author: JUSTICE McMORROW

text:
      In re ESTATE OF GRACE W. MAHER, Deceased (Edward F. Maher, Petitioner-Appellant, v. Mary Anne King, Indiv., as Heir, as Legatee, and as Ex’r under a purported Will of Grace W. Maher, Respondent-Appellee).
    First District (4th Division)
    No. 1—91—1748
    Opinion filed August 20, 1992.
    Rehearing denied December 3, 1992.

      Paul D. Keller, of Wilmette, and G. Kent Yowell, of Northbrook, for appellant.
    Maureen Jeannette Kelly, of Kelly, Kelly & Kelly, of Chicago, for appellee.
   JUSTICE McMORROW

delivered the opinion of the court:

The decedent, Grace Maher, died on February 19, 1990, at the age of 80. She was predeceased by her husband, Lawrence Maher, who died on November 4, 1988. Grace and Lawrence had no children. Petitioner, Edward Maher, is the nephew of Lawrence; respondent, Mary Anne King, is the niece of Grace Maher. On March 13, 1990, an instrument dated December 22, 1988, was admitted to probate as Grace’s last will. Respondent was the sole beneficiary under that will and was named and appointed as its executor. On April 4, 1990, petitioner instituted this action to contest the will. The third amended petition, the subject of this appeal, contained four counts alleging that the will was invalid due to (1) lack of testamentary capacity by Grace, (2) the exercise of undue influence by respondent, (3) fraud, and (4) the existence of irrevocable, mutual and reciprocal wills executed by Grace and Lawrence in 1987.

Respondent filed a motion to dismiss the petition in its entirety for failure to allege facts sufficient to state a cause of action. At a hearing on April 24, 1991, the trial court denied the motion to dismiss count I, but granted the motion as to the remaining three counts. Petitioner has abandoned his appeal from the dismissal of count III, alleging fraud. Thus, we consider only the sufficiency of count II, alleging undue influence, and count IV, alleging that mutual irrevocable wills were executed by Grace and Lawrence in 1987 pursuant to a contract between them not to revoke those wills.

The petition contains the following allegations: On May 13, 1987, while residents of the Alexian Brothers retirement facility in Milwaukee, Wisconsin, Lawrence and Grace executed wills (the 1987 wills) in which each devised his or her estate to the other and, upon the death of the surviving spouse, to petitioner and respondent in equal shares. Petitioner was named as executor in both wills.

On November 4, 1988, Lawrence died at St. Michael’s Hospital in Milwaukee, where he and Grace were both patients. At the time of Lawrence’s death, Grace was confined in a wheelchair and was unable to care for herself. The petition alleged that attending physicians at St. Michael’s Hospital diagnosed Grace as suffering, inter alia, from senile dementia, and advised the creation of a conservatorship because Grace had become incompetent and unable to handle her own affairs. In mid-November 1988, respondent travelled to Milwaukee and had Grace transported by ambulance to Evanston Hospital in Evanston, Illinois. Respondent took possession of all of the personal effects and papers of Lawrence and Grace, including the 1987 wills. Grace was diagnosed at Evanston Hospital as suffering from depression, dementia and congestive heart failure. On November 23, 1988, respondent had Grace transported to Bethany Methodist Terrace Home in Morton Grove, Illinois. At the time of her removal from Evanston Hospital, Grace was oriented only to her own person and could not remember either long- or short-term events without coaching. During the admission interview at Bethany, Grace described her daily activities as including getting up and going to work, despite that she was an invalid and had not been employed for several years.

The petition further alleged that on November 26, 1988, respondent caused Grace to execute a living will, which was witnessed by respondent’s close friend, Nancy Mayer. Later that same day, respondent executed a “do not resuscitate” order for Grace. In December 1988, respondent asked Nancy to recommend an attorney for the purpose of drafting a will for Grace. Respondent consulted with attorney George Kelly, since deceased, who prepared the will at issue. On December 22, 1988, Grace signed page two of the three-page document in the presence of respondent and two co-workers of respondent who accompanied respondent to the Bethany nursing home and signed page three of the will as witnesses. The will named respondent as executor and sole beneficiary of Grace’s estate.

Grace was subsequently transferred to Glenbrook Hospital where, on February 19, 1990, she died. The autopsy report stated that Grace’s primary disease was arteriosclerosis of the brain, supporting the clinical diagnosis of senile dementia. The immediate cause of death was severe bronchopneumonia.

The petition also contained allegations that six years earlier, respondent told petitioner that she hated Lawrence and Grace but was “counting on” their money; that when respondent arrived at St. Michael’s Hospital in Milwaukee, Grace ordered her away, charging that respondent was only “after [her] money”; that in relating this incident to petitioner, respondent expressed her hatred of Grace; that when told by petitioner, in mid-November 1988, that Lawrence’s estate passed to Grace, respondent stated, “that’s all I need to know”; and that respondent made statements to petitioner that she and he had been named co-beneficiaries of Grace’s estate.

Count II of the petition concluded by alleging that a fiduciary relationship existed between Grace and respondent by reason of respondent’s assumption of a position of dominance over Grace’s person and property and the resulting dependence by Grace, in her weakened physical and mental condition, upon respondent. Petitioner alleged that respondent procured the preparation of the will at issue, under which she receives a substantial benefit, i.e., the entire estate; and that respondent exercised undue influence to cause Grace to sign the will, which was contrary to an agreement with her late husband and her wishes.

Petitioner contends that the petition alleged sufficient facts to raise a presumption of undue influence by respondent in the procurement and execution of Grace’s will. Petitioner argues that the trial court therefore erred in dismissing count II for failure to state a cause of action.

Undue influence necessary to invalidate a will is that influence which prevents the testator from exercising her own free will in the disposition of her estate. It must be directly connected with the execution of the instrument, operate at the time it was made, and be directed toward procuring the will in favor of a particular party or parties. Peters v. Catt (1958), 15 Ill. 2d 255, 154 N.E.2d 280.

A presumption that a will was executed as a result of undue influence on the testator arises if: (1) a fiduciary relationship existed between the testator and a person who receives a substantial benefit under the will; (2) the testator was in a dependent situation and the beneficiary was in a position of dominance over the testator; (3) the testator reposed confidence and trust in the beneficiary; and (4) the beneficiary was instrumental or participated in the procurement and execution of the will. (Herbolsheimer v. Herbolsheimer (1975), 60 Ill. 2d 574, 328 N.E.2d 529; Peters v. Catt, 15 Ill. 2d 255, 154 N.E.2d 280; In re Estate of Jessman (1990), 197 Ill. App. 3d 414, 554 N.E.2d 718.) Old age and the physical or mental disability of the testator are also material circumstances on the issue of undue influence. Peters v. Catt, 15 Ill. 2d 255, 154 N.E.2d 280; Swenson v. Wintercorn (1968), 92 Ill. App. 2d 88, 234 N.E.2d 91.

A fiduciary relationship may exist as a matter of law, e.g., as between attorney-client, guardian-ward, trustee-beneficiary and the like, or it may arise from a relationship which is moral, social, domestic or personal in its origin. (Swenson v. Wintercorn, 92 Ill. App. 2d at 100.) Factors to be considered in determining whether a fiduciary relationship in fact existed include the degree of kinship, disparity in age, health, mental condition and education, and the extent to which the servient party entrusted the handling of her affairs to the dominant party. Swenson v. Wintercorn, 92 Ill. App. 2d at 100.

In the instant case, petitioner alleged, in count I of the amended petition, that Grace lacked testamentary capacity to execute a valid will. He alleged that Grace was depressed and disoriented and that an attending physician in Milwaukee advised the creation of a conservatorship for her following the death of her husband, Lawrence. Petitioner alleged that the primary cause of Grace’s mental disability was senile dementia, and included passages from the autopsy report stating that conclusion. The trial court denied respondent’s motion to dismiss count I, and thus, the issue of whether Grace possessed the requisite capacity to make a valid will in the first instance remains pending.

Count II, alleging undue influence, incorporated the allegations of count I and alleged that respondent caused Grace’s removal by ambulance from Milwaukee to the Chicago area, and took possession of all of Grace’s and Lawrence’s belongings and papers, including their 1987 wills, which allegations respondent admits. Petitioner further alleged that respondent thereafter made all decisions regarding Grace’s person and her medical and nursing home care, which respondent also does not dispute; and that she caused Grace to execute a living will, which was witnessed by respondent’s close friend, following which respondent executed a “do not resuscitate” order for Grace.

