text:
    People of the State of Illinois, Plaintiff-Appellee, v. Joe Castillo, Defendant-Appellant.
    Gen. Nos. 54,664, 54,665, 54,666. (Consolidated.)
    First District, Fourth Division.
    September 23, 1970.
    Gerald W. Getty, Public Defender of Cook County, of Chicago (Herbert Becker, Ronald P. Katz, and James J. Doherty, Assistant Public Defenders, of counsel), for appellant.
    Edward V. Hanrahan, State’s Attorney of Cook County, of Chicago (Robert A. Novelle and Arthur L. Belkind, Assistant State’s Attorneys, of counsel), for appellee.
   MR. JUSTICE ENGLISH

delivered the opinion of the court.

Defendant has appealed from three convictions entered upon pleas of guilty, contending that the trial court did not properly inform him of the nature of the charges against him. Four indictments had been returned against defendant, one on a charge of robbery and three on charges of armed robbery. Ill Rev Stats 1965, c 38, §§ 18-1, 18-2. To all four indictments, he had entered pleas of not guilty. Defendant was then tried on one of the indictments, convicted of armed robbery, and sentenced to a term of 5 to 15 years. That judgment is not before us on this appeal. Subsequently, he changed his plea to guilty as to the remaining three indictments, and, after being adjudged guilty by the court, received three sentences of 3 to 12 years, to run concurrently with the prior sentence.

Defendant was arraigned on March 28, 1967, at which time he was furnished with copies of the indictments and orally informed by the court of the nature of the charges against him. Defendant, being represented by counsel, waived formal reading of the indictments, and entered a plea of not guilty as to each offense. Following defendant’s trial and conviction for armed robbery on April 29, 1968, the trial of the remaining three charges was set for June 6, 1968. At that time, defendant and his attorney stood before the bench, and defense counsel stated that defendant desired to change his plea with respect to the three pending indictments. The following colloquy then took place:

MR. DARRAGH (defense counsel): “May it please the Court, Jose Castillo, is present before the Court. At this time, Judge, you will recall, this was formally a jury trial under Indictment 67-948. The jury found him guilty of armed robbery.
“Heretofore, your Honor, pleas of not guilty have been entered on Indictments 67-946-7-9. At this time, your Honor, we would like to withdraw those pleas of not guilty and enter pleas of guilty to Indictments 67-946, 947 and 949.”
THE COURT: “Mr. Castillo, you just heard your lawyer say to this Court that you desire to withdraw your pleas of not guilty heretofore made in Indictments 67-946, 67-947, 67-949 and enter, in lieu thereof, a plea of guilty, is that correct?”
DEFENDANT CASTILLO: “Yes, sir.”
THE COURT: “Now, you realize, that when you enter a plea of guilty you automatically do away with the right to a trial by j ury ?”
DEFENDANT CASTILLO: “Yes, sir.”
THE COURT: “You waive the defects in the indictments, except the jurisdiction, perhaps, but you have no right to raise technical objections to the indictments. And the Court may sentence you to the Illinois State Penitentiary for a period of — let me see, I want to get the right one here.”
MR. BURNHAM (Assistant State’s Attorney): “Two to any number, Judge, on each.”
THE COURT: “Two to any number of years. In other words, it is indefinite. I may give you two to any number of years.
“Knowing that, on each indictment, and they may run consecutively. That is, after you finish the sentence on one indictment, you may, the next sentence starts to run. That is what we mean by consecutively.
“Now, knowing that, you insist on your plea of guilty, is that right?”
DEFENDANT CASTILLO: “Yes, sir.”
THE COURT: “Allright.
“Let the record show that the defendant has been admonished of his pleas of guilty, the consequences thereof, and he insists on his plea.”

