text:
    LEWIS POWELL, Indiv. and as member of Menard Electric Cooperative, et al., Plaintiffs-Appellants, v. WESTERN ILLINOIS ELECTRIC COOPERATIVE et al., Defendants-Appellees (Illinois Power Company, Inc., Defendant).
    Fourth District
    No. 4—88—0355
    Opinion filed March 17, 1989.
    Rehearing denied April 17, 1989.

      James C. Craven, of James C. Craven, P.C., and Thomas F. Londrigan and Gordon W. Gates, both of Londrigan, Potter & Randle, P.C., both of Springfield, for appellants.
    Thomas E. Wack, Deborah Bell Yates, and Peter W. Herzog, all of Bryan, Cave, McPheeters & McRoberts, of St. Louis, Missouri, for appel-lees.
   JUSTICE LUND

delivered the opinion of the court:

On September 22, 1986, plaintiffs Lewis Powell and others filed a derivative action against nominal defendants Western Illinois Power Cooperative (WIPCO) and Soyland Power Cooperative, Inc. (Soyland), and real defendant Illinois Power Company, Inc. (IP). The derivative action resulted from the failure or delay of WIPCO and Soyland to bring action against IP for alleged wrongdoing by IP in the construction of the nuclear power plant near Clinton, Illinois (Clinton Nuclear Station). After various motions and pleading procedures, including an amended complaint by plaintiffs on March 13, 1987, WIPCO and Soy-land moved to be realigned as plaintiffs and asked that the original plaintiffs be dismissed as to all of the derivative counts. Plaintiffs objected, contending their amended pleadings suggested a conflict of interest existed with WIPCO and Soyland directors preventing proper determination of litigation matters. The trial court ordered a good-faith hearing, placing the burden on plaintiffs to establish the lack of good faith on the part of WIPCO and Soyland’s board of directors. On January 7, 1988, the trial court denied pending motions and found plaintiffs failed to establish that the present board of directors suffered from a conflict of interest or acted in bad faith. An order was entered realigning the derivative defendants as plaintiffs and dismissing plaintiffs from the derivative action counts. This appeal followed.

From cases cited and from our additional research, it appears we are dealing with a case of first impression in the State of Illinois. Often, derivative actions are brought because of alleged specific wrongdoing by corporate management and directors. WIPCO and Soyland are cooperatives but, for purposes of this action, are treated as corporations.

Various rural electric cooperatives, serving rural Illinois, created WIPCO and Soyland for purposes of most economically obtaining electrical power supplies for the various distribution coops. The distribution coops do not aiid, for practical purposes, cannot produce the power they sell directly to their consumers.

The WIPCO and Soyland board of directors are elected by the directors of the various distribution coops. The directors of the distribution coops, in turn, are elected from the membership of their respective coops. The membership is composed of the coops’ power consumers.

The present action evolved from a 1976 partnership agreement between WIPCO and Soyland on one hand and IP on the other. The initial agreement provided for IP to own 80% of the Clinton Nuclear Station, with Soyland owning 10.5% and WIPCO owning 9.5%. The original estimated cost for the Clinton Nuclear Station was $400 million. The final cost, evidently, exceeded $4 billion. The overrun on cost brought WIPCO and Soyland to the brink of bankruptcy. Many distribution coops were faced with unanticipated large rate increases.

In 1983 and 1984, as a result of the financial disaster facing WIPCO and Soyland, an agreement evolved between WIPCO and Soyland on one side and IP on the other, freezing the coops’ required investments, reducing the coops’ ownership interest, mutually releasing liability, and tolling the statute of limitations. In separate agreements, certain rights to IP fossil-fuel electric energy sources were extended to the coops.

In December 1985, an independent audit by Touche-Ross alleged cost overruns exceeding $400 million at the Clinton Nuclear Station, due to IP mismanagement. The WIPCO and Soyland board started investigations into a possible legal action based upon mismanagement overruns. Plaintiffs had made many complaints about the IP transaction. The present action by plaintiffs resulted from nominal defendants delaying their actions against IP.

We, by our summary of the history, do not intend to downplay the complexity of all the facts surrounding this cause of action. Plaintiffs seek, as part of their requested relief, a rescission of the original partnership agreement and the voiding of the 1983 and 1984 agreements, especially those concerning mutual release liability.

Nominal defendants, together with their underlying member cooperatives, are faced with decisions concerning power sources, power costs, and the economic effect of winning or losing litigation with IP. These business decisions are far from simple and, possibly, beyond the actual ability of either plaintiffs or the management and directors of WIPCO and Soyland.

Legally, we begin by recognizing the principle that corporate decisions are the responsibility of the board of directors and not subject to various shareholders’ control. This is referred to as the business judgment rule and extends to the management of matters of litigation. (United Copper Securities Co. v. Amalgamated Copper Co. (1917), 244 U.S. 261, 263, 61 L. Ed. 1119, 1124, 37 S. Ct. 509, 510.) There generally is a presumption that in making a business decision, the directors act on informed basis, in good faith, and in the honest belief that the action taken is in the best interest of the company. Aronson v. Lewis (Del. 1984), 473 A.2d 805.

Derivative actions exist when directors or officers commit wrongful acts detrimental to the corporation, and the corporation fails to bring a related legal action. (13 W. Fletcher, Cyclopedia of the Law of Private Corporations §5941.1, at 18-22 (rev. ed. 1984).) These wrongful acts can include fraudulent conduct, breach of fiduciary duties, or the failure to bring a suit against a third party. The nature of a derivative suit is twofold. It is a suit to compel the corporation to sue, and a suit by the corporation, asserted by the shareholder on its behalf, against those liable to it. Kaufman v. Kansas Gas & Electric Co. (D. Kan. 1986), 634 F. Supp. 1573, 1577; Aronson, 473 A.2d at 811.

Generally, a corporation can, due to the business judgment rule, step in and dismiss a derivative suit as being contrary to the corporation’s best interest. (See Abramowitz v. Posner (2d Cir. 1982), 672 F.2d 1025.) However, this ability is restricted if it appears that the corporate management and directors are not acting independently and in good faith. See Abramowitz, 672 F.2d 1025; Zapata Corp. v. Maldonado (Del. 1981), 430 A.2d 779.

In the present case, the complaint alleges, as a basis for its suit, that nominal defendants have failed to proceed with the suit against IP. There are no allegations of any other wrongdoing by the corporate authorities. After the nominal defendants asked to be realigned, plaintiffs asked permission to file an amended complaint which named various officers and directors as defendants and alleged they are personally liable to the corporations for their conduct. The court did not allow this amended information, and it is not now part of this action.

Thus, we are faced with the anomalous situation where plaintiffs have filed suit on behalf of the corporations against IP, alleging the management of the corporations refused to do so, but, now that the corporations wish to conduct the action on their own behalf, plaintiffs are resisting them.

Plaintiffs insist the court’s decision was erroneous for several reasons. First, they believe the court should not have conducted the hearing on the good faith and independence of nominal defendants. Second, they maintain, if the hearing should have been conducted, the court mistakenly placed the burden of proof on them. Third, they allege that, if the first two steps were proper, then the court’s ultimate decision was against the manifest weight of the evidence.

PROPRIETY OF EVIDENTIARY HEARING

Plaintiffs assert the court should not have conducted a hearing. They rely on a string of Federal cases which hold that in questions of party realignment, the court must look at the pleadings and the nature of the dispute to determine if the corporation is actually antagonistic to the shareholders’ claim. (See Liddy v. Urbanek (11th Cir. 1983), 707 F.2d 1222, 1224; Lewis v. Odell (2d Cir. 1974), 503 F.2d 445, 447.) We do not find these cases persuasive since they are directed to questions of party alignment for purposes of Federal diversity jurisdiction.

Rather, we believe the analysis most persuasive to our situation is in those cases where the court allows the corporation to dismiss the derivative complaint over the wishes of the plaintiff shareholders (see Abramowitz, 672 F.2d 1025; Zapata, 430 A.2d 779), since the authority to ultimately dispose of the lawsuit is what is involved in the present case. In those cases, the court acknowledged the efficacy of the business judgment rule and the importance of deferring to the corporate authorities in decisions involving corporate litigation. Accordingly, they determined a hearing should be held to determine the directors’ good faith and independence in seeking termination of the suit. If that is established, then, due to the business judgment rule, the action would be dismissed.

Similarly, the Illinois courts recognize the strong preference to the decisions of the corporate boards:

“ ‘The directors represent all the stockholders and are presumed to act honestly and according to their best judgment for the interests of all. Their judgment as to any matter lawfully confided to their discretion may not lightly be challenged by any stockholder or at his instance submitted for review to a court of equity. *** And a court of equity may not be called upon at the appeal of any single stockholder to compel the directors of the corporation to enforce every right which it may possess, irrespective of other considerations. It. is not a trifling thing for a stockholder to attempt to coerce the directors of a corporation to an act which their judgment does not approve, or to substitute his judgment for theirs.’ ” (Goldberg v. Ball (1940), 305 Ill. App. 273, 282, 27 N.E.2d 575, 579, quoting Corbus v. Alaska Treadwell Gold, Mining Co. (1903), 187 U.S. 455, 463, 47 L. Ed. 256, 259-60, 23 S. Ct. 157, 160.)

It would seem incongruous to recognize this important principle and then deny the corporate authorities the right to control a corporate cause of action based on the artful pleadings of the derivative complaint. We believe that, due to this presumption, a corporation should be able to be realigned and take over responsibility for its own cause of action, subject to a hearing on the good faith and independence of the board in reaching this determination.

WIPCO and Soyland contend the realignment should have been automatic and without the trial court hearing. In light of the allegations of conflict, and WIPCO and Soyland’s delay in seeking realignment, we disagree and approve the trial court’s hearing requirement. " In so deciding, we are cognizant of the conflict with the general policy letting corporate directors make all of the business decisions.