Respondent argues that there are no allegations that Grace entrusted her with the handling of her business and financial affairs or that Grace reposed trust and confidence in respondent. As noted, however, respondent does not deny that she took possession of Grace’s possessions and papers and made all decisions concéming her care. The gist of count II is that Grace was physically and mentally incapacitated and was involuntarily made dependent upon respondent by respondent’s assumption of a position of dominance over Grace. In our view, petitioner’s allegations are sufficient to state the existence of a fiduciary relationship.

The petition further alleged that shortly after Grace’s return from Milwaukee, respondent consulted with an attorney for the purpose of drafting a new will for Grace. That attorney drafted the will at issue in which respondent was named executor and sole beneficiary. The petition alleged that respondent brought the will, and two co-workers to act as witnesses, to the nursing home where Grace was residing, and was present in the room when Grace signed the will.

The supreme court in Mitchell v. Van Scoyk (1953), 1 Ill. 2d 160, 115 N.E.2d 226, noted that the active agency of the chief beneficiary in procuring a will, especially in the absence of those having an equal claim on the estate of a testator whose mind is debilitated by age and illness, is a circumstance indicating the probable exercise of undue influence; this presumptive undue influence arises irrespective of the existence of a fiduciary relationship between the testator and the beneficiary. See also Schmidt v. Schwear (1981), 98 Ill. App. 3d 336, 424 N.E.2d 401; Swenson v. Wintercorn (1968), 92 Ill. App. 2d 88 (even absent the existence of a fiduciary relationship, where one procures the execution of a will largely benefitting herself to the detriment of others having an equal claim to the bounty of the testator, who is infirm due to age or illness, a presumption arises that she exercised undue influence).

The petition adequately alleged the existence of a fiduciary relationship. That relationship, coupled with the allegations that the will was prepared by an attorney engaged by respondent, and the fact that respondent is the sole beneficiary named in that will are sufficient to state a cause of action against respondent for the exercise of undue influence.

Petitioner has also included in the record a “first current account” statement filed by respondent, as executor of the estate, on June 27, 1991, after notice of appeal had been filed from the dismissal of counts II and IV. The statement includes an entry showing payment of $10,000 to respondent for “balance of guardian fees.” Petitioner argued in his original brief that this supports an inference that respondent assumed the role of guardian of Grace. Petitioner further argues in his reply brief that respondent obtained a general power of attorney from Grace on the day respondent caused Grace’s removal from Milwaukee. He maintains that these facts were not discovered prior to his third amended petition because of respondent’s failure to comply with a discovery request that she appear for a deposition. Petitioner contends that the first current account filed by respondent showing payment to her of guardian fees constitutes a judicial admission that she was Grace’s guardian and establishes the existence of a fiduciary relationship as a matter of law.

A power of attorney creates a fiduciary relationship as a matter of law (In re Estate of Jessman (1990), 197 Ill. App. 3d 414, 554 N.E.2d 718; Lemp v. Hauptmann (1988), 170 Ill. App. 3d 753, 529 N.E.2d. 203), as does the relationship of guardian and ward (In re Estate of Osborn (1984), 128 Ill. App. 3d 453, 470 N.E.2d 1114; Swenson v. Wintercorn (1968), 92 Ill. App. 2d 88, 234 N.E.2d 91). Because this cause must be remanded for further proceedings on count II on the ground that the petition, as it was presented to the trial court, was sufficient to allege a fiduciary relationship in fact, this argument should be addressed by the parties upon remand to the trial court.

Petitioner also contends that count IV, alleging that Grace and Lawrence executed irrevocable, mutual and reciprocal wills, was improperly dismissed for failure to state a claim. He asserts that count IV sufficiently alleges mutual wills executed pursuant to a contract not to revoke. We disagree.

Mutual wills are the separate instruments of two or more persons, which are reciprocal in their terms, and by which each testator makes a testamentary disposition in favor of the other. Monniger v. Koob (1950), 405 Ill. 417, 91 N.E.2d 411; Frese v. Meyer (1945), 392 Ill. 59, 63 N.E.2d 768.) Whether or not mutual wills are revocable by either party depends on the circumstances and understanding upon which they were executed. (Monninger v. Koob, 405 Ill. at 422.) One of the main attributes of a will is that the will is ambulatory and may be revoked at any time by the testator during his or her lifetime. Thus, mutual wills which deprive the parties of that right to revoke must be established by clear and satisfactory evidence of a contract not to revoke. Monninger v. Koob, 405 Ill. at 422.

If the circumstances establish that the mutual reciprocal wills were executed pursuant to such a contract, then they become irrevocable upon the death of one of the testators. (Felson v. Scarpelli (1988), 165 Ill. App. 3d 869, 520 N.E.2d 801.) Mutual wills, however, are not, generally, of themselves, sufficient evidence of a contract, and the consideration to support the alleged contract must come from outside the wills. (Monninger v. Koob, 405 Ill. at 422; Frese v. Meyer, 392 Ill. at 65.) The mere existence of mutual wills does not give rise to a presumption of a contract, nor are they evidence that such a contract, in fact, existed. (Proctor v. Handke (1983), 116 Ill. App. 3d 742, 452 N.E.2d 742.) Although a person may enter into a contract to dispose of her property by will in a particular manner, such contracts are not favored. Consequently, the courts require clear and convincing evidence that the mutual wills were executed pursuant to a binding contract to be irrevocable. Monninger v. Koob, 405 Ill. at 423; Proctor v. Handke, 116 Ill. App. 3d at 747.

Count IV of the petition before us alleges that the 1987 wills of Grace and Lawrence were mutual and reciprocal in that each devised all property to the surviving spouse, but if the other spouse predeceased the testator, then the property was to be divided equally between petitioner and respondent. The petition alleged that Grace and Lawrence worked together to acquire all of the property, that it was their mutual desire that the survivor enjoy the fruits of their labor during his or her life, but that their property should ultimately descend to both parties’ families following both their deaths. The petition asserts that the wills were executed pursuant to an oral contract between Grace and Lawrence and that it was their understanding and agreement that revocation by the surviving spouse so as to disinherit the relative of the other would be a violation of their agreement. In support of his assertion, petitioner alleged that on the day the 1987 wills were executed, Grace and Lawrence stated to their attorney and his assistant that each wanted his or her property to go to the other and then to their respective families in equal shares, and that the plan they agreed upon was fair in all respects.

These allegations are factually insufficient to allege the existence of an oral contract to execute irrevocable wills. Count IV merely alleges that Grace and Lawrence executed mutual and reciprocal wills which named Grace’s niece and Lawrence’s nephew as contingent co-beneficiaries. Petitioner has alleged no facts which would establish an agreement that neither testator could revoke the will after the death of the other spouse. The mere allegation that the decedents expressed to their attorney their desire that any property remaining upon the death of the second spouse be divided between their families and that the plan they agreed upon was fair would not, if proven, suffice to establish the existence of an oral contract not to revoke the wills. While Grace and Lawrence apparently concurred in naming petitioner and respondent as contingent co-beneficiaries, as each of the 1987 wills provides, there is nothing in the statement to the attorney or in the wills themselves which would prove that they further agreed that neither of them had the right of revocation. The wills contain no reference to each other, nor do they contain any language from which an oral contract not to revoke can be inferred. Each will gives all of the testator’s property to the other spouse, without condition or qualification. See Monninger v. Koob, 405 Ill. 417, 91 N.E.2d 411; Proctor v. Hadke, 116 Ill. App. 3d 742, 452 N.E.2d 742.

Absent specific facts to show that the decedents entered into an oral contract to make mutual and reciprocal wills which became irrevocable upon the death of one of the spouses, the complaint fails to state a claim for which relief may be granted. Under these circumstances, the trial court properly exercised its discretion in dismissing count IV of the amended petition.

For the reasons stated, the portion of the order of the trial court dismissing count II of petitioner’s amended petition to contest the purported will at issue on the ground that it was the product of undue influence is reversed; the portion of the order dismissing count IV of petitioner’s amended petition alleging the existence of irrevocable mutual and reciprocal wills is affirmed; and the cause is remanded to the trial court for further proceedings.

Affirmed in part, reversed in part, and remanded.

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


source: Caselaw Access Project

author: JUSTICE RAKOWSKI

license: Public Domain

text:
    THE PEOPLE OF COOK COUNTY ex rel. JACK O’MALLEY, State’s Attorney of Cook County, Petitioner-Appellant, v. ILLINOIS COMMERCE COMMISSION et al., Respondents-Appellees.
    First District (6th Division)
    Nos. 1—91—0046, 1—91—0172, 1-91-0501 cons.
    Opinion filed September 25, 1992.
    Modified on denial of rehearing December 4, 1992.

      Jack O’Malley, State’s Attorney, of Chicago (Thomas H. Rowland and Sheila Maemanus, Assistant State’s Attorneys, of counsel), for petitioner.
    Roland W. Burris, Attorney General, of Springfield (David L. Nixon, Special Assistant Attorney General, of Chicago, of counsel), for respondent Illinois Commerce Commission.

      Kevin M. Forde and Hopkins & Sutter, both of Chicago (Paul F. Hanzlik, John Gavin, David Goroff, and Steven A. Levy, of counsel), for respondent Commonwealth Edison Company.
   JUSTICE RAKOWSKI

delivered the opinion of the court:.

Petitioner-appellant, the People of Cook County ex rel. Jack O’Malley, State’s Attorney of Cook County (Cook County), appeals an order of respondent-appellee Illinois Commerce Commission (the ICC), which held that respondent-appellee Commonwealth Edison Company (Edison) did not violate the law in the dispatch of its western coal fired plants. The order appealed from was entered in a fuel adjustment proceeding, as required by statute (see Ill. Rev. Stat. 1985, ch. 111⅔, par. 9—220). At issue in such a proceeding is whether a utility collected authorized amounts under its fuel adjustment clause during a given year when compared to the actual costs of fuel and power purchased by the utility. After considering Cook County’s arguments, we affirm.

The relevant facts are as follows. The electronic service rates Edison charges to its customers are subject to advance approval by the ICC under the statutory authority of the Illinois Public Utilities Act (the Act) (Ill. Rev. Stat. 1985, ch. 111⅔, par. 1 et seq.). Edison may only charge its customers the rates it has on file with the Commission. Generally, once rates are established with the ICC they are fixed. Section 9—220 of the Act, however, also provides in pertinent part:

“Notwithstanding the provisions of [this Article], the Commission may authorize the increase or decrease of rates and charges based upon changes in the cost of fuel used in the generation or production of electronic power *** through the application of fuel adjustment clauses.” (Ill. Rev. Stat. 1985, ch. 111⅔, par. 9—220.)

This exception exists for the purpose of allowing fuel costs or savings to be passed through to customers promptly, absent the need for frequent rate case proceedings. Re Uniform Fuel Adjustment Clauses (Ill. Com. Comm’n 1981), 45 Pub. Util. Rep. 4th 1, 3-4.

A uniform fuel adjustment clause (FAC) the ICC adopted in 1981 (see Commission General Order 211, reported at 83 Ill. Adm. Code §425 (1991)) (the Code) contains a mathematical formula by which fuel charges to customers change each month to reflect changing costs of fuel and purchased power, and allows for current recovery of such costs by the utility. Under section 425.20 of the Code, fuel costs which are passed through this section of the Code are required to represent either actual, historical costs or estimates of actual costs as they become available.

Section 9—220 also provides that the ICC monitor the application of a utility’s FAC. Utilities file with the ICC monthly calculations of FAC charges and submit to annual audits of FAC charges and costs. (Re Uniform Fuel Adjustment Clauses, 45 Pub. Util. Rep. 4th at 18.) Additionally, section 9—220 provides that the ICC conduct annual public hearings to determine the prudence of costs passed on to consumers and to reconcile the costs collected under the FAC with the actual costs incurred. The ICC will order refunds if it determines that the charges passed on through the FAC do not represent actual costs of prudently purchased fuel. It was via the authority of section 9—220 that the ICC ordered Edison sub judice to present a reconciliation and to demonstrate prudence of its purchases of fuel and power during the relevant periods.

Section 425.40(a) of the Code requires that electrical utilities adhere to economic dispatch in the operation of their generating units. That section defines “economic dispatch” as:

“the operation of the electric utility’s system, utilizing the sources of available power to achieve minimum overall costs, taking into consideration the utility’s voltage, frequency, reliability, environmental, safety and service quality requirements, as well as the utility’s existing contractual obligations.” 83 Ill. Adm. Code §425.40(a) (1991).

William Gould, the ICC’s senior economic analyst in the planning and operations section of the engineering department of the public utilities division, testified that the principles of economic dispatch require that incremental and fixed costs be distinguished. Fixed costs are those costs which are incurred regardless of the amount of generation or operation of a generating unit — or whether energy is produced at all. Incremental costs, on the other hand, are those costs which vary with production and are proportional to the amount of energy produced. A utility satisfies the economic dispatch requirement when units with lower incremental costs are operated ahead of those with higher incremental costs. In order to minimize total system costs, the utility must dispatch its generating units based upon incremental costs, and not based on total costs or other costs.

In the mid-1970’s, Edison entered into long-term coal contracts with three coal companies — Black Butte, Big Horn and Decker. These contracts shall hereinafter be referred to as the “western coal contracts.” The long-term nature of the western coal contracts was insisted upon by the contracting coal companies, and the original contracts required that Edison accept delivery of and pay for a designated minimum quantity of coal each year. At the time the western coal contracts were entered into, Edison’s needs were based upon forecasts which projected that demand for electricity would increase at least 5% per year. The western coal contracts provided coal to suit about 60% of Edison’s needs at the time. As it turned out, electrical demand did not increase as expected, and consequently, the western coal contracts provided for the delivery of more coal than Edison needed to generate electricity.

In response, Edison negotiated a number of amendments to the western coal contracts in the years 1982, 1983, 1986 and 1988. Under the amendments, Edison paid about 75% of the contracts’ cost of a ton of coal as “mineral rights” or “reserve charge” when it could not take the costs as scheduled. Upon this payment, Edison was entitled to defer delivery of the paid-for coal to a later date, and Edison would be obligated to pay the remaining 25% when it accepted delivery of the deferred coal.

Testimony before the ICC established that minimum overall costs are realized when generating units are dispatched on the basis of incremental costs. ICC staff witness William Gould testified that as fixed costs are always present, only variable or incremental costs should effect the dispatch of the utility’s generating system. Staff witness Kenneth Costello testified that “dispatching on the basis of incremental costs minimizes a utility’s total operating costs.” Robert Beckwith, Edison’s manager of fuel, stated that as Edison was obliged to pay for mineral rights, they should be considered as fixed costs and not used for dispatching purposes. Costello agreed that Edison’s calculation of incremental costs for the dispatch of its western coal fired units properly excluded the 75% reserve charge.

The ICC found that Edison’s dispatch methodology should be upheld, and that the evidence established that Edison’s system is operated to achieve minimum overall cost and satisfied the requirement of economic dispatch.

On June 21, 1989, the ICC staff filed a motion to amend the hearing schedule with respect to the issue of Edison’s prudence in its western coal contracts in 1985 and 1986. The ICC hearing examiners granted the staff’s motion and consolidated consideration of the prudence of Edison’s western coal contracts for 1985 and 1986 with Edison’s FAC proceeding for 1987. Eventually, upon the motion of a governmental intervenor not a party to this appeal, consideration of Edison’s prudence in the western coal contracts in 1985, 1986 and 1987 was consolidated into the docket for the FAC proceeding for the year 1988. Cook County is a party to those hearings.

The first issue we address is whether the ICC’s finding that Edison complied with its statutory regulations in the operation of its generating units in 1985 and 1986 was error.

As the ICC stated in its order, the gravamen of Cook County’s appeal is:

“The basis of the Intervenors’ argument that Edison violated economic dispatch in dispatching its western coal plants is Edison’s use of incremental or mining charge of reserve coal as the dispatch cost for all western coal, despite the fact that most of the coal consumed in 1985 and virtually all of the coal consumed in 1986 was base coal and the original contracts under which such coal was provided do not provide for the division or procurement into explicit reserve and mining charges. The mining charge equals only about one-fourth of the total fuel cost of western coal. Thus, western coal is dispatched at approximately 25% of the cost passed on through the FAC to ratepayers.”

As we recently stated in Moneada v. Illinois Commerce Comm’n (1991), 212 Ill. App. 3d 1046, 1051-52, 571 N.E.2d 1004:

“The Commission’s findings on questions of fact are prima facie true, and its orders are prima facie reasonable. A reviewing court can only reverse a Commission rule, regulation, order or decision if the Commission is without jurisdiction, its order is not supported by substantial evidence or the order or manner in which it was decided violates Federal or State constitutional laws to the prejudice of the appellant. Furthermore, the party challenging the order has the burden of proof. [Citations.] The Commission’s determination of a question of law, however, is not binding on review. [Citation.]”

Cook County makes several arguments that the ICC’s order in the case sub judice should be reversed. Cook County points out that in addition to complying with section 9—220 of the Act, Edison was governed by other provisions of the Act which require that its fuel procurement and energy dispatch practices in 1985 and 1986 constituted the “least cost means of meeting the utility’s service obligations,” and that the rates and charges which resulted were just and reasonable. (See Ill. Rev. Stat. 1985, ch. 111⅔, pars. 8—401, 8—501, 9—101.) The goal of the Act, Cook County notes, is to regulate utility rates so as to ensure reliable service at the least possible cost to citizens.

According to Cook County, Edison failed to meet the requirements of economic dispatch in its western coal plants by using the incremental cost, which represented only 25% of the cost passed to ratepayers, when Edison was allowed to recover 100% of the cost. This was not a method of providing electricity at the least and minimum cost, and was not a just and reasonable imposition on Edison’s ratepayers through the FAC. We disagree.

Decisions of the ICC are entitled to substantial deference because they are judgments of a tribunal appointed by law and informed by experience. (See Village of Apple River v. Illinois Commerce Comm’n (1960), 18 Ill. 2d 518, 165 N.E.2d 329.) A reviewing court may not try a case de novo, put itself in the place of the ICC, or substitute its judgment for the ICC’s. Village of Apple River, 18 Ill. 2d at 523.

There was testimony before the ICC that Edison was contractually obligated to purchase an amount of coal — base coal — and given that Edison was obligated to pay for the base coal, whether it was used or not, it was a fixed cost. Fixed costs are not to be included in incremental costs for the purpose of dispatching. Even Cook County’s witness, Dr. Pflaum, acknowledged that a portion of the total cost of the western coal was “sunk.” Pflaum, as well as several other witnesses, testified that Edison would be required to pay substantial amounts to terminate its contractual obligations. Further, there was uncontroverted testimony before the ICC that the fixed component of the western coal was to be paid whether Edison took delivery or not. Witnesses also testified that the alternative approaches suggested by Cook County would wind up costing Edison’s customers even more.

Section 425.40 requires that the utility must operate its system to achieve minimum overall cost. Upon reviewing the record, we find that the evidence below supports the conclusion that while the western coal itself was more expensive than other coal which Edison could have burned, 75% of the costs for the western coal were fixed pursuant to contract. Using the incremental, nonfixed cost of the western coal for purposes of economic dispatch, as witnesses testified was proper, yielded a lower cost being passed through the FAC than using other available coal, which was more expensive than the incremental, nonfixed portion of the western coal.

In sum, we cannot say that the ICC, the expert body of this State in utility issues, ruled contrary to substantial evidence before it. As Edison properly dispatched its plants on the basis of incremental costs, economic dispatch was satisfied, and economic dispatch being satisfied, following Cook County’s logic and the requirements of section 425.40(a) of the Code, Edison operated at minimum overall costs. Section 425.40(a), after all, provides that the operation of the utility system take into account the utility’s existing contractual obligations. Section 425.20 of the Code allows for the passing through the FAC of Edison’s recovery of “actual, historical costs,” which Cook County does not contend are incremental costs. The statutory and Code scheme manifestly allow for a greater recovery through the FAC than that which is used in dispatch.

Cook County also argues that the ICC erred in placing the burden of proof in the proceedings sub judice upon the governmental interveners. In support of this assertion, Cook County cites a portion of the ICC order which states: the governmental interveners’ evidence is “insufficient to establish that Edison operated its plants in violation of economic dispatch.” While it is true, as Cook County notes, that the supreme court’s holding in People ex rel. Hartigan v. Illinois Commerce Comm’n (1987), 117 Ill. 2d 120, 510 N.E.2d 865, would require that allocation of the burden of proof on the interveners would be error, it is not clear that the ICC actually placed the burden of proof upon Cook County and the other governmental interveners. The order and the record demonstrate that Edison introduced substantial evidence in its direct case, and the order is more properly read as a suggestion that the intervenors failed to introduce sufficient evidence to rebut Edison’s showing that economic dispatch was complied with.

The next issue we address is whether it was error for the ICC to consolidate consideration of the prudence of certain 1985 and 1986 Edison coal purchases with the 1988 FAC proceeding.

Cook County makes two different and alternative arguments with respect to the issue of the determination of the pruden'ey of Edison’s procurement of western coal in 1985 and 1986. First, Cook County argues that it was error for the ICC not to determine prudency in the underlying proceeding. This argument takes issue with the ICC’s decision to defer the issue to a later (and presently litigated) docket. Cook County argues that the Act was violated in the deferment, as a prudency determination need be conducted annually. (See Ill. Rev. Stat. 1985, ch. 111⅔, par. 9—220.) Cook County again argues that the burden of proof on this issue was shifted, noting that the trial court stated in its order of deferment: “Adequate safeguards can be placed in the orders [in the dockets] to ensure that overcollection for fuel proven for years 1985 and thereafter will be credited to customers through the fuel adjustment clause mechanism.” (Emphasis added by Cook County.) Cook County argues that deferral was unfair, as customers who have left Edison’s system will be difficult to locate. Finally, Cook County argues that deferral was a denial of its and other governmental interveners’ due process rights.

Next, Cook County makes an inconsistent argument, namely: that the ICC actually did make a prudency determination for the years 1985 and 1986, and that this determination (which found prudency) was violative of the law or contrary to the manifest weight of the evidence. Obviously, Cook County cannot be correct in both arguments, and a review of the record reveals that the latter argument, that the ICC did specifically rule on prudency, is untenable. This is so because it ignores plain language in other parts of the order, which specifically states that the prudence of the western coal purchases is set on a later, different docket, and that supplemental orders could.be entered in the event that refunds or credits are ordered in the future due to overcollection. The finding in paragraph 9 of the order which Cook County refers to is obviously either mistaken boilerplate language or refers, as Edison suggests, to fuels other than the western coal purchased in those years. Significantly, Cook County has not denied that the other docket proceeds during this appeal, that it is a party to the other docket, or that the prudence of the 1985 and 1986 western coal purchases is being litigated in the other docket.

We further reject Cook County’s argument that it was error for the ICC to defer that issue to a later docket. Edison is correct that section 9—220 only requires the ICC to “initiate” hearings to determine prudence of fuel purchases. It does not say that such issues must be disposed of during each year. As Edison points out, an administrative body has wide discretion in shaping and conducting proceedings and hearings. (See Antioch Milling Co. v. Public Service Co. (1954), 4 Ill. 2d 200, 210, 123 N.E.2d 302; Desai v. Metropolitan Sanitary District of Greater Chicago (1984), 125 Ill. App. 3d 1031, 1033, 466 N.E.2d 1045.) Other prudence issues with respect to contracts for the same coal from the same companies are at issue in the pending docket, and doubtless common questions of fact and law abound in relation to the prudency determinations. Further, Cook County has not advanced any specific arguments or authority to suggest that the ICC will not be able to adequately determine prudency in 1985 and 1986 in the other docket, or that the ICC will not be able to make appropriate refunds. For this same reason, there is no merit to Cook County’s assertion that due process rights were violated. For the foregoing reasons, we hold that it was not error for the trial court to consolidate the original prudency determinations to the later docket.

For the foregoing reasons, we affirm the decision of the ICC.

Affirmed.

McNAMARA and JIGANTI, JJ., concur.

       Justice Rosemary LaPorta participated in oral argument prior to her death. Justice Mel R. Jiganti was substituted on the panel and has listened to the oral argument tape and has read the briefs.


author: JUSTICE LaPORTA

text:
    SHAFER-PEARSON AGENCY, INC., on Behalf of Itself and All Others Similarly Situated, Plaintiff-Appellant, v. CHUBB CORPORATION et al., Defendants-Appellees (Good Weather International Corporation, Defendant).
    First District (6th Division)
    No. 1—90—2509
    Opinion filed January 10, 1992.

      Kevin M. Forde, Ltd., of Chicago, and Luedtke, Hartweg & Turner, of Bloomington (Kevin M. Forde, Katrina Veerhusen, and John Luedtke, of counsel), for appellant.
    Keck, Mahin & Cate, of Chicago, and Rogers & Wells, of New York, New York (Peter R. Sonderby, Janet L. Reali, and James W. Paul, of counsel), for appellees.
   JUSTICE LaPORTA

delivered the opinion of the court:

Plaintiff Shafer-Pearson Agency, Inc., filed a breach of contract action against defendants on November 23, 1988, on its own behalf and on behalf of a class of others similarly situated. The complaint alleged that the plaintiff class of agents and brokers solicited drought insurance for defendants but were not paid commissions owed to them by defendants, Chubb Corporation, Federal Insurance Company and Good Weather International Corporation.

The trial court certified the class, dividing the class into 10 subclasses, each class representing a separate State where the insurance policies were written. Defendants Chubb and Federal moved for summary judgment as to 9 of the 10 subclasses, excluding the Illinois subclass. The trial court granted summary judgment in favor of defendant as to nine subclasses. The court subsequently denied plaintiff’s motion for reconsideration.

Plaintiff raises two issues on appeal: (1) whether certain State statutes bar the plaintiff class members’ claims for commissions from defendants; and (2) whether defendants have waived or should be estopped from asserting these statutes as a bar to the class members’ claims because (a) estoppel is contrary to public policy and to allow Chubb to rely on its own failure to comply with appointment statutes to excuse it from paying earned commissions would result in a manifest injustice; (b) the class members and Chubb are not in pari delicto and therefore the class members can properly be awarded the commissions they have earned; (c) Chubb waived any right to rely on appointment statutes by accepting the benefits generated by the class members by paying commissions to some of the class members for identical policies; and (d) Chubb is estopped from relying on the Iowa, Michigan or Ohio statutes which require the registration of an insurer’s agents because class members in those States reasonably relied on assertions made by Chubb’s agent, Good Weather.

In June of 1988, plaintiff, Shafer-Pearson, signed a broker’s agreement with Good Weather to sell drought insurance issued by Federal Insurance Company, a subsidiary of Chubb Corporation. The agreement provided that plaintiff would receive 10% commission on every policy for which it submitted an application accompanied by a premium check.

In the summer of 1988, Shafer-Pearson submitted 191 applications for approximately $9.8 million in drought insurance to Good Weather, but the applications and premium checks were returned by Good Weather “due to capacity limits” on the sale of the insurance. ShaferPearson filed the instant action, contending that defendants breached their agreement to pay earned commissions to plaintiff and to members of the class. The trial court certified the class, establishing 10 subclasses to represent the brokers and agents in each of the 10 States where the policies were sold. The 10 states were Illinois, Indiana, Iowa, Minnesota, Missouri, Wisconsin, Michigan, Ohio, Kentucky and Tennessee.

Facts obtained through discovery established that Good Weather and Federal entered into an agreement in May of 1985 whereby Good Weather was to act as Federal’s exclusive administrator for certain types of insurance, including drought insurance. Good Weather, through independent agents and brokers, offered drought insurance in 1987 to farmers to insure them against the risk of below-normal rainfall. Approximately $250,000 in premiums were collected by Good Weather for the drought insurance sold in 1987.

In 1988, the same type of insurance was offered in the 10 States listed. Good Weather was authorized to accept applications totaling $30 million in coverage. Shafer-Pearson and approximately 124 other entities sold more than 8,700 insurance policies representing approximately $350 million in applied-for coverage. Federal issued $40 million in insurance on a “first-come, first-served” basis. All other applications were rejected and the premium checks were returned. Brokers who submitted the applications that resulted in the issuance of insurance received their 10% commission from an appointed agent of Federal.

In actions separate from this litigation, Chubb and Federal were sued in a class action suit by farmers who had submitted applications and by several State administrative agencies that charged Chubb and Federal failed to follow various State procedures in the issuance of drought insurance. These actions are not at issue here.

After this action was filed, Chubb filed a cross-claim against Good Weather which alleged that Good Weather breached or failed to comply with duties imposed upon it by an administrative contract agreement signed by Good Weather and Chubb. On May 26, 1989, Good Weather moved to dismiss plaintiff’s complaint, arguing that it acted for a disclosed principal and therefore was not liable for nonperformance of a contract between Chubb and plaintiff. Good Weather also moved to dismiss the cross-complaint filed against it by Chubb. Both motions were denied in July 1989.

After discovery on' the plaintiff’s action against both Good Weather and Chubb, defendant Chubb filed a motion for summary judgment directed at the class members in all of the States except Hlinois. Chubb argued that each of the nine States involved had a statute in effect at the relevant time that prohibited the payment of commissions to agents or brokers unless they were “appointed” to solicit business by the insurer in accordance with the statutes of their respective States. Plaintiff responded that most of the statutes cited by Chubb dealt with the “licensing” of insurance brokers or agents and not with the “appointment” of brokers or agents. Plaintiff contended Chubb’s argument was not valid on two grounds. Plaintiff argued that Chubb had waived its right to deny the outstanding commission payments because in fact it had paid commissions for the $40 million in drought insurance coverage issued in 1988. Plaintiff also argued that Chubb was estopped from relying on any statute that might be applicable because employees of Chubb’s agent, Good Weather, made representations to the class members that either advised them that there was no need to be appointed by Chubb or that Good Weather would “take care of” any appointment requirements. Plaintiff submitted a number of affidavits from brokers and agents to support that position.

On April 26, 1990, the court granted Chubb’s motion for summary judgment. The court held: “Plaintiff’s lack of appointment is critical. It is so because it is statutory. As stated in Florida Risk Planning Consultants, Inc. v. Transport Life Insurance, 732 F.2d 593 (7th Cir. 1984), if the estoppel theory were to apply to a licensing statute, it could render the statute meaningless and with out [sic] application. Since Plaintiff/class members lacked the required appointments necessary by statute, this Court finds that any commissions generated therefrom, would be violative of the statutes.”

Plaintiff’s motion for reconsideration was denied; the court found plaintiff’s arguments had already been raised and rejected by the court. In addition, the court ordered that its April 26, 1990, opinion be modified nunc pro tunc to show that the order affected only 9 of the 10 subclasses, excluding the Illinois subclass. The court stated that its ruling was a final order in accordance with Supreme Court Rule 304 (134 Ill. 2d R. 304) and there was no just reason to delay enforcement or appeal.

Plaintiff appealed, contending that the trial court erred in its ruling because it failéd to consider the language of the nine State statutes individually. Plaintiff contends that the trial court misconstrued the statutes to prohibit the payment of commissions to “non-appointed” brokers and agents. Plaintiff contends that under the plain language in statutes of six of the States involved — Kentucky, Minnesota, Indiana, Tennessee, Wisconsin and Missouri — the payment of commissions is prohibited only to people who are “unlicensed.” The record shows that the approximately 125 class members involved here were all licensed as brokers or agents in their respective States.

Plaintiff concedes that the State statutes in the three remaining States — Michigan, Iowa and Ohio — “appear to prohibit the payment of commissions to parties who are not both licensed and appointed.” In those States, plaintiff contends, Chubb has waived or should be estopped from asserting the effects of the statutes because .of its own failures to register the appointments with the respective States. Plaintiff argues that the class members and defendants are not in pari delicto and therefore it would be permissible to find in favor of the class, even if class members were in violation of State law. In addition, plaintiff argues that this decision could be reached on public policy grounds because defendant should not be able to benefit from its failure to register the agents and brokers.

First we consider whether certain State statutes bar the plaintiff class members’ claims for commissions from defendants. Plaintiff contends that the trial court improperly interpreted the State statutes in Kentucky, Minnesota, Indiana, Wisconsin and Missouri to each require licensing as a broker or agent and appointment as an agent for the insurance company before a commission can be paid. Tennessee also fits into this category but because of other relevant statutory language, we will deal with the Tennessee subclass later in the opinion. We examine the State statutes individually.

KENTUCKY

The Kentucky statute states that “no agent shall place, and no insurer shall accept, any insurance with any insurer as to which he does not then hold a license and appointment as agent under this subtitle.” (Ky. Rev. Stat. Ann. §304.9—080 (5) (Baldwin 1987).) Plaintiff contends that the lone Kentucky class member fits within the statutory exception which permits “general line[] agent[s] *** [to] occasionally place an insurance coverage with an insurer as to which he is not then appointed as an agent, and such insurer may accept such business only when placed through a licensed resident agent of the insurer.” (Ky. Rev. Stat. Ann. §304.9—410 (Baldwin 1987).) The statute then requires that both the general line agent and the resident agent be licensed in the State.

State administrative regulations define “occasional” as placement of business that is 20% or less than the agents’ total premiums. (806 Ky. Admin. Reqs. 9:200 (_).) Plaintiff contends that an affidavit filed by the Kentucky class member establishes that his applications for drought insurance constituted less than 20% of his agency’s total premium volume for the year.

Defendants argue that plaintiff does not fit into the exception because plaintiff has not alleged that Good Weather was a “licensed resident agent” in Kentucky. But plaintiff contends that defendant had inappropriately tried to shift the burden here by making it plaintiff’s obligation to license its resident agent, when in fact it is the insurer’s obligation. The Kentucky class member, by affidavit of Bill Knuckles, acknowledges that he was licensed as a general line agent.

We find plaintiff is correct in his contention that the burden to license its resident agent with the State is on the insurer. The Kentucky class member was licensed and submitted insurance policy applications to an agent of Good Weather. It was Good Weather’s obligation to make sure that its spokesperson was a “licensed resident agent” in accordance with the requirements of the State’s insurance statute. Good Weather’s failure to register its agent should not deprive this plaintiff class member of a commission if it has been earned.

INDIANA

The Indiana statute states, in pertinent part, “[a]n insurer, insurance agent *** may not pay any commission *** to any person for services as an insurance agent, *** unless the person held, at the time the services were performed, a valid license for that kind of insurance as required by the laws of Indiana for such services.” Ind. Code Ann. §27—1—15.5—3(d) (Burns 1986).

Plaintiff argues that the plain language of the statute, which deals directly with the payment of commissions, states only that a person must be licensed and says nothing about appointments. Plaintiff argues that defendants mistakenly try to bring in portions of other Indiana statutes in an effort to discount the plain meaning of the law.

Defendants argue that Indiana law defines an insurance agent as someone who negotiates policies of insurance “on behalf of an insurer.” (Ind. Code. Ann. §27—1—15.5—2(1) (Burns 1986).) Defendants cite to other portions of Indiana insurance laws which state that an insurance agent must be “qualified and duly licensed” and commissions cannot be paid unless an agent holds a valid license “as an insurance agent.” (Ind. Code Ann. §27—1—15.5—3(a), (d) (Burns 1986).) From these three provisions of Indiana law, defendants draw the conclusion that “absent an appointment, therefore, even licensed producers would not qualify as ‘insurance agents’ under the statute, and would accordingly be ineligible to receive a commission.”

We find the plain meaning of the statute dealing with commissions requires that agents be licensed and that responsibility for registering its agents with appropriate State authorities is on the insurer, in this case, Chubb. The statute includes no language requiring appointments as an agent of the insurer in order for him to earn and be paid a commission. Therefore we find the trial court improperly found Indiana law barred payment of commissions to the class members, who were all licensed brokers or agents.

WISCONSIN

Wisconsin statute section 628.61, entitled “Sharing Commissions,” states “[n]o intermediary or insurer may pay any consideration *** to any person for services performed within this state as an intermediary if he or she knows or should know that the payee is not licensed under s. 628.04 or 628.09.” Wisc. Stat. Ann. §628.61 (West 1980).

Wisconsin statute section 628.11, entitled “Listing of Insurance Agents,” states: “An insurer shall report to the commissioner at such intervals as the commissioner establishes by rule all appointments and all terminations of appointments of insurance agents to do business in this state, and shall pay the fees proscribed ***.” Wisc. Stat. Ann. §628.11 (West 1980).

Plaintiff argues simply that section 628.61 permits payment of commissions to those duly licensed in the State without regard to whether they are registered as agents of the insurer.

Defendants contend that plaintiff fails to consider the entire statutory scheme in Wisconsin. Defendants contend Wisconsin law prohibits insurers from conducting business with any “producers” who are not “listed” with the State.

Defendants cite Wisconsin Administrative Code section 6.57, which states, “[n]o insurer shall accept business directly from any intermediary unless that intermediary is a licensed agent listed with that company” and “[n]o intermediary-agent shall submit an application for insurance directly to an insurer or solicit insurance on behalf of a particular insurer unless the agent is listed with that insurer.” Wisc. Admin. Code §§Comm’r Ins. 6.57 (5), (6) (_:_, 19__).

Plaintiff argues that Chubb's failure to follow administrative procedures to list all of its agents with the State does not bar Chubb from paying commissions under section 628.61 of the statute.

We find merit in plaintiff’s argument and find that Chubb’s failure to “list” plaintiff class members with the State as required under the administrative codes does not bar the payment of commissions under section 628.61. Section 628.61 specifies only that an agent must be licensed to be paid. It does not provide that an agent first confirm that the insurer has listed him with the State before a commission can be paid.

MINNESOTA

Minnesota’s State statute provides, in pertinent part, that “[n]o commission or other compensation shall be paid or allowed by any person, firm, or corporation to any other person, firm, or corporation acting, or assuming to act, as an insurance agent without a license therefor.” Minn. Stat. Ann. §60A.17 subd. 10 (West 1986).

Minnesota’s statute provides that “[a] person who holds a valid agent’s license from this state may solicit applications for insurance on behalf of an admitted insurer with which the licensee does not have a valid appointment on file with the commissioner; provided, that the licensee has permission from the insurer to solicit insurance on its behalf and, provided further, that the insurer upon receipt of the application for insurance submits a written notice of appointment to the commissioner.” Minn. Stat. Ann. §60A.17, subd. la(f) (West 1986).

Plaintiff contends that the class members were given permission to act on behalf of Chubb by its agent Good Weather and that under the latter statute Chubb had an obligation to submit a written notice of appointment to the commissioner once it received an application for insurance from the class participants. Plaintiff argues that this requirement is separate and distinct from Minn. Stat. Ann. 60A.17, subd. 10, which provides only that one be licensed to be paid a commission.

Defendant agrees that section 60A.17 applies but argues that this court must look to the definition of “insurance agent” under Minnesota law. “Insurance agent” is defined as someone “acting under express authority from, and an appointment pursuant to section 60A.17 by, an insurer and on its behalf to solicit insurance, or to appoint other agents to solicit insurance, or to write and countersign policies of insurance, or to collect premiums therefor within this state.” Minn Stat. Ann. §60A.02 (West 1986).

Defendants argue that an agent who is not so appointed is not a properly licensed agent and therefore cannot be paid a commission. Defendants argue that plaintiff class members also cannot fit into the exception to section 60A.17, which permits an agent to submit insurance applications to the insurer even though he has not been appointed so long as the insurer then submits a written notice of appointment to the commissioner. Defendants argue that no such written notice of appointment was submitted by Chubb and therefore plaintiff class members did not comply with State statute and were not entitled to commissions.

Plaintiff responds that the plain language in Minnesota’s statute bars payment of commissions for unlicensed agents only and says nothing about a prior requirement to register an appointment before a commission can be paid. Plaintiff contends the definition of insurance agent quoted by defendants deals with an agent’s requirements to initially obtain a license in the State, arid does not preclude the right to payment of a commission once already licensed.

We find the statutes consistent and, when read together, permit payment of a commission to someone who is licensed. The requirement to file appointments with the commissioner is separate and is the obligation of the insurer.

MISSOURI

The Missouri statute provides, “[n]o insurance company doing business in this state shall pay any commission or other compensation to any person for any services, as agent, in obtaining in this state any contract of insurance except to a licensed agent of the company, or a licensed insurance agency or broker having a copy of his license on file with said company.” Mo. Ann. Stat. §375.158 (Vernon 1968).

Missouri law defines “insurance agent” as “any authorized agent of an insurer, or representative of the agent, who acts as an agent in the solicitation of, negotiation for, or procurement or making of, any insurance or annuity contract.” Mo. Ann. Stat. §375.012 (Vernon 1991).

Plaintiff argues that the Missouri class members complied with the latter portion of section 375.158 when they submitted copies of their licenses as did all other brokers selling “rain” insurance through Good Weather and Chubb. Defendants, argue, however, that no commission can be paid to plaintiff class members because the agents were not appointed.

The State statute provides that “[e]very insurance company authorized to provide or transact insurance in this state shall, within 10 working days of an appointment of an agent to act for such insurance company, notify the director of such appointment upon forms prescribed by the director.” Mo. Ann. Stat. §375.022 (Vernon 1968).

We do not agree with defendants’ argument that this requirement prevents plaintiff class members from collecting commissions. This statutory requirement merely places the burden of appointment on the insurer. It does not link payment of commissions to appointment. Nor do we agree with defendants’ contention that plaintiff class members now claim they are insurance brokers or agents of the insured. Section 375.158 provides for payment of commissions to an agent of the insurance company or to an insurance agency doing business as an agent representing the insurer or as a broker representing the insured. Plaintiff class members fall into the former category and therefore would not be prohibited from earning a commission under this statutory provision.

In summary, we find the trial court improperly interpreted the State statutes in Kentucky, Indiana, Minnesota, Missouri and Wisconsin to bar payments of commissions to plaintiff subclass members in those States because the plain language of those statutes permits payment of a commission to any agent or broker who is licensed.

IOWA, MICHIGAN AND OHIO

Plaintiff class members concede that the statutes in the remaining three States — Iowa, Michigan and Ohio — “appear” to each require an agent to be both licensed by the State and appointed by the insured. But plaintiff class members contend that in each State the statute places the onus on the insurer to register the appointments with the State. Plaintiff class members contend that defendants have waived or should be estopped from asserting these statutes as a bar to the class mémbers’ claims. Plaintiff class members argue that this position is applicable with regard to these three States and to each of the other six States where this court might find an appointment is required before a commission can be paid.

Plaintiff class members cite four reasons why this court should reverse the trial court’s summary judgment ruling in favor of defendants: (1) it is contrary to public policy and would result in a manifest injustice to allow Chubb to rely on its own failure to comply with appointment statutes to excuse it from paying earned commissions; (2) the class members are not in pari delicto with Chubb and therefore the class members can properly be awarded the commissions they have earned; (3) Chubb waived any right to rely on appointment statutes by accepting the benefits conferred by the class members by paying commissions to some of the class members for identical policies; and (4) Chubb is estopped from relying on the Iowa, Michigan or Ohio statutes because class members in those States reasonably relied on assertions made by Chubb’s agent, Good Weather.

1. PUBLIC POLICY CONSIDERATIONS

First we consider whether it is contrary to public policy and manifestly unjust to allow Chubb to rely on its own failure to comply with appointment statutes to excuse it from paying earned commissions.

Plaintiff contends therefore that it would be contrary to public policy considerations to allow Chubb to invoke the statutes for protection from its own failures. To do so would permit insurers to breach their contractual agreements with brokers simply by failing to file the necessary statutory appointment forms with the appropriate State authorities.

Plaintiff refers us to three cases which support its position: Wolk v. Benefits Association of Railway Employees (W.D. Pa. 1958), 168 F. Supp. 715, Oakes v. Aetna Casualty & Surety Co. (Tex. Civ. App. 1977), 551 S.W.2d 504, and State v. Sellers (Iowa 1977), 258 N.W.2d 292.

In Wolk, a Pennsylvania district court reasoned that the defendant carrier was not entitled to assert a defense of noncertification of plaintiff as its insurance agent where defendant’s own conduct resulted in the noncertification. (Wolk, 168 at 718.) In Oakes, an insurance agent sued the insurance companies for which he sold policies after his license was suspended because the insurance companies had failed to register the necessary insurance policy forms with the State. A Texas court of appeals held that summary judgment was improperly granted to defendants because it found that defendants had failed to establish that plaintiff did not have a right to rely on defendants to secure the required approval. Oakes, 551 S.W.2d at 507.

In Sellers, the supreme court of Iowa considered what, if any, effect it would have on the validity of surety bonds once it was discovered they were executed by an unlicensed agent of defendant. The court, quoting from 3 G. Couch, Insurance, section 26:56 (2d ed. 1984), reasoned that statutory licensing provisions were designed to protect the insured, not to permit the insurer to avoid its obligations. Sellers, 258 N.W.2d at 299.

Defendants discount the language in Wolk, arguing that it is dictum, and in Oakes, noting that the case involved registering policy forms, but did not involve licensing. Defendants argue that the burden was on the class members not to take or submit applications until they had been properly appointed according to State statute and that their violation of the statute should prevent their recovery.

Defendants cite several cases in support of their argument that the class members had to verify compliance with State appointment statutes: Florida Risk Planning Consultants, Inc. v. Transport Life Insurance Co. (7th Cir. 1984), 732 F.2d 593, Caribbean Insurance Services, Inc. v. American Bankers Life Assurance Co. (1st Cir. 1985), 754 F.2d 2, Dunn v. Phoenix Village, Inc. (W.D. Ark. 1963), 213 F. Supp 936, Gallimore v. Arcadia National Life Insurance Co. (Ohio Ct. App. Mar. 23, 1988), Perkins v. Lambert (Tex. Civ. App. 1959), 325 S.W.2d 436, and Fewel & Dawes, Inc. v. Pratt (1941), 17 Cal. 2d 85,109 P.2d 650.

We find, however, that these cases are not relevant since they involve invalidating insurance contracts because of the failure of the agent to be licensed rather than with appointment requirements. That is not our case. Here, the agents and brokers involved were all licensed and a number of the identical applications for policies written, $40 million worth, were apparently good enough to be honored by defendants’ issuance of policies. Here the insurance contracts entered into were not against public policy. The controversy stemmed from the defendants’ failure to file appointments.

In Florida Risk Planning Consultants, the only case cited by the trial court in its ruling, a consulting group, FRPC, sought to collect commissions from Transport Life Insurance Company for insurance policies it “actively solicited for and placed with Transport.” (Florida Risk Planning, 732 F.2d at 596.) FRPC originally worked as an agent for the Zurich Insurance Company and then later for Transport Life Insurance Company when Transport assumed Zurich’s responsibilities in 1976. FRPC solicited the leaders of groups such as auto clubs for permission to sell group policies. If people were interested, FRPC would forward the applications to Central Insurance Agency in Chicago, which would then forward the applications on to Transport. Once approved, each group was assigned a designated subagent who remained .responsible for soliciting new members.

The subagents were all licensed insurance agents but FRPC was not licensed. Both FRPC and the subagents earned commissions based on the insurance coverage sold. FRPC sued Transport when Central Insurance Agency failed financially and stopped paying FRPC commission payments. Transport defended the action, contending that FRPC was not licensed and therefore could not collect a commission. The district court granted defendant’s motion for summary judgment and the Seventh Circuit Court of Appeals upheld that dismissal. The court of appeals found that FRPC acted as an unlicensed agent when it solicited members and collected applications and initial premium payments. The court held that under Illinois law commissions could not be paid to an individual or company that performed illegally as an unlicensed insurance agent. Florida Risk Planning, 732 F.2d at 596.

Florida Risk Planning dealt with an organization that was not a licensed insurance agent and is therefore distinguishable from our case, where all the plaintiff class members are licensed. In the same way, we do not find relevant the other cases cited by defendants. Fewel dealt with an unlicensed party who asked the court to enforce a contract between it and an insurer for payment of insurance commissions. The court refused to- enforce the contract, finding that the contract was illegal bécause the plaintiff was never licensed and therefore able to receive commissions. (Fewel, 17 Cal. 2d at 90, 109 P.2d at 653.) In Perkins, the court held that the insurance agent’s failure to obtain an appointment from the insurer prohibited him from collecting a commission. We note that the Texas State statute specifically required the agent to obtain an appointment before he could collect a commission. Perkins, 325 S.W.2d at 438.

Defendants have not addressed plaintiff’s contention that public policy considerations prohibit an insurer from benefiting from an agent’s efforts without the obligation to pay a commission to him — arguments which we find compelling. As the court stated in Sellers, clearly the licensing and appointment portions of the State statutes are designed to protect the insured, rather than the insurer. Here, defendants urge the court to rely on the insurer’s own failure to process administrative paperwork as a reason for rejecting plaintiff class members’ efforts to collect commission payments. Though a trial may produce other evidence which might rightfully block the payment of such commissions, on public policy grounds we believe this was not a proper basis for granting defendants’ summary judgment motion.

2. IN PARI DELICTO

Next plaintiff argues that the class members and Chubb are not in pari delicto, or equally at fault, and therefore the class members can properly be awarded the commissions they have earned. Plaintiff contends that it was Chubb's statutory duty to register the appointments of its agents under Iowa, Michigan and Ohio law, and Chubb knew it had not fulfilled its duty. Plaintiff argues that the class members were not as culpable with r.egard to the statute because they relied on assertions from defendants, who told them the appointments were either unnecéssary or were being “taken care of.” ' ‘ .

In support of this argument,.plaintiff cites O’Hara v. Ahlgren, Blumfeld & Kempster (1987), 158 Ill. App. 3d 562, 511 N.E.2d 879, aff'd (1989), 127 Ill. 2d 333, 537 N.E.2d 730 (1989). In O’Hara, the court stated that in pari delicto is a legal principle that permits the less culpable of various parties in certain situations to obtain relief from otherwise illegal or tortious transactions or occurrences. The Illinois Supreme Court specifically stated that it would not decide the application of in pari delicto in the O’Hara case so we need not compare the facts of that case to ours. O’Hara, 158 Ill. App. 3d at 563-64.

Defendants contend that plaintiff class members cannot recover commissions because they are equally at fault, or in pari delicto, with defendants for their failure to obtain the necessary appointments. Defendants argue that public policy dictates this result because plaintiff should not be able to profess to be ignorant of statutory requirements.

While the class members cannot claim ignorance of the statutory obligation to register their appointments as agents of the insurer with the State, here, unrefuted affidavits from class members indicate that the class members relied on representations made to them by Good Weather that the insurer would be following through on registering the appointments. Since the statutes involved obligated defendant insurer to file the necessary paperwork and defendants had assured the class members that they would do so, we conclude that the doctrine of in pari delicto would not bar any potential recovery by the class.

3. WAIVER AND ESTOPPEL

Finally, plaintiff argues that Chubb through its actions and the actions of its agents waived its right to, and is estopped from, relying on the State statutes as a defense. Plaintiff contends that defendants waived their right to rely on the statutes when they solicited applications from broker and agent class members, accepted applications from the plaintiff class members in 1988 and paid commissions on accepted applications from class members in 1987. Plaintiff acknowledges the universal proposition that waiver is a voluntary and intentional relinquishment of a known right. A party may invoke the doctrine of estoppel where he has materially changed his position to his detriment in reliance on another’s statement or action.

Plaintiff argues that, here, affidavits from class members established that defendants, through their agent Good Weather, represented to all class members that appointments were either unnecessary or “being taken care of.” Plaintiff argues that this establishes defendants’ knowledge of their statutory obligation and thereby defendants waived their right to rely on the statutes.

Plaintiff class members argue that defendants should be estopped from claiming statutory noncompliance because the class members relied on these assurances from employees of Chubb’s agent, Good Weather, and because defendants paid commissions to class members on previously written identical insurance policies in 1987.

Defendants reject th.e waiver and estoppel arguments on the ground that waiver and estoppel cannot be relied on to enforce a contract performed in violation of a licensing statute. Defendants cite seven cases to support this argument. (Armstrong v. Tidelands Life Insurance Co. (Tex. Civ. App. 1971), 466 S.W.2d 407; Benefits Administration Corp. v. Rearick (Tex. Ct. App. 1986), 705 S.W.2d 234; Central National Bank v. Alexander Marketing, Inc. (1977), 47 Ill. App. 3d 58, 361 N.E.2d 766; Hutner v. Greene (2d Cir. 1984), 734 F.2d 896; Dellwood Enterprises, Inc. v. Pacific American Real Estate Fund (8th Cir. 1981), 653 F.2d 350; Stinson v. Potter (Tenn. Ct. App. 1978), 568 S.W.2d 291; Relocation Realty Services Corp. v. Carlson Cos. (Minn. 1978), 264 N.W.2d 643, 646.) The majority of the cases cited by defendants do not discuss waiver or estoppel and all are factually distinguishable from the case on appeal here. In each cited case the court found the challenged contract was illegal because the broker was not licensed. Here the plaintiff agents and brokers were licensed in the State in which they were doing business, and the controversy is based solely on the State registration of their authority to solicit applications for this insurance company.

The trial court relied on Florida Risk Planning, stating that if the estoppel theory were to apply to a licensing statute, it could render the statute meaningless and without application. This case differs from Florida Risk Planning, however. The Florida Risk Planning court held that a nonlicensed company was prohibited from collecting commissions and that the defendant was not estopped from raising his own illegal actions as a defense.

We find, with regard to Michigan, Ohio and Iowa, that the reasoning in Sellers is compelling. Statutory provisions such as licensing are intended for the protection of the insured and not for the protection of the insurer. Though the illegality of a contract can be raised properly as a defense, the illegality here had nothing to do with the agent’s illegal gathering of applications and premium checks. The illegality occurred in the insurer’s failure to follow administrative and statutory procedures imposed by State statute on the insurer.

In addition, we find that a fact question remains as to whether the defendants waived their right to rely on the State statutes as a defense when they paid commissions to agents and brokers for policies issued the year prior. We also find a fact question remains as to whether defendants are estopped from relying on the State statutes as a defense. Plaintiff class members offered unrefuted affidavits from brokers and agents who stated that they reasonably relied on representations made by Chubb’s agent, Good Weather, that any necessary registration with the State was unnecessary or would be “taken care of.”

We hold defendants’ failure to register the agents with the State does not prevent plaintiff class members in Michigan, Ohio and Iowa from collecting commissions once they have submitted an application and premium check if, in fact, that is what they contracted with defendants to do.

TENNESSEE

Plaintiff contends that the plain meaning of the Tennessee statute also permitted payment of a commission to plaintiff subclass members because they were all licensed in Tennessee. The Tennessee statute permits payment of a commission, in part, to those who “held at the time such services were performed a valid license for that line of insurance as required by the laws of this state.” Tenn. Code Ann. §56—6—126 (1980) (repealed 1989).

Defendants contend that the subclass members acted improperly in submitting applications for insurance with defendants because Tennessee law prohibited the placement of a policy of insurance with an insurer by any agent not appointed by the insurer. Defendants cite Tenn. Code Ann. section 56—6—119(a) (Supp. 1988), which states: “(a) no insurance agent *** shall place a policy of insurance "with an insurer unless he has been appointed by such insurer to act as its agent or limited insurance representative.” This section provides for an exception to the rule which is only applicable on policies for life, disability and health insurance.

We find the trial court correctly interpreted the State statute in Tennessee to find that it placed the burden of appointment on plaintiff subclass members to establish entitlement to commissions. The agent here had the responsibility to see that the registration of his appointment occurred.

However, we find that the issue of whether defendants waived their right to rely on the Tennessee State statute when agents and brokers were paid commissions for policies issued the previous year is a question of fact which requires further hearing and consideration by the court. An additional question of fact which militates against summary judgment for the defendants is whether defendants are estopped from relying on the Tennessee statute as a defense because plaintiff class members offered unrefuted affidavits from brokers and agents who stated that they reasonably relied on representations made by Chubb’s agent, Good Weather, that any necessary registration with the State was unnecessary or would be “taken care of.”

Conclusion

In summary, we find that the statutes in the States of Kentucky, Indiana, Missouri, Minnesota and Wisconsin require that agents be licensed to be paid a commission and hold that licensing is enough to secure their right to a commission if their contract with defendants to solicit potential insureds so permits. As to the subclass members in Michigan, Ohio and Iowa, we find the State statutes place the burden to register the agent on the insurer but that the insurer’s failure to register the agent with the State does not bar the agents from obtaining a commission if one is due.

We find the trial court erred in granting defendants’ summary judgment motion. Summary judgment is appropriate where the pleadings, depositions and admissions on file, together with the affidavits, show that there is no genuine issue of material fact. Barnes v. Washington (1973), 56 Ill. 2d 22, 26, 305 N.E.2d 535.

Therefore, we hold that the trial judge correctly interpreted the Tennessee State statute to require the agent to determine if he or she was registered with the State before placing an insurance application with the insurer, but that factual determinations as to the insurer’s waiver of this requirement or whether estoppel applies remain. We reverse and remand this case to the trial court for further proceedings consistent with this decision.

Reversed and remanded.

EGAN, P.J., and McNAMARA, J., concur.