Defendant’s sole contention on appeal is that the court erred by accepting his guilty pleas without informing him of the nature of the charges against him. The Code of Criminal Procedure, Section 115-2(2) provides that a guilty plea entered in open court may be accepted when “the court has informed the defendant of the consequences of his plea and of the maximum penalty provided by law which may be imposed upon acceptance of such plea.” Ill Rev Stats 1967, c 38, § 115-2 (2). Additional regulation of this subject is to be found in Supreme Court Rule 401(b) which provides in pertinent part:

(b) Procedure on Plea or Waiver. The court shall not permit a plea of guilty ... by any person accused of a crime for which, upon conviction, the punishment may be imprisonment in the penitentiary, unless the court finds from proceedings had in open court at the time waiver is sought to be made or plea of guilty entered, or both, as the case may be, that the accused . . . understands the nature of the charge against him, and the consequences thereof if found guilty .... The inquiries of the court, and the answers of the accused to determine whether he . . . comprehends the nature of the crime with which he is charged and the punishment thereof fixed by law, shall be taken and transcribed and filed in the case.

Ill Rev Stats 1967, c 110A, § 401 (b). There is no question but that the trial court’s admonishment to defendant was sufficient to preserve defendant’s rights under the Code provision, as defendant was informed of the consequences of his plea and the maximum penalty provided by law. Defendant, however, urges most strongly the narrower question, under Rule 401(b), as to whether the court had reasonable basis for belief that defendant understood the nature of the charges against him.

We note from the record in this case that at arraignment defendant had been told the nature of the charges in all four indictments. Defendant enjoyed the advice of counsel at all stages of these proceedings. Following his conviction for armed robbery and sentence of 5 to 15 years, the obvious defense plan was for defendant to plead guilty to the other three indictments in order to receive concurrent sentences, hopefully within the span of the sentence already imposed. This plan was effectuated when on his guilty pleas defendant was given concurrent sentences of 3 to 12 years. Following the above-quoted colloquy, the court accepted defendant’s pleas and immediately proceeded to hear stipulations of fact as to the three indictments which were referred to by number, and the stipulations included specific statements setting forth the nature of the separate charges. During this time, defendant remained with his counsel before the bench, and both, without doubt, had adequate opportunity to make known their objections if the stipulations as recited by the State’s Attorney were in any way contrary to defendant’s understanding of the nature of the charges to which defendant had moments before pleaded guilty. Contrariwise, at the conclusion of each stipulation, defendant’s attorney advised the court that it was “so stipulated” by defendant.

It was then shown, in aggravation, that in 1959 defendant had been found guilty of larceny and admitted to probation with six months in jail. In 1961, defendant was given a 5-year sentence for robbery in Texas from which he was paroled in 1962, and then in 1963 returned to the penitentiary for parole violation.

We believe that it would have been preferable, under Rule 401(b), if detailed reference had been made to the nature of the charges at the precise moment, before acceptance of the pleas, when the judge was satisfying himself that defendant understood the consequences of his pleas and the applicable penalties. Nevertheless, we conclude, on the basis of this record, that, at all times pertinent, defendant did in fact comprehend the nature of the crimes with which he was charged, and that there was, therefore, compliance with the intent of both the Code and the Rule.

Accordingly, the judgments are affirmed.

Affirmed.

DRUCKER and LEIGHTON, JJ., concur.


source: Caselaw Access Project

author: MR. PRESIDING JUSTICE STAMOS

license: Public Domain

text:
    People of the State of Illinois, Plaintiff-Appellee, v. George H. Kozak, Defendant-Appellant.
    Gen. No. 54,762.
    First District, Fourth Division.
    October 21, 1970.
    Andrew M. Raucci, of Chicago, for appellant.
    Edward V. Hanrahan, State’s Attorney of Cook County, of Chicago (Robert A. Novelle and Zenon Forowycz, Assistant State’s Attorneys, of counsel), for appellee.
   MR. PRESIDING JUSTICE STAMOS

delivered the opinion of the court.

After a bench trial, defendant was convicted of driving a motor vehicle while his driver’s license was suspended, in violation of Ill Rev Stats 1967, c 95%, § 6-303 (a).1 He was placed on one year’s probation. Defendant appeals and seeks a reversal of his conviction, or in the alternative, a new trial. Defendant contends (1) that the statute he was charged with violating is inapplicable to the facts of the case; (2) that he was not proven guilty beyond a reasonable doubt; and (3) that the trial court erred in refusing to strike testimony as to defendant’s admissions when the prosecution failed to prove the corpus delicti.