BURDEN OF PROOF AT HEARING

Similarly, we find the court properly placed the burden on plaintiffs to prove the coops were not acting independently and in good faith in seeking to be realigned as plaintiffs. Plaintiffs insist this is incorrect, relying on Zapata, where the Delaware Supreme Court placed the burden on the corporate authorities.

However, a close reading of Zapata, which is further explained in Abramowitz, clarifies that the court was addressing two different situations. The first is where a demand to sue is not made on the corporation because it is deemed futile. This is generally due to improper conduct of members of the board of directors where the courts recognize it would be a useless task to ask the board to sue themselves. In this situation, if the board seeks to dismiss the action, the disinterested board members have the burden of proving their good faith. (Abramowitz, 672 F.2d at 1031.) This is not the situation with which we are faced.

The second circumstance involves those cases where a demand to sue a party has been made on the board and they have refused to do so. In that situation, since the refusal to sue was presumably made by application of the board’s business judgment, the shareholder has the burden at the hearing on the motion to dismiss to prove some wrongdoing on the behalf of the board in reaching that determination. (Abramowitz, 672 F.2d at 1031.) This is the factual setting before us, and we find this analysis persuasive.

As noted, the business judgment rule is grounded on the thesis that the corporate directors are, in good faith, applying their best business judgment for the benefit of all. Accordingly, a decision to not sue or delay filing a suit should be given deference. There may exist a myriad of factors for the board making that determination. For example, in the present case, it is apparent the directors were attempting to balance concerns of costs and long-term power supply, as well as investigating a possible claim against one of its suppliers. In such a situation, the directors’ decision is presumed proper, and the burden is properly placed on the shareholder plaintiffs to show that the directors are not now acting in good faith and independently in desiring to prosecute the lawsuit. An opposite result would unduly burden corporation management and directors, who have the responsibility for the business decisions of the corporation, from taking control of what are, in fact, the corporation’s legal proceedings.

ATTORNEY-CLIENT PRIVILEGE ISSUE

Prior to determining the question of sufficiency of evidence, we consider the plaintiffs’ argument that the trial court improperly found an attorney-client privilege existed, limiting certain discovery from the board of directors’ minutes of both WIPCO and Soyland.

Plaintiffs were supplied with redacted copies of defendants’ board meeting minutes. Plaintiffs attempted to elicit testimony concerning the redacted discussions between attorney John Ward and defendants’ board. Defendants asserted the privilege, alleging they did not want the representatives of IP, present in the courtroom, to receive the information. The court upheld the privilege.

The attorney-client privilege exists in order that one who is, or seeks to become, a client may consult freely with counsel, without fear of compelled disclosure of information communicated by him to the attorney whom he has employed, or seeks to employ. (People v. Adam (1972), 51 Ill. 2d 46, 48, 280 N.E.2d 205, 207, cert. denied (1972), 409 U.S. 948, 34 L. Ed. 2d 218, 93 S. Ct. 289.) The privilege is created and continues to exist where legal advice of any kind is sought from a professional legal advisor in his capacity as such, at which time the communications relating to that purpose, which are made in confidence by the client, are at his instance permanently protected from disclosure by himself or by the legal advisor, except when the privilege is waived. (Adam, 51 Ill. 2d at 48, 280 N.E.2d at 207.) This privilege also applies to discussions between a legal advisor and the control group of a corporation. (Consolidation Coal Co. v. Bucyrus-Erie Co. (1982), 89 Ill. 2d 103, 118, 432 N.E.2d 250, 257.) In the present case, it is evident defendants are such a control group and, absent any exceptions, the general rule should apply.

John Ward testified he is an attorney, licensed and practicing in Iowa. He is not licensed in Illinois State courts, but is licensed in the Federal courts. Since 1983, he has provided services to Soyland. In response to questioning about the redacted portion of the March 1984 minutes, defendants asserted their privilege. The court reviewed an unredacted copy of the minutes and, finding that legal advice was involved, upheld defendants’ assertion.

Plaintiffs observe that Ward admits he is not licensed to practice in Illinois. They argue the purpose of the privilege is to protect the attorney-client relationship. Since Ward cannot be considered an attorney in Illinois, then there is no relationship to protect.

It is clear Ward is not licensed in Illinois. However, this appears to have little to do with the efficacy and application of the privilege. The purpose of the privilege is to facilitate a dialogue between a legal advisor and a client to allow for advice and an exchange of information without fear of this discussion being subject to compelled disclosure. The key appears to be not whether an attorney is licensed in Illinois, but whether a protected relationship has developed between a professional legal advisor and a client.

The above analyses seem particularly appropriate in view of the fact the practice of law is becoming increasingly specialized and technical. It is, therefore, necessary for corporate boards to seek out counsel from those attorneys having developed the requisite expertise. To hold that the communications between these parties has somehow lost its privileged character because counsel is not licensed in the present jurisdiction makes little sense. In fact, in the Federal courts, the privilege is available as long as counsel is “a member of the bar of a court” (emphasis added) (United States v. United Shoe Machinery Corp. (D. Mass. 1950), 89 F. Supp. 357, 358), and has been applied even though counsel was not licensed in the respective jurisdiction. See Paper Converting Machine Co. v. FMC Corp. (E.D. Wis. 1963), 215 F. Supp. 249; Georgia-Pacific Plywood Co. v. United States Plywood Corp. (S.D.N.Y. 1956), 18 F.R.D. 463; Zenith Radio Corp. v. Radio Corp. of America (D. Del. 1954), 121 F. Supp. 792.

Plaintiffs next contend that this court should adopt a good-cause exception to the privilege in shareholder derivative lawsuits. They rely on the case of Garner v. Wolfinbarger (5th Cir. 1970), 430 F.2d 1093, cert. denied (1971), 401 U.S. 974, 28 L. Ed. 2d 323, 91 S. Ct. 1191.

The Garner opinion might seem applicable to the present case and the hearing held by the trial court. However, the present action is not against the officers and directors, as in Garner, and this would, normally, justify a decision contrary to Garner. In the trial court hearing, the issue related to the good-faith conduct of the directors in pursuing the action against IP. The litigated relationship appears similar to the facts in Garner, with an important exception — the disclosure of information sought could have a detrimental effect on the cooperatives in their litigation with IP. IP was present by counsel and is the principal party defendant in the derivative action.

We conclude the trial court acted properly in holding the attorney-client relationship existed. Further, we have gone further than the trial court and have examined the sealed documents containing the unredacted minutes, and conclude no information of value exists relating to determining the issue of good faith.

PROPRIETY OF TRIAL COURT’S DETERMINATION

We have considered the evidence before the trial court. The record indicates the substantial problems which confronted both WIPCO and Soyland in obtaining power sources. In the 1980’s Soy-land cancelled construction that had already begun on a coal generation plant located in Pike County. Availability of government financing became questionable when a $900 million projected cost was determined. Negotiations for long-term power sources, in addition to the Clinton Nuclear Station, were sought from several sources. Separate contracts with IP, relating to energy from fossil-fuel plants, were delayed because of hearings before the Federal Energy Regulatory Commission. Negotiations for long-term contracts with Central Illinois Public Service Company appeared to be proceeding over a lengthy period of time and causing great concern.

During all this time, the escalating costs of the Clinton Nuclear Station, together with the settlement of claims because of cancellation or delay of the Pike County construction, placed both WIPCO and Soyland on the verge of bankruptcy. Congressional action was eventually needed and obtained to enable satisfactory refunding of debt payments to the United States government.

Negotiations with IP resulted in a limit on the investment in the Clinton Nuclear Station. The coop minutes over the several-year period indicated the great concern over power costs. Board members changed, as did management personnel. Opinions of board members in how to proceed differed. In May 1986, a separate legal committee was set up to evaluate the advisability of proceeding in the derivative action. Concern was voiced by this committee relating to the possibility of loss of all power benefits from IP. In December 1986, a consulting firm was retained to advise WIPCO and Soyland as to advisability of seeking action against IP relating to the Clinton Nuclear Station construction mismanagement.

We are mindful of the various transactions between WIPCO and Soyland on one hand and IP on the other, but we conclude the trial court’s decision allowing the cooperatives to be realigned as plaintiffs and dismissing the initial plaintiffs was not against the manifest weight of the evidence.

The substantial record in this case further indicates the complexities which exist. It is obvious that consideration must be given to interests other than just recovering a portion of an unnecessary $400 million overrun or a billion dollar overrun. The long-term source of power must be considered with the present and future projected costs of electrical energy from both the Clinton nuclear source and fossil-fuel sources. Decisions concerning these matters are those of the board of directors.

Because of our decision, we find issues relating to preliminary injunctions to be moot.

Affirmed.

McCULLOUGH, P.J., and KNECHT, J., concur.


source: Caselaw Access Project

author: JUSTICE SPITZ

license: Public Domain

text:
    THE VILLAGE OF BUFFALO, Petitioner, v. THE ILLINOIS COMMERCE COMMISSION et al., Respondents (Illinois Power Company, Inter-venor).
    Fourth District
    No. 4—88—0529
    Opinion filed March 9, 1989.
    Modified on denial of rehearing April 18, 1989.

      William Herrmann and Nancy Gaitskill, both of Governor’s Office of Consumer Services, of Chicago, and Roger D. Colton, of Boston, Massachusetts, for petitioner.
    Neil F. Hartigan, Attorney General, of Springfield (Ana C. Cusack and Kathleen Nolan, Special Assistant Attorneys General, of Chicago, of counsel), for respondents.

      Owen E. MacBride, Edward J. Finn, and Heather F. Wood, all of Schiff, Hardin & Waite, of Chicago, for intervenor Illinois Power Company.
   JUSTICE SPITZ

delivered the opinion of the court:

In 1976, intervenor, Illinois Power Company (Illinois Power), Soy-land Power Cooperative, Inc., and Western Illinois Power Cooperative, Inc. (Cooperatives), entered into the Clinton Power Station ownership participation agreement (OPA). The OPA, together with certain subsequent amendments thereto, provided, inter alia, that Illinois Power and the Cooperatives would jointly own and be jointly responsible for the construction and operating costs of the Clinton Power Station (Clinton). The OPA originally provided for the Cooperatives to own approximately 14% of Clinton. As subsequently amended, it provided that the Cooperatives’ ownership share of Clinton would be 20%. Under the OPA, Illinois Power is responsible for the design, construction, licensing, testing, and operation of Clinton and pays all related direct costs to contractors and suppliers engaged on the project. The Cooperatives are billed periodically for their share of the cost and reimburse Illinois Power accordingly.

For many years, Illinois Power had provided bulk electric power to the Cooperatives at wholesale for resale to the Cooperative members. By 1983, Illinois Power and the Cooperatives began negotiating for Illinois Power to provide the Cooperatives with electric energy and power under a long-term agreement by which the prices to the Cooperatives would be similar to the cost the Cooperatives would incur if they owned their own generating facilities. Additionally, in 1983, the Cooperatives sought to limit their investment in the construction costs of Clinton. As a result of these negotiations, in March 1984, Illinois Power and the Cooperatives entered into a letter of intent which expressed the intent of the parties to reach certain definitive agreements relating to electrical service by Illinois Power to the Cooperatives and limiting the Cooperatives’ direct investment in Clinton to $450 million.

On October 3, 1984, the Governor’s Office of Consumer Services filed a verified petition on behalf of the Village of Buffalo (Village), requesting the Illinois Commerce Commission (Commission) to institute a proceeding to investigate and review the terms of the March 1984 letter of intent. On October 5, 1984, five agreements were executed by Illinois Power and the Cooperatives to finalize and implement the letter of intent. These agreements included: (1) a power coordination agreement; (2) amendment No. 6 to the OPA; (3) amendment No. 2 to the Clinton Station operating agreement; (4) a loan agreement; and (5) a mutual release and satisfaction agreement. This appeal concerns only amendment No. 6. Under this amendment, the Cooperatives’ investment in the direct cost of Clinton would be capped at $450 million and the parties’ ownership shares in Clinton would be adjusted in accordance with the ratios of their respective investments in the direct costs to the total direct costs.

On December 5, 1984, the Commission granted the Village’s petition and instituted a proceeding to investigate the aforementioned agreements. A number of prehearing conferences and hearings were held before a hearing examiner. One of the Village’s assertions throughout the proceedings was that amendment No. 6 violated section 7 — 102(c) of the Public Utilities Act (Act) (111. Rev. Stat. 1987, ch. lll2/s, par. 7 — 102(c)), which prohibits a public utility from encumbering the whole or any part of its business or property without prior approval or consent of the Commission. It was the Village’s position that amendment No. 6 was an unlawful encumbrance on the property or business of Illinois Power, which required prior Commission approval pursuant to section 7 — 102(c) of the Act. Illinois Power argued that the purpose of section 7 — 102(c) was to protect a public utility from disposing of property it needs to serve the public. Illinois Power asserted that amendment No. 6 did not provide for the disposal of utility property used to serve the public and did not require prior Commission approval.

In an order dated April 29, 1988, the Commission denied the Village’s requested relief and dismissed the petition. The order stated:

“The Commission *** does not accept the Village’s position that Amendment No. 6 constitutes an encumbrance upon the business or property of [Illinois Power] undertaken without Commission approval in violation of Section 7 — 102(c) of the Act. *** While [Illinois Power] takes on additional obligations under Amendment No. 6 *** the assumption of these obligations does not constitute an encumbrance on [Illinois Power’s] property.”

The Commission concluded that amendment No. 6 did not require Commission approval under the Act, and therefore, was not subject to the Commission’s jurisdiction. The Village’s subsequent application for reconsideration was denied on June 15, 1988. On July 18, 1988, the Village filed a petition for review in this court. (107 Ill. 2d R. 335; Ill. Rev. Stat. 1987, ch. lll2/3, par. 10 — 201(a).) On September 2, 1988, Illinois Power was granted leave to intervene.

The sole issue before the court is whether the Commission’s interpretation of section 7 — 102(c), that the obligation created by amendment No. 6 did not constitute an encumbrance, was correct.

Section 7 — 102 of the Act provides in pertinent part:

“Unless the consent and approval of the Commission is first obtained or unless such approval is waived by the Commission in accordance with the provisions of this Section:
* * *
(c) No public utility may assign, transfer, lease, mortgage, sell (by option or otherwise), or otherwise dispose of or encumber the whole or any part of its franchises, licenses, permits, plant, equipment, business or other property ***.” (111. Rev. Stat. 1987, ch. 1112/3, par. 7 — 102.)

Specifically, the instant case involves the propriety of the Commission’s interpretation of the word “encumber” in section 7 — 102(c) of the Act. (Ill. Rev. Stat. 1987, ch. 1112/3, par. 7 — 102(c).) A resolution of the issue presented requires an examination of the statute involved together with an application of the rules of statutory construction.

The primary rule of statutory interpretation and construction, to which all other canons and rules are subordinate, is to ascertain and effectuate the true intent and meaning of the legislature. (People ex rel. Hanrahan v. White (1972), 52 Ill. 2d 70, 73, 285 N.E.2d 129, 130.) In interpreting a statute, a court must give the legislative language its plain and ordinary meaning. (Illinois Power Co. v. Mahin (1978), 72 Ill. 2d 189, 381 N.E.2d 222.) If the language of the statute is plain, clear, and unambiguous, and if the legislative intent can be ascertained therefrom, it must prevail and will be given effect by the courts without resorting to other aids for construction. In re Marriage of Logston (1984), 103 Ill. 2d 266, 469 N.E.2d 167.

However, the proper interpretation of a statute and determination of legislative intent cannot always be based upon its language alone. Where a statute is ambiguous and the legislative intent cannot be ascertained from the plain and ordinary meaning of its language, then the court is guided by the rules of statutory construction. (Rigney v. Edgar (1985), 135 Ill. App. 3d 893, 482 N.E.2d 367; Trigg v. Sanders (1987), 162 Ill. App. 3d 719, 515 N.E.2d 1367.) Generally, the interpretation of a statute must be grounded on the nature and object of the statute as well as the consequences which would result from construing it one way or another. (Andrews v. Foxworthy (1978), 71 Ill. 2d 13, 373 N.E.2d 1332.) Legislative intent may be ascertained from the reason and necessity for the act, the evils sought to be remedied, and the objects and purposes sought to be obtained. (In re Marriage of Antonich (1986), 148 Ill. App. 3d 575, 499 N.E.2d 654, dismissed (1987), 113 Ill. 2d 574, 505 N.E.2d 350.) Moreover, statutory interpretations by administrative agencies express an informed source for ascertaining legislative intent. Adams v. Jewel Cos. (1976), 63 Ill. 2d 336, 348 N.E.2d 161.

It is generally recognized that courts will give substantial weight and deference to an interpretation of an ambiguous statute by the administrative body charged with the application and enforcement of the statute. (Radio Relay Corp. v. Illinois Commerce Comm’n (1977), 69 Ill. 2d 95, 370 N.E.2d 528; Scott v. Edgar (1987), 152 Ill. App. 3d 221, 505 N.E.2d 4.) A significant reason for this deference is that courts appreciate that agencies can make informed judgments upon the issues, based upon their experience and expertise. (Illinois Consolidated Telephone Co. v. Illinois Commerce Comm’n (1983), 95 Ill. 2d 142, 447 N.E.2d 295.) The supreme court has recognized that while they are not binding on a court, “interpretations by administrative agencies express an informed source for ascertaining the legislative intent” (Adams v. Jewel Cos. (1976), 63 Ill. 2d 336, 344-45, 348 N.E.2d 161, 165), and such interpretations should be and normally are persuasive (Mississippi River Fuel Corp. v. Illinois Commerce Comm’n (1953), 1 Ill. 2d 509, 116 N.E.2d 394; Milkowski v. Department of Labor (1980), 82 Ill. App. 3d 220, 402 N.E.2d 646). This deference to administrative constructions is often applied in the case of factual situations where constructions have been consistently adhered to for a long period of time. (Radio Relay Corp., 69 Ill. 2d 95, 370 N.E.2d 528.) Yet, while lack of consistency or duration may affect the weight a court will give to an administrative interpretation in a particular case, consistency and duration are not requisites for applying the rule. (See Illinois Consolidated Telephone Co. v. Illinois Commerce Comm’n (1983), 95 Ill. 2d 142, 152, 447 N.E.2d 295, 300 (and cases cited therein).) It is against this backdrop that the Village’s contentions will be analyzed.

In support of its position, the Village first argues that the Commission erroneously limited section 7 — 102 to a proscription only of encumbrances on the property of a utility. The Village asserts that the Commission considered only whether the encumbrance existed on the property of Illinois Power, but that the Act exceeds such limitations to proscribe encumbrances on the business of Illinois Power. The Village further asserts that the term “encumbrance” in section 7— 102(c) encompasses not only “liens” but also “obligations” such as the $230 million obligation in the instant case. The Village cites to Monti v. Tangora (1981), 99 Ill. App. 3d 575, 425 N.E.2d 597, for the proposition that the word “encumbrance” not only includes liens but is also any right in a third party which diminishes the value of a utility as a business. The Village maintains that the $230 million obligation here diminishes the value of the business of Illinois Power and creates a right in a third party to be paid in a full and timely fashion. The Village concludes that the $230 million obligation, while not creating a lien on Illinois Power property, is an encumbrance on the business of Illinois Power and, therefore, Illinois Power was required under section 7 — 102 of the Act to seek prior Commission approval.

These contentions are unpersuasive. First, the Village’s assertion that the Commission considered only whether an encumbrance existed on the property of Illinois Power mischaracterizes the Commission’s ruling. The Commission’s order actually stated:

“The Commission likewise does not accept the Village’s position that Amendment No. 6 constitutes an encumbrance upon the business or property of [Illinois Power] undertaken without Commission approval in violation of section 7 — 102(c) of the Act.” (Emphasis added.)

This indicates that the Commission did not limit the application of section 7 — 102(c) to only encumbrances on the property of Illinois Power, but considered and rejected whether amendment No. 6 was an encumbrance on Illinois Power’s business or property. Next, the Village has misstated the language from Monti by deleting the word “land.” This court in Monti defined an encumbrance as “any right to, or interest in, land which may subsist in a third party to the diminution of the value of the estate, but consistent with the passing of the fee by conveyance.” (Emphasis added.) (Monti v. Tangora (1981), 99 Ill. App. 3d 575, 580, 425 N.E.2d 597, 602.) The Monti court’s definition of “encumbrance” was based upon and is identical to the Supreme Court’s definition of “encumbrance” in Brown v. Lober (1979), 75 Ill. 2d 547, 389 N.E.2d 1188. After defining the term, the Monti court reasoned:

“Although the word ‘encumbrance’ is said to have no technical, legal meaning, the covenant is construed broadly to include not merely liens such as mortgages, judgment liens, taxes, or others to which the land may be subjected to sale for their payment, but also attachments, leases, inchoate dower rights, water rights, easements, restrictions on use, or any right in a third party which diminishes the value or limits the use of the land granted. 3 Am. Law of Prop. §12.128 (1952).” (Monti, 99 Ill. App. 3d at 580-81, 425 N.E.2d at 602.)

The foregoing definition and discussion support the Commission’s interpretation. The obligation in this case was not a claim against, right to, or interest in the land or property of Illinois Power, nor could it be characterized as one of the types of encumbrances listed by this court in Monti. Furthermore, the holding in Monti, that the existence of a building code violation which created a future obligation to pay money was not an encumbrance, does not support the Village’s position.

The Village’s second contention is that the Commission erred in not finding that the term “encumbrance” included “to load with debt” or “to burden with financial obligations.” The Village cites to Fuller v. Dillon (1964), 220 Ga. 36, 136 S.E.2d 733, and Underwood v. Fairbanks, Morse & Co. (1933), 205 Ind. 316, 185 N.E. 118, to argue that the term “encumbrance” means, among other things, to load with debt or burden with financial obligations. The Village also relies upon the fourth edition of Black’s Law Dictionary, asserting that it defines “incumbrance” as “[a] claim, lien, charge or liability.” (Black’s Law Dictionary 908 (4th ed. 1957).) The Village concludes that these definitions demonstrate that the obligation in the case at bar constitutes an encumbrance.

We are unpersuaded by these contentions. Initially, we point out that the Village’s reliance upon Fuller and Underwood is misplaced. The court in Fuller held that a court order requiring payment from a particular trust fund constituted an encumbrance on that fund. The Fuller court reasoned: “The word ‘encumbrance’ has been defined as follows: A burden on the title or a charge on property; to load with debts; a claim or lien upon an estate which may diminish its value, a lien created by a judgment.” (Fuller, 220 Ga. at 39, 136 S.E.2d at 737.) The court concluded that the lien created by the court order in that case was an encumbrance. In the instant case, no court order or lien is involved. Next, in Underwood, the court held that the issuance by an Indiana municipality of “pledge orders” whose payment was to be from identified revenue did not create an “encumbrance” under a statute similar to the one at issue in the instant case. In so holding, the court stated:

“[I]t is insisted that [defendant] has encumbered [its plant] by pledging net revenue of the present municipal plant to the payment of the pledge orders. We cannot so construe the word encumber. The word ‘encumber’ ordinarily means ‘to charge, or burden with financial obligations or mortgages.’ There is no question of a mortgage involved and the pledge orders, when issued, will not be a lien on the plant ***.” (Underwood, 205 Ind. at 334, 185 N.E. at 124.)

Thus, the court , determined that as there was no lien or mortgage, there was likewise no encumbrance. Hence, these cases do not support the Village’s position.

Furthermore, the most current edition of Black’s Law Dictionary defines an encumbrance, in full, as follows: “Any right to, or interest in, land which may subsist in another to diminution of its value, but consistent with the passing of the fee. [Citation.] A claim, lien, charge, or liability attached to and binding real property; e.g., a mortgage; judgment lien; mechanics’ lien; lease; security interest; easement or right of way; accrued and unpaid taxes.” (Black’s Law Dictionary 473 (5th ed. 1979).) This definition relates to real property or real estate and that there is nothing in the definition to indicate that the intangible aspect of a company, such as its “business,” “value” or “goodwill,” could be encumbered. The Village quoted only a brief portion of the definition of “encumbrance” in the fourth edition of Black’s Law Dictionary. A reading of the entire definition in the current (fifth) edition fails to support the Village’s argument.

In sum, the various definitions of “encumbrance” by this court in Monti, the supreme court in Brown, and that from Black’s Law Dictionary demonstrate that an encumbrance is an interest in or right to property, not a contingent, unsecured obligation to pay money. In particular, the Monti court characterized encumbrances as liens creating security interests in land, including both those for which land may be subjected to sale for their payment as well as other restrictions which limit the use of the land granted, but do not subject that land to immediate sale for their payment. Each of those encumbrances is an interest in property adverse to the fee owner of the property. The Monti definition of encumbrance does not include a mere unsecured, contingent obligation to pay money, such as was created here by amendment No. 6. Furthermore, a reading of section 7 — 102(c) reveals that each of the actions there listed, requiring prior Commission approval, involves the creation of an interest or right in the property of the utility in a third person. Amendment No. 6 created no interest in Illinois Power in favor of a third party. In view of the foregoing and because the Commission’s interpretation is to be given substantial weight and deference, we will not disturb the Commission’s decision.

Accordingly, the order of the Illinois Commerce Commission is affirmed.

Affirmed.

McCULLOUGH, P.J., and KNECHT, J., concur.


author: PRESIDING JUSTICE McCULLOUGH

text:
    KATIE B. DEISS, Plaintiff-Appellant, v. MERLE L. DEISS, SR., Indiv. and as Trustee, et al., Defendants-Appellees.
    Fourth District
    No. 4—88—0599
    Opinion filed March 9, 1989.

      Charles L. McNeil, of McNeil & McNeil, of Mason City, for appellant.
    William H. Knuppel, of Boggs & Knuppel, P.C., of Havana, for appel-lees.
    Wayne P. Coffelt, of Fleming, Messman & O’Connor, of Bloomington, guardian ad litem.

   PRESIDING JUSTICE McCULLOUGH

delivered the opinion of the court:

Plaintiff Katie B. Deiss appeals the circuit court’s order denying her petition for declaratory judgment. Plaintiff contends the inter vi-vos trust of which she is a codonor is void because it violates the rule against perpetuities and the circuit court’s finding to the contrary is erroneous. We affirm.

Plaintiff Katie B. Deiss and her husband, Rudolph V. Deiss, established an irrevocable trust on January 29, 1969, with their son, Orville Deiss, as trustee. The corpus of this trust consists of a house in Mason City and farmland located in McLean, Logan, and Mason Counties in Illinois and farmland in Jewel County in Kansas. The trust provides that the trustee shall manage the real estate and pay the mortgages and other encumbrances on the property out of the income received from farming the property. Any net income is paid to Rudolph and Katie. The trustee is given the power to “lease and release” the real estate, including leasing the tract which the trustee then occupied to himself as well as leasing the remaining tracts to the other sons of the donors, Rudolph V. Deiss, Jr., Merle Deiss, and LeRoy Deiss. The trustee is also given the power to mortgage and remortgage the trust property.

At the first death of Rudolph and Katie, all of the income of the trust is paid to the survivor of them. Rudolph Deiss died on November 15, 1973. The trust continues until Katie’s death and all of the mortgages on the trust property are paid in full. After both conditions are met, the corpus and accumulated income of the trust is divided as follows:

Orville Deiss farmland in Mason County

Rudolph V. Deiss, Jr. farmland in Logan County

farmland in McLean County Merle Deiss

house in Mason City, LeRoy Deiss

Illinois, and farmland in Kansas.

Each child of the donor receives a life estate in the property and the remainder passes to the children of each named child (grandchildren of the donors), or to his children (great-grandchildren of the donors), should a grandchild predecease his parent.

On July 1, 1987, the plaintiff filed a complaint for declaratory judgment, praying that the trust be declared void because it violates the rule against perpetuities and that the court declare that the defendants, the sons of the plaintiff as well as the present living grandchildren and great-grandchildren of the plaintiff, have no interest in the trust property. A guardian ad litem was appointed to represent the minor beneficiaries.

In the instant case, the remainder interest is described as follows:

“[Ujpon the death of the survivor [of the donors] this trust shall continue until mortgages on the real estate *** has [s-ic] been paid in full and both [djonors are deceased. At the time that both of these conditions are met, the corpus and accumulated income of the trust shall be divided [with specific parcels going to each of the four sons for life] *** with remainder [in such parcels] to his children, the children of any predeceased child to take the share their parent would have taken if living. *** Should any of our children die leaving no child or children, or descendants of a child or children surviving, their share shall go, in equal shares, to their brothers or the children thereof per stirpes.”

After hearing argument from the parties, the court found that the trust did not violate the rule against perpetuities and denied plaintiff’s petition.

Plaintiff argued in the trial court that the remainder interests are contingent because two conditions must be met before the interests vest: the mortgages must be paid in full and the children must survive the death of the life tenant of the property. Plaintiff argued that the mortgage condition delayed vesting, and because it is possible that any of the children of the plaintiff, all lives in being at the creation of the interest, could die before the plaintiff and before the mortgages are paid, vesting may not occur within 21 years after their death. This violates the rule against perpetuities and, therefore, the trust is void.

The defendants, Merle, Sr.; Stacia; Merle, Jr.; Lynette; Steve; LeRoy; and Susan, argued in the trial court that the remainder interests were vested at the time the trust was created. These defendants urged that the payment of the mortgages affected the quantum or amount of the estate and not the time of its vesting. Because the remainder interests were vested, the defendants argued that the rule against perpetuities does not apply and therefore the trust is valid.

Plaintiff now urges that the trial court erred in concluding that the remainder interests are vested and that the payment of mortgages does not delay vesting but refers to the quantum of the estate conveyed. Plaintiff urges that Johnson v. Preston (1907), 226 Ill. 447, 80 N.E. 1001, and Trabue v. Gillham (1951), 408 Ill. 508, 97 N.E.2d 341, govern this case. Plaintiff also represents that the so-called “quantum theory” does not apply to this case.

The guardian ad litem urges that the payment of mortgages by the trustee affects the quantum of the estate received by the beneficiaries and does not prevent the vesting of the interest at the time of the creation of the trust. Thus, the remainder interests are vested and the rule against perpetuities does not apply. Among other cases, the guardian ad litem directs our attention to Ducker v. Burnham (1893), 146 Ill. 9, 34 N.E. 558.

Similarly, several of the defendants on appeal urge that the interests are vested remainders because there is no uncertainty as to who takes the property after the retirement of the mortgages and the deaths of the plaintiff, as surviving donor, and all the named life tenants.

The rule against perpetuities concerns the remoteness in the vesting of interest. It provides:

“No interest is good unless it must vest, if at all, not later than twenty-one years after some life in being at the creation of the interest.” (J. Gray, The Rule Against Perpetuities §201, at 191 (4th ed. 1942).)

The rule against perpetuities does not apply to vested interests and the postponement of enjoyment or possession does not bring the interest within the rule. (Chicago Title & Trust Co. v. Shellaberger (1948), 399 Ill. 320, 334, 77 N.E.2d 675, 683.) Since the rule against perpetuities does not apply to vested interests, it must be determined whether the language in the document before us created a vested or contingent remainder.

Initially, we note as did the supreme court in Warren-Boynton State Bank v. Wallbaum (1988), 123 Ill. 2d 429, 435-36, 528 N.E.2d 640, 643, that the law of future interests is confusing at best. Moreover, while there is an abundance of reported cases, no case is ever factually identical to the issue then before the court and, therefore, each case must be carefully examined. We have thoroughly reviewed those cases relied upon by the parties and conclude that the language in the instrument in this case describes a vested remainder.

Plaintiff urges that the payment of the mortgages before the division of the trust property is a condition precedent which makes the remainder interest contingent and subject to the rule against perpetuities. Because the mortgages may never be paid in full, the remainder interests violate the rule and are void. As authority, plaintiff cites Johnson v. Preston (1907), 226 Ill. 447, 80 N.E. 1001.

In Johnson, the testatrix devised certain real estate in the residue of her estate to her executor “to have and to hold for a space of 25 years from and after the date of the probate of this will.” Thereafter, the property so held was devised to several of the testatrix’ grandsons in fee simple. During the 25 years, each named beneficiary was to share in the use, benefit and enjoyment of the property, and each was allowed to live and work on the property. The court held that the executor’s interest was subject to a condition precedent — probate of the will — and since the condition could not be said to conclusively happen within 21 years, the devise to the executor was void.

We find Johnson distinguishable from the instant case. Significantly, the estate of the executor in Johnson was subject to a condition precedent, thus making it a contingent interest. The executor himself in Johnson had to fulfill a condition — probating the will — before his interest arose. In the instant case, there is no condition that the plaintiff’s four sons must fulfill or plaintiff’s grandchildren or great grandchildren must personally fulfill before their interest arises. It is the trustee in the case before us who is directed and therefore has a duty to pay the mortgages on the trust corpus before dividing the corpus among the plaintiff’s four sons after her death. We do not find Johnson persuasive authority for this case.

Plaintiff also urges Smith v. Renne (1943), 382 Ill. 26, 46 N.E .2d 587, is persuasive authority for this case. In Smith, the testatrix devised the remainder of her estate to her trustees “to be held for a period of five years or until such time as in their opinion it could be sold to the best advantage.” The heirs at law in Smith claimed the provision violated the rule against perpetuities and, therefore, the property passed to them by intestacy. The court held where there is a general direction to trustees to sell, without fixing a time of sale, it is their duty to sell the property within a reasonable time and they can be compelled to do so by a court of equity. Since the courts hold a reasonable time is less than 21 years, the Smith court found no violation of the rule against perpetuities.

The court in Smith cited to the rule set out in Johnson that “[w]hen lives form no part of the postponed period the limit of time within which an estate must vest is twenty-one years.” (Smith, 382 Ill. at 29, 46 N.E.2d at 589.) The Smith court noted that under the circumstances of that case, the rule did not apply, in large part because the ultimate takers of the property involved were charities. We find Smith factually distinct and the rule referred to inapplicable to the instant case because here there is no postponement of vesting, but only a postponement of enjoyment.

Plaintiff next argues that the language used to describe the remainders in this case also makes them contingent and, therefore, subject to the rule against perpetuities. Specifically, plaintiff contends that the remainderman cannot be ascertained until the death of the life tenants — plaintiff’s four sons. Plaintiff cites Trabue v. Gillham (1951), 408 Ill. 508, 97 N.E.2d 341, in support of her argument. In Trabue, the remainder interest described as follows was found to be a contingent remainder:

“ ‘At the death of the said ***, I devise the real estate herein given him for life, to his children and the descendants of any deceased child of his, in fee ***, the descendants *** to take the portion such deceased child would be entitled to if living.’ ” (Trabue, 408 Ill. 2d at 508, 97 N.E.2d at 341.)

The issue in Trabue concerned the meaning of the phrase “die leaving no issue,” found in a later clause of the will. The court found that “die leaving no issue” evidenced the testator’s intent that the remain-derman be ascertained at the death of the life tenant. Thus, a condition precedent of surviving the life tenant was attached to the remainder interest. The court further supported its conclusion by looking specifically to the word “and” used by the testator in the above-quoted clause. The court stated:

“The gift following the life estate is to the children and the descendants of any deceased child. The interest of the descendants is in terms given the same status as that of the children, and is to arise at the same moment the children’s interest comes into existence.” (Emphasis in original.) Trabue, 408 Ill. at 512, 97 N.E.2d at 343.

The language used in the instant case is distinct from that used in Trabue. Here, the donors stated that after the life estate to each son, “the remainder to his children, the children of any deceased child to take the share their parent would have taken if living.” In a later clause, the trust provides:

“Should any of our children die leaving no child or children, or descendants of a child or children surviving, their share shall go, in equal shares, to their brothers, or the children thereof per stirpes.”

Taken together, both clauses do not treat grandchildren and great-grandchildren equally. The great-grandchildren’s interests arise when a grandchild dies, which death could occur before the death of a life tenant-child of the donors. In the present case, the class of the remainder beneficiaries is certain and ascertainable now, unlike in Tra-bue.

Similar language to that used in the instant case has been found to be a vested interest, subject to divestment during the life of a life tenant where a remainderman predeceases a life tenant. (Warrington v. Chester (1920), 294 Ill. 524, 526, 128 N.E. 549, 550 (“ ‘[u]pon the re-marriage of my said wife *** I give *** to my children *** to be equally divided among them *** the issue of any child who may have then deceased taking the share to which such deceased child would be entitled to if living’ ”); Murphy v. Westhoff (1944), 386 Ill. 136, 139, 53 N.E.2d 931, 932 (“ ‘all *** real estate *** to my said wife for and during her life, with remainder to my children [named] in fee *** in the event of the death of one of them *** then to the survivors or survivor of them’ ”); Fleshner v. Fleshner (1941), 378 Ill. 536, 537, 39 N.E.2d 9, 10 (“ ‘[A]ll of my property *** to my beloved wife *** for *** life. After the death of my wife *** to my beloved children [named] or the surviving heirs of their body, the residue of my estate’ ”).) The language in the instant case does not require the survival of remainder beneficiary until the death of the donors’ children as a condition precedent but contemplates that a child of any. one of the four sons of the donors may die before his parent. We find the language used in the instant case describes a vested remainder.

The trial court held that the sons of the plaintiff will take an equitable life estate at the death of the plaintiff and their descendants will take equitable remainders with the trustee retaining legal title to accomplish the payment of the mortgages. This conclusion is supported by the decision in Scofield v. Olcott (1887), 120 Ill. 362, 11 N.E. 351, where the court held:

“[I]f such payment or distribution appear to be postponed for the convenience of the fund or property, as where the future gift is postponed *** a direction to pay upon the decease of the legatee for life, or after payment of the debts, the gift in remainder vests at once, and will not be deferred until the period in question. But where the payment is deferred for reasons personal to the legatee, the gift will not vest till the appointed time. [Citations.]” Scofield, 120 Ill. at 373, 11 N.E. at 353.

The Scofield court also held:

“A devise to a person after the payment of debts and legacies is not contingent, until such debts and legacies are paid; such a devise confers an immediately vested interest; the words of apparent postponement are considered only as creating a charge. [Citations.]” Scofield, 120 Ill. at 376, 11 N.E. at 355.

The holding of Scofield was later reaffirmed in Ducker v. Burnham (1893), 146 Ill. 9, 34 N.E. 558, Hawkins v. Bohling (1897), 168 Ill. 214, 48 N.E. 94, and Mettler v. Warner (1910), 243 Ill. 600, 90 N.E .2d 1099. The Ducker court also noted that “[t]he law presumes, that words of postponement relate to the enjoyment of the remainder rather than to the vesting thereof, and the intent to postpone the vesting of the estate must be clear and manifest.” Ducker, 146 Ill. at 22-23, 34 N.E. at 561.

We find that the instrument before us does not clearly and manifestly evidence an intent to postpone the vesting of the estates until the payment of the mortgages. What is postponed is full enjoyment of the property.

Lastly, plaintiff contends that the quantum theory referred to by the trial court has little meaning in the context of this case. Specifically, plaintiff urges that the quantum principle means nothing more than size and the size of the trust corpus, 940 acres of farmland, is not affected by the payment of the mortgages because the income from the farmland is used to pay these mortgages. Further, when and if the mortgages are paid in full, the size of the corpus will always be the same — 940 acres. Thus, according to the plaintiff, the quantum argument means nothing in this case. We cannot agree.

Plaintiff’s quantum argument ignores the fact that the trust provides that after both conditions are met, the corpus and accumulated income are divided among the donors’ children for life. While the number of acres of farmland remain the same, the value of the devise is increased due to the retirement of the mortgages thereon. Also, the devise of the trust property carries with it the income which the property produces and that income decreases over time because it

is used to pay the mortgages. Plaintiff focuses on the number of acres involved and ignores the value of the devise, a fact noted by the court in Mettler when ascertaining a testator’s intent.

For the foregoing reasons, we agree with the trial court’s findings and order that the trust is not violative of the rule against perpetu-ities. Therefore, the order of the trial court denying plaintiff’s petition for declaratory judgment is affirmed.

Affirmed.

SPITZ and GREEN, JJ., concur.


author: JUSTICE LUND

text:
      In re T.D. et al., Minors (The People of the State of Illinois, Petitioner-Ap-pellee, v. Junior Davis, Respondent-Appellant).
    Fourth District
    No. 4—88—0595
    Opinion filed March 17, 1989.

      Jon C. Baxter, of Decatur, for appellant.
    Larry R. Fichter, State’s Attorney, of Decatur, and Robert W. Mueller, of Springfield (Kenneth R. Boyle and Robert J. Biderman, both of State’s Attorneys Appellate Prosecutor’s Office, of counsel), for the People.
    David L. Massey, of Decatur, guardian ad litem.

   JUSTICE LUND

delivered the opinion of the court:

On July 13, 1988, the circuit court of Macon County entered an order finding T.D. and S.D. to be neglected and abused minors. They were subsequently placed in the custody and guardianship of the Department of Children and Family Services (DCFS). DCFS was authorized to place the minors in the temporary custody of their mother. Respondent Junior Lee Davis, their father, now appeals. We affirm.

On February 17, 1988, a juvenile petition was filed alleging that T.D., a female born in June 1976, and S.D., a female bom in April 1974, were abused and neglected as set forth in the Juvenile Court Act of 1987 (111. Rev. Stat. 1987, ch. 37, par. 801 — 1 et seq.). The petition specifically alleged in count I that the minors’ environment was injurious to their welfare. Counts II and III alleged the minors were abused because respondent committed various sex offenses on S.D. Counts IV and V alleged the minors were abused because their mother was aware of this conduct and did not stop it.

At the same time, respondent was arrested and charged with the criminal offenses alleged in counts II and III. He was subsequently acquitted of these criminal allegations by a jury.

The juvenile hearing commenced with the testimony of Janelle Beedle, a special education instructor with the Decatur school system. She testified that S.D., one of her students, suffers from a learning disability. On February 15, 1988, a handout concerning sexual abuse was passed out. S.D. was particularly interested and asked a number of questions. Later, when Beedle was alone with S.D., she asked S.D. if there was a problem. S.D. indicated she was the person being abused. Beedle and S.D. then met with the guidance officer. S.D. stated she wished to speak with her mother one more time to see if she could get it stopped.

The next day, S.D. told Beedle her mother told her to tell. They then met with the guidance officer and representatives of the police and DCFS. S.D. told them she was afraid to take baths because she was being touched by respondent. She said her mother was aware but was beaten up when she tried to stop it.

S.D., 14 years of age, testified outside the presence of her parents. She stated respondent gave her the “bad touch” while she was in bed. Respondent had just taken S.D.’s mother to work. He then instructed her brother, N.D., to go do the laundry. Respondent approached S.D.’s bed, pulled her pants down, and placed his finger in her vagina. T.D. and her brother A.D. were asleep in the bed at the time.

S.D. also stated that at other times, respondent has entered the bathroom when she was taking a bath. He made her bend over, and then he would spread her vagina apart and look in it. At this time, her mother was at work, and the other children were outside. She testified that in the past she had told her mother about other bad touchings, and her mother said she would talk to respondent but could not do much about it.

On cross-examination, she acknowledged respondent has been strict with her. He did not want her running the streets and wanted her to complete school. She also denied seeing a Larry Whitelow. Her parents were divorced, but respondent had come back to live with them. She admitted wanting respondent out of the house. She also indicated she felt respondent was strict with her but not with the others.

Pam Waterman is a child protective service investigator for DCFS. On February 16, she was called to interview S.D. She related S.D.’s statement to her, which corresponded with S.D.’s testimony, except that S.D. told her that respondent would occasionally put his finger in her vagina when he had her bent over in the bathroom. She also interviewed T.D. T.D. told Waterman that one time she saw respondent pull down S.D.’s pants and put his finger in her vagina. She also said respondent would come in when she was taking a bath, have her bend over, and check her out.

Larry Moorehead, a Decatur police officer, interviewed Courtney Davis, the children’s mother. She told him that S.D. first told her of a problem with respondent fondling her about five years ago. She also stated that on February 15, S.D. told her she was going to tell somebody about respondent. Courtney told S.D. this would create family problems. Further, N.D. and T.D. had also talked with her about respondent bothering S.D. She told S.D. she could not control respondent in this regard.

N.D. testified he did the laundry every weekend. From the laundry room, he had an unobstructed view of S.D.’s bedroom. He never saw respondent go into the bedroom for a long time. He also saw Larry Whitelow over at the house after his parents went to work. One time, he saw WTiitelow kissing S.D. while having his hand down her pants.

On cross-examination, N.D. admitted being close to his father. He also acknowledged telling the police that he saw respondent go into the bathroom when the girls were taking a bath and hearing them yell at him to get out. He admitted that on February 16, he told the police that he saw respondent go into S.D.’s bedroom and stay there for five minutes. He explained he was mistaken in this latter statement.

Respondent is 40 years old. He and Courtney were divorced in 1986. He testified he moved back in April 1987 to help Courtney raise S.D. He denies physically disciplining the children. Since the divorce, he has left that up to Courtney. He is concerned about S.D. because she likes to run the streets and associate with members of gangs. S.D. does not like discipline and has a history of telling stories. He denies ever sexually touching S.D.

Courtney Davis stated the first complaint S.D. made to her was on February 15. She does not remember any such other complaints. On cross-examination, she acknowledged making her earlier statement to the police. She said she disregarded those earlier complaints because she had seen no indication of that type of problem.

The court found the minors were abused and neglected. It subsequently placed them with DCFS with the authorization they be placed with their mother since respondent had moved out of the house. It also entered a protective order prohibiting respondent from visitation with the minors unless representatives of DCFS were present and the minors consented to the visitation.

Respondent appeals, alleging: (1) the juvenile petition should have been dismissed pursuant to the doctrine of collateral estoppel; and (2) the court’s decision was against the manifest weight of the evidence. We disagree and affirm.

Prior to the hearing, respondent had filed a motion to dismiss the juvenile petition, which was denied. The motion was based on the fact that the sexual acts, which he allegedly committed on S.D. and which were contained in the juvenile petition, were the exact same acts for which he was criminally prosecuted and acquitted. Respondent maintains that since the jury must necessarily have found he did not commit those acts in the criminal case, then the court, in the juvenile case, is bound by that determination pursuant to the doctrine of collateral estoppel, and the juvenile case should have been dismissed.

Our supreme court has addressed the topic of collateral estoppel numerous times and continues to refer to the definition it gave in Hoffman v. Hoffman (1928), 330 March 17, 1989. 413, 417, 161 N.E. 723, 725-26, where it stated:

“Where some controlling fact or question material to the determination of both causes has been adjudicated in the former suit by a court of competent jurisdiction and the same fact or question is again at issue between the same parties, its adjudication in the first cause will, if properly presented, be conclusive of the same question in the later suit, irrespective of the question whether the cause of action is the same in both suits or not. *** [I]t must appear by the record of the prior suit that the particular controversy sought to be construed was necessarily tried and determined, — that is, if the record of the former trial shows that the verdict could not have been rendered without deciding the particular matter it will be considered as having settled that matter as to all further actions between the parties * * * >>

The doctrine applies to criminal, as well as civil, proceedings. People v. Grayson (1974), 58 Ill. 2d 260, 265, 319 N.E.2d 43, 46.

In the criminal prosecution, the jury determined that the State did not prove beyond a reasonable doubt that respondent had committed the charged offenses. However, in the proceeding under the Juvenile Court Act, the State need only prove that respondent committed these offenses by the lesser, civil burden of a preponderance of the evidence. (In re Prough (1978), 61 Ill. App. 3d 227, 232, 376 N.E.2d 1078, 1082.) It is this difference in the required burden of proof which makes it apparent the doctrine is inapplicable to the present case. It is quite conceivable that a fact finder could be convinced by a preponderance of the evidence that a fact occurred while, at the same time, not being convinced beyond a reasonable doubt that it occurred. Thus, a finding of not guilty in a criminal case does not preclude a civil proceeding based on the same allegations. Everly v. Chicago Police Board (1983), 119 Ill. App. 3d 631, 640, 456 N.E.2d 992, 998; Shallow v. Police Board (1981), 95 Ill. App. 3d 901, 908, 420 N.E.2d 618, 624.

Respondent next argues the court’s findings of abuse were incorrect. He asserts S.D.’s testimony was unbelievable and should have been disregarded.

In neglect and abuse proceedings, the State has the burden of proving its case by a preponderance of the evidence. (Prough, 61 Ill. App. 3d at 232, 376 N.E.2d at 1082.) The essential policy consideration, and the standard to be applied, is the best interests and welfare of the child. (In re Stilley (1977), 66 Ill. 2d 515, 520-21, 363 N.E.2d 820, 822.) It is well settled that a court’s finding of neglect or abuse is not to be reversed unless it is against the manifest weight of the evidence. (Stilley, 66 Ill. 2d at 520, 363 N.E.2d at 822; In re Simmons (1984), 127 Ill. App. 3d 943, 948, 469 N.E.2d 215, 219.) As our supreme court explained:

“The delicacy and difficulty of child-custody and child-neglect cases justify the burden of responsibility placed on the trial court and the ensuing deference which must be given to the trial court. The trial court has the opportunity to observe the demeanor and conduct of parties and witnesses. ‘We recognize *** that in viewing a judgment of a trial court respectful weight must be given the consideration that the trial court had the opportunity of observing the witnesses.’ (People ex rel. Edwards v. Livingston (1969), 42 Ill. 2d 201, 210.) ‘This is a vital factor in evaluating the correctness of [the trial judge’s] determination. We should not disturb his findings unless they are palpably against the weight of the evidence.’ Giacopelli v. Florence Crittenton Home (1959), 16 Ill. 2d 556, 566-67.” Stilley, 66 Ill. 2d at 520, 363 N.E.2d at 822.

In the case at bar, the court believed the testimony of S.D. and disregarded that of respondent. Others may have weighed the evidence differently and reached a different conclusion. However, that is not the question. Our sole concern is whether there is sufficient evidence to support the trial court’s findings. We hold there is.

Affirmed.

SPITZ and GREEN, JJ., concur.


author: JUSTICE GREEN

text:
    RICHARD R. COEN, JR., Special Adm’r of Kyle R. Coen, Deceased, et al., Plaintiffs, v. ILLINOIS CENTRAL GULF RAILROAD COMPANY et al., Defendants and Counterplaintiffs and Third-Party Plaintiffs-Appellants (Monica Forbes, f/k/a Monica Coen, Counterdefendant; Central Illinois Public Service Company et al., Third-Party Defendants-Appellees).
    Fourth District
    No. 4—88—0585
    Opinion filed March 17, 1989.

      Phebus, Tummelson, Bryan & Knox, of Urbana (Joseph W. Phebus and Allen E. Verchota, of counsel), for appellants.
    Frederic L. Kenney, of Armstrong, Winters, Prince, Featherstun & Johnson, of Decatur, for appellee Coles-Moultrie Electric Cooperative.
    Sorling, Northrop, Hanna, Cullen & Cochran, Ltd., of Springfield (R. Gerald Barris and Della S. Nelson, of counsel), for appellee Central Illinois Public Service Company.
   JUSTICE GREEN

delivered the opinion of the court:

On May 30, 1985, plaintiffs Richard R. Coen, Jr., as special administrator of the estate of Kyle R. Coen, deceased, and Monica Coen brought suit against defendants Illinois Central Gulf Railroad Company (ICG) and R.D. Fletcher in the circuit court of Champaign County. Subsequently, defendants filed an amended third-party complaint against third-party defendants Central Illinois Public Service Company (CIPS) and Coles-Moultrie Electric Cooperative (Coop). On June 3, 1988, the court allowed CIPS’ motion to dismiss defendants’ third-party complaint against CIPS for failure to state a cause of action. The order provided that the dismissal was in bar of action as to the defendants’ claim for contribution. On July 28, 1988, the court made a similar ruling, dismissing defendants’ third-party complaint against Coop for failure to state a cause of action and declaring the dismissal to be in bar of action as to defendants’ claim for contribution. On August 8, 1988, defendants filed a notice of appeal from the foregoing orders.

On August 23, 1988, Coop filed a document with the court requesting the court to clarify and amend its order of July 28, 1988, noting that the order contained no finding pursuant to Supreme Court Rule 304(a) (107 111. 2d R. 304(a)) which would make that order appealable. The order was final only as to the contribution claim of defendants against Coop but not final as to all other claims and parties in the case. On September 13, 1988, the circuit court entered a written order dismissing in bar of action count III of defendants’ third-party complaint, which was directed solely against Coop. The order also made a finding pursuant to Supreme Court Rule 304(a). Defendants then filed a supplemental notice of appeal purporting to cover all of the circuit court orders dismissing defendants’ claims against both Coop and CIPS. As the Rule 304(a) finding of the September 13, 1988, order made the dismissal of defendants’ claim against Coop appealable, that appeal is before us. We affirm that order.

On October 12, 1988, CIPS moved in this court to dismiss defendants’ purported appeal of the order dismissing their claims for contribution against CIPS. This court recognized that the order of June 3, 1988, lacked appealability absent a Rule 304(a) finding but, mistakenly, concluded that the September 13, 1988, finding pursuant to Rule 304(a) covered the June 3, 1988, order. Accordingly, this court ruled that the supplemental notice of appeal perfected the appeal against CIPS and denied the motion to dismiss. Defendants then sought a Rule 304(a) finding from the circuit court as to the June 3, 1988, order, but the circuit court concluded it had no jurisdiction because of our denial of the motion to dismiss the appeal and denied the request. Subsequently, we recognized our error and dismissed the appeal as to the order concerning CIPS. Apparently, no Rule 304(a) finding could be obtained and a new notice of appeal filed before scheduled oral arguments. Thus, although the case has been fully briefed on the merits by all parties, we are limited here to the appeal of the order of dismissal as to Coop.

Plaintiffs’ complaint alleged Kyle R. Coen was killed, and Monica Coen injured, when an ICG train, running on its right-of-way and operated by Fletcher, collided at a highway crossing with an automobile driven by Monica Coen and in which Kyle R. Coen was riding as a passenger. Both defendants were charged with negligence. One of the grounds of negligence charged was that ICG had obscured the vision of Monica Coen at the crossing by failure to keep the right-of-way cleaned of bushes, shrubbery, trees, and weeds in violation of section 73 of the Illinois Public Utilities Act (111. Rev. Stat. 1983, ch. lll2/s, par. 77).

As pertinent here, count III of defendants’ amended third-party complaint directed against Coop alleges that (1) CIPS had erected “for [Coop]” an electric transmission pole near ICG’s right-of-way with a guy wire and anchor which extended upon ICG’s right-of-way; (2) plaintiffs had alleged that a bush on that right-of-way had obstructed plaintiff Monica Coen’s view of the ICG train as it approached the crossing at the time of the collision and was a proximate cause of the collision; (3) “the presence of the guy wire and the anchor on the railroad’s right-of-way was a cause of said bush" (emphasis added); and (4) “having caused to be placed said guy wire anchor” on the right-of-way, Coop owed a duty to ICG and Fletcher “to exercise ordinary care to maintain the guy wire and anchor, which maintenance would include the cutting of any bush or foliage resulting from the presence of the anchor.” Defendants then requested contribution from Coop in the event of defendants’ liability to plaintiffs.

By the terms of section 2(a) of “An Act in relation to contribution among joint tortfeasors,” a right to contribution arises when two or more persons are liable in tort to the same person for the same injury. (111. Rev. Stat. 1985, ch. 70, par. 302(a).) Thus, we are primarily concerned here not with the question of duty owed by Coop to defendants, but its duty to plaintiffs.

Both in its motion to dismiss and on appeal, Coop has contended it had no duty to cut any bush which was in the “presence” of the guy wire and anchor. It cites the decision of this court in Esworthy v. Norfolk & Western Ry. Co. (1988), 166 Ill. App. 3d 876, 520 N.E.2d 1044. That case concerned the duty of an owner or occupier of land near a railroad crossing in regard to obstructions to the view down the tracks which exist on the owner or occupier’s land. This case concerns duty in regard to obstructions on the right-of-way of a railroad.

In contending Coop had a duty to remove the bush, defendants rely on Peoria & Eastern Ry. Co. v. Kenworthy (1972), 7 Ill. App. 3d 350, 287 N.E.2d 543 (person parking vehicle on right-of-way near crossing causing obstruction may be liable to indemnify railroad company found liable for crossing collision), Chicago & Illinois Midland Ry. Co. v. Evans Construction Co. (1965), 32 Ill. 2d 600, 208 N.E.2d 573 (if contractor had left loose tie on right-of-way, contractor would have been required to indemnify railroad company for latter’s liability to its employee injured by tie), and Gulf, Mobile & Ohio R.R. Co. v. Arthur Dixon Transfer Co. (1951), 343 Ill. App. 148, 98 N.E.2d 783 (party leaving truck too close to track required to indemnify railroad company for latter’s liability to employee crushed between track and train). Those cases all differ from the instant case in that, there, the duty placed on parties to indemnify arose from acts of those parties in placing on the right-of-way the objects obstructing the view or coming into contact with the person injured.

Here, the alleged duty on Coop to cut the bush is stated to arise because Coop had the guy wire and anchor, which extended into the right-of-way, erected, and the “presence” of the wire and anchor was “a cause of said bush.” A causal relationship between the existence of a guy wire and an anchor and the presence of a bush is not readily apparent. Defendants explain this relationship on the unalleged basis that the existence of the wire and anchor made the task of railroad employees in cutting the bush more difficult. An allegation that the wire and anchor made cutting more difficult would have created a more “plain and concise statement” of the cause of action which defendants sought to set forth. Ill. Rev. Stat. 1985, ch. 110, par. 2— 603(a). Citing the seminal case of Skinner v. Reed-Prentice Division Package Machinery Co. (1977), 70 Ill. 2d 1, 374 N.E.2d 437, and subsequent cases such as J.I. Case Co. v. McCartin-McAuliffe Plumbing & Heating, Inc. (1987), 118 Ill. 2d 447, 516 N.E.2d 260, and Doyle v. Rhodes (1984), 101 Ill. 2d 1, 461 N.E.2d 382, defendants maintain that contribution should be liberally allowed. However, those cases merely expand upon the circumstances whereby one tortfeasor can obtain contribution from another. Those cases do not expand upon the concepts which create tort liability, and they do not enlarge the scope of duty which gives rise to tort liability.

Citing the well-known cases of Cunis v. Brennan (1974), 56 Ill. 2d 372, 308 N.E.2d 617, and Mieher v. Brown (1973), 54 Ill. 2d 539, 301 N.E.2d 307, defendants point out that reasonable foreseeability of injury is a very important aspect of duty, and duty is an issue which must be determined as a matter of law by the court. We agree but note that in determining duty, in addition to considering foreseeability, the court must also consider (1) the likelihood of injury resulting from the conduct involved; (2) the magnitude of the burden of guarding against it; and (3) the consequences of placing the burden upon the party in question. (Kirk v. Michael Reese Hospital & Medical Center (1987), 117 Ill. 2d 507, 526, 513 N.E.2d 387, 396, cert. denied (1988), 485 U.S. 905, 99 L. Ed. 2d 236, 108 S. Ct. 1077.) However, we deem the question of duty here to turn mostly upon the factor of foreseeability. We must decide whether a crossing collision should reasonably have been seen by an entity alleged to have been in the position of Coop as a result of having a guy wire and anchor placed on the ICG right-of-way.

The allegations of the third-party complaint make clear that the bush, and not the wire and anchor, was the obstruction of which plaintiffs complain. Thus, the specific question which we must determine is whether Coop was required to foresee: (1) the wire and anchor would make the task of ICG in keeping the right-of-way clear substantially more difficult; (2) because of that difficulty, ICG would default in its statutory obligation to keep the crossing clear of obstruction; and (3) that failure would result in a collision at the crossing. We recognize some foreseeability of a collision arising from the conduct alleged to have been committed by Coop but deem the relationship between the conduct and the collision to be quite remote.

The parties have not presented us with any cases concerning the question of imposing tort liability for an injury on a party whose wrongful conduct makes more difficult the task of which another party has in discharging its duty to protect an innocent party. In addition to the remote nature of any foreseeability of injury, we would note here that the continued burden upon Coop of seeing that the right-of-way was being properly cleared around the wire and anchor would be very substantial, and a better policy would be to place sole responsibility upon the entity operating trains on the right-of-way.

Considering the lack of reasonable foreseeability of the collision arising from the placement of the wire and anchor, and the burden of placing a duty of maintaining that portion of the right-of-way on Coop, we hold that count III of the third-party complaint fails to allege a duty on Coop owed to plaintiffs which would give rise to a right of defendants for contribution.

We affirm the judgment of the circuit court in dismissing count III of the amended third-party complaint.

Affirmed.

McCULLOUGH, P.J., and LUND, J., concur.


text:
    RICHARD WEBB, Plaintiff-Appellant, v. WAYNE WEBB, Defendant-Ap-pellee.
    Fourth District
    No. 4—88—0654
    Opinion filed March 17, 1989.

      Brinkoetter & Barnes, P.C., of Decatur, for appellant.
    Britt A. Brown, of Brown, Hawkins, Basola & Mattingley, of Decatur, for appellee.
   JUSTICE GREEN

delivered the opinion of the court:

On April 29, 1988, plaintiff Richard Webb filed a complaint in the circuit court of Macon County against defendant Wayne Webb seeking a money judgment. The basis of the suit was an unsatisfied workers’ compensation award which plaintiff had obtained against Macon County Speedway, Inc. (Speedway), a corporation alleged to have become insolvent. The complaint alleged defendant was the “principal shareholder” and “principal operating officer” of Speedway and, as such, liable for Speedway’s failure to obtain workers’ compensation insurance or to qualify as a self-insurer. (Ill. Rev. Stat. 1985, ch. 48, par. 138.4.) Plaintiff does not purport to sue under section 19(g) of the Workers’ Compensation Act (Act) (Ill. Rev. Stat. 1985, ch. 48, par. 138.19(g)), which permits a claimant to obtain a judgment on a workers’ compensation award. In such proceedings, Illinois courts have not permitted judgments to be obtained against parties not named in the original petition for compensation. See, e.g., Grieff v. Olsen’s Automotive Supply (1988), 167 Ill. App. 3d 589, 521 N.E.2d 659, appeal denied (1988), 122 Ill. 2d 574.

On August 2, 1988, following hearing, the circuit court granted defendant’s motion to dismiss the complaint for failure to state a cause of action. Plaintiff has appealed. He recognizes there is no direct precedent in Illinois holding an individual officer of a corporation or a principal shareholder thereof liable for a workers’ compensation award obtained against that corporation but upon which the corporation defaults. He asks, however, since defendant was alleged to be the “principal shareholder” and “principal operating officer” and failed to bring Speedway within the requirements of the Act, this court create a cause of action “more consistent with the ends of justice” than existing law. For reasons we later state, we abstain from creating such a cause of action and affirm the judgment of the circuit court.

Plaintiff’s complaint also alleged: (1) he had been awarded sanctions and attorney fees against Speedway for its failure to pay his award; and (2) he had obtained a judgment against Speedway on the award. As damages plaintiff sought judgment for (1) $1,879, the amount of the award; (2) $4,394.50, the amount of the sanction placed on Speedway for failure to pay the award; (3) $1,757.80, the amount of attorney fees “awardable” for representation of plaintiff in the proceedings to obtain the award; (4) $878.90, the amount awarded for attorney services in obtaining the sanction against Speedway; (5) an amount for attorney fees in the instant proceedings; and (6) interest at the statutory rate on the above amounts.

Plaintiff cites Amfac Foods, Inc. v. International Systems & Controls Corp. (1982), 294 Or. 94, 654 P.2d 1092, where the court held, in a breach of contract case, that when a plaintiff seeks to collect a corporate debt from a shareholder by virtue of the shareholder’s control over the debtor corporation, the plaintiff must allege and prove not only that the debtor corporation was under the actual control of the shareholder, but also that the plaintiff’s inability to collect from the corporation resulted from some sort of improper conduct on the part of the shareholder.

Illinois precedent limits personal immunity from liability for corporate debts where a corporation is found to be merely the alter ego or business conduit of a dominant personality. In McCracken v. Olson Companies, Inc. (1986), 149 Ill. App. 3d 104, 500 N.E.2d 487, the court held the corporate entity could be disregarded and the veil of limited liability pierced where there is (1) such unity of interest in ownership that the separate personalities of the corporation and the individual no longer exist; and (2) circumstances such that an adherence to the fiction of a separate corporate existence would promote injustice or inequitable consequences.

In Gallagher v. Reconco Builders, Inc. (1980), 91 Ill. App. 3d 999, 415 N.E.2d 560, the court held personal liability should be imposed upon an individual operating a corporate contracting firm which failed to complete a construction job as agreed. The court stated that a corporate entity will be disregarded where it would otherwise present an obstacle to the protection of private rights and where the corporation is merely the alter ego of a dominating personality. The court went on to say that the decision to disregard the corporate entity involves the consideration of many factors, such as (1) inadequate capitalization; (2) failure to issue stock; (3) failure to observe corporate formalities; (4) nonpayment of dividends; (5) insolvency of the debtor corporation at the time; (6) nonfunctioning of other officers or directors; (7) absence of corporate records; and (8) whether in fact the corporation is only a mere facade for the operation of the dominant stockholders.

The complaint here falls far short of any allegation that the corporate respondent to the workers’ compensation case was an alter ego of defendant.

Moreover, although courts in other States have found personal liability to exist for officers and directors of corporations which have failed to insure their compensation liability and then defaulted on their obligations because of bankruptcy, those cases were brought either as a tort claim for the individual’s failure to provide compensation or where a statute provided for individual liability on the part of the corporation’s officers and directors. (See Samuel v. Baitcher (1981), 247 Ga. 71, 274 S.E.2d 327; Wyrybkowski v. Cobra Pre-Hung Doors, Inc. (1976), 66 Mich. App. 555, 239 N.W.2d 660, respectively.) The doctrine of piercing the corporate veil was not involved.

In Samuel, the court noted that the purpose of the Georgia Workers’ Compensation Act has been described as a “humanitarian measure” providing relief, to the injured employee and protecting employers from excessive damage awards. (Samuel, 247 Ga. at 73, 274 S.E.2d at 329.) The court noted the Act should be liberally interpreted by the court to carry out this purpose. They further noted that the immunity enjoyed by an employer’s agents under the Workers’ Compensation Act does not relieve the agents from carrying out the responsibilities of procuring insurance as required by statute. The court concluded it was not reasonable or just to hold that an employer’s agents may fail or refuse to perform duties imposed upon them by statute and at the same time rely upon the statute to escape the consequences of their failure to act properly. Samuel, 247 Ga. at 73-74, 274 S.E.2d at 329.

In Wyrybkowski, the court noted the Michigan legislature provided that the officers and directors “ ‘shall be individually and jointly and severally liable for any portion of any such judgment as is returned unsatisfied after execution against the corporation.’ ” (Emphasis in original.) Wyrybkowski, 66 Mich. App. at 559, 239 N.W.2d at 662, quoting Mich. Comp. Laws Ann. §418.647 (West), and Mich. Stat. Ann. §17.237(647) (Callaghan).

We agree, however, with the courts of those jurisdictions which have held, in the absence of legislation such as that in Michigan, that any alteration in the legislative scheme of the Workers’ Compensation Act should come from the legislature and not piecemeal by the courts. See Tasker v. Lopez (Utah 1983), 674 P.2d 127; Johnson v. Bialick (1972), 294 Minn. 231, 200 N.W.2d 172; see generally 2A A. Larson, Workmen’s Compensation Law §67.29, at 12 — 125, 12—126 (1988).

Accordingly, for the reasons stated, we affirm the judgment of the circuit court.

Affirmed.

McCULLOUGH, P.J., and KNECHT, J., concur.