author: JUSTICE HARRISON

text:
      In re MARRIAGE OF JERI SUE DUNN, f/k/a Jeri Sue Herron, Petitioner-Appellant, and KEVIN M. HERRON, Respondent-Appellee.
    Fifth District
    No. 5—90—0006
    Opinion filed February 26, 1991.

      Steven E. Katzman, of Belleville, for appellant.
    William C. Norton, of Conn, Clendenin, Norton & Farris, of Marrissa, for appellee.
   JUSTICE HARRISON

delivered the opinion of the court:

Petitioner, Jeri Sue Dunn, formerly Herron, appeals from the orders of the circuit court of Randolph County, entered October 10 and December 11, 1989, modifying custody with respect to the minor child of her marriage to respondent, Kevin M. Herron, and denying her motions to vacate or modify judgment. The parties’ marriage was dissolved by order of the circuit court of Randolph County on June 29, 1984, and petitioner was given permanent custody of the parties’ minor child, Mindy Sue Herron. On January 12, 1989, respondent filed a petition to modify the custody order, alleging a substantial change of circumstances affecting the best interests of the minor child, to wit: (1) that petitioner has not been providing a good home environment or proper adult supervision for the minor child; (2) that the minor child is not happy or well adjusted living with petitioner and prefers to reside with respondent; and (3) that the minor child was voluntarily placed by petitioner in the custody of respondent on or about November 1, 1988.

At issue here is whether the circuit court’s granting of the custody modification petition was against the manifest weight of the evidence and an abuse of discretion under the provisions of section 610(b) of the Illinois Marriage and Dissolution of Marriage Act (Ill. Rev. Stat. 1989, ch. 40, par. 610(b)). That section provides in pertinent part:

“The court shall not modify a prior custody judgment unless it finds by clear and convincing evidence, upon the basis of facts that have arisen since the prior judgment *** that a change has occurred in the circumstances of the child or his custodian *** and that the modification is necessary to serve the best interest of the child.” Ill. Rev. Stat. 1989, ch. 40, par. 610(b).

Custody modification under section 610(b) is based on a legislative presumption in favor of the present custodian in order to promote stability and continuity in the child’s environment. However, once the trial court has determined that this presumption has been overcome, a court of review will not disturb that determination unless the trial court’s decision was contrary to the manifest weight of the evidence or amounted to an abuse of discretion. In re Marriage of Wechselberger (1983), 115 Ill. App. 3d 779, 786, 450 N.E.2d 1385, 1389-90.

At the hearings held in this matter on September 14 and 21, 1989, extensive evidence was presented. Testimony by witnesses in support of respondent’s petition can be summarized as follows. Reverend Ralph Mehring, retired minister of St. John Lutheran Church in Sparta, Illinois, testified that respondent was a member of his congregation and had served on the church’s finance committee. Respondent brought his daughter Mindy with him to church on a regular basis and she attended Sunday school. Rev. Mehring felt that respondent and Mindy had a close and loving relationship.

George Houston, district supervisor for the St. Louis County Department of Highway and Traffic, testified that respondent had worked under his direction for 2V2 years. Houston described respondent as a hard worker and a very dependable, responsible person. Peter Schwent, one of respondent’s co-workers, testified that he had known respondent since he began his employment with the highway department. Schwent and his wife occasionally socialized with respondent and his second wife, Nancy, and on some of those occasions Schwent had observed Mindy at respondent’s home. Schwent felt that respondent and Mindy had a normal parent-child relationship and that Mindy appeared to be healthy and well adjusted.

Clinical psychologist Dr. Daniel Cuneo testified as an expert witness, having been ordered by the court to prepare an evaluation and report concerning the best custodial arrangement for the minor child. Based upon his evaluation and interviews, Dr. Cuneo stated that it would be in Mindy’s best interest for respondent to have primary physical custody. Dr. Cuneo believed that respondent was a more psychologically stable parent and could better provide the stability needed by the minor child. In Dr. Cuneo’s opinion, petitioner had led a “rather chaotic lifestyle” which may have been one of the primary factors that led to problems Mindy had experienced in kindergarten. Dr. Cuneo credited respondent’s work with Mindy as being one of the main reasons for an improvement in her school work.

Dr. Cuneo further testified that Mindy, age six, had indicated a preference to live with her father, although she expressed a love for both parents. Mindy told Dr. Cuneo that her mother sometimes whips her, but expressed a greater fear of her mother’s ex-husband, Michael Dunn, who, she stated, “whips hard.”

Although Dr. Cuneo admitted that petitioner was a fit parent, he felt that her thinking was confused and that her life was “in a state of flux.” Dr. Cuneo concluded:

“Jeri Dunn may try her best. She just hasn’t been able to provide the structure the child needs. That doesn’t make her a bad person. It’s *** what would be the better place for this child and this child did suffer some difficulties, some things we can actually measure; and I didn’t feel that it was worth taking the risk to see what else we could do to this kid.”

Dwight Baue, age 20, testified that he first met petitioner in May 1989, through her job at Pizza Hut in Sparta, Illinois. Shortly thereafter, petitioner invited Baue to her home for a small party. Several weeks later, Baue and petitioner were supposed to go on a picnic but instead went to her trailer, where they ate and Baue consumed “eight small bottles” of beer. Because petitioner had to work that night, Baue volunteered to baby-sit Mikey, petitioner’s child from her second marriage. Baue told petitioner that he had to get a load of merchandise from the airport for his employer and could take Mikey along with him.

Baue subsequently accepted employment with a barge line and went to petitioner’s trailer to tell her good-bye. Another of petitioner’s male friends came by and, after talking together for a while, petitioner left with this friend. Baue, who did not know petitioner was leaving, felt obliged to stay and watch Mikey, since the child was awake and petitioner’s sleeping brother was the only other person in the trailer. Baue put Mikey to sleep and finally left around midnight, although petitioner had not yet returned.

Baue returned to Sparta 10 days later, after suffering an injury on the barge, and was invited by petitioner to her apartment, where he spent the night. Thereafter, Baue lived with petitioner for approximately one month, sometimes baby-sitting for the children while petitioner was at work. Baue testified that during the time he lived with petitioner, she had approximately six late night parties with her coworkers from Pizza Hut.

Baue further testified that petitioner told him her ex-husband Michael Dunn had once pushed her against a cabinet, resulting in a two-inch scar on her back. Bane moved from petitioner’s residence after she began feeling sick in the mornings, although denying she was pregnant. Additionally, Baue claimed to have caught “crabs” from petitioner. On cross-examination, Baue admitted that he had used cocaine several times in the past and that petitioner had voiced her disapproval when she learned of this behavior.

Nancy Herron, respondent’s second wife, testified that she and respondent had dated since 1984 and were married on April 15, 1989. Mrs. Herron, who was employed as a corporate travel agent, stated that she had made arrangements for after-school child care for Mindy in the event that respondent were to be awarded custody. Mrs. Herron described her relationship with Mindy as a very good one. Although Mrs. Herron believed that Mindy was basically physically and mentally healthy, she stated that there had been times when they would pick Mindy up from petitioner’s house and she would be dirty. During recent periods of visitation, Mrs. Herron noticed that Mindy was nervous and experienced difficulty sleeping.

Respondent testified that he had been employed as an equipment operator by the St. Louis County Highway and Traffic Department for 2xlz years, working from 8 a.m. to 4:30 p.m. and earning an approximate net income of $1,000 per month. Respondent stated that since the divorce, he has always paid child support and exercised his visitation privileges.

Respondent further testified that on the day before Thanksgiving, 1988, petitioner took Mindy to the home of respondent’s mother, saying that she didn’t want Mindy anymore. Respondent, who was living with his parents in Sparta, Illinois, believed that petitioner intended to give him permanent custody of Mindy, and had her sign a note forfeiting child support for Mindy “while [respondent] is caring for her during the school year or until she comes back home with me.” Prior to the transfer of custody, Mindy had been attending kindergarten at Trico School in Percy, Illinois. The parties had discussed the fact that Mindy was doing poorly there, and after Mindy was enrolled in the Sparta school system, respondent helped her with her school work.

Respondent stated that on January 8, 1989, petitioner reasserted and took custody of Mindy and immediately thereafter he instituted this custody modification action out of concern for his daughter’s well-being. Respondent admitted that because petitioner had moved to Sparta prior to resuming her custody of Mindy, Mindy has remained in the same school, where, he believes, she could receive a good education.

Numerous witnesses also testified on behalf of petitioner. Fleta Gordon testified that she had been employed as a teacher at the Sparta Primary Attendance Center for 21 years. Mrs. Gordon was Mindy’s kindergarten teacher from the end of November 1988, until the end of May 1989. At first, Mindy was very far behind the other children, but made “tremendous progress within the first few weeks in Sparta, almost faster than any child I had seen before.” Mrs. Gordon had conferences with both parties during the school year and saw no regression in Mindy’s progress after she began living with petitioner again.

