text:
    THE PEOPLE OF THE STATE OF ILLINOIS, Plaintiff-Appellee, v. RONALD BLAINE ELLIOTT, Defendant-Appellant.
    Fourth District
    No. 4 — 91—0517
    Opinion filed February 20, 1992.

      Daniel D. Yuhas, of State Appellate Defender’s Office, of Springfield, for appellant.
    Lawrence R. Fichter, State’s Attorney, of Decatur (Kenneth R. Boyle, Robert J. Biderman, and James Majors, all of State’s Attorneys Appellate Prosecutor’s Office, of counsel), for the People.
   JUSTICE LUND

delivered the opinion of the court:

On May 28, 1991, defendant Ronald Elliott entered a plea of guilty to one count of aggravated criminal sexual abuse, a Class 2 felony (Ill. Rev. Stat. 1989, ch. 38, pars. 12—16(c)(1)(i), (g)) in the circuit court of Macon County. Under the terms of a negotiated plea agreement, the trial court sentenced him to a two-year term of periodic imprisonment, consisting of work release while confined to the county jail. At the hearing, it was revealed that defendant had served sentences in the penitentiary on four prior occasions.

At a further hearing on July 12, 1991, the trial court acknowledged this sentence exceeded the maximum allowed by law. Section 5—7—1(d) of the Unified Code of Corrections (Code) (Ill. Rev. Stat. 1989, ch. 38, par. 1005—7—1(d)) provides for a maximum sentence of one year of periodic imprisonment, when the sentence is to be served in a county jail facility on work release. The prosecutor suggested a modification of defendant’s sentence to two years’ probation, with the first year to be served on work release. Defense counsel acknowledged the advantage to defendant of such a modification by elimination of one year of his work release, but defendant himself objected. He expressed the conviction that such a modification was somehow an increase in the severity of his sentence. He indicated he believed he could be resentenced to a greater term of imprisonment if he violated the terms of probation than if he violated the terms of work release. The trial court attempted to explain to defendant the error of this reasoning, without success. Over defendant’s objection, the trial court modified defendant’s sentence to two years’ probation, with the first year to be served in the county jail on work release. This appeal followed.

The maximum term of periodic imprisonment which could be imposed upon defendant in the instant case was one year, as provided in section 5 —7—1(d) of the Code:

“A sentence of periodic imprisonment shall be for a definite term of from 3 to 4 years for a Class 1 felony, 18 to 30 months for a Class 2 felony, and up to 18 months, or the longest sentence of imprisonment that could be imposed for the offense, whichever is less, for all other offenses; however, no person shall be sentenced to a term of periodic imprisonment longer than one year if he is committed to a county correctional institution or facility, and in conjunction with that sentence participate in a county work release program comparable to the work and day release program provided for in Article 13 of the ‘Unified Code of Corrections’ in state facilities.” (Emphasis added.) Ill. Rev. Stat. 1989, ch. 38, par. 1005-7-1(d).

The trial court may modify or revoke a term of periodic imprisonment, as permitted by section 5—7—2 of the Code:

“(a) A sentence of periodic imprisonment may be modified or revoked by the court if:
(1) the offender commits another offense; or
(2) the offender violates any of the conditions of the sentence; or
(3) the offender violates any rule or regulation of the institution, agency or Department to which he has been committed.
***
(c) *** Where a sentence of periodic imprisonment is revoked, the court may impose any other sentence that was available at the time of initial sentencing.” Ill. Rev. Stat. 1989, ch. 38, pars. 1005—7—2(a), (c).

The court retains jurisdiction of a defendant during the term of his periodic imprisonment and may order a diminution of his term if his conduct, diligence, and general attitude merit such action. Ill. Rev. Stat. 1989, ch. 38, par. 1005-7-7.

Defendant argues on appeal that the trial court erred in modifying his sentence. He claims his sentence should instead have been reduced to the maximum one year of periodic imprisonment allowed by law. The gist of his complaint is that the trial court should not have imposed probation, which was not a part of his original sentence under his plea agreement. He believes the trial court was without power to modify his sentence except as allowed under section 5—7—2 of the Code as quoted above.

The only authority cited by defendant in support of his contention is People v. Gentry (1977), 48 Ill. App. 3d 900, 363 N.E.2d 146. In that case, defendant was convicted of disorderly conduct and resisting arrest. He was sentenced to one year in the House of Corrections on the resisting arrest conviction. He appealed, with one of his contentions being that this sentence went beyond the maximum term permitted by law. The appellate court agreed, noting the maximum term was 364 days, not one year. The court then reduced defendant’s sentence by one day— to 364 days.

Defendant maintains that other decisions have similarly reduced to the statutory maximum those sentences which were outside the limits of the law. He claims none of these decisions have allowed the trial courts to impose different sentencing conditions in order to somehow balance the benefit a defendant receives, when he was mistakenly sentenced to a term beyond what the law permitted.

The State argues the court did not modify its sentencing order, but merely “corrected” it. The State’s theory is that the record indicates it was the intent of the trial court to monitor defendant for a period of two years, whether that process involved periodic imprisonment or probation. It regards defendant’s sentence as being very lenient, given his four prior trips to the penitentiary. The State believes, under this scenario, that the trial court merely corrected its sentencing order to two years’ probation, with the first year to be served on periodic imprisonment. The State argues a court has inherent power to reconsider and correct its own rulings, even in the absence of a statute or rule granting it such authority. In People v. Mink (1990), 141 Ill. 2d 163, 565 N.E.2d 975, cert. denied (1991), 501 U.S__, 115 L. Ed. 2d 1030, 111 S. Ct. 2863, the trial court granted defendant’s motion for a new trial, finding the State had not established venue on one of the charges of which defendant had been found guilty. The State moved for reconsideration of this order, and its motion was granted by a different judge who then vacated the new trial order and entered judgment on the jury verdicts. Defendant appealed. The Illinois Supreme Court noted that a court in a criminal case has inherent power to reconsider and correct its own rulings, even in the absence of a statute or rule granting such authority. This power extends to interlocutory as well as final orders. The court pointed out that the trial court had set the matter for a new trial and had thereby retained jurisdiction of the defendant and the indictment. As long as the case was pending before it, the trial court had jurisdiction to reconsider any order which it had previously entered. Mink, 141 Ill. 2d at 171, 565 N.E.2d at 978-79.

In People v. Heil (1978), 71 Ill. 2d 458, 376 N.E.2d 1002, the defendant made a demand for a speedy trial. Sometime later, the trial court granted defendant’s motion for discharge based upon violation of his right to a speedy trial. The State filed a motion the next day asking the trial court to set aside its order of discharge. Prior to the hearing on this motion, defendant’s bail was discharged and the bail deposit refunded to his attorney. After a hearing on the State’s motion, the trial court vacated its order of discharge and set the case for trial. The appellate court reversed the judgment, holding that although the trial court had jurisdiction over the case when it vacated the discharge order, that order was binding and conclusive and operated to preclude readjudication thereof. The supreme court reversed the appellate court. Pointing out that relevant criminal statutes and rules demonstrate the intent that the trial court have the power to reconsider final appealable orders within 30 days of their entry, it was held that the trial court did indeed have the power to consider the State’s motion within 30 days of the entry of the order of discharge. (Heil, 71 Ill. 2d at 462-64, 376 N.E.2d at 1002-04; see also Ill. Rev. Stat. 1989, ch. 38, pars. 116—1, 116—2, 1005—8—1(d); 134 Ill. 2d Rules 604(d), 605(b), 606(b).) As the supreme court said in People v. Crilly (1985), 108 Ill. 2d 301, 311, 483 N.E.2d 1236, 1240, “It would be absurd to suppose that trial judges who conclude they have made mistakes should not be free to correct them within an appropriate time frame.” (See also People v. Van Cleve (1982), 89 Ill. 2d 298, 303, 432 N.E.2d 837, 839 (holding that a trial judge can enter a judgment of acquittal following a guilty verdict, if the judge concludes that the refusal to direct a verdict was erroneous).) We note, however, that in the instant case, the trial court’s modification of its sentencing order took place outside that 30-day period.