The agreed statement of facts shows that on June 14, 1969, police officers of the Berkeley Police Department investigated an automobile accident in the parking lot of Guido’s Finer Foods. The investigation developed that defendant’s vehicle had apparently struck an unoccupied vehicle and defendant admitted he was operating his vehicle at the time. Defendant’s driver’s license had been suspended a few days before this occurrence. The police testified that they did not see defendant operate his vehicle; that the parking lot is owned by Guido’s Finer Foods and it is not a public body; and that no municipal or governmental body, to the officer’s knowledge, maintains or cleans this parking lot.

Defendant contends that the statute, which by its terms is applicable only when a person is driving a motor vehicle on a highway of this State, is not violated by driving in a parking lot which is not a “highway” as defined in Ill Rev Stats 1967, c 95½, § 1-121. We agree.

In People v. Erickson, 108 Ill App2d 142, 246 NE2d 457, the defendant was charged with driving a vehicle while under the influence of intoxicating liquor in violation of section 47 of the Uniform Act Regulating Traffic on Highways (Ill Rev Stats 1967, c 95½, § 144(a)). As in the instant case, the occurrence took place in a privately-owned parking lot. In Erickson this court noted that the legislature did not restrict the offense of driving while under the influence of intoxicating liquor to highways, and said at page 145, after referring to pertinent statutes :

“The Illinois Legislature . . . , expressly and specifically provided that the offense of driving a vehicle while under the influence of intoxicating liquor would apply, not only if it occurred upon highways, but “elsewhere throughout the state.”

However, in the present case the statute makes it a punishable offense to drive without a license on a highway without expanding the prohibition to “elsewhere throughout the state.” Therefore, the prohibition does not extend to operation of a motor vehicle in a privately-owned parking lot.

Since we have determined to reverse, we need not discuss defendant’s remaining contentions.

The judgment is reversed.

Reversed.

DRUCKER and ENGLISH, JJ., concur.

       Chapter 95%, Section 6-303(a), Illinois Revised Statutes, 1967. Any person who drives a motor vehicle on any highway of this State at a time when his operator’s or chauffeur’s license or permit or privilege so to do or his privilege to obtain a license or permit under this Act is revoked or suspended as provided by this Act or any other Act, except as may be allowed by a restricted driving permit issued under this Act, shall be punished by imprisonment for not less than 7 days nor more than 1 year and there may be imposed in addition thereto a fine of not more than $1,000.

       Chapter 95½, Section 1-121. Highway.
      The entire width between the boundary lines of every way publicly maintained when any part thereof is open to the use of the public for purposes of vehicular travel.

       Section 47 of the Uniform Act Regulating Highways (Ill Rev Stats 1967, c 95½, § 144(a)) provides that an intoxicated person may not drive or be in control of a vehicle “within this state.” This terminology is further defined in Section 20 of the Act which states that the provisions of Article V (Driving While Intoxicated, Transporting Alcoholic Liquor, and Reckless Driving) apply, “upon highways and elsewhere throughout the state.” (Emphasis supplied.)


author: MR. JUSTICE MURPHY

text:
    Earl Ross, et al., Plaintiffs-Appellees, v. 311 North Central Avenue Building Corporation, G. J. Nikolas, et al., Defendants-Appellants.
    Gen. No. 54,815.
    First District, First Division.
    September 21, 1970.

      Alphonse Cerza, of Chicago, for appellants.
    David S. Wald, of Chicago, for appellees.
   MR. JUSTICE MURPHY

delivered the opinion of the court.

This is a class action brought by plaintiffs, minority stockholders in the defendant building corporation. In a non jury trial, the court entered a decree which found that in the use of surplus funds of the corporation, the acts of the defendant directors, who were in control of the corporation, were fraudulent and oppressive as against the minority stockholders. The relief granted included liquidation of the defendant corporation and attorney’s fees for plaintiffs. In this appeal from the decree, the contentions of defendants are primarily based on the premise that the conduct of the individual defendants did not constitute fraud and no damage resulted to anyone.