Stacey Diercks testified that she was a 16-year-old high school student who occasionally baby-sat for Mindy and Mikey during June and July 1989. Petitioner always left something for the children to eat and her apartment and the children’s clothes were always clean. During the time she baby-sat, Ms. Diercks did not notice anyone else living with petitioner and her two children.

Michael Dunn, Sr., testified that he and petitioner were married on July 6, 1984, seven days after petitioner’s divorce from respondent. Dunn and petitioner divorced in September 1988, and petitioner retained custody of their child, Michael S. Dunn II. However, the couple began seeing each other again in October 1988 and had maintained a relationship since that time. Dunn stated that he was the father of the child that petitioner was carrying at the time of the hearing, and that the two of them planned to remarry in December 1989. Dunn, a self-employed truck driver, denied ever physically abusing petitioner. Dunn felt he had a good relationship with Mindy, but admitted spanking her several times.

Petitioner testified that she had been employed at Pizza Hut since February 1, 1989. Because she usually works during the day, her schedule allows her to take Mindy to and from school and help with some of her Brownie activities. Petitioner stated that she decided to let Mindy live with respondent in November 1988, because she had talked with his mother and they had decided to enroll Mindy in school in Sparta, due to her difficulties in kindergarten at the Trico School. Petitioner testified that the agreement with respondent was that Mindy would stay with him at his mother’s home only until the end of the school year and that petitioner would move to Sparta as soon as she got a job and a place to live. During the time that Mindy lived with respondent, petitioner had visitation every weekend. Petitioner stated that while Mindy was spending Christmas vacation with her, Mindy told her that she wanted to live with petitioner rather than with her father.

Petitioner further testified that she had never had sex with Dwight Baue and that he had never lived with her. Although she admitted that Baue had stayed overnight at her house several times, he was always in the company of Fern Aud, a friend of petitioner’s and the woman whom Baue was dating. Petitioner further admitted that she was warned by the manager of her apartment complex for violating a rule concerning additional persons staying in the apartment for an extended period of time. Petitioner noted, however, that she was cited for having two additional guests. Petitioner stated that she had recently gotten into an argument with Baue when she learned that “he smokes pot and he snorted cocaine.” Petitioner had tried to persuade Ms. Aud not to see Baue anymore because of the drug usage, and when Baue found out, he became angry with petitioner and told her that he would get even with her.

Petitioner testified that she began dating Michael Dunn after she had separated from respondent in April 1984. Petitioner denied that Dunn had ever abused her, although she stated that respondent had done so on several occasions during their marriage. Petitioner described the relationship between Mindy and Dunn as being “very close” and felt that Mindy and her brother Mikey were “inseparable.” Petitioner testified that she had moved six times since her divorce from respondent in 1984, but explained that several of the moves were necessitated by Mindy’s educational needs and by her marriage to and subsequent divorce from Dunn.

Bonnie Jacoby, petitioner’s mother, testified that she often babysits for Mindy and Mikey while petitioner is at work. Mrs. Jacoby believes that petitioner takes very good care of her children and has always kept them neat and clean. Mrs. Jacoby had seen Dwight Baue with Fern Aud several times at petitioner’s apartment, but did not believe that petitioner had ever dated him. Mrs. Jacoby further testified that she was relieved when petitioner ended her marriage to respondent, but was upset when petitioner and Michael Dunn divorced. Mrs. Jacoby denied that Dunn had ever abused petitioner, but related one instance during petitioner’s marriage to respondent where she observed “hold marks” or bruises on petitioner’s wrists.

Crystal Povolish testified that she had been petitioner’s neighbor since June 1, 1989. In early June, Ms. Povolish observed Dwight Baue leaving petitioner’s residence and was told by petitioner that Baue was “Fern’s boyfriend.” Although Ms. Povolish was not aware of any parties held at petitioner’s apartment, she admitted that she sometimes worked evenings. Ms. Povolish stated that she has often seen Michael Dunn at petitioner’s apartment and felt that he was very nice to the children.

Elizabeth Stork, petitioner’s maternal grandmother, testified that she also helped baby-sit for the children on a weekly basis when petitioner was working. Mrs. Stork stated that during a Christmas dinner celebration at her home, Mindy seemed upset. When Mrs. Stork asked Mindy what was wrong, Mindy, who was then living with respondent, told Mrs. Stork that she wanted to live with her mother. Mrs. Stork offered to let petitioner and her children move into her home in Sparta until petitioner could find a place of her own. Petitioner moved into the Stork home in early January 1989 and lived there until the end of March 1989. On several occasions during that time, respondent used loud, vulgar language and called petitioner derogatory names in front of Mindy upon returning her from visitation periods. Mrs. Stork has observed Michael Dunn interacting with petitioner’s children on numerous occasions and stated that he is both gentle and kind when correcting them. Mrs. Stork had never seen Dunn be unkind to petitioner.

It is not for a reviewing court to try the case de novo. (In re Custody of Sussenbach (1985), 108 Ill. 2d 489, 499, 485 N.E.2d 367, 371.) Once the trial court concludes that a change in custody is necessary, great deference must be accorded that decision, since the trial court is in the best position to judge the credibility of the witnesses and determine the needs of the child. (108 Ill. 2d at 499, 485 N.E.2d at 370.) Here, the trial court held that a change had occurred in the circumstances of the parties and the minor child which would permit modification. The trial court believed the evidence clearly and convincingly established that petitioner has not been providing a good home' environment or proper adult supervision for Mindy and that Mindy may indeed be adversely affected by continued exposure to petitioner’s lifestyle.

Petitioner argues that in attempting to prove that she had not been providing a proper home environment, respondent relied primarily on the testimony of Dr. Cuneo and Dwight Baue. In answer to petitioner’s contention that Baue’s testimony was incredible, we note that the change-in-circumstances finding could have been made by the court without reliance on Baue’s claims. In custody modification proceedings, the examining psychologist’s testimony is entitled to great weight. (See In re Marriage of Dilley (1984), 127 Ill. App. 3d 992, 996-98, 469 N.E.2d 674, 677-78.) Here, according to Dr. Cuneo’s expert testimony and report, petitioner’s actions while she had custody of Mindy were not always in Mindy’s best interest.

Petitioner and Mindy had resided in seven separate locations in the five years since the parties’ marriage was dissolved. Although the ill effects of a custodial parent’s changes in residence need not manifest themselves before a court can alter a child’s custody (In re Marriage of Pease (1982), 106 Ill. App. 3d 617, 620-21, 435 N.E.2d 1361, 1365), here Dr. Cuneo believed that petitioner’s “rather chaotic lifestyle” was primarily responsible for Mindy’s problems in school.

Additionally, petitioner had married, divorced and was planning to remarry Michael Dunn, a man whom Mindy feared because he “whips hard.” Most importantly, however, Dr. Cuneo believed that petitioner’s home was unstable, especially when compared to the environment provided by respondent and his second wife, Nancy. These findings, when taken together, are sufficient to show that a change in circumstances had occurred since custody had been granted to petitioner. See Sussenbach, 108 Ill. 2d at 498, 485 N.E.2d at 370 (change in circumstances occurred that justified change in custody of child from mother to father where mother’s new husband had emotional problems and had used force against child on at least two separate occasions, mother’s home was unstable, and father’s home provided stable environment).

The trial court was also convinced the evidence clearly established that a modification awarding custody to respondent was necessary to serve Mindy’s best interest. The stability of the environment is an important factor in determining a child’s best interest. (Pease, 106 Ill. App. 3d at 620, 435 N.E.2d at 1365.) Here, the court, in its December 11, 1989, order, adopted Dr. Cuneo’s finding that “it would be in the best interests of Mindy Sue Herron for her primary physical custody to be placed with her father, Kevin M. Herron, the Respondent herein.” The court further agreed with Dr. Cuneo that “Kevin M. Herron was the more psychologically stable parent and can better provide for the stability that Mindy Sue Herron needs in her life.” The court concluded that respondent is well able to provide a good and proper home and environment for Mindy wherein she would receive the “proper care, moral and religious training and *** support.”

Given the court’s findings and the record in this case, we cannot say that the court’s decision to modify custody constituted an abuse of discretion or was contrary to the manifest weight of the evidence. Accordingly, the orders of the circuit court of Randolph County are affirmed.

Affirmed.

RARICK, P.J., and WELCH, J., concur.


source: Caselaw Access Project

author: JUSTICE CHAPMAN

license: Public Domain

text:
    C.L. MADDOX, INC., Plaintiff and Counterdefendant-Appellee, v. ROYAL INSURANCE COMPANY OF AMERICA, f/k/a Royal-Globe Insurance Company, Defendant and Counterplaintiff-Appellant.
    Fifth District
    No. 5—89—0001
    Opinion filed February 26, 1991.

      William S. Daniel, of Daniel Law Offices, P.C., of Belleville, for appellant.
    Donald V. Ferrell, of Jelliffe, Ferrell & Morris, of Harrisburg, for appellee.
   JUSTICE CHAPMAN

delivered the opinion of the court:

C.L. Maddox, Inc. (insured), brought this action in the St. Clair County circuit court on a policy of insurance issued by the Royal Insurance Company of America (Royal), for damages to its business premises. The damage occurred at approximately 3:30 a.m. on August 19, 1981, as a result of an incendiary explosion and fire. Minutes before the explosion, 10-year-old Tammy Pankey reportedly saw Curtis L. Maddox, president and sole shareholder of the insured, enter and leave the insured building. Based on the incendiary nature of the explosion and fire and witness Pankey’s identification of the insured’s president and sole shareholder as the man entering and exiting the building shortly before the explosion, Royal denied the insured’s claim under the policy. Other significant facts will be set forth as we discuss the various issues raised by Royal.

Count I of the insured’s complaint sought compensatory damages for breach of contract for insurance coverage provided for damage to the structure, damage to contents, and business interruption. Count II was a claim for punitive damages for the breach of duty of good faith and fair dealing.

The jury awarded the plaintiff the sum of $243,211.85 on count I and found in favor of the defendant on count II. At a subsequent hearing the trial court found Royal’s denial of the claim to be intentional and in bad faith. The trial court awarded the insured $217,415.17 for Royal’s bad-faith denial of the claim. Royal raises the following issues for our review:

I. Whether the trial court committed reversible error by allowing into evidence a letter written by the insured’s insurance broker, William Rea.
II. Whether the trial court committed reversible error by excluding a portion of the appraisal report prepared by John Olson, which contained Olson’s opinion that North Harrisburg would undergo economic development, on the issue of C.L. Maddox’s motive to commit arson.
III. Whether the trial court committed reversible error by excluding a portion of John Olson’s appraisal report, which contained Olson’s opinion of the subject property’s fair market value, on the issue of C.L. Maddox’s motive to commit arson.
IV. Whether the trial court committed reversible error by excluding evidence of Curtis L. Maddox’s personal financial condition on the issue of his motive to commit arson.
V. Whether the trial court committed reversible error by allowing the insurance broker, William Rea, to testify to his legal conclusion that plaintiff was “entitled to recover” under the insurance policy in question.
VI. Whether the trial court committed reversible error by excluding evidence of the subject property’s fair market value on the issue of damages.
VII. Whether the trial court committed reversible error in allowing the issue of punitive damages to go to the jury.
VIII. Whether the trial court committed reversible error by allowing the jury to view a videotape of a labor disturbance which took place in Galatia, Illinois, on August 18, 1981.
IX. Whether the trial court committed reversible error by allowing the jury to render a verdict in a case brought by a party who was not the real party in interest at the time of the trial.
X. Whether the trial court committed reversible error by its ruling denying defendant’s motion for setoff.
XI. Whether the trial court committed reversible error by awarding plaintiff a $217,415.76 judgment against defendant as a statutory “vexatious and unreasonable” penalty.

We reverse and remand this cause for a new trial on the compensatory damages claim because of the errors committed by the trial court on issues I, II, III and IV. We will discuss other issues that may arise on the retrial of this cause.

I.

THE LETTER

Royal first argues that the introduction into evidence of a letter, which was written by William Rea and sent to Byron Wambles, a Royal employee, was error. Rea’s letter is an out-of-court statement offered for the purpose of establishing the truth of the matters asserted in it, and, therefore, is hearsay. The only hearsay exception which is arguably applicable to Rea’s letter is the “admission by agents” exception. Taylor v. Checker Cab Co. (1975), 34 Ill. App. 3d 413, 339 N.E.2d 769.

Royal argues that the exception is inapplicable because Rea was an insurance broker and not a Royal agent. The insured argues that the letter was properly introduced as an admission. The letter reads as follows:

“Byron, I know as a Royal employee there are some things you can’t comment on, but I know two things (1) Curt Maddox did not do damage to his building [and] (2) Royal will eventually have to pay monies out.”

In Taylor the court stated: “A statement of an agent, when made in the exercise of his duties and pertaining to matters within the scope of his authority, may constitute a binding admission on the principal which can be introduced substantively against the principal.” (Taylor, 34 Ill. App. 3d at 419, 339 N.E.2d at 775.) However, the existence of the agency relationship cannot be shown merely by the statements of the alleged and supposed agent. Sommerio v. Prudential Insurance Co. of America (1937), 289 Ill. App. 520, 7 N.E.2d 631.

The record before us reveals that the only evidence presented by the insured to show the existence of the agency relationship between Royal and Rea was the testimony of Rea himself. Rea testified that he had the power to “write coverage” and “bind” Royal. This evidence is insufficient as a matter of law to establish the agency relationship. (Sommerio, 289 Ill. App. 520, 7 N.E.2d 631.) We also note that Rea testified that he was not an employee of Royal and that he was in fact an independent sales broker. He also testified that he did not have an exclusive agency contract with Royal and was not paid by it.

Moreover, even if there was sufficient evidence to establish that Rea was an agent of Royal, the insured would also have to prove that Rea, when writing the letter, was acting within the scope of his authority before the letter could be properly admitted into evidence. Taylor, 34 Ill. App. 3d 413, 339 N.E.2d 769.

There is no doubt that the insured failed to meet this burden. There is no evidence whatsoever indicating that Royal gave Rea the express authority to determine the validity of claims brought against it. Nor is there any evidence that Royal adopted or ratified Rea’s statements in the letter. The insured, however, argues that Rea had the implied authority to determine the validity of claims brought against Royal. It is simply not reasonable to imply that Rea had the authority to determine the validity of claims brought against Royal from his power to write coverage for it. (See Sommerio, 389 Ill. App. 625, 7 N.E.2d 631.) We note also that Rea testified that his role was one of a “sales broker” and not one of a “claims manager.”

In view of these facts, it is clear that Rea’s comments in the letter were not admissions by Royal. The trial court erred in admitting the letter into evidence. As an alternative argument for admission of the letter, the plaintiff briefly asserted at trial that the letter could be admitted as notice to the defendant. However, this argument has not been presented to this court. Moreover, the admissibility of the letter on the notice basis goes only to the issue of bad faith on the insurance company’s part, and the letter was introduced during plaintiff’s case on the compensatory damages claim. Therefore, it could not have been properly admitted on the notice issue at that time. The prejudicial effect of the letter was further enhanced by the plaintiff’s counsel’s reference to it during closing arguments. We therefore reverse and remand this cause for a new trial on the compensatory damages claim. Since the punitive damages claim has been resolved against the plaintiff, at the new trial of this cause the letter, upon a proper objection by Royal, should be excluded from the evidence.

II and III.

THE APPRAISAL REPORT OF JOHN OLSON

Royal next contends that the trial court erred when it excluded from evidence the February 28, 1981, real estate appraisal report prepared by John Olson for Curtis L. Maddox and all testimony concerning it. Portions of the report were offered to show C.L. Maddox’s motive to commit arson. More specifically, Royal attempted to admit the portion of the report which contained Olson’s opinion that North Harrisburg would develop in the future and the portion of the report which contained Olson’s opinion that the ■ insured property’s fair market value was $60,107.55. Royal argues that Mr. Maddox’s knowledge of these facts prior to the explosion and fire tends to prove his motive for arson. The insured argues that the evidence was irrelevant and properly excluded.

Evidence tending to show the motive for arson is clearly relevant. In Commerce Union Bank v. Midland National Insurance Co. (1964), 53 Ill. App. 2d 229, 202 N.E.2d 688, the defendant raised the affirmative defense of arson. The court stated:

“Arson, by its very nature, is usually incapable of direct proof and the evidence is necessarily often of a negative nature. [Citation.] It has been held that the opportunity for the commission of arson, the motive inducing arson, and the identity of the person accused of arson may all be established by circumstantial evidence.” Commerce Union Bank, 53 Ill. App. 2d at 239, 202 N.E.2d at 693.

The evidence indicated that the insured owned property in the North Harrisburg area before the fire and began moving its operation into the area in September of 1981, approximately one month after the fire. The fact that Mr. Maddox had knowledge of North Harrisburg’s future business potential prior to the explosion and fire, when coupled with his knowledge that the fair market value of his building was only $60,107.55, tends to show that he had a motive to destroy his property. We see no reason to exclude the portion of the appraisal predicting future development in North Harrisburg. On retrial of this cause such evidence should be admitted.

The portion of the report containing Olson’s opinion on the fair market value of the insured’s property poses a more difficult question. The fair market value of the property, as indicated above, was $60,107.55. It had been insured for some time for $100,000, and shortly before the fire Royal required the insured to raise its coverage from $100,000 to $240,000. The insured argues that because Royal required it to raise its coverage on the property, the evidence of the fair market value should be excluded. It also argues that Smith v. Allemannia Fire Insurance Co. (1920), 219 Ill. App. 506, prevents the introduction of fair market value evidence into the case. Royal contends that the fact that the insured let it raise its insurance coverage without disclosing the property’s fair market value tends to prove a motive to commit arson. While it strains credulity to accept that Royal was completely unaware of the property’s fair market value when it required the insured to raise its coverage from $100,000 to $240,000, we must agree with Royal that evidence of the property’s fair market value should have been admitted to show the insured’s motive for committing arson. While it is true that Royal required the insured to raise its coverage, the fact remains that the insured was aware of the property’s fair market value before the explosion and fire occurred. The jury should have been given the opportunity to consider the property’s fair market value insofar as it relates to the insured’s motive to commit arson.

The insured argues that the evidence is inadmissible under Smith. We disagree. Smith pronounced a rule of damages and thus it is inapplicable on the issue of the insured’s motive to commit arson.

By approving the introduction of fair market value evidence for motive purposes in this case, we are not holding that its introduction would be proper in all cases. (See, e.g., People v. Alward (1933), 354 Ill. 357, 188 N.E. 425.) Only when there is a sufficient amount of “other” evidence which tends to show that the insured was responsible for the fire is its introduction into evidence proper. In the present case, among other things, there was evidence that the insured was having some financial difficulties, that it owned property at another industrial site, and there was an eye witness who reportedly saw C.L. Maddox, the insured’s president and sole shareholder, enter and leave the building just prior to the explosion and fire. Under these circumstances we feel that the evidence of the property’s fair market value should be admitted to show the motive of the insured to commit arson.

IV.

FINANCIAL CONDITION OF C.L. MADDOX

Royal next contends that the trial court improperly excluded evidence of C.L. Maddox’s personal financial difficulties. The trial court’s ruling was based on the fact that the insured was C.L. Maddox, Inc., and not C.L. Maddox, individually. Royal argues that the trial court’s exclusion of the evidence was improper in view of the fact that C.L. Maddox was the sole shareholder of C.L. Maddox, Inc. It also argues that the evidence should have been admitted to rebut the testimony of R.C. Davenport. We agree.

A corporation may not recover insurance proceeds if its sole shareholder is found to be responsible for the destruction of the property. (D.I. Felsenthal Co. v. North Assurance Co. (1918), 284 Ill. 343, 120 N.E. 268.) In Felsenthal, where Mr. Fox owned nearly all of a corporation’s stock and was the assignee.of all stock he did not own, the court stated:

“It is true, as contended by appellant, that the general rule of law is that the willful burning of property by a stockholder in a corporation is not a defense against the collection of the insurance by the corporation, and that the corporation cannot be prevented from collecting the insurance because its agents willfully set fire to the property without the participation or authority of the corporation or of all of the stockholders of the corporation. When, however, the beneficial owner of practically all of the stock in a corporation, and who has the absolute management and control of its affairs and its property and is its president and a director, sets fire to the property of a corporation or causes it to be done, there is no sound reason to support the contention of appellant that the corporation should be allowed to recover on a policy for the destruction of the corporate property by a fire so occasioned. Every principle of insurance law and sound reasoning would seem to be against such contention.” (Felsenthal, 284 Ill. at 348-49.)

Given the fact that an insured corporation cannot recover if the sole shareholder is found to have destroyed the corporate property, it would be a strange rule which would preclude the admission of evidence which tends to show that the sole shareholder was responsible for the fire.

The Felsenthal court also discussed the fact that the trial court allowed the defendant insurance company to conduct a broad cross-examination of Mr. Fox. The court did not discuss the details of the cross-examination. However, it stated:

“Fox, then, was really to be considered, when examined as a witness, the same as if he were the insured. The same latitude in cross-examination of Fox was permitted in this case by the trial court as if he were the insured. The court committed no error in so doing.” Felsenthal, 284 Ill. at 351.

The issue in this case was whether or not C.L. Maddox, sole shareholder and president of the insured, was responsible for the explosion and fire. If he was, the insured could not recover. (Felsenthal, 284 Ill. 343.) We feel that evidence which tends to prove that C.L. Maddox caused the fire should be admitted even though the insured is C.L. Maddox, Inc. As mentioned above, evidence of motive is admissible when the affirmative defense of arson is raised. (Commerce Union Bank, 53 Ill. App. 2d 229, 202 N.E.2d 688.) The evidence of C.L. Maddox’s financial difficulties tends to show his motive to commit arson. The trial court erred in excluding the evidence.

In addition to the foregoing, the evidence should have been admitted because the insured introduced evidence of the personal financial condition of C.L. Maddox.

After the trial court granted the insured’s oral motion in limine and excluded all evidence relating to C.L. Maddox’s personal financial condition, the insured’s counsel cross-examined RC. Davenport, former president of the Harrisburg National Bank. The following exchange took place between the insured’s counsel and Mr. Davenport:

“Q. Mr. Davenport, in reviewing Group Exhibit 8, sir, I note that several of those notes appear to be unsecured. Is that fact correct?
A. That’s correct.
Q. What does that mean, Mr. Davenport?
A. That means that only when the signature of the principal, C.L. Maddox, that these were made — we have had enough confidence in this person and still do, that we said that we still do business of a substantial amount on an unsecured basis with him.
Q. Mr. Davenport, you have testified extensively about various months, various accounts here concerning C.L. Maddox, Inc. Is it correct, sir, or do I understand correctly from your testimony that the Harrisburg National Bank’s association with C.L. Maddox or Curt Maddox or C.L. Maddox, Inc. has been satisfactory as far as the bank is concerned?
A. We consider him one of our best customers.
Q. And has Mr. Maddox always, based upon your records and information, paid monies he has owed this bank when due?
A. Yes. If not exactly when due, when agreed upon.” (Emphasis added.)

After this testimony was received Royal sought to have the trial court’s earlier oral motion in limine lifted. The trial court denied Royal’s request. The testimony set forth above clearly indicates that the insured interjected evidence of C.L. Maddox’s personal financial condition after obtaining an in limine order precluding Royal from doing so. Mr. Davenport’s testimony, in essence, was that C.L. Maddox was financially sound. The jury was left to infer that C.L. Maddox had no reason to destroy his company’s property. We feel that Royal should have been given the opportunity to introduce evidence of C.L. Maddox’s financial difficulties in an attempt to rebut this inference. For the reasons set forth above, we feel that the trial court erred in excluding the evidence of C.L. Maddox’s personal financial difficulties. On the retrial of this cause the evidence should be admitted.

V.

THE TESTIMONY OF WILLIAM REA

Royal next contends that certain portions of Mr. Rea’s testimony were improper and inadmissible. The testimony relevant to this issue is as follows:

“Q. Based upon the proof of loss that was submitted, identified as Plaintiffs Exhibit 4, the estimate of Walker & Associates Engineering that is attached to it, and in your judgment, sir, under the terms and conditions of the policy, what was C.L. Maddox, Inc. entitled to recover on the structure?
A. $240,000.”

No objection was made by Royal to this testimony. A few moments later the following exchange took place:

“Q. In your opinion, sir, based upon your years as an adjustor, your years in the industry, being a representative of Royal selling their policy of insurance, based upon the proof of loss submitted by Mr. Maddox on behalf of C.L. Maddox, Inc., based upon the co-insurance provision of the policy which you have already described for us, can you tell us what he was entitled to recover under the policy as to damage and lost contents?
MR. DANIEL: Objection. Calls for a conclusion as to entitlement to recover, which is not a sales agent determination; it’s a claim determination. Again if the question was only as to numbers I wouldn’t have the objection Your Honor.
THE COURT: The objection is overruled.
Q. (By Mr. Farrell) Do you remember my question?
A. Yes, sir. $93,045, 93,045.
Q. All right, now with respect to the structure, it is your opinion that under the policy and based upon the proof of loss, C.L. Maddox was entitled to recover what?
MR. DANIEL: Same objection.
THE COURT: Same ruling.
Q. (By Mr. Farrell) You may answer.
A. 240,000, 240,000, $240,000.”

Royal argues that the trial court erred in admitting this testimony into evidence. It contends that Rea’s comments were nothing more than improper expressions of opinions. The insured argues first that Royal waived this issue on appeal by failing to properly object at trial. They also contend that Rea was an agent of Royal and that his testimony constituted an admission of liability by Royal. They also argue that Rea was “qualified” to express the opinions set forth above.

In view of the fact that we have reversed because of the admission of Rea’s letter, we need not address the waiver question raised by the insured. However, we will comment on the admissibility issue since the insured may attempt to elicit this testimony on the retrial of this cause. We need not repeat our agency analysis; it is sufficient to state that Mr. Rea was not an agent of Royal, and admission of the testimony on that ground would be error. We note at this point that from the tenor of Royal’s objections it can be inferred that it would have had no objection to Rea’s testimony relating to the dollar value of the loss. Royal’s objection focuses on Rea’s statement that the insured is “entitled” to recover. We feel that Rea’s expression of the opinion that the insured was entitled to collect from Royal was improper.

“An opinion that a party should win is not a permissible expert opinion. This is so even though expert opinion is permissible upon some of the ultimate issues involved in determining who should win.” (In re K.L.M. (1986), 146 Ill. App. 3d 489, 498, 496 N.E.2d 1262, 1268.)

(See also M. Graham, Cleary & Graham’s Handbook of Illinois Evidence §704.1, at 535 (5th ed. 1990).) Rea’s testimony did not provide the jury with an opinion on a fact in the case. It was essentially Rea’s opinion that the insured should win the case. Therefore, the admission of the testimony was improper and on retrial of this cause it should be excluded.

VI.

FAIR MARKET VALUE ON THE ISSUE OF DAMAGES

Royal next asserts that the trial court erred when it excluded evidence of the subject property’s fair market value on the issue of damages. Both parties agree that the policy of insurance in question is an actual cash value policy. The controversy exists over how actual cash value is to be defined. The trial court defined actual cash value as replacement cost minus depreciation and excluded evidence of the building’s fair market value. Testimony from both parties established that the replacement cost minus depreciation of the building was $345,000. John Olson, who was retained by C.L. Maddox, appraised the building’s fair market value at $60,107.55.

Royal argues that Illinois Department of Insurance Rule 9.19(15), which defines actual cash value as reproduction costs minus depreciation, is inapplicable to commercial property. Royal asserts that actual cash value must be calculated by taking into consideration the structure’s fair market value. We agree with Royal insofar as it asserts that Rule 9.19(15) applies only to residential structures. Our research has disclosed no comparable rule relating to commercial property. However, we do not believe that the existence of this fact necessitates the conclusion that fair market value must be considered to determine the actual cash value of commercial property on the issue of damages.

The issue was specifically addressed in Smith v. Allemannia Fire Insurance Co. (1920), 219 Ill. App. 506. In Smith the insured’s property consisted of an office building with a basement store, which was severely damaged by fire. Reproduction costs minus depreciation on the structure amounted to $150,000, while the fair market value was determined to be between $80,000 and $100,000. The trial court awarded the insured damages of $78,409.26, and the appellate court reversed, stating:

“[A]ctual cash value means reproduction value less depreciation for age and not market value.” Smith, 219 Ill. App. at 513.

In support of its decision, the Smith court, quoting Cooley in his briefs on the Law of Insurance, Vol. 4, page 3081, stated:

“ ‘If the property destroyed is a building, the measure of damages is not the market value of the building at the time of the loss, nor what someone would have paid for the building, but the actual value of the property at the time of the loss, as the insured is entitled to be indemnified for the loss sustained. The market value cannot be used as the test in determining the amount of recovery for the destruction of a building for various reasons. If there was no market demand for the property so it could be sold, it would have no value, and consequently there would be no loss. A farmer might have an insured building of the value of $5,000 on a farm, and yet be held to have sustained no loss by its destruction because there was no demand for land in the location, and the farm could not have been sold. If not salable at all, it might have a value to the owner as a home for himself and family or for business purposes. Again, the market value of some buildings (as, for instance, tenement houses) may be much greater than their actual value. Besides the market value rule would render it almost, if not quite, impossible in many cases to determine the amount of the loss.’ ” Smith, 219 Ill. App. at 512.

While we are aware that other States have adopted a “broad evidence” rule which would permit the introduction of market value evidence (McAnarney v. Newark Fire Insurance Co. (1928), 247 N.Y. 176, 159 N.E. 902; Messing v. Reliance Insurance Co. (1962), 77 N.J. Super. 531, 187 A.2d 49), we decline to adopt such a rule. We hold, as did the Smith court, that actual cash value means reproduction costs less depreciation for age and not market value. Thus the evidence of the property’s fair market value offered on the issue of damages was irrelevant and properly excluded.

We have earlier indicated that evidence of the fair market value is admissible on the issue of motive to commit arson and now hold that it is inadmissible on the issue of damages. We are aware of the potential confusion which may exist when evidence is admitted for one purpose and excluded for another. Therefore we hold that the insured is entitled to the following limiting instruction: “This evidence of the property’s fair market value is only to be considered on the issue of whether or not the insured was responsible for the explosion and fire. If you conclude that the insured was not responsible for the explosion and fire, then you must not consider this evidence on the issue of damages.” This instruction should be given when the evidence is first introduced and again at the close of all the evidence when the other instructions are given.

VII.

PUNITIVE DAMAGES COUNT/ACQUITTAL

Royal next contends that the trial court erred in allowing the issue of punitive damages to be submitted to the jury. While Royal argues primarily that the alleged error was prejudicial because the jury was informed of its $898 million net worth, it also argues inferentially that certain other evidence which would ordinarily be inadmissible on the compensatory damage count was allowed into evidence on the punitive damages issue. Specifically Royal argues that the evidence of Mr. Maddox’s acquittal on criminal charges of arson was improperly admitted into evidence.

This trial was conducted in two phases. After all evidence was received on the liability issue on the compensatory damages count, a hearing was conducted before the "trial judge to determine if there was sufficient evidence to present to the jury on the punitive damages count. The trial court held the evidence was sufficient, and the punitive damage evidence, including evidence of the acquittal, was heard by the jury. The jury had not resolved the issue of liability on the compensatory damages count before hearing the punitive damage evidence.

Because Royal prevailed on the punitive damages count at trial, we need not address whether the introduction of the evidence on the issue of punitive damages was improper. However, we will discuss the acquittal evidence insofar as it relates to the compensatory damages claim because this evidence may be offered at the retrial of this cause.

Evidence of an individual’s prior acquittal in an earlier criminal proceeding is inadmissible in a subsequent civil action. (Aetna Casualty & Surety Co. v. Dichtl (1979), 78 Ill. App. 3d 970, 398 N.E.2d 582.) “Since an acquittal might merely mean that the offense was not proved beyond all reasonable doubt, the acquittal is of no relevance in a civil proceeding where the facts need only be proved by the greater weight of the evidence.” (Smith v. Andrews (1964), 54 Ill. App. 2d 51, 59, 203 N.E.2d 160, 164; see also Greenberg v. Aetna Insurance Co. (1967), 427 Pa. 511, 235 A.2d 576.) Therefore, on retrial of this cause evidence of C.L. Maddox’s acquittal on charges of arson should be excluded.

VIII.

THE VIDEO

Royal next contends that the trial court erred when it allowed a videotape showing a labor disturbance to be viewed by the jqry. Royal argues that the tape was not relevant to the issues at trial and even if it was relevant, its prejudicial effect substantially outweighed its probative value. We disagree.

“The determination of whether evidence is relevant is largely within the discretion of the trial court and a reviewing court will not disturb the ruling unless there has been an abuse of discretion.” (Ferdinand v. Yellow Cab Co. (1976), 42 Ill. App. 3d 279, 286, 355 N.E.2d 547, 553.) “Any evidence that is offered to prove a proposition that is a matter of controversy in a case or is of probative value of a contested issue is ‘material.’ [Citation.] The evidence is relevant if it tends to prove an issue in controversy or make the matter more or less probable.” Joynt v. Barnes (1979), 71 Ill. App. 3d 187, 199, 388 N.E.2d 1298, 1307.

In this case neither party denied the fact that the fire was of an incendiary nature. Royal defended this action by arguing that the insured through its agent, C.L. Maddox, was responsible for the explosion and fire. The videotape was relevant to the issue of the perpetrator of the fire. The insured had received threats in the past for its nonunion activities. The disturbance occurred approximately 24 hours before the explosion and fire, and the videotape showed individuals destroying a crane clearly labeled “C.L. Maddox, Inc.” The videotape tended to rebut Royal’s affirmative defense of arson.

Having determined that the evidence was relevant, we address Royal’s other argument. Royal argues that the videotape’s prejudicial effect substantially outweighed its probative value. We disagree.

“The trial court’s balancing of unfair prejudice and probative value is completely within its discretion, and its decision on admissibility must be accorded ‘great deference.’ ” Crawford v. Edmonson (1985), 764 F.2d 479, 484.

The admission of the videotape may have hurt Royal’s case; however, this does not mean the evidence was improper. After reviewing the videotape, we do not feel that its prejudicial effect substantially outweighed its probative value. Therefore, we hold that allowing the jury to view the tape was not error.

IX.

REAL PARTY IN INTEREST

Royal also argues that the trial court erred in allowing the jury to render a verdict in a case brought by someone other than the “real party in interest.” On June 17, 1987, one month prior to trial, the insured assigned 100% of its chose in action against Royal to Harrisburg National Bank. Only C.L. Maddox and the bank were aware of the assignment. Royal was informed of the assignment after judgment was entered against it. As previously indicated, R.C. Davenport, former president of the bank, testified as to the insured’s favorable standing at the bank.

Royal contends that section 2 — 1008(a) of the Code of Civil Procedure (Ill. Rev. Stat. 1989, ch. 110, par. 2 — 1008(a)) required the bank to be a named party to the suit. It contends that the failure of the bank to be named as a plaintiff renders the judgment void. However, the plain language of section 2 — 1008(a) leads to another conclusion. The pertinent portion provides:

“Abatement — Change of interest or liability — Substitution of parties, (a) Change of interest or liability. If by reason of marriage, bankruptcy, assignment, or any other event occurring after the commencement of a cause or proceeding, either before or after judgment, causing a change or transmission of interest or liability, or by reason of any person interested coming into existence after commencement of the action, it becomes necessary or desirable that any person not already a party be before the court, or that any person already a party be made party in another capacity, the action does not abate, but on the motion an order may be entered that the proper parties be substituted or added, and that the cause or proceeding be carried on with the remaining parties and new parties, with or without' a change in the title of the cause.” (Emphasis added.) Ill. Rev. Stat. 1989, ch. 110, par. 2-1008(a).

The section clearly provides that a change of interest will not cause the action to abate. Upon motion a party may be added and the action will be carried on from that point. Furthermore, at the retrial of this cause the issue of surprise will not arise. Royal will be aware of whether or not the bank has an interest in the suit. If the bank has such an interest, Royal may add the bank as a party pursuant to section 2 — 1008(a) (Ill. Rev. Stat. 1989, ch. 110, par. 2 — 1008(a)) and inquire of witnesses about their possible bias.

X and XI.

SETOFF AND VEXATIOUS DELAY

In view of our decision to reverse and remand this cause for a new trial, it is unnecessary for us to address Royal’s contentions that the trial court erred in denying its motion for setoff and awarding the insured $217,415.76 for statutory “vexatious and unreasonable” delay.

In conclusion, we reverse and remand for proceedings on the compensatory damages claim consistent with this opinion.

Reversed and remanded.

RARICK, P.J., and HOWERTON, J., concur.


text:
    FIRST BANK AND TRUST COMPANY, f/k/a Bank of Johnston City, Plaintiff and Counterdefendant-Appellee, v. LARRY TIMMONS et al., Defendants and Counterplaintiffs-Appellants.
    Fifth District
    No. 5-89-0159
    Opinion filed February 27, 1991.

      Thomas E Crosby, of Winters, Brewster, Murphy, Crosby & Patchett, of Marion, for appellants.
    Michael E Dahlen, of Feirich/Schoen/Mager/Green, of Carbondale, for appellee.
   JUSTICE CHAPMAN

delivered the opinion of the court:

This case is on appeal pursuant to a finding under Supreme Court Rule 304(a) (107 Ill. 2d R. 304(a)) following the trial court’s dismissal of Larry and Virginia Timmons’ counterclaim against the First Bank and Trust Company (formerly known as the Bank of Johnston City and hereinafter referred to as Bank). The Bank filed a complaint to accelerate and enforce payment of the Timmonses’ home loan. The Timmonses filed a three-count counterclaim in which the following theories of recovery were pled: count I charged the Bank with failure to procure disability insurance on the Timmonses’ mortgage loan; count II claimed that the Bank breached the covenant of good faith and fair dealing implied into the mortgage contract when it refused to allow the Timmonses to repair their home with fire insurance proceeds; and count III claimed that the Bank’s breach set forth in count II was committed willfully and wantonly. The trial court dismissed all three counts with prejudice based upon its finding that they were barred under the doctrine of res judicata. We affirm as to count I and reverse as to counts II and III.

Since the trial court dismissed the counterclaim on res judicata grounds, some discussion of the earlier litigation between these parties is necessary in order to understand the issue before the court on this appeal. The factual background was set forth in the earlier unpublished order in the consolidated cases of Timmons v. Bank of Johnston City, Williamson County No. 85—L—72, and First Bank & Trust Co. v. Timmons, Williamson County No. 87—L—95, which was filed on July 12, 1988, in cause No. 5—85—0843. (Timmons v. Bank of Johnston City (1988), 171 Ill. App. 3d 1168, 543 N.E.2d 626 (unpublished Rule 23 order).) We will incorporate portions of that order with slight modifications to reflect the parties’ positions in this case.

Larry and Virginia Timmons contracted to buy a house near Johnston City, Illinois, during the summer of 1979. In August 1979, they went to the office of Michael J. Bowling, executive vice-president of the defendant Bank of Johnston City (the Bank), to apply for an installment home loan. The Timmonses already had a loan with the Bank dating from 1976 when they purchased a 40-acre farm in the area. The new loan involved the trading of their farm plus a mortgage of $60,000.

Larry Timmons had a history of back problems commencing with an injury in 1968 while in the service. Over the course of 11 years prior to applying for the second loan with the Bank, Larry had re-injured his back numerous times and had undergone two disc surgeries. When the Timmonses applied for their first loan with the Bank in 1976, Larry was on disability. Because of Larry’s history of back problems, the Bank informed him that he would have to take out disability insurance on the new loan. He agreed to do so and filled out the necessary papers supplied by the Bank. The Timmonses testified they were told that if Larry were to become disabled again, the insurance company would make their monthly payments for as long as he was disabled or until the loan was paid off. In reality, the disability portion of the policy was limited to a two-year indemnity period.

The insurance company, National Fidelity Life, requested Larry to undergo a medical exam. On the medical report sent to the company, Larry stated he had had back surgery but was completely recovered. The company agreed to insure the Timmonses but excluded any coverage relating to Larry’s back problems. The Timmonses agreed to this condition.

On September 26, 1979, Larry was injured at work when a 40-pound coffee urn fell on his neck. This injury precipitated his current disability to the extent that Larry was no longer able to work. The Timmonses filed a claim with the insurance company to cover their mortgage payments. The company made the monthly payments to the Bank for two years, the maximum indemnity period under the policy, for a total of $14,863.68. During this same two-year period, the house burned because of an electrical problem while the Timmonses were out of town. As a result of the fire, Larry and Virginia Timmons were no longer able to live in the house. When the disability payments ceased, the Timmonses could not make any further payments on the loan. Consequently, the Bank instituted foreclosure proceedings. The Timmonses, in the meantime, filed a claim against the Bank (and certain of its employees) and the insurance company for failing to procure and issue a disability policy with a 20-year indemnity period (the life of the loan). The outstanding mortgage balance was then $78,429.10.

The Timmonses settled with the insurance company for $4,500 and proceeded to trial against the Bank. The jury found in their favor on the Bank’s failure to procure a 20-year indemnity insurance policy, and the circuit court of Williamson County awarded the Timmonses $78,465.06.

This court reduced and modified the lump-sum nature of the judgment in the earlier litigation, but affirmed the jury’s determination of liability on the part of the Bank. In doing so we stated:

“The Timmons[es] testified they were told in the event of disability, the insurance policy would cover the loan payments until either Larry returned to work or the loan was paid in full. The insurance application itself contained no reference to any limit to the indemnity period. While both the policy and an outline of coverage made reference to the two-year limitation, neither were [sic] even received by the Bank until February 1980, long after the onset of Larry’s disability. What is at stake here is a contract to procure insurance. Therefore, what the parties believed and what their intents were at the time of entering the contract, the negotiation stage, is crucial. Clearly the evidence presented an issue of credibility on the matter which the jury obviously resolved in plaintiff’s favor.” (Emphasis in original.) Timmons v. Bank of Johnston City, unpublished Rule 23 order at 6.

Turning to the counterclaim in this appeal, the record reveals that count I alleges:

“4. Defendant failed to procure said insurance policy and as a result of this breach of contract occurred [sic] to procure said policy Counterplaintiffs were unable to pay the installments as they became due under the attached promissory note.
5. As a consequence of Defendant’s failure to procure insurance in [sic] the concomitant inability of Plaintiffs to satisfy the obligations of said note and mortgage, Defendant wrongfully ordered Plaintiffs to relinquish possession of the property on June 15,1982.”

These charges obviously represent the identical theory and claim that was pursued in the earlier case and the trial court was correct in dismissing count I under the doctrine of res judicata.

However, counts II and III of the counterclaim have nothing to do with the original claim based on the Bank’s failure to procure disability insurance. The latter two counts are based upon the Bank’s allegedly improper appropriation of proceeds from a fire insurance policy that covered the Timmonses’ home. Count II alleges:

“6. That on May 26, 1981, a fire occurred at the home of Larry and Virginia Timmons, which premises were mortgaged to secure the promissory note executed by the Timmons to the Bank of Johnston City.
7. That at the time of said loss and partial destruction of the dwelling, the Plaintiffs had a fire insurance policy with Economy Fire & Casualty Company, Policy No. 4812 — 093287, upon which they made a claim for insurance proceeds to rebuild the damaged dwelling.
8. On or about January 6, 1982, Economy Fire & Casualty Company tendered a settlement check in the amount of Twenty-three Thousand Five Hundred Thirteen Dollars ($23,513.00) to the Larry and Virginia Timmons and the Bank of Johnston City as named mortgagee.
9. Larry Timmons requested the Bank of Johnston City to endorse the insurance draft so that he could use the proceeds to rebuild the dwelling which had been partially destroyed by fire. The Bank of Johnston City by and through its officers refused to endorse said check and insisted that Larry and Virginia Timmons endorse the check and allow the Bank of Johnston City to apply the insurance proceeds to the outstanding balance of the promissory note.
10. The Plaintiffs refused to endorse the check because the proceeds would not be used to refurbish and repair the burnt out dwelling.
11. Because of the refusal of the Bank of Johnston City to allow the Plaintiffs to use the insurance proceeds to repair the dwelling, the Plaintiffs were unable to repair their dwelling.
12. Implied in all contracts, including the mortgage agreement attached hereto, is an implied covenant of good faith and fair dealing.
13. The dwelling, as security, was not impaired by the fire, and could have been repaired to its prior state if the insurance proceeds had been applied to repair the premises.
14. That the refusal of the Bank of Johnston City to tender the insurance proceeds for purposes of repair of the dwelling breached the implied covenant of good faith and fair dealing implied in law into said mortgage agreement.
15. As a consequence of the breach of the covenant of good faith and fair dealing, the Plaintiffs were constructively evicted from their dwelling, suffered public humiliation and said dwelling suffered waste above and beyond that caused by the fire damage which will require expenditure of amounts above that of the insurance proceeds to repair.”

Count III is a repetition of count II accompanied by charges that the Bank’s conduct was willful and wanton.

In order for the prior suit to be a complete bar to counts II and III under the doctrine of res judicata, there must be an identity of parties, subject matter, and of cause of action. (Riley v. Singer (1979), 75 Ill. App. 3d 1036, 394 N.E.2d 746.) While the elements of the rule may be succinctly stated, it has been accurately noted that, “The rule, unfortunately, is more easily stated than applied; the difficulty is determining what constitutes a single ‘claim, demand, or cause of action.’ ” Kirk v. Board of Education of Beemer Community High School District, No. 228 (7th Cir. 1987), 811 F.2d 347, 352.

The Bank argues that both claims asserted by the Timmonses have their origin in the original mortgage agreement and that therefore the counterclaim was properly dismissed on res judicata grounds. While the Bank’s contention about the origin of the claims may be generally accurate, the legal result that they wish to achieve from that origin is not appropriate in this case. The mortgage agreement gave rise to two separate insurance policies. The Timmonses’ first claim was based upon the Bank’s failure to procure the disability insurance. The Timmonses’ present counterclaim, however, is based upon the Bank’s alleged wrongful appropriation of fire insurance proceeds. While the background existence of the mortgage may be an essential fact in each claim, it is far from the controlling factor in either claim.

The essential evidence in the first suit dealt with the activities and/or representations of the Bank and the Timmonses with regard to the disability policy. The essential evidence in the present suit will revolve around the activities of the parties with regard to the fire insurance proceeds. Without specifically deciding whether there is a significant difference between a “core of operative facts test,” or an “essential evidence” test (Pfeiffer v. William Wrigley Jr. Co. (1985), 139 Ill. App. 3d 320, 484 N.E.2d 1187), it is clear that the Timmonses’ counterclaim involves a different cause of action than did their original suit. La Grange Federal Savings & Loan Association v. Rock River Corp. (1981), 97 Ill. App. 3d 712, 423 N.E.2d 496.

The Bank also contends that evidence regarding the fire insurance policy proceeds was introduced in the original suit. We note that the record of the original case reveals that this evidence was first elicited by the Bank. Counsel for the Timmonses in the first case made no reference to the proceeds in his opening statement, and it was first brought out by counsel for the Bank during the cross-examination of Virginia Timmons. In addition, neither the issues instruction nor the damage instruction in the first suit made any reference to the fire insurance proceeds. Under these circumstances we do not think that the incidental references to the fire insurance proceeds suggest any attempt upon the Timmonses’ part to assert any such claim in the original suit.

Finally, the Bank contends that the trial court should be affirmed because the Bank acted properly under the law in applying the insurance proceeds toward the mortgage debt. This was not the basis of the trial court’s ruling, and our review of the record suggests that the issue was not adequately presented to the trial judge. Therefore, we make no ruling on this issue, but reverse and remand for further proceedings consistent with this opinion.

Affirmed in part; reversed and remanded in part.

RARICK, P.J., and WELCH, J., concur.


author: JUSTICE GOLDENHERSH PRESIDING JUSTICE RARICK,

text:
    PHILGER, INC., Plaintiff-Appellee, v. THE DEPARTMENT OF REVENUE, Defendant-Appellant.
    Fifth District
    No. 5—89—0507
    Opinion filed February 27, 1991.

      RARICK, P.J., specially concurring.
    Neil F. Hartigan, Attorney General, of Springfield (Robert J. Ruiz, Solicitor General, and Jan E. Hughes, Assistant Attorney General, of Chicago, of counsel), for appellant.
    Thompson & Mitchell, of Belleville (Kurt S. Schroeder, of counsel), for appellee.
   JUSTICE GOLDENHERSH

delivered the opinion of the court:

Defendant, the Department of Revenue of the State of Illinois, appeals from an order of the circuit court of St. Clair County finding that the decision of the Board of Appeals of the Department of Revenue (hereinafter Board) that plaintiff, Philger, Inc., was responsible for $20,000 in the retailers’ occupation tax (hereinafter tax) (Ill. Rev. Stat. 1985, ch. 120, par. 451) on Augustine’s Restaurant, a business purchased by plaintiff, was against the manifest weight of the evidence and remanding the cause to defendant to grant the relief requested by plaintiff. In this cause, defendant raises a single issue, namely, whether the circuit court had jurisdiction to review the decision of the Board. We affirm.

The facts of this case are not in dispute. On September 2, 1982, a lease with an option to purchase was entered into between Augustine’s, Inc., lessor, and Ralph Augustine, lessee, for certain premises located in Belleville known as Augustine’s Restaurant. On November 12, 1982, Ralph Augustine assigned the lease and option to plaintiff. Prior to the assignment, Ralph Augustine’s business manager and the treasurer of Philger, Inc., Geraldine Verdi, contacted defendant through defendant’s employee, Dale Zeller, to inquire into the amount of tax owed by Augustine’s Restaurant. In October 1982, Dale Zeller provided Geraldine Verdi with specific figures from a computer printout sheet of the amount owed by Augustine’s Restaurant. On October 4, 1982, and again on November 12, 1982, plaintiff made payments to defendant totaling $2,495.70.

On January 27, 1983, defendant issued a bulk sales stop order in which defendant claimed a lien against plaintiff in the amount of $20,000 for past-due tax owed by Augustine’s Restaurant. Thereafter, First National Bank, the bank responsible for financing plaintiff’s purchase of Augustine’s Restaurant, paid $4,890.35 on behalf of plaintiff for what was believed to be the remainder of the restaurant’s past-due tax. Prior to the final closing of the sale between Ralph Augustine and plaintiff, Greg Goodman, a vice-president at First National Bank, questioned Dale Zeller about the status of the bulk-sales stop order. Zeller informed Goodman that the bulk-sales stop order was a matter of procedure and that it would be released as soon as the paperwork was processed in the Chicago office, since the entire amount of past-due tax owed by the restaurant had been paid.

The sale of Augustine’s Restaurant to plaintiff closed on April 22, 1983. On March 14, 1984, defendant notified plaintiff of a demand of payment for $41,111.36 for tax accrued by Augustine’s Restaurant prior to its sale to plaintiff. On March 23, 1984, plaintiff’s attorney sent a letter to the Board and sent a copy of the letter to defendant’s Bankruptcy, Bulk Sales and Probate Division seeking a review of defendant’s demand for payment and requesting a determination that plaintiff not be held liable for payment of the tax. On May 4, 1984, defendant issued an amended bulk-sales stop order in the amount of $60,000.

Hearings were held before the Board on June 8, 1984, and December 3, 1984. On April 26, 1985, plaintiff’s attorneys received a memorandum order from the Board finding no legal basis for the relief requested and denying plaintiff’s petition. On May 24, 1985, plaintiff filed a complaint with the circuit court of St. Clair County under the Administrative Review Law (Ill. Rev. Stat. 1985, ch. 110, par. 3 — 101 et seq.) and section 12 of the Retailers’ Occupation Tax Act (Ill. Rev. Stat. 1985, ch. 120, par. 451) seeking judicial review of the Board’s order. Defendant filed a motion to dismiss which was denied. The circuit court also denied defendant’s motion for interlocutory appeal by permission.

A hearing on plaintiff’s complaint was held before the circuit court after which the circuit court entered an order finding the Board’s decision against the manifest weight of the evidence. The circuit court set aside the Board’s order and remanded the cause to defendant to grant the relief requested by plaintiff. Defendant concedes that there is some confusion as to the exact amount it seeks to collect from plaintiff. According to defendant’s brief, however, defendant seeks only to collect the $20,000 on the original bulk-sales stop order.

The issue we are asked to address by defendant is whether the circuit court had jurisdiction to review the decision of the Board. Defendant argues that the decision of the Board was not reviewable under either the provisions of the Administrative Review Law (Ill. Rev. Stat. 1985, ch. 110, par. 3 — 101 et seq.) or by common law certiorari. Plaintiff responds that while a circuit court has no jurisdiction to review decisions of administrative boards under the Administrative Review Law where the statute creating such board does not adopt the provisions of the Administrative Review Law, the circuit court can still review a board's decision under common law certiorari. We find that at the time the complaint was filed, the decision of the Board was reviewable under common law certiorari.

The Administrative Review Law applies only where it is adopted by express reference in the act creating or conferring power upon the administrative agency involved. (White v. Board of Appeals (1970), 45 Ill. 2d 378, 381, 259 N.E.2d 51, 53.) Section 39b20 of the Civil Administrative Code (Ill. Rev. Stat. 1985, ch. 127, par. 39b20), which creates the Board, does not expressly adopt the Administrative Review Law. Therefore, the Board’s decision cannot be reviewed under the Administrative Review Law. (Tri-R-Vending Service Co. v. Department of Revenue (1988), 172 Ill. App. 3d 348, 526 N.E.2d 574.) However, when judicial review cannot be had under the Administrative Review Law, a petition for writ of certiorari is a proper procedure under which the circuit court can review. (Meylor v. Boys (1981), 101 Ill. App. 3d 148, 150, 427 N.E.2d 1023, 1025; Smith v. Department of Public Aid (1977), 67 Ill. 2d 529, 367 N.E.2d 1286.) Moreover, even if a complaint is filed under the Administrative Review Law, and that act is later found to be inapplicable, the complaint is nevertheless sufficient to authorize review under common law certiorari. Maddox v. Williamson County Board of Commissioners (1985), 131 Ill. App. 3d 816, 475 N.E.2d 1349.

In Maddox, the plaintiff, a former county supervisor of assessments, filed an action in the circuit court of Williamson County for review of a decision of the defendant, the Williamson County Board of Commissioners, under the Administrative Review Law (Ill. Rev. Stat. 1983, ch. 110, par. 3 — 101 et seq.). On appeal, the defendant contended that the plaintiff’s complaint for administrative review was ineffective to vest the circuit court with subject matter jurisdiction to review its decision because there was no provision for review under the Administrative Review Law in the statute under which the board had acted. (See Ill. Rev. Stat. 1983, ch. 120, par. 484(a).) The defendant further contended that review was available to plaintiff only by means of common law certiorari and since the plaintiff failed to file its complaint under such procedure, the circuit court was without jurisdiction to review the decision of defendant. The Maddox court held that because “ ‘the substantial differences that at one time existed between common law and statutory certiorari have been all but obliterated’ ” (131 Ill. App. 3d at 822, 475 N.E.2d at 1353, quoting from Smith v. Department of Public Aid (1977), 67 Ill. 2d 529, 541, 367 N.E.2d 1286, 1293), the complaint, as filed under the Administrative Review Law, was sufficient to vest the circuit court with jurisdiction to review the defendant’s decision.

In the instant case, plaintiff filed its complaint pursuant to the Administrative Review Law and section 12 of the Retailers’ Occupation Tax Act (Ill. Rev. Stat. 1985, ch. 120, par. 451). As previously decided by our colleagues on the First District Appellate Court, a circuit court has no jurisdiction to review a decision of the Board under the Administrative Review Law because the act creating and conferring power upon the Board is without an express adoption of the Administrative Review Law. (See Ill. Rev. Stat. 1985, ch. 127, par. 39b20; Tri-R-Vending Service Co. v. Department of Revenue (1988), 172 Ill. App. 3d 348, 526 N.E.2d 574.) When judicial review cannot be had under the Administrative Review Law, the case is, nevertheless, reviewable under a petition for writ of certiorari. (Meylor v. Boys (1981), 101 Ill. App. 3d 148, 150, 427 N.E.2d 1023, 1025; Smith v. Department of Public Aid (1977), 67 Ill. 2d 529, 367 N.E.2d 1286.) In addition, in light of our decision in Maddox, the complaint in the instant case, filed under the Administrative Review Law, was sufficient to vest the trial court with jurisdiction to review the Board’s decision. Maddox v. Williamson County Board of Commissioners (1985), 131 Ill. App. 3d 816, 475 N.E.2d 1349.

Defendant cites to Tri-R-Vending Service Co. v. Department of Revenue (1988), 172 Ill. App. 3d 348, 526 N.E.2d 574, to support its proposition that a circuit court does not have jurisdiction to review a decision of the Board. We find Tri-R-Vending Service Co. distinguishable from the. case at bar. In Tri-R-Vending Service Co., the plaintiff, a taxpayer, filed a petition for compromise of its tax liability with the defendant’s Board of Appeals.- The petition was denied by the Board, and the taxpayer filed a complaint for review under the Administrative" Review Law. The circuit court granted the defendant’s motion to dismiss the complaint for lack of jurisdiction, and the First District Appellate Court dismissed the plaintiff’s appeal on the grounds that the circuit court had no jurisdiction under the Administrative Review Law to review the Board’s order because the Administrative Review Law had not been expressly adopted in the act creating or conferring power upon the Board. After a review of Tri-R-Vending Service Co., it is apparent that the plaintiff therein did not make the argument that its complaint, filed under the Administrative Review Law, was sufficient to vest the circuit court with jurisdiction to review the Board’s decision as provided for in Maddox. Therefore, the First District Appellate Court never addressed the issue before us.

It is well established in Illinois that circuit courts have the power to issue common law writs of certiorari to inferior tribunals whenever it can be shown that they have either exceeded their jurisdiction or have proceeded illegally and no direct appeal or other method of direct review of their proceedings is provided. (Goodfriend v. Board of Appeals (1973), 18 Ill. App. 3d 412, 418, 305 N.E.2d 404, 409.) Defendant contends, however, that because the Board functions in an equitable and discretionary manner, the Board’s decisions are not subject to review. We are unconvinced by defendant’s argument. We agree with defendant that the Board has broad discretionary powers. The broad discretionary power possessed by an administrative body is analogous to the discretion possessed by a court. Both courts and administrative bodies must exercise their discretion judiciously, not arbitrarily. (Robert N. Nilles, Inc. v. Pollution Control Board (1974), 17 Ill. App. 3d 890, 894, 308 N.E.2d 640, 643.) Under the circumstances herein, the circuit court was correct to set aside the order of the Board and to remand the cause to defendant to grant the relief requested by plaintiff.

Plaintiff did all that it could prior to the sale of Augustine’s Restaurant to ensure that defendant would get the tax due it. After paying approximately $7,000 in tax, plaintiff was told by a representative of defendant, prior to the closing of the sale, that a bulk-sales stop order was a matter of procedure and that it would be released as soon as the paperwork was processed in the Chicago office as the entire amount of tax owed by Augustine’s Restaurant had been paid. Despite this promise and nearly one year after the closing of the sale of the restaurant, defendant sought to recover taxes from plaintiff in amounts ranging from $20,000 to $60,000. Defendant cites the case of Austin Liquor Mart, Inc. v. Department of Revenue (1972), 51 Ill. 2d 1, 280 N.E.2d 437, in which our supreme court held the general rule is that the government is not estopped from collecting a tax due it because of previous mistakes or misinformation of its agents in attempting to collect the tax. What defendant fails to mention is the corollary to this rule, also stated in Austin Liquor Mart, Inc., that the State does not have absolute immunity from the application of equitable principles, and the State can be estopped in the exercise of its power of taxation or the collection of revenue in order to prevent fraud or injustice. (51 Ill. 2d at 6, 280 N.E.2d at 440.) In the instant case, it would be an injustice for plaintiff to be required to pay the additional $20,000 demanded by defendant. The $20,000 which defendant seeks was a tax on sales made by the former owners of the restaurant, not on sales made by plaintiff. Had defendant demanded the money prior to the closing of the sale, the $20,000 could have been deducted from the purchase price. We find that the circuit court’s decision was correct and was not against the manifest weight of the evidence.

For the foregoing reasons, the order of the circuit court of St. Clair County is affirmed, and the cause is remanded to the Board for further proceedings not inconsistent with this opinion.

Affirmed and remanded.

HOWERTON, J., concurs.

PRESIDING JUSTICE RARICK,

specially concurring:

I concur in the result reached by the majority because of the unique factual scenario presented in this instance. I write this special concurrence, however, because I do not believe that normally a decision from the Board of Appeals of the Department of Revenue can be appealed. I believe that the Board was designed generally to sit as a “matter of grace,” granting special relief (i.e., deferred payments or installments, waiver of penalties) to the aggrieved taxpayer who has already been through the process of appealing the assessment itself. At that stage, such “arrangements” are a matter for the Department and the taxpayer alone. Here, however, there has been no appeal or review of the assessment itself or the taxpayer’s liability, nor can there be. Yet, the taxpayer is entitled to some avenue of review of the Department’s assessment of liability. For these reasons, I concur in the result reached by the majority.