Ct. 1817. In that case, the Court said that racial discrimination in employment could be inferred based upon circumstantial evidence. Respondent could rebut the inference by articulating a legitimate, nondiscriminatory reason for the employment action at issue. Once the reason was articulated, the complainant could prove his case by demonstrating that the reason was merely a pretext for discrimination.

This analysis has nothing to do with the facts of the instant case. Under McDonnell Douglas, a respondent explicitly denies discrimination and offers a legitimate, nondiscriminatory reason for the employment transaction at issue. In the case at bar, respondents admit that they are discriminating against families with children.

Respondents argue that they do not discriminate against workers and their families but merely limit their prohibition to children. They claim their conduct was “rational.” Respondents ignore the fact that they disregard a clear legislative act which makes it illegal to discriminate against children. This provision is related to a legitimate governmental purpose. (Rackow, 152 Ill. App. 3d at 1059.) Respondents’ argument must be rejected.

Respondents admit that no ordinance of the village expressly prohibits children from living on the backstretch. They argue that such a policy is implicit in section 26—208(b), which requires that rooms on the backstretch “will be assigned only to persons listed on the Illinois Racing Board Stable Employment List.” (Arlington Heights, Ill., Village Code, ch. 26, par. 26—208(b) (1979).) Since children under the age of 16 are not eligible for employment in the stable area, respondents argue, it is clear that they may not be allowed under this provision to live in the backstretch or stable area. This interpretation would appear to be inconsistent with section 26 — 202(m) of the Village Code, which provides that children over the age of one year and under the age of 12 years shall be counted as one-half persons for purposes of determining maximum occupancy of housing units at the track. (Arlington Heights, Ill., Village Code, ch. 26, par. 26—202(m) (1979).) Such a provision would have been unnecessary if the village had indeed prohibited children from living on the backstretch. The occupancy limitations that applied to dorms constructed after 1979 do not dictate the exclusion of family members under the age of 14, but rather limit the number of persons who may occupy accommodations of a given size. Furthermore, several of the dorms in question were constructed prior to the enactment of this ordinance and are specifically excluded from its coverage. Thus, the Village Code does not require that respondents adopt the exclusionary policy at issue here, and compliance therewith does not require respondents to act in violation of the Human Rights Act.

Respondents also cite the rule of the Illinois Racing Board as a basis for its policy of excluding children. Rule 84 provides that race track workers must be licensed. (Codified at 11 Ill. Adm. Code §1408.50 (1983).) These provisions do not, however, address the issue of who may live at the track. Although Rule 345 limits the entry to the backstretch area to licensed personnel, supervised children are allowed on the track during the day. (Codified at 11 Ill. Adm. Code §1325.50(a) (1975).) Thus, the rules in question do not prohibit children from occupying the accommodations on the backstretch. The rules of the Board must be interpreted to comply with Illinois law. In the event of conflict, the Human Rights Act must prevail over the rules of the Illinois Racing Board.

Finally, respondents contend that their concern for the health, safety and well-being of the children constitutes a legitimate, nondiscriminatory reason for their policy of excluding children from the backstretch housing. The record does not support this argument.

The record discloses that families with children have been residing on the backstretch for many years. The track has even funded some of the social programs for the children found at the track’s community center. At the very least, the track provided space for these programs to operate, indicating an acquiescence to the children’s presence on the part of the track. There is testimony that the backstretch compares favorably to urban low income areas, which obviously do not exclude children. The environmental hazards found in these urban areas are worse than those found at the backstretch. The density of the backstretch is about half that of West Garfield Park. Moreover, unlike the urban low income areas, the track provides a setting where there are on-site medical, dental, day-care, educational, and recreational facilities.

The respondents contend that children are unsafe residing on the backstretch. Yet, respondents are unable to provide evidence of any horse-related injuries to a child under the age of 14. The parents of these children have voluntarily adopted their own rules to insure the safety of their children as they reside on the backstretch. There was no evidence of any disease transmitted by the horses to the backstretch children and no evidence of airborne or water disease on the backstretch.

The evidence does not support respondents’ contention that they are excluding children under the age of 14 from residing in the backstretch housing because of a concern for the health, safety and welfare of these children.

We therefore conclude that respondents failed to establish any legitimate nondiscriminatory reason to avoid liability for their violation of the Act.

III

We reject respondents’ argument that damages awarded complainants Armstrong and Shannon for mental distress, embarrassment and emotional injury are not compensable under the Act. “ ‘Actual damages’ in the context of the [Human Rights Act] contemplates compensation for emotional harm and mental suffering caused by a violation of the [Human Rights Act].” Village of Bellwood Board of Fire & Police Commissioners v. Human Rights Comm’n (1989), 184 Ill. App. 3d 339, 355, 541 N.E.2d 1248, appeal denied (1989), 127 Ill. 2d 612.

IV

Administrative Law Judge Gerl presided over the proceedings before the Commission during the presentation of evidence. Subsequent to the evidentiary hearings, but prior to submission of the post-hearing briefs, Judge Gerl resigned. He was replaced by Judge Patton, who authored the recommended order and decision ultimately adopted by the Commission. Respondents contend that, because of this substitution of judges, Judge Patton was unable to make the credibility assessments necessary to render her decision. Respondents contend that this practice constitutes reversible error.

Respondents cite Quincy Country Club v. Illinois Human Rights Comm’n (1986), 147 Ill. App. 3d 497, 498 N.E.2d 316, as authority for their contention. We find this case factually distinguishable from the case at bar. In Quincy Country Club, the evidence on nearly every issue was highly disputed, making the credibility of the witnesses an important factor in the judge’s decision. The parties in the instant proceedings stipulated to a majority of the testimony. Credibility assessments are unnecessary where the testimony is stipulated and the dispute between the parties lies in the application of the law to the facts. (See Illinois Bell Telephone Co. v. Human Rights Comm’n (1989), 190 Ill. App. 3d 1036, 547 N.E.2d 499, appeal denied (1989), 129 Ill. 2d 563.) We therefore conclude that the substitution of the administrative law judge did not constitute reversible error.

V

We agree with the Commission’s determination that Limited is the successor or assignee of the Corporation. It was proper to add Limited as an additional party to the complaint. We therefore conclude that the Commission had jurisdiction to enter an order against Limited as the successor or assignee of the Corporation.

Accordingly, the order of the Human Rights Commission is affirmed.

Affirmed.

DiVITO, P.J., and SCARIANO, J., concur.