The State also cites People v. Peatry (1976), 38 Ill. App. 3d 332, 347 N.E.2d 169, People v. Clark (1976), 43 Ill. App. 3d 117, 356 N.E.2d 1144, and People v. Webb (1976), 38 Ill. App. 3d 629, 347 N.E.2d 486, in further support of its contention that the trial court intended to monitor defendant for two years and it could therefore add probation to make up for the lost year of periodic imprisonment. In the Peatry and Clark cases, the defendants were found guilty of murder, attempt (murder), and armed robbery. At sentencing, the trial court sentenced them to a minimum of 40 years’ and a maximum of 120 years’ imprisonment. The written judgment order and the mittimus also contained similar wording. After defendants had filed their notices of appeal, the judgment and mittimus were amended to recite that defendants were sentenced to concurrent terms of 40 to 120 years on each charge of which they were convicted. Defendants argued the trial court lost jurisdiction when the notices of appeal were filed and, in effect, it had imposed additional sentences through the amendment. (Clark, 43 Ill. App. 3d at 118-19, 356 N.E.2d at 1146; Peatry, 38 Ill. App. 3d at 339-40, 347 N.E.2d at 175.) In both cases, the appellate court rejected this contention. It was emphasized that the trial court was correcting the judgment, not modifying it. (Clark, 43 Ill. App. 3d at 119, 356 N.E.2d at 1146.) The court noted the trial court had not intended to enter an incomplete judgment and it could correct the record to make it comport with the apparent intention to impose sentences on each of the convictions. (Peatry, 38 Ill. App. 3d at 340, 347 N.E.2d at 175.) In Webb, a similar situation occurred. Defendants had been tried for armed robbery at a bench trial. At the conclusion of the trial, the judge stated he found defendants guilty of robbery. However, the sentences he imposed were for armed robbery, the notices of appeal were from judgments of armed robbery, and references were made throughout the trial and at sentencing to use of a gun. The appellate court said that ordinarily the common-law record imports veracity, but where it is contradicted by facts appearing in the report of the proceedings, a reviewing court must look to the record as a whole to resolve the inconsistencies. The court found defendants were convicted of armed robbery, not simple robbery. Webb, 38 Ill. App. 3d at 636, 347 N.E.2d at 492.

These cases are distinguishable from the instant case. Here, we are not dealing with a conflict between the common-law record and the record of the sentencing hearing. It was not the intention of the trial court to include probation as a condition of defendant’s original sentence. The record shows the following proceedings in connection With the acceptance of the plea agreement between the State and defendant at the original May 28, 1991, sentencing hearing:

“THE COURT: Is there an agreement?
MR. FINNEY [Defense counsel]: There is. The agreement is he will be sentenced to periodic imprisonment for a work release term of two years. I will have to prepare an order specifying the times. Further he will be ordered not to have any contact with [R.B.] or the named minor in the other charge during the time of the periodic imprisonment. And further, that the mittimus be stayed until Thursday.
THE COURT: Is that correct, Miss McClure?
MS. McCLURE [Assistant State’s Attorney]: Yes, your Honor.
THE COURT: Now, Mr. Elliott, if the court agrees with this recommend, you understand that in addition to that there will be a daily charge of — how much?
MR. FINNEY: I believe it’s $12.
THE COURT: —a charge of $12 for every day that you are incarcerated made against you. Do you understand that?
A. Yes, sir.
THE COURT: What about prior history of criminality?
MR. FINNEY: Mr. Elliott has a record. He has at least one burglary conviction that is about fifteen years ago. He spent some time in the penitentiary, but it was a long time ago. Is that basically correct, Ron?
MR. ELLIOTT [Defendant]: Yes.
THE COURT: How many times have you been in the penitentiary?
A. [Mr. Elliott:] About four.
Q. [The Court:] But you have been off your last parole for more than a dozen yearsf?]
A. [Mr. Elliott:] It was about ’74-’75.
MR. FICHTER [State’s Attorney]: My last contact with Mr. Elliott was about that time, your Honor.
THE COURT: So he has a record but it’s been a long time ago. Do you concur, Mr. Fichter, with the statement of prior history?
MR. FICHTER: I do.
THE COURT: So the People are waiving a presentence report?
MR. FICHTER: Yes, your Honor.
THE COURT: And the defendant is waiving a presentence report?
MR. FINNEY: Yes.
THE COURT: Okay, Mr. Elliott, if you do wish to plead guilty, sign that. That is a statement that says you waive your right to trial by jury.
Show the defendant executes and files written waiver of trial by jury as to Count II and pleads guilty to the offense of Aggravated Criminal Sexual Abuse. Court accepts the plea and finds the defendant has been advised of his rights, that he understands his rights and the consequences of his plea; further that he understands the possible punishment for the offense and persists in the plea of guilty. Finding that there is a factual basis for the plea and that the plea was made voluntarily without any threats or promises. Judgment of conviction entered upon the plea. Court concurs in the negotiated plea. For the offense the defendant is sentenced to periodic imprisonment for a period of 2 years. See written order to be filed regarding hours and days of periodic imprisonment. People waive presentence report. Defendant waives presentence report, with the court making a finding of prior history of criminality. The defendant is further ordered and directed to have no contact of any kind, nature or form for and during the period of sentence with the victim [R.B.] or with [J.B.]. On motion of People, Count I dismissed without prejudice. Mittimus to issue. Mittimus stayed to May 30, 1991 at 5:00 p.m. Defendant ordered and directed to report to the Sheriff of Macon County no later than 5:00 p.m. May 30, 1991 for commencement of sentence.”

After this colloquy took place, the trial court proceeded to advise defendant of his appeal rights. Contrary to the State’s argument, the quoted material suggests no intention on the part of the trial court other than to accept the plea agreement between defendant and the State and to enter judgment thereon.

The State has cited no cases, nor have we found any in our research, which would provide support for its contention that the trial court was authorized to impose a different sentence on defendant because of the mistake made in the original sentencing order. In fact, there are several cases wherein trial courts have sentenced defendants to terms beyond the statutory maximum. In those cases, the appellate courts have uniformly reduced the sentences to the statutory maximum or have simply eliminated the unauthorized portion of the sentence. See, e.g., People v. Franklin (1989), 189 Ill. App. 3d 425, 545 N.E.2d 346; People v. Clark (1975), 27 Ill. App. 3d 534, 327 N.E.2d 142 (abstract of opinion); People v. Rance (1974), 21 Ill. App. 3d 15, 315 N.E.2d 60; People v. Schanuel (1974), 22 Ill. App. 3d 174, 317 N.E.2d 279; People v. Husar (1974), 22 Ill. App. 3d 758, 318 N.E.2d 24.

As defendant points out, there was no evidence presented to the trial court to suggest that he had been guilty of any misconduct, so that the court might have revoked or modified his sentence of periodic imprisonment under section 5—7—2 of the Code. Nor is there any showing in the record regarding defendant’s conduct, diligence, and general attitude which might have warranted a diminution of his sentence under section 5—7—7 of the Code. Absent some justification for modification of defendant’s sentence under these statutory sections, the trial court was without power to do anything other than to reduce defendant’s sentence to the maximum periodic imprisonment allowed by law and, thus, correct the error in the original sentence. The imposition of probation as an additional sentencing condition was beyond the authority of the trial court and was therefore void.

The final argument of the State which we must address is that this appeal should be dismissed because defendant failed to file a motion asking the trial court to reconsider its modification of his sentence prior to filing his appeal. Such a motion is required when a defendant wishes to appeal only from his sentence under our supreme court’s decision in People v. Wilk (1988), 124 Ill. 2d 93, 529 N.E.2d 218. (See also People v. Wallace (1991), 143 Ill. 2d 59, 570 N.E.2d 334.) The rationale behind this rule is that such a motion allows the trial court to reconsider the appropriateness of the sentence imposed and to correct any errors made. Wilk, 124 Ill. 2d at 110, 529 N.E.2d at 224.

The defendant was not required to file such a motion where the trial court’s sentence, as modified, was void. However, even were we to find that the filing of a motion to reconsider was necessary in this case, we would nevertheless decline to dismiss defendant’s appeal. It is a well-established principle that a void order may always be attacked on appeal, regardless of whether there was a failure to properly preserve the issue for review. (In re Franklin (1976), 42 Ill. App. 3d 129, 133, 355 N.E.2d 570, 573.) Dismissal of this appeal because defendant failed to file a motion with the trial court asking for reconsideration of a void sentence would be a poor basis upon which to deny him the relief to which he is clearly entitled.

The proper procedure was for the trial court to simply reduce defendant’s sentence to one year of periodic imprisonment, the maximum allowed by law, rather than to add probation in an attempt to compensate for the lost year of work release. We find that the trial court’s sentence, as modified on July 12, 1991, must be reversed. However, it is unnecessary to remand to the trial court for resentencing. Pursuant to Supreme Court Rule 615(b)(4) (134 Ill. 2d R. 615(b)(4)), we may reduce defendant’s sentence to that which is within the statutory limits. We therefore reduce defendant’s sentence from two years’ periodic imprisonment to one year’s periodic imprisonment, under the same terms and conditions as are contained in the trial court’s original sentencing order of May 28, 1991.

Reversed.

McCULLOUGH and KNECHT, JJ., concur.


source: Caselaw Access Project

author: JUSTICE McCULLOUGH

license: Public Domain

text:
      In re MARRIAGE OF MARY KAY FORAN, Petitioner-Appellee, and CHRISTOPHER P. FORAN, Respondent-Appellant.
    Fourth District
    No. 4 — 91—0370
    Opinion filed January 31, 1992.
    Robert I. Auler, of Auler Law Offices, P.C., of Urbana, for appellant.
    L. Keith Hays, Jr., of Monticello, for appellee.
   JUSTICE McCULLOUGH

delivered the opinion of the court:

On April 22, 1991, the trial court dismissed with prejudice Christopher Foran’s petition for relief from judgment. He appeals that dismissal, contending his petition for relief from judgment was the proper pleading for relief from the judgment entered against him. We affirm.

On July 29, 1988, the marriage of Mary Kay Foran and Christopher P. Foran was dissolved. As part of the property settlement, Christopher was to pay Mary Kay $20,050 in three installments, the first in the amount of $5,000 to be paid as soon as could reasonably be done after the property settlement order was entered. Christopher was to pay $9,000 on or before July 1, 1989, and $6,050 on or before January 1, 1990. When he failed to pay the second installment, Mary Kay filed, on September 5, 1989, a petition for adjudication of contempt seeking sanctions against Christopher for his failure to pay.

On September 18, 1989, Christopher filed the petition for relief from judgment pursuant to section 2—1401 of the Code of Civil Procedure (Code) (Ill. Rev. Stat. 1989, ch. 110, par. 2—1401). In that petition, Christopher alleged Mary Kay knew she had genital warts prior to the dissolution of their marriage and concealed that fact from him. Christopher further alleged Mary Kay concealed the fact that this disease was sexually transmitted and was contagious to him and his partners. Christopher alleged he infected his present wife with the disease, necessitating the birth of their child by Cesarean section. Christopher sought an offset from the judgment entered against him pursuant to the property settlement in the amount of the medical expenses incurred by him and his current wife due to this disease.

On October 10, 1989, Mary Kay filed a response to the petition for relief from judgment. She admitted being diagnosed and treated for this disease but denied any diagnosis of the means of transmission. She further denied concealing the fact of her condition from Christopher and specifically alleged she informed him of her condition. Mary Kay admitted she referred Christopher to her doctor and believed Christopher was diagnosed and treated for the same disease.

No other action was taken on this petition until March 20, 1991, when Mary Kay filed a motion to dismiss Christopher’s petition for relief from judgment for want of prosecution. Mary Kay alleged Christopher had failed to obtain a hearing date on his petition since October 10, 1989, and had also failed to engage in any discovery pursuant to the issues in the petition and response. Mary Kay sought the dismissal of Christopher’s petition and further sought judgment against Christopher for $15,050 plus interest, representing the amounts past due on the second and third installments ordered under the property settlement which Christopher had failed to pay.

On April 22, 1991, a hearing was held on Mary Kay’s motion to dismiss. The trial court noted local rule 2.1(j) of the circuit court rules (Rules of Practice of the Circuit Court, Sixth Judicial Circuit, Rule 2.1(j), eff. June 1, 1983), which allows a trial court to deem a motion withdrawn if the moving party fails to obtain an allotment for a hearing on the motion within 90 days of its filing. The trial court may also deny the relief requested with or without prejudice. However, it appears from the record the trial court did not rely on this rule when it dismissed Christopher’s petition.

Christopher argued the delay in the case was caused by the unusual nature of the case and counsel’s uncertainty on how to proceed in the matter. Christopher stated the delay was unintentional and asked the court to set another pretrial hearing for the parties to discuss a settlement. Mary Kay argued no action was taken on the case because Christopher was attempting to avoid a finding of contempt and an order to pay the money owed pursuant to the property settlement.

The trial court dismissed Christopher’s petition, stating:

“The Court has read the Petition, and believes that the defendant may have, if he wishes, he may file an action to obtain damages from Mrs. Foran for the alleged act or harm that she is alleged to have caused him. However, the Court does not believe that the case at bar (88—D—53) is the place in which to gain relief from this alleged wrong committed on the defendant.”

The trial court then entered judgment in favor of Mary Kay in the amount of $15,050 plus $2,186 interest. This appeal follows.

“This court has held that when a court is in the exercise of special statutory jurisdiction, that jurisdiction is limited to the language of the act conferring it and the court has no powers from any other source. [Citation.] In the exercise of special statutory jurisdiction, if the mode of procedure prescribed by statute is not strictly pursued, no jurisdiction is conferred on the circuit court.” Fredman Brothers Furniture Co. v. Department of Revenue (1985), 109 Ill. 2d 202, 210, 486 N.E.2d 893, 895-96.

A court’s jurisdiction in a dissolution of marriage action is conferred only by statute, and it must act within the statutory grant and may not rely upon its general equity powers. In re Marriage of Garrison (1981), 99 Ill. App. 3d 717, 720, 425 N.E.2d 518, 521; Strukoffv. Strukoff (1979), 76 Ill. 2d 53, 60, 389 N.E.2d 1170,1172-73.

Section 503 of the Illinois Marriage and Dissolution of Marriage Act (Act) (Ill. Rev. Stat. 1989, ch. 40, par. 503) provides for the disposition of both marital and nonmarital property in a dissolution proceeding. Property to be characterized as “non-marital property” is specifically listed in section 503(a) of the Act while all other property acquired subsequent to the marriage is classified as “marital property.” A court is to assign each spouse’s nonmarital property to that spouse and divide the marital property in just proportions considering all relevant factors. 111. Rev. Stat. 1989, ch. 40, par. 503(d).

However, nowhere in the Act is the court granted the authority to do what Christopher asked the trial court to do. In essence, Christopher wanted the trial court to conduct a separate trial within the dissolution proceeding to decide the issue raised in his petition and determine the amount of damages, if any, owed to him by Mary Kay. Since the Act does not confer upon the court the power to conduct such a trial, within the context of the dissolution proceeding, the trial court correctly dismissed with prejudice Christopher’s petition.

Christopher may be entitled to damages resulting from Mary Kay’s conduct. Several States have recognized a cause of action sounding in tort for the transmission of a sexually transmitted disease. (See, e.g., Maharam v. Maharam (1986), 123 A.D.2d 165, 510 N.Y.S.2d 104; B.N. v. K.K. (1988), 312 Md. 135, 538 A.2d 1175; S.A.V v. K.G.V. (Mo. 1986), 708 S.W.2d 651; Long v. Adams (1985), 175 Ga. App. 538, 333 S.E.2d 852; Mussivand v. David (1989), 45 Ohio St. 3d 314, 544 N.E.2d 265.) However, we agree with the trial court that the proper method of obtaining such relief would be a personal injury action against Mary Kay.

For clarification purposes, we note the prejudice attached to the dismissal of Christopher’s petition applies only in the context of the dissolution proceeding. Neither the language utilized by the trial court in its ruling nor our language regarding the possibility of an action in tort either compels or precludes Christopher from pursuing such an action. We take no position on whether Christopher should pursue such an action or the outcome of any such action should he file one. The dismissal of Christopher’s section 2—1401 petition for relief from judgment was not an abuse of discretion.

Affirmed.

GREEN, P.J., and STEIGMANN, J., concur.


author: JUSTICE STEIGMANN JUSTICE LUND,

text:
    THE TOWN OF CUNNINGHAM, Plaintiff-Appellant, v. PROPERTY TAX APPEAL BOARD et al., Defendants-Appellees.
    Fourth District
    No. 4 — 91—0357
    Opinion filed January 31, 1992.
    LUND, J., specially concurring.
    Frederic M. Grosser, of Champaign, for appellant.

      Roland W. Burris, Attorney General, of Springfield (Rosalyn B. Kaplan, Solicitor General, and John A. Morrissey, Assistant Attorney General, of Chicago, of counsel), for appellee Property Tax Appeal Board.
    Arvey, Hodes, Costello & Burman, of Chicago (Eugene L. Griffin, Jerome A. Siegan, and Larry C. Jurgens, of counsel), for appellee Carson Pirie Scott & Company.
   JUSTICE STEIGMANN

delivered the opinion of the court:

Plaintiff, the Town of Cunningham, appeals from an order of the circuit court, affirming a decision of the Property Tax Appeal Board (PTAB) concerning the assessed valuation of a shopping mall in Urbana, Illinois. The issue presented on appeal is whether a taxing authority should consider the contract sale price and rent when determining the assessed valuation of the property when the rent does not reflect market rates because of the unique financing nature of the transactions.

We affirm.

I. Facts

In 1964, Carson Pirie Scott & Company (Carsons) developed the Lincoln Square shopping center in Urbana with one of its stores serving as the anchor store. In 1987, Carsons sold the mall and leased back the space occupied by its store from the buyer. Although it initially listed the property for $6 million with a lease-back provision for $200,000 to $250,000 per year for 10 to 15 years, Carsons eventually sold the mall for $9.3 million with a $615,000-per-year lease back for 15 years. Under this arrangement, Carsons received more cash up front, even though it would pay more rent in the following 15 years. By selling the property for more than the market price, Carsons in effect received extra cash somewhat akin to a loan. Carsons would repay this “loan” by paying a higher rent in the years to come. Most important for Carsons, it received this surplus cash without incurring debt on its balance sheets.

Later that year, the Town of Cunningham assessor determined the value of the mall for property taxes at $3,100,000 based on an appraised market value of $9.3 million, the sale price. Carsons filed a complaint with the Champaign County Board of Review (Board of Review), which affirmed the assessment. During this appeal, the property was assessed in 1988 at a value of $3,044,200, based on the $9.3 million sale price adjusted for market changes in the year since the sale. The Board of Review, however, set the assessed value at $2,677,180, based on a fair market value of $8,600,000. Carsons then appealed both decisions to the PTAB.

At the PTAB hearing, the Town of Cunningham, which had intervened in the proceedings, conceded that the 1987 sale price of $9.3 million, upon which the original assessment was based, exceeded the fair market value of the property. Both parties also agreed that the rent of $650,000 exceeded the true market rate to accommodate for the increased sale price. Though both parties submitted appraisals based on all three methods of property appraisal (market comparison, income potential, and cost reconstruction), both parties agreed that the income approach best reflected the true market value of a shopping mall.

Two differences separated the parties in their appraised values. First, simply as a matter of estimation, they arrived at substantially different appraised market values for 1987 under the income approach. Carsons’ appraiser valued the mall at $5,830,000, while the township’s appraiser valued the mall at $7,633,000 based on a comparison of the income that comparable properties produced.

The second difference focuses on the township appraiser’s consideration of the excess rent. While Carsons’ appraiser ignored the excess rent because it did not reflect market rates, the township’s appraiser considered the excess rent as additional income generated by the mall. Based on his appraisal of $7,633,000, the township’s appraiser calculated that Carsons paid $191,500 in excess rent over the market rate. Capitalizing this figure at a rate of 20%, the appraiser finally valued the mall at $8.59 million for 1987. This compared with Carsons’ appraiser’s assessed value of $5.83 million at a capitalization rate of 11%. Both appraisers agreed that the value of the property increased about 5% in 1988.

After hearing this evidence, the PTAB found for Carsons and revalued the assessment according to Carsons’ appraisal. On administrative review, the circuit court remanded the case to the PTAB with directions that it consider the effect of the Illinois Supreme Court’s recent decision in Kankakee County Board of Review v. Property Tax Appeal Board (1989), 131 Ill. 2d 1, 544 N.E.2d 762, filed after the PTAB had rendered its decision. On remand, the PTAB reaffirmed its prior decision and distinguished Kankakee County from the present case because Kankakee County involved government rent subsidies for apartment buildings. The circuit court affirmed and the Town of Cunningham appeals.

II. Standard Of Review

Defendants argue that we must accept the PTAB’s findings as prima facie correct and that we can reverse only if the PTAB’s conclusions are against the manifest weight of the evidence. In support, they cite Lake County Board of Review v. Property Tax Appeal Board (1989), 192 Ill. App. 3d 605, 548 N.E.2d 1129, and Gas Research Institute v. Department of Revenue (1987), 154 Ill. App. 3d 430, 507 N.E.2d 141. However, unlike those cases, this appeal does not require us to determine the correct value of the mall property. Instead, it requires us to address the appropriate factors that the PTAB should consider when it determines that value. Accordingly, we address this legal question without giving any deference to the PTAB’s conclusions on the matter. Kankakee County, 131 Ill. 2d at 14-15, 544 N.E.2d at 768; Lake County, 192 Ill. App. 3d at 613-14, 548 N.E.2d at 1134-35; Gas Research, 154 Ill. App. 3d at 433, 507 N.E.2d at 143.

III. Contract Rent And Price Used To Determine Market Rent And Price For Tax Assessments

The Revenue Act of 1939 requires that the taxing authority assess real estate taxes at one-third the fair cash value of the subject property. (Ill. Rev. Stat. 1989, ch. 120, par. 501(1).) The Illinois Supreme Court has held that “fair cash value” means “ ‘what the property would bring at a voluntary sale where the owner is ready, willing and able to sell but not compelled to do so, and the buyer is ready, willing and able to buy but not forced so to do ***.’” (Springfield Marine Bank v. Property Tax Appeal Board (1970), 44 Ill. 2d 428, 430, 256 N.E.2d 334, 336, quoting People ex rel. McGaughey v. Wilson (1937), 367 Ill. 494, 496, 12 N.E.2d 5, 6.) The appraisals presented to the PTAB focused on determining the fair market value of the subject property through the three methods of valuation, focusing specifically on the income approach because that approach best reflected what the market would bear for commercial property.

The present case requires us to address whether the assessment should consider the actual contract sale price and the contract rent when they do not reflect the market values because of the particular nature of the financing in the sales contract. In Springfield Marine Bank, the supreme court held that “[i]n determining the value of the property, rental income may of course be a relevant factor. [Citation.] However, it cannot be the controlling factor, particularly where it is admittedly misleading as to the fair cash value of the property involved.” (Springfield Marine Bank, 44 Ill. 2d at 430-31, 256 N.E.2d at 336.) The court further held that the actual rent did not reflect market value because the parties had fixed the rent in 1952 and the property had substantially increased in value since then. (Springfield Marine Bank, 44 Ill. 2d at 431, 256 N.E.2d at 336.) Accordingly, the court held that the assessment should not consider the actual rent. Springfield Marine Bank, 44 Ill. 2d at 431, 256 N.E.2d at 336.

PTAB has misconstrued the Springfield Marine Bank holding by viewing it as standing for the proposition that contract rent is irrelevant when determining the market value of property. For instance, in two independent but factually similar cases before PTAB, the owner of a government-subsidized apartment building received more than the market rate for similar nonsubsidized apartments. (See Kankakee County, 131 Ill. 2d at 7-8, 544 N.E.2d at 764-65; Lake County Board of Review v. Property Tax Appeal Board (1988), 172 Ill. App. 3d 851, 853, 527 N.E.2d 84, 85.) Although the rent the tenants paid fell below market rates, government subsidies inflated the actual rent above market rates. PTAB ruled in those cases that Springfield Marine Bank dictated that the market rate for comparable, nonsubsidized apartments should determine the tax assessment rather than the actual, contract rent. See Kankakee County, 131 111. 2d at 15-16, 544 N.E.2d at 768-69; Lake County, 172 111. App. 3d at 856-57, 527 N.E.2d at 87.

Both the Second District Appellate Court and, later, the Illinois Supreme Court disagreed, and the supreme court wrote the following:

“Springfield Marine does not stand for the proposition that contract rent is irrelevant where it is different from market rent. Rather, that case simply held that, when property is subject to an unfavorable lease, the contract rent or actual rental income must be disregarded in determining the property’s fair market value when the actual rental income does not reflect the property’s capacity for earning income. *** When actual rental income does not reflect the income-earning capacity of property, it may be disregarded, and the taxing authority may look to rents obtainable for comparable property in the open market. Where actual income truly reflects the income-earning capacity of the property, however, it may not be ignored simply because it does not coincide with rents obtainable on the open market.” (Kankakee County, 131 Ill. 2d at 15-16, 544 N.E.2d at 768.)

Plaintiff, the Town of Cunningham, contends that Kankakee County applies to the present case in that, even though the rent paid by Car-sons does not reflect the market rent, the tax assessment should consider it. It argues that the PTAB erred as a matter of law when it wrote that “it is fair to conclude from a reading of Kankakee County that consideration of actual rents is only applicable to subsidized housing cases.” At first blush plaintiff’s argument is not without appeal. Nevertheless, on further study, we conclude that although the decision in Kankakee County is firmly based in the context of government subsidized housing, that decision discusses basic legal principles of property valuation that direct us to affirm the decision of the circuit court and PTAB.

In Kankakee County, the court held that the assessor should have considered the effect the government subsidy contract had on the income-earning capacity of a particular piece of property. (Kankakee County, 131 Ill. 2d at 19, 544 N.E.2d at 770.) However, the supreme court noted that “the standard for determining the fair market value of property is the price at which ready, willing and able buyers and sellers would agree.” Kankakee County, 131 Ill. 2d at 16, 544 N.E.2d at 768, citing with approval Springfield Marine, 44 Ill. 2d at 431, 256 N.E.2d at 334.

In this case, both parties agree that the actual rent paid by Carsons exceeded the market rental value of the property. The source of this surplus rent, however, is not the real property itself, or the specific use of the property in the community. (See Kankakee County, 131 Ill. 2d at 18-19, 544 N.E.2d at 770 (restricting consideration of the property’s use to subsidized housing).) The surplus rent paid by Carsons represented the cost of receiving a cash infusion of $3.3 million in excess of the market value of the property from the buyer. However, property taxes should be based on the income-generating capacity of the bricks and mortar of the property, not any financing arrangements of the particular seller, which became the lessee and the new owner. (See Springfield Marine, 44 Ill. 2d at 431, 256 N.E.2d at 336 (“[I]t is the capacity for earning income, rather than the income actually derived, which reflects ‘fair cash value’ for taxation purposes”).) Therefore, the PTAB correctly held that the appraisal of the mall property should not have included the actual rent paid by Carsons because that rent substantially reflected neither the actual income potential nor the true market rent. We agree with the PTAB’s conclusion that “unlike the subsidized housing situation in Kankakee County, the additional income over economic or market rent is not due to the earning capacity of the real estate, but rather is due to the particular nature of the contract between the parties.”

We can explain our conclusion in another way: assume that Car-sons had not needed the extra $3.3 million but decided as a financial strategy to be a lessee rather than an owner. Accordingly, we can assume that Carsons would have sold the property at or about its initial listed price of $6 million, in which case we would not be addressing the issue of surplus rent. The difference between this hypothetical situation and reality is the financial condition and strategies of Carsons, not any factor relating to the property itself. We reject the notion that an assessed valuation can be in any way dependent upon the microeconomics of the financing arrangements of the parties to the sale of the property or of a particular occupant of a property.

Accordingly, we affirm.

Affirmed.

McCullough, J., concurs.

JUSTICE LUND,

specially concurring:

I specially concur only to warn those who consider this opinion to not miss the forest because of the trees. Some pretty fancy financing was going on with Carson Pirie Scott & Company in fiscal years 1986 and 1987.

There was a plan to concentrate on retailing. The 1987 annual report discusses liquidation of the catering and food business, while adding the Minnesota-based Donaldson’s department stores. County Seat specialty stores were also being added. Financing was a major concern.

The increase in sale price from $6 million to $9,300,000 resulted in an increase of almost $400,000 in annual rent payments for 15 years. If the annual $400,000 was paid at the rate of $33,333 per month, the monthly payment would come very close to liquidating a 15-year $3,300,000 note carrying a 9% interest rate.

The tax effects of such transactions are complicated, but are necessary corporate considerations. These considerations have little to do with the fair market value of, and the reasonable rental return from, real estate investments.


author: JUSTICE LUND

text:
    THE PEOPLE OF THE STATE OF ILLINOIS, Plaintiff-Appellee, v. STEPHEN L. ROUSEY, Defendant-Appellant.
    Fourth District
    No. 4 — 91—0435
    Opinion filed January 30, 1992.
    Daniel D. Yuhas and Lawrence Bapst, both of State Appellate Defender’s Office, of Springfield, for appellant.
    Charles G. Reynard, State’s Attorney, of Bloomington (Kenneth R. Boyle, Robert J. Biderman, and David E. Mannchen, all of State’s Attorneys Appellate Prosecutor’s Office, of counsel), for the People.
   JUSTICE LUND

delivered the opinion of the court:

Defendant Stephen L. Rousey pleaded guilty to armed robbery (Ill. Rev. Stat. 1989, ch. 38, par. 18—2) and aggravated criminal sexual abuse (Ill. Rev. Stat. 1989, ch. 38, par. 12—16(a)(1)). The trial court sentenced him to concurrent terms of 14 and 17 years’ imprisonment, respectively.

Defendant filed a pro se motion to reconsider his sentence two months after the sentencing hearing. The court dismissed the motion as untimely. This court allowed defendant to file a late notice of appeal. On appeal, defendant claims he was denied due process when the trial court dismissed his untimely motion to reconsider his sentence because the trial court had not admonished him that he must file a motion to reconsider sentence or any alleged sentencing errors would be waived. We disagree and dismiss the appeal.

Supreme Court Rule 604(d) (134 Ill. 2d R. 604(d)) outlined the procedure for an appeal by a defendant from a judgment entered on a guilty plea. Rule 604(d) directs a defendant to file a motion to withdraw his guilty plea and vacate the judgment before an appeal can be taken.

Our supreme court in People v. Wilk (1988), 124 Ill. 2d 93, 529 N.E.2d 218, broadened Rule 604(d), by requiring those defendants complaining only in regard to a sentence to file a motion attacking the sentence prior to appeal. In order to preserve such sentencing issues for review, defendant must file a motion to reconsider the sentence prior to appealing. (People v. Wallace (1991), 143 Ill. 2d 59, 570 N.E.2d 335.) Defendant filed such a motion, but the filing was untimely.

On the same day our supreme court filed Wallace, we filed People v. Lawrence (1991), 211 Ill. App. 3d 135, 569 N.E.2d 1175. In Lawrence, defendant claimed he was denied his right to appeal because the trial court failed to inform him that he could appeal his sentence without withdrawing his guilty plea. Lawrence stated:

“ ‘And since Rule 605(b) [(107 Ill. 2d R. 605(b))] does not require an admonishment concerning the filing of a motion to reconsider the sentence, the trial court’s failure to admonish pursuant to Rule 605(b) cannot form the basis for preserving the issues in the instant appeal.’ (People v. Gerdes (1990), 196 Ill. App. 3d 133, 134, 553 N.E.2d 108, 109.)” Lawrence, 211 Ill. App. 3d at 139, 569 N.E.2d at 1178.

Supreme Court Rule 605(b) (107 Ill. 2d R. 605(b)) requires the court to admonish defendant that he must file a written motion to withdraw his guilty plea prior to filing an appeal. It does not require that a defendant be admonished that he must file a motion to reconsider if he is appealing only from a sentence.

In Gerdes, we held that “even if a motion to reconsider were required to be filed [as Wallace requires], pursuant to Supreme Court Rule 615(a) (107 Ill. 2d R. 615(a)), a reviewing court has the discretion to consider plain error or defects which affect substantial rights of the defendant even though defendant may have waived those issues for purposes of review.” (Gerdes, 196 Ill. App. 3d at 135, 553 N.E.2d at 109.) We stand by our holding in Gerdes. Today, the supreme court does require a defendant to file a motion to reconsider sentence prior to filing an appeal challenging only the sentence. Any plain error would be there even if defendant failed to file a motion to reconsider. Defendant presented this court with no allegation of plain error. He simply claims he was denied due process.

Our supreme court has held that it is not constitutional error to fail to give an admonition required by Supreme Court Rule 605(b). (People v. Cox (1972), 53 Ill. 2d 101, 106, 291 N.E.2d 1, 4; People v. Covington (1970), 45 Ill. 2d 105, 108, 257 N.E.2d 106, 108.) If failure to give expressly required admonitions did not deny due-process rights, clearly defendant had no due-process right to an admonition not expressly required.

We therefore affirm.

Affirmed.

GREEN, P.J., and KNECHT, J., concur.


text:
    THE PEOPLE OF THE STATE OF ILLINOIS, Plaintiff-Appellee, v. DARRYL SHANNON, Defendant-Appellant.
    Fourth District
    No. 4 — 91—0319
    Opinion filed February 20, 1992.

      Daniel D. Yuhas and Lawrence Bapst, both of State Appellate Defender’s Office, of Springfield, for appellant.
    Donald D. Bernardi, State’s Attorney, of Pontiac (Kenneth R. Boyle, Robert J. Biderman, and David E. Mannchen, all of State’s Attorneys Appellate Prosecutor’s Office, of counsel), for the People.
   JUSTICE LUND

delivered the opinion of the court:

Defendant Darryl Shannon, a prisoner at Pontiac Correctional Center (Pontiac), was convicted of aggravated battery (Ill. Rev. Stat. 1989, ch. 38, par. 12—4(b)(6)) following a jury trial in the circuit court of Livingston County. The alleged victim was a correctional officer at Pontiac. According to the victim, defendant hit him in the face after the victim placed his hand on defendant’s shoulder and turned defendant around. Defendant introduced evidence of the victim’s actions and contends he had legal justification for his actions. On appeal, defendant argues he had evidence of legal justification, and that the State failed to prove him guilty beyond a reasonable doubt. We disagree and affirm.

First, we point out facts in People v. Williams (1974), 57 Ill. 2d 239, 311 N.E.2d 681, are far different from those in the present case, which involves a prisoner’s reaction to physical contact by a correctional officer. Physical contact by a correctional officer, or for that matter a police officer, acting within the scope of his or her duties, does not provide justification for a retaliatory attack. Any other rule of law would lead to asinine results and interfere with the control of those imprisoned.

On review, when considering the sufficiency of the evidence to support a conviction, “ ‘[T]he relevant question is whether, after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt.’ ” (Emphasis in original.) (People v. Collins (1985), 106 Ill. 2d 237, 261, 478 N.E.2d 267, 277, quoting Jackson v. Virginia (1979), 443 U.S. 307, 319, 61 L. Ed. 2d 560, 573, 99 S. Ct. 2781, 2789.) Here, the evidence viewed in a light most favorable to the prosecution shows that all elements of the crime were proved beyond a reasonable doubt. True, there was conflict between testimony of the State’s witnesses and that of defense witnesses. However, credibility is for the trier of fact, and the reviewing court will not substitute its judgment where evidence is merely conflicting. People v. Foster (1979), 76 Ill. 2d 365, 373, 392 N.E.2d 6, 9; People v. Jackson (1982), 105 Ill. App. 3d 750, 754, 433 N.E.2d 1385, 1389.

The State’s evidence established that contact by the victim with defendant was connected with an attempt to require several inmates to proceed to the back of a cafeteria food line. This evidence established that the victim’s conduct was within the scope of his duties and did not justify retaliation. While this was in conflict with defendant’s statement that the victim had verbally assaulted him, poked him in the face, and spit in his face, the fact finder was entitled to believe the victim.

Affirmed.

McCULLOUGH and COOK, JJ., concur..


author: JUSTICE STEIGMANN

text:
    UNITED CITIES GAS COMPANY, Petitioner, v. ILLINOIS COMMERCE COMMISSION, Respondent.
    Fourth District
    No. 4 — 91—0070
    Opinion filed January 31, 1992.

      Daniel J. Kucera and Frank A. Mraz, both of Chapman & Cutler, of Chicago, for petitioner.
    Roland W. Burris, Attorney General, of Springfield (David L. Nixon, Special Assistant Attorney General, of Chicago, of counsel), for respondent.
   JUSTICE STEIGMANN

delivered the opinion of the court:

United Cities Gas Company (United Cities) appeals an order of the Illinois Commerce Commission (ICC) entered in a rate case (United Cities Gas Co. (Nov. 19, 1990), Ill. Com. Comm’n Nos. 90—0008, 90— 0152), contending (1) costs allegedly associated with the acquisition of another gas utility were improperly excluded from its rate base and from its operating expenses for the rate case test year, and (2) its allowed rate of return is inadequate. We reverse and remand for further proceedings.

I. Costs Of Consulting And Noncompeting Agreement

On December 21, 1989, United Cities filed new tariffs with the ICC proposing a general rate increase for its Illinois customers. Among the factors which entered into United Cities’ determination of its proposed new rates was a payment of $5.7 million which it had made concurrently with its acquisition of Union Gas in exchange for a consulting and noncompete agreement. Under this agreement, Union Gas’ former owners agreed to provide consulting services to United Cities and entered into a covenant not to compete against United Cities. United Cities recorded the amount which it paid pursuant to this agreement as a deferred debit and proposed to amortize the expenses of the agreement attributable to Illinois over a 10-year period corresponding to the term of the agreement.

The ICC staff excepted to United Cities being allowed to recover the costs of this agreement from its ratepayers.

At the ICC hearing on United Cities’ request for increased rates, Richard K. Wrench, United Cities’ assistant director of regulatory affairs, testified that the consulting and noncompete agreement was an integral part of United Cities’ acquisition of Union Gas, and that the result of the acquisition of Union Gas, including placement of the unamortized costs of the consulting and noncompete agreement in United Cities’ rate base, was a reduction in United Cities’ Illinois revenue requirements of $213,200. In his surrebuttal testimony, Wrench stated that because the former owners of Union Gas are active in the business in which United Cities operates, as well as in direct sales of natural gas on the spot market, United Cities deemed it imperative to obtain a consulting and noncompete agreement which placed these persons in a supportive rather than an adversarial position.

Wrench testified that United Cities’ Illinois customers benefit as a result of the consulting and noncompete agreement because of the supportive role in which it places the former owners of Union Gas. Wrench further stated the following with regard to the effect of United Cities’ acquisition of Union Gas on United Cities’ Illinois rate ratepayers:

“There is a cost reduction due to the allocation of certain common expenses to Kansas which were previously borne by other jurisdictions, including Illinois. In this instant case, this amounted to $296,697. The prorated expense of [the consulting and noncompete] agreement of $124,122 netted against this benefit results in an ongoing benefit to the customers of Illinois amounting to $172,575. The agreement’s cost will run out in ten (10) years, however, the benefit of sharing of costs will accrue. to the Illinois customers way beyond the ten (10) years, if not forever.”

Steven Knepler, of the accounting department of the ICG’s research and standards section, testified that the cost of the consulting and noncompete agreement (1) should be included in account number 114, gas plant acquisition adjustment, and (2) amortized annually to nonoperating income in account number 425, miscellaneous amortization, over a period not to exceed the agreement’s life.

On cross-examination by United Cities’ counsel, Knepler stated he understood that United Cities’ acquisition of Union Gas would not have taken place absent the consulting and noncompete agreement. Knepler agreed that after considering the cost of the agreement, United Cities’ acquisition of Union Gas resulted in a benefit in excess of $170,000. Knepler stated, however:

“A. [Knepler:] The benefits from the noncompete agreement come from the allocation process [(allocating fixed costs to a larger number of customers)] and not the noncompete agreement per se for the Illinois ratepayers.
* * *
The noncompete agreement does not add any value to the service to the Illinois ratepayer. It does not enhance the quality of service.”

Knepler acknowledged, though, that the benefits of the acquisition of Union Gas “go hand in hand” with the agreement.

The hearing examiner noted that there was testimony on United Cities’ behalf which established (1) that the company’s management believed it imperative to place the former owners of Union Gas in a supportive rather than an adversarial position, and (2) that the agreement was an integral part of United Cities’ acquisition of Union Gas, which would not have taken place without it. On this basis, the hearing examiner concluded that the evidence established that the consulting and noncompete agreement benefitted Illinois ratepayers and that the unamortized cost of this agreement was thus properly included in United Cities’ rate base.

In an order which addressed exceptions to the hearing examiner’s proposed order, the ICC incorporated the following two paragraphs from the hearing examiner’s recommended order:

“On rebuttal, Mr. Knepler accepted the Company’s rebuttal and surrebuttal evidence showing that the acquisition of Union Gas would not have taken place without the [consulting and noncompete] Agreement and that the acquisition benefits customer [sic] in Illinois through the reallocation of various general corporate and common expenses over the broader base after the merger. Respondent’s Exhibit [No.] S-5 shows that the merger has caused a reduction in annual allocated expenses to Illinois customers of $320,160 and the annual cost of the Agreement to Illinois ratepayers is $124,122 resulting in the net savings of $196,038 to Illinois ratepayers. Mr. Knepler also acknowledged that the acquisition of Union Gas has enhanced Respondent’s credit standing. On surrebuttal, Mr. Wrench testified that the Company’s recent Series Q First Mortgage Bonds were issued at 130 basis points over 30 year Treasury Bonds, or 9.75%. This compares to its previous issues in the market place at 165 basis points over Treasury Bonds.
On surrebuttal, Mr. Wrench testified that the former owners of Union Gas are financiers and entrepreneurs located in New York City who have a multitude of diversified investments including some in the natural gas and utility businesses including indirect sales of natural gas on the spot market. He stated that [United Cities’ senior management] and Board of Directors believed it to be imperative to place these individuals in a supportive rather than in an adversarial position. Mr. Wrench testified that the Agreement was an integral part of the acquisition which would not have taken place without it.”

However, the ICC rejected the hearing examiner’s determination that the unamortized cost of the consulting and noncompete agreement should be included in United Cities’ rate base. The ICG’s statement of reasons for this decision reads in its entirety as follows:

“After reviewing the record on this issue, the Commission determines that Staff has justified its proposed adjustment to deny [United Cities’] request for regulatory treatment [inclusion in its rate base of the costs of] the Consulting and Non-Compete Agreement. The evidence establishes that it is the acquisition [of Union Gas], and not the Agreement, which has resulted in benefits to Illinois ratepayers. While Staff has accepted the Company’s position that the acquisition of Union Gas would not have occurred without the Agreement, the Company has failed to show how the cost of the Consulting and Non-Compete Agreement benefits Illinois ratepayers. Further, nothing in the record helps us to determine what percentage of the $5,740,000 is for consulting fees and what percentage is for the Non-Compete Agreement. Finally, the record is insufficient to determine whether the 10-year Consulting and Non-Compete Agreement will benefit Illinois ratepayers. We, therefore, conclude that these costs should not be placed in rate base.”

Disagreeing in a concurring opinion, Commissioner Manshio eventually concluded that there is, for practical purposes, no distinction between United Cities’ acquisition of Union Gas and the consulting and noncompete agreement. Commissioner Manshio noted that evidence presented by United Cities established that the agreement was an integral part of the acquisition which would not have occurred without it, and that the ICC staff had agreed with this conclusion. Commissioner Manshio stated that the agreement had value because it enabled United Cities to acquire Union Gas, which resulted in a net annual savings to Illinois ratepayers of $196,000. Also, Commissioner Manshio observed that the agreement (1) protected the integrity of United Cities’ service areas and (2) improved its credit rating, which reduced its debt costs.

United Cities argues the ICC erred in not permitting inclusion of (1) the unamortized cost allocable to Illinois of its consulting and non-compete agreement with the former owners of Union Gas in its rate base, and (2) one-tenth of the cost of this agreement in its operating expenses for the rate case test year. United Cities contends that this agreement was inseparable from its acquisition of Union Gas and resulted in a $124,122 net benefit or reduction in costs to its Illinois ratepayers. United Cities argues that this agreement also benefitted its Illinois ratepayers by (1) improving its credit rating and consequently reducing its cost of capital and (2) protecting its Illinois service areas from ruinous competition and loss of customers. United Cities concludes that the ICC’s resolution of this issue conferred upon its Illinois customers all the benefits flowing from the agreement without permitting United Cities to recover any of the resulting costs. For these reasons, United Cities contends that the ICC’s failure to permit it to recover the costs of the consulting and noncompete agreement allocable to Illinois is arbitrary, confiscatory, and contrary to the manifest weight of the evidence.

The ICC contends that it properly excluded the costs of the consulting and noncompete agreement from United Cities’ rate base because the costs of this agreement did not meet the test of being reasonable, related to utility expenses, and of benefit to ratepayers or utility service. The ICC states that the agreement provides only that unknown services may be rendered to United Cities at some point in the future, and the record does not establish that United Cities needed such an agreement.

In determining whether the ICC acted properly in refusing to allow United Cities to recover the costs of the consulting and noncompete agreement in its rates, we are mindful of the principle that the findings of the ICC are prima facie true and correct and cannot be set aside on appeal unless clearly contrary to the manifest weight of the evidence. (Ill. Rev. Stat. 1989, ch. 111⅔, par. 10—201(d).) Moreover, ICC decisions are “entitled to great weight as being the judgment of a tribunal appointed by law and informed by experience.” (Village of Apple River v. Illinois Commerce Comm’n (1960), 18 Ill. 2d 518, 523, 169 N.E.2d 329, 332.) In reviewing ICC decisions, we are limited to determining whether (1) the ICC’s decision was within the scope of its statutory authority, (2) the ICC made findings adequate to support its decision, (3) the findings have substantial evidentiary support in the record, and (4) the ICC’s decision infringed upon constitutional rights. Illinois Bell Telephone Co. v. Illinois Commerce Comm’n (1973), 55 Ill. 2d 461, 469, 303 N.E.2d 364, 369.

Deference to the judgment of the ICC is particularly appropriate in the area of fixing rates. (Iowa-Illinois Gas & Electric Co. v. Illinois Commerce Comm’n (1960), 19 Ill. 2d 436, 442, 167 N.E.2d 414, 417.) Courts generally accord great respect to the expertise of the ICC in this area. (Cerro Copper Products v. Illinois Commerce Comm’n (1980), 83 Ill. 2d 364, 370-71, 415 N.E.2d 345, 348-49.) We nevertheless conclude that this is one of those very rare cases in which the ICC’s findings are clearly contrary to the manifest weight of the evidence.

The ICC’s conclusion that there is nothing which establishes that the cost of the consulting and noncompete agreement confers benefits on United Cities’ Illinois ratepayers is belied by the evidence that the agreement was an integral part of the acquisition of Union Gas, and that the acquisition would not have occurred absent such an agreement. Thus, the consulting and noncompete agreement benefitted United Cities’ Illinois ratepayers to the same extent as the other terms and conditions of the acquisition of which it was an essential part.

Steven Knepler’s testimony that the consulting and noncompete agreement does not add anything to the value of service to United Cities’ Illinois ratepayers also does not support disallowance of the cost of the consulting and noncompete agreement. The entire acquisition transaction, which encompassed the consulting and noncompete agreement as one of its integral parts, resulted in significant cost savings to United Cities’ Illinois ratepayers. In determining the costs of acquiring Union Gas that United Cities may recover in the rates it charges its customers for natural gas service, the cost of the consulting and noncompete agreement cannot be separated from the other amounts which United Cities expended to acquire Union Gas.

The cases on which ICC principally relies to support its position as to this issue are inapposite. In Illinois Bell Telephone Co. (55 Ill. 2d at 478-81, 303 N.E.2d at 373-76), the court held that the ICC properly denied a utility recovery through its rates of monies expended for lobbying, charitable contributions, civic and social club dues, and unnecessarily high licensing fees paid to an affiliated company. Similarly, in Du Page Utility Co. v. Illinois Commerce Comm’n (1971), 47 Ill. 2d 550, 560-61, 267 N.E.2d 662, 667-68, the court ruled that the ICC properly disallowed recovery in rates of one-half the amount of excessive salaries paid to the officers of a public utility. Here, by contrast, the disputed expenditure is a legitimate cost of the acquisition of another utility.

The cost of the consulting and noncompete agreement was an integral part of the cost of United Cities’ acquisition of Union Gas. Because the amount which United Cities expended to secure this agreement is a legitimately incurred cost of service which it is entitled to recover in its rates (Illinois Bell Telephone Co. v. Illinois Commerce Comm’n (1953), 414 Ill. 275, 286, 111 N.E.2d 329, 335), the portion of the ICC’s decision which denies recovery of this cost is contrary to the manifest weight of the evidence. We therefore reverse this portion of the ICC’s decision.

II. Securities Issuance Expenses

United Cities also challenges the portion of the ICC’s order which establishes the rate of returns on capital to which it is entitled. United Cities suggests that the ICC may have improperly disregarded expenses attributable to the issuance of new securities— “flotation costs” —in determining its permissible rate of return.

Scott Rungren, a financial analyst with the financial analysis section of the ICC’s finance department, testified as follows concerning the inclusion of flotation costs in United Cities’ rate of return on equity:

“The Company had an equity issuance in May[ ] 1989 for which it has yet to receive compensation. The total cost related to this issuance was $716,177. The Company also has an equity issuance planned for April, 1991, for which the issuance cost is expected to be $862,500. The total issuance costs for these two issuances is $1,578,677. Based on a five-year amortization which results in a $315,735 average annual issuance expense, and a 0.0657 allocation factor attributed to the Illinois jurisdiction, the appropriate issuance expense adjustment [to the permissible rate of return on common equity] is 0.42%, or 42 basis points.
* * *
The addition of the issuance expense adjustment results in a cost of common equity range of 13.62% to 14.22%. I recommend the midpoint of this range, 13.92%, for the authorized rate of return on common equity for [United Cities].”

Rungren further testified that (1) a thorough cost of common equity analysis requires application of appropriate financial models as well as the analyst’s informed judgment, and (2) a cost of equity recommendation based solely on judgment is inappropriate, as is the mechanistic application of financial models.

Dr. Donald A. Murray, an economist who testified on behalf of United Cities, stated on cross-examination that the proposed equity issuance to which part of the flotation costs here at issue related was previously scheduled for the fall of 1990 but had been delayed until the spring of 1991.

United Cities accepted the testimony of Rungren concerning its cost of capital, and the hearing examiner relied on Rungren’s testimony in assessing United Cities’ cost of capital. The hearing examiner concluded United Cities’ rates should be based on the following costs for various categories of capital:

In that portion of its order concerning United Cities’ cost of capital, the ICC incorporated the relevant findings and summary of the evidence which were contained in the hearing examiner’s proposed order. The ICC adopted the hearing examiner’s determinations with regard to the costs of all classes of capital, with the exception of common equity. The ICC revised the cost of common equity to 13.62% (from 13.92%), which yielded a total weighted cost of capital of 11.75%, instead of 11.89% as stated in the hearing examiner’s proposed order. As its basis for this departure from the hearing examiner’s recommendation, the ICC stated the following:

“The Commission accepts Mr. Rungren’s analysis for the purpose of establishing a range within which the selection of an allowed rate of return on equity for Respondent would be reasonable. Determination of the actual allowed return on equity within the established range of reasonableness always involves elements of judgment, based upon the unique facts and circumstances of each case. In this case, the Commission has accepted a 42 basis point upward adjustment to the recommended equity return range due to flotation costs, although some of those costs are attributed to an equity issue that will not occur until April of 1991, at the earliest. The Commission notes, however, that the Respondent will begin charging rates to recover these costs shortly after issuance of this order. In addition, although the evidence indicated that some equity issuance is likely, there remains some uncertainty concerning the exact timing and amount of the equity issuance due to market and other conditions which may exist at the time of the planned issuance. Yet, ratepayers will continue to pay rates which reflect these flotation costs regardless of when the issuance actually occurs. After review of the entire record, therefore, the Commission is of the opinion that a proper balancing of the interest of ratepayers and shareholders indicates that the allowed return on equity should be established at the lower end of the range on [sic] reasonableness established by Mr. Rungren.”

In his concurring opinion, Commissioner Manshio further opined that the ICG’s reduction of United Cities’ allowable rate of return on equity from the rate stated in the hearing examiner’s proposed order was tantamount to denying United Cities an opportunity to recover securities issuance expenses. Commissioner Manshio noted that United Cities had issued equity securities in May 1989 as to which it had not yet received compensation for flotation costs, and that the majority’s order ignored this. At the conclusion of his concurring opinion, Commissioner Manshio stated:

“On a practical level, [United Cities] and Staff agreed to the midpoint of Staff’s analysis. This agreement, however, is subject to the Commission’s review and approval. The exercise of review and approval should be based upon substantive analysis rather than perceived expertise. If the Commission disagrees with flotation costs, but allows them and then goes to the low end of the range because they were used, what message is sent? I submit a mixed one at best. Is the Commission penalizing the use of flotation costs? Is the Commission saying that a utility must not only be prepared to articulate its rationale for accepting an agreement [as to a rate of return], but also have a fully supported alternative in case the Commission rejects the uncontested argument? What is our standard of moving within the range of reasonableness, pure discretion? This exercise of discretion will have consequences on the willingness of parties to settle issues, on the scope of briefs, and whether courts will defer to the assumed expertise of an administrative agency.”

State public utility commissions have not accorded a uniform treatment to security flotation costs. Some commissions hold that such costs are chargeable to a utility’s stockholders, while others include them in the expenses recoverable from ratepayers. (See C.F. Phillips, Jr., The Regulation of Public Utilities 354-55 (1984).) In this case, however, it is clear from the language of the ICC’s order that the ICC accepts the general principle of permitting utilities to recover flotation costs as a component of the permitted rate of return on equity. The ICC apparently awarded United Cities a rate of return on equity at the low end of the recommended range because some of the flotation costs on which the upward adjustment in the permissible range of return on equity was premised were for securities not yet issued, and it was not certain exactly when they would be issued. However, the ICC apparently accepted Scott Rungren’s conclusions, and those of the hearing examiner, that assuming United Cities would issue all of the securities which it had planned to issue, 0.42% would be an appropriate adjustment to the permissible return on equity to reflect flotation costs for the securities.

Excluding flotation costs, Rungren arrived at a permissible range of return on United Cities’ equity of 13.2% to 13.8%. With the addition of 42 basis points—.42%—for flotation costs, the permissible range of return became 13.62% to 14.22%, with a midpoint of 13.92%. The flotation costs associated with the May 1989 securities issuance, which United Cities had not yet recovered, were $716,717, while the flotation costs associated with a planned April 1991 securities issue were $862,500, for total claimed flotation costs of $1,578,677.

Prior to its decision in this case, the ICC apparently permitted utilities to amortize the actual or estimated dollar amounts of flotation costs over the period of time that new rates were expected to be in effect, even if the securities to which the expenses were attributable had not yet been issued when the ICC entered its order. (See Re Illinois Power Co. (1983), 51 P.U.R.4th 39, 83.) Of course, the ICC is not prohibited from changing its policies with regard to substantive issues such as this, so long as the changes are not effectuated in an arbitrary and capricious manner. (See City of Chicago v. Illinois Commerce Comm’n (1985), 133 Ill. App. 3d 435, 440-41, 478 N.E.2d 1369, 1373-74.) As United Cities points out, administrative agencies may not, however, depart from prior practices and customs in interpreting their procedural rules, especially where there may have been detrimental reliance on the agency’s prior interpretations of its rules. (See Alton Packaging Corp. v. Pollution Control Board (1986), 146 Ill. App. 3d 1090, 1093-94, 497 N.E.2d 864, 866-67.) In this case, though, the determination as to the manner in which a utility may recover security issuance expenses from its ratepayers is more in the nature of a policy determination than an interpretation of the administrative agency’s procedural rules. Moreover, United Cities would presumably be permitted to seek adjustments of its rates in future proceedings before the ICC to recover any expenses related to its 1991 securities issue which were not recovered in the present proceeding. United Cities does not suggest how it would be irreparably prejudiced by the ICC changing its policy as to this matter.

Accordingly, although the ICC is not precluded from changing its rate-making policy by excluding flotation costs attributable to unissued securities from the expenses utilities may recover from their customers, the ICC nevertheless has insufficient evidentiary support for its decision with respect to United Cities’ authorized rate of return on common equity. The ICC provided no findings to support its departure from the midpoint of the range of return on common equity premised solely on flotation costs attributable to already issued securities.

Of the flotation costs United Cities sought to recover, 45.4% were attributable to securities issued in May 1989, and the remainder were attributable to securities which had yet to be issued. Of the 42 basis points (0.42%) by which the range of return on equity was increased to account for flotation costs, 19.07 basis points (0.1907%) were attributable to already issued securities. The permissible range of return, increased by flotation costs attributable to previously issued securities, would be 13.907% to 13.9907%, with a midpoint of 13.6907%. Thus, if a range of return on equity based on only the flotation costs of already issued securities is utilized, the rate of return on equity allowed by the ICC, 13.62%, is still below the midpoint of this range. The record contains no explanation for the ICC not permitting United Cities a rate of return on equity which is at the midpoint of this range.

A departure from the midpoint of the permissible range of return increased by the flotation costs of already issued securities would perhaps be an appropriate exercise of the ICC’s judgment and discretion, provided the ICC stated a basis for such a holding. In this case, however, the ICC did not state any reasons which support its decision to depart from the midpoint of this range of return on equity. The ICC’s order, therefore, does not contain sufficient findings of fact to permit intelligent review of its decision. (Chicago & West Towns Rys., Inc. v. Illinois Commerce Comm’n (1947), 397 Ill. 460, 467, 74 N.E.2d 804, 808.) For this reason, we reverse the portion of the ICC’s order concerning United Cities’ authorized rate of return and remand with directions that the ICC make further findings as to this matter.

III. Conclusion

Pursuant to our authority under section 10—201(e)(iv)(A) of the Public Utilities Act (Act) (Ill. Rev. Stat. 1989, ch. 111⅔, par. 10—201(e)(iv)(A)), we reverse that portion of the ICC’s order denying United Cities recovery of the costs of the consulting and noncompete agreement into which it entered when it acquired Union Gas as against the manifest weight of the evidence. Pursuant to our authority under section 10— 201(e)(iii) of the Act (Ill. Rev. Stat. 1989, ch. 111⅔, par. 10—201(e)(iii)), we also reverse that portion of the ICC’s order dealing with United Cities’ authorized rate of return because it does not contain findings sufficient to permit informed judicial review thereof; and this cause is remanded to the Illinois Commerce Commission with directions to make findings that explain its departure from the midpoint of the range of return on equity premised on flotation costs attributable to securities which United Cities had already issued. In all other respects, the order of the Illinois Commerce Commission is affirmed. o

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

McCULLOUGH and LUND, JJ., concur.