The material facts in this case are not in dispute and are substantially set forth in the decree which follows:

DECREE
This cause having come up for trial and testimony having been taken and arguments having been made by all counsel, the Court makes the following findings:
1. That the suit by the plaintiffs is a proper class action in behalf of themselves and the other shareholders of the 311 North Central Avenue Building Corporation.
2. That the plaintiffs directly own 806 shares of the capital stock of the said corporation, and represent by their class action approximately 34% of the capital stock of said corporation.
3. That the individual defendants, G. J. Nikolas, Jr., G. J. Nikolas, III, and Robert C. Nikolas, and other relatives and members of their families, own approximately 64% of the shares of stock issued by said corporation, and are the sole directors and officers of said corporation.
4. That the said corporation is the owner of the building commonly known as an apartment hotel.
5. That the said individual defendants have operated and managed said real estate for and in behalf of the corporation, for a number of years.
6. That sometime in the year 1967, the individual defendants withdrew from the said corporation the sum of $48,597.16, and purported to loan same to a corporation known as S. W. Corner Washington and Harvey Corporation, the shares of which were owned by the said individual defendants and their families, and the said individual defendants were the directors and officers of said corporation.
7. Defendants maintain that the loan to the said S. W. Corner Washington and Harvey Corporation was evidenced by a second mortgage of said corporation, payable in 20 years, without prepayments, bearing interest at 6% per annum; that said loan was used to reduce the amount of a first mortgage upon the property of said corporation from $250,000.00 to $200,000.00. No such second mortgage was produced, none was recorded, no evidence was offered of any person, lawyer or otherwise, who prepared such a mortgage, nor were minutes of a meeting of the directors produced authorizing the loan; no proof was offered of any insurance to cover protection for this mortgage, no opinion of title showing the condition of the title was produced. I find that no such second mortgage was ever executed.
8. Even if there had been such a second mortgage executed, the loan to said S. W. Corner Washington and Harvey Corporation was frozen for the full term of 20 years.
9. The minority shareholders of the 311 North Central Avenue Building Corporation were not informed of this loan, excepting that in the report to shareholders for the year 1967 under “investments” appeared an item “Second Mortgage in the sum of $49,597.12.” The fact that the loan was made to a corporation owned and controlled by the individual defendants and their families, was not disclosed in any of the reports issued to the shareholders of the defendant corporation. Upon learning of the said loan, the plaintiffs filed this suit on April 10, 1968; summons were served on the defendants on April 15, 1968, and the money was replaced in the account of the defendant corporation on April 24, 1968, purporting to represent the proceeds of sale of the alleged second mortgage at par.
10. The individual defendants contend that the purpose of loaning the money on the second mortgage was to increase the income from 4%% on previous investments to a 6% return.
11. The defendants contend further that the funds were not distributed to the shareholders as a liquidating dividend, but was kept as a reserve for future needs of the corporation. Obviously, loaning the money for a period of 20 years without prepayments, would make it impossible to use these funds for future needs of the corporation. It is my opinion that if the directors were willing to freeze the loan for a 20 year period, the funds were not needed for corporate purposes, and were available for a liquidating dividend.
12. The evidence is clear that a commission or bonus for a second mortgage loan for a straight period of 20 years, at 6% interest, would justify a commission of not less than $15,000.00.
13. The contention of the defendant that they gained no benefit from the loan, because there was no reduction in the monthly payments on the first mortgage, which was reduced by the loan is not persuasive. The loan enabled the defendants to retire the first mortgage many years sooner, relieving them of the necessity of payments of principal for a number of years after the first mortgage is retired.
14. The return of the funds after the commencement of the suit does not negate the effect of the fraud.
15. That the loan to the S. W. Corner Washington and Harvey Corporation, a corporation owned and controlled by the individual defendants and their families, was a fraud upon the 311 North Central Avenue Building Corporation, and upon the minority stockholders.
16. That no second mortgage was ever executed and that, in falsely representing that there was such a second mortgage, they compounded the fraud.
17. The plaintiffs have rendered a beneficial service to all the shareholders of the corporation in filing the suit and procuring a refund of the funds improperly diverted by the defendants, and are entitled to compensation for attorneys’ fees and other services and expenses.
18. That the conduct of the defendants was oppressive.
IT IS THEREFORE ORDERED:
1. That the prayers to remove the board of directors and to deny the defendants to vote their stock is hereby denied.
2. That the funds returned to the corporation, approximately Forty-nine Thousand ($49,000.00) Dollars, and presently invested in Certificates of Deposit be kept intact, and not be used, changed or distributed without leave of Court.
3. That the defendants be and are hereby removed from management of the aforesaid 311 North Central Building and that the Court retain jurisdiction to appoint a fair, impartial and independent management to manage the aforesaid property.
4. That the aforesaid corporation be liquidated and its assets sold, but that said sale be deferred until a time when the market becomes more propitious and that the Court retain jurisdiction for the purpose of determining the time and place and manner of such sale.
5. That plaintiffs be reimbursed by defendants for all costs and monies expended by them for expenses and services in prosecuting this lawsuit and that defendants pay to David S. Wald, Attorney for the plaintiffs, the sum of Five Thousand ($5,000.00) Dollars as attorney’s fees to date.
6. The Court finds there is no just reason for delaying enforcement or appeal of this decree.

In the appeal from this decree defendants contend:

1. The conduct of the individual defendants did not constitute fraud because there was no intention to cheat another and no damage resulted to anyone.
2. The controversy in this matter was moot at the time of the trial.
3. The trial court could not order a liquidation of the corporation on the ground of fraudulent and oppressive conduct by the directors since the acts of the directors were not fraudulent or oppressive.
4. The law imposes upon the directors of a going corporation that has been operated for years at a profit the duty of managing its affairs and determining how surplus funds shall be used.
5. Attorney’s fees are allowed in a chancery case only when provided by statute or a benefit has been received as a result of the services rendered.
6. The motion for judgment on the face of the pleadings should have been allowed in this case.
7. The plaintiffs are in this court with unclean hands, filed the suit in bad faith and should not have pursued the matter further than the deposition for discovery, therefore, plaintiffs should pay the costs, expenses, and attorney’s fees expended by the defendants.

We have examined defendants’ contentions and authorities cited in support thereof. In view of our conclusion that this record amply sustains the trial court’s findings of fraudulent and oppressive acts, it would serve no useful purpose to discuss or distinguish the circumstances here from those in each of the cases cited by defendants or the factual variations affecting the disputed transactions in each of those cases.

At the outset, we find no merit in defendants’ contention that their motion for judgment on the face of the pleadings should have been allowed in this case, or that the plaintiffs are in court with unclean hands and in bad faith. The acts of the defendants, which the trial court found to be fraudulent or oppressive, were in no way chargeable to acts of the plaintiffs.

Initially considered is defendants’ contention that the conduct of the individual defendants did not constitute fraud. A summary of the pertinent facts shows that on January 25, 1967, the individual defendants withdrew from the corporation approximately $49,000 and purported to loan this money to a corporation known as “S. W. Corner Washington and Harvey Corporation,” the shares of which were owned by the individual defendants and their families, and the individual defendants were the officers and directors of the second corporation. The loan was supposedly evidenced by a “second mortgage” upon the property of the second corporation, payable in twenty years, nonamortized, and bearing interest at 6% per annum, payable monthly. There was no disclosure of this transaction until approximately a year later. The annual statement sent to the stockholders shortly after January 1, 1968, contained an item: “Investment — second mortgage $48,597.16.” When one of the plaintiffs called George Nikolas, III, the defendant president of the corporation, and asked him about the item, Mr. Nikolas stated, “I can do anything I see fit with this money.” No second mortgage was produced, none was recorded, and no evidence was offered as to who prepared the loan. The trial court found that no such second mortgage was executed or ever existed.

A witness for plaintiffs, Peter K. Lannon, who had extensive experience in real estate appraisals and mortgages, testified that a “second mortgage” such as the one purportedly made by the defendants could not have been secured in ordinary business channels at the time this alleged mortgage was made, and if a second mortgage of this nature was made, the commission or bonus for such a loan would not be less than $15,000.

Plaintiffs’ authorities include Shlensky v. South Parkway Bldg. Corp., 19 Ill2d 268, 166 NE2d 793 (1960), where our Supreme Court discussed the duties and liabilities of corporate directors and officers in transactions similar to the instant case. There the court cited the case of Geddes v. Anaconda Copper Mining Co., 254 US 590 (1921), and quoted therefrom the following (p 282):

“The relation of directors to corporations is of such a fiduciary nature that transactions between boards having common members are regarded as jealously by the law as are personal dealings between a director and his corporation; and where the fairness of such transactions is challenged, the burden is upon those who would maintain them to show their entire fairness; and where a sale is involved, the full adequacy of the consideration. Especially is this true where a common director is dominating in influence or in character. This court has been consistently emphatic in the application of this rule, which, it has declared, is founded in the soundest morality, and we now add, in the soundest business policy. [254 US at p 599].”

In Shlensky, the court said (pp 280-81):

“. . . transactions between corporations with common directors may be avoided only if unfair, and that the directors who would sustain the challenged transaction have the burden of overcoming the presumption againt the validity of the transaction by showing its fairness.”

And on page 283, the court stated the factors to be considered in determining fairness are:

“While the concept of ‘fairness’ is incapable of precise definition, courts have stressed such factors as whether the corporation received in the transaction full value in all the commodities purchased; the corporation’s need for the property; its ability to finance the purchase; whether the transaction was at the market price, or below, or constituted a better bargain than the corporation could have otherwise obtained in dealings with others; whether there was a detriment to the corporation as a result of the transaction; whether there was a possibility of corporate gain siphoned off by the directors directly or through corporations they controlled; and whether there was full disclosure — although neither disclosure nor shareholder assent can convert a dishonest transaction into a fair one.”

In Majewski v. Gallina, 17 Ill2d 92, 160 NE2d 783 (1959), our Supreme Court set forth the guidelines for determining fraud and said (p 99):

“There is no general rule for determining what facts will constitute fraud; whether or not it is found depends upon the special facts of each particular case. While fraud is never presumed, a conspiracy, as alleged herein, is rarely susceptible of direct proof, but must, very nearly always from the nature of things, be established by circumstantial evidence and legitimate inferences arising therefrom. . . . These inferences depend largely upon the common-sense knowledge of the motives and intentions of men in like circumstances.”

Also, at page 100:

“Thus, fraud may be inferred from the nature of the acts complained of, the individual and collective interest of the alleged conspirators, the situation, the intimacy and relation of the parties at the time of the commission of the acts, and generally all the circumstances preceding and attending the culmination of the claimed conspiracy.”

In determining the propriety of a decree, a reviewing court is not justified in disturbing the findings unless they are manifestly and palpably wrong or against the weight of the evidence. (2 ILP, § 787, p 756.) After examining the circumstances surrounding the loan to S. W. Corner Washington and Harvey Corporation, we conclude that the finding by the trial court that the loan “was a fraud upon the 311 North Central Avenue Building Corporation, and upon the minority stockholders” is not against the manifest weight of the evidence and therefore should be affirmed. This conclusion also applies to the finding by the court “that the conduct of the defendants was oppressive.”

Considered next is defendants’ contention that the controversy was moot at the time of the trial. Defendants argue that because the funds which were extracted were paid back to the defendant corporation, no controversy existed and any prior misconduct was cured. We do not agree. The central issue concerning the transaction in question was whether defendants’ conduct was a fraud as to the corporation and its minority stockholders. The subsequent return of the funds two weeks after the suit was filed and ten days after summons did not negate the fraud committed initially by the defendants’ actions nor the remedies available either by statute or in equity for corporate mismanagement by those who are entrusted with it. The trial court considered the question at length, and in denying defendants’ contention that the matter was moot the court said: “It cures what? Their good faith, their honesty, their duty as fiduciaries to the other stockholders? Does that cure it?” We agree with the court’s remarks and find no merit to defendants’ contention that the question was moot at the time of the trial.

Defendants next contend that the trial court had no power to liquidate the assets of the defendant corporation except under statutory authority. This assertion is based on the premise that defendants’ actions were not fraudulent or oppressive. As previously noted, the trial court found that the defendants acted fraudulently and also found their conduct was oppressive. Section 86 of the Illinois Business Corporations Act (Ill Rev Stats, c 32, ¶ 157.86) reads in pertinent part:

“Courts of equity shall have full power to liquidate the assets and business of a corporation:
“(a) In an action by a shareholder when it is made to appear ((
“(3) That the acts of the directors or those in control of the corporation are illegal, oppressive, or fraudulent; or
“(4) That the corporate assets are being misapplied, or wasted.” (Emphasis added.)

The statute in paragraph (a), subparagraph (3), uses the correlative “or” implying that the court’s authority may be invoked when any one of the acts so stated is committed.

In Gidwitz v. Lanzit Corrugated Box Co., 20 Ill2d 208, 170 NE2d 131 (1960), where the court dealt with the same statutory provision, it is said (p 212):

“There appears to be no claim that the acts of the directors or officers in this case are ‘illegal’ or ‘fraudulent,’ but only that the ‘deadlock’ is ‘oppressive’ to the plaintiffs as shareholders . . . .” (Emphasis added.)

The court continued (pp 214-215) :

“We have held that the word ‘oppressive’ as used in this statute, does not carry an essential inference of imminent disaster; it can contemplate a continuing course of conduct. The word does not necessarily savor of fraud, and the absence of ‘mismanagement, or misapplication of assets,’ does not prevent a finding that the conduct of the dominant directors or officers has been oppressive. It is not synonymous with ‘illegal’ and ‘fraudulent.’ Central Standard Life Ins. Co. v. Davis, 10 Ill2d 566.”

Moreover, the court stated (pp 220-221):

“It is not necessary that fraud, illegality or even loss be shown to exhibit oppression of plaintiffs and their interest in the corporation. Corporate dissolution is a drastic remedy that must not be lightly invoked. . . . Nevertheless, when oppression is positively shown, the oppressed are entitled to the protection of the law.”

On our analysis of the evidence, we find the defendants failed to establish the fairness of the challenged transaction. The finding by the trial court that the acts of the directors of the defendant corporation were fraudulent or oppressive was sufficient to permit the trial court to use its authority under section 86 of the Business Corporations Act. We conclude the statutory liquidation was properly ordered.

Considered next is defendants’ contention that the directors of a going corporation have the duty of managing its affairs and determining how surplus funds shall be used. We agree as long as they do not use the funds fraudulently or oppressively. In Hall v. Woods, 325 Ill 114, 156 NE 258 (1927), it is said (p 138):

“[A] court of chancery will not interfere . . . when there is no charge of fraud or gross mismanagement resulting or likely to result in loss to the corporation or to any of the stockholders.”

We conclude that after the trial court found that the acts of the defendants were both fraudulent and oppressive, the court properly removed the defendants from managing the corporation until proper liquidation might be undertaken. Ritter v. Ritter, 381 Ill 549, 46 NE2d 41 (1943).

Defendants next contend that the awarding of costs and attorney’s fees to the plaintiffs was improper in this case. They rely on the rule that in the absence of statute, costs, expenses and attorney’s fees are not allowed to the successful litigant. They also point out that the Illinois Business Corporations Act does not provide for the allowance of these fees. Ill Rev Stats, c 33, § 18, states:

“. . . in all other cases in equity, not otherwise directed by law, it shall be in the discretion of the court to award costs or not; and the payment of costs, when awarded, may be compelled by execution.”

Defendants also maintain that a derivative suit cannot be filed by shareholders without first making a demand on the corporation officers to file such a suit. (Goldberg v. Ball, 305 Ill App 273, 27 NE2d 575 (1940).) Defendants state that had a demand been made on the defendants, the named plaintiffs would have been advised of the decision made at the directors’ meeting and the suit would not have been necessary, and “once suit was filed and the plaintiffs learned from the verified amended answer, and by deposition for discovery that the loan had been repaid and the corporation had invested the funds in certificates of deposit, there was no need for continuing with the litigation.”

Plaintiffs contend that it is a well-established rule in Illinois that courts of equity have the authority to order an allowance of solicitor’s fees and costs expended, to a party who has at his own expense maintained a successful suit for the preservation, protection or increase of the common fund or common property. Plaintiffs argue that the money was returned through the efforts of the plaintiffs and their attorney, and at no time prior to the filing of this lawsuit did defendants indicate to plaintiffs a so-called change of heart. Plaintiffs assert, also, that defendants “had consistently taken the position in their conversations with Earl Ross, plaintiff, and his attorney as late as the stockholders meeting that they could do as they wished with the reserve funds.”

Authorities on this point include First Nat. Bank of Chicago v. LaSalle-Wacker Bldg. Corp., 280 Ill App 188 (1935), where it is said (p 197):

“We think the rule is firmly established that a court of equity or a court in the exercise of equitable jurisdiction will, in its discretion, order an allowance of solicitor’s fees to a party who, at his own expense, has maintained a successful suit for the preservation, protection or increase of a common fund or of common property, or who has created at his own expense or brought into court, a fund in which others may share with him.”

In Bingham v. Ditzler, 320 Ill App 88, 49 NE2d 812 (1943), it is said (p 95):

“The general rule is that if the plaintiff in a stockholders’ suit is successful and the benefit goes to the corporation, he is entitled to recover his necessary expenses and disbursements, including an attorney’s fee.”

And at page 98:

“We think the rule is firmly established that a court of equity . . . will in its discretion order an allowance of solicitor’s fees to a party who, at his own expense, has maintained a successful suit for the preservation, protection, or increase of the common fund or of common property, or who has created at his own expense or brought into court, a fund in which others may share with him.”

In LaSalle Nat. Bank v. MacDonald, 2 Ill2d 581, 119 NE2d 266 (1954), it is said (p 589):

“Under the applicable statute, costs in chancery cases, with exceptions not now material, rest in the discretion of the court, (Ill Rev Stat 1953, chap 33, par 18,) to be exercised according to equitable rules and principles.”

In Lee v. City of Chicago, 31 Ill2d 252, 201 NE2d 361 (1964), it is said (p 256):

“[The statute] provides that the costs in chancery cases are in the discretion of the court — a discretion to be exercised according to equitable rules and principles. ... As a general rule the successful parties should not be required to pay any portion of the costs, where there is no equitable ground upon which to base an apportionment.”

We conclude that attorney’s fees and costs, in a matter such as this, may be awarded in the discretion of the court according to equitable rules and principles, and generally they must come from the fund being protected by the suit. In the instant case we think the individual defendants, “according to equitable rules and principles,” could be properly required to pay either all or part of the costs and solicitor’s fees. 31 Ill2d 252, 256.

Plaintiffs in essence are prosecuting this suit on behalf of the defendant corporation. In ordering that plaintiffs be reimbursed for their solicitor’s fees and costs, the court made no apportionment, if any was intended, between the defendants. The defendants made no showing or attempt to show an equitable ground for apportionment. We think the trial court should consider and determine the apportionment between defendants of the attorney’s fees and court costs here, because we consider there is an equitable ground upon which to base such an apportionment.

We conclude that the decree of the trial court should be affirmed, and the question of apportionment among defendants of plaintiffs’ attorney’s fees and court costs should be considered by the trial court and a finding made in the future proceedings in this case.

The decree of the trial court is affirmed, as noted, and the cause is remanded for further proceedings and in accordance with the views expressed herein.

Affirmed and remanded with directions.

BURMAN, P. J. and ADESKO, J., concur.


author: MR. PRESIDING JUSTICE McCORMICK

text:
    Chicago and North Western Railway Company, Plaintiff-Appellee, v. Illinois Commerce Commission and the Attorney General of the State of Illinois, Defendants-Appellants.
    Gen. No. 54,817.
    First District, Second Division.
    October 13, 1970.

      William J. Scott, Attorney General of State of Illinois, of Chicago, for appellants.
    Edward V. Hanrahan, State’s Attorney of Cook County, of Chicago, for appellee.
   MR. PRESIDING JUSTICE McCORMICK

delivered the opinion of the court.

On February 4, 1969, the plaintiff, Chicago and North Western Railway Company (hereafter referred to as the Railroad), filed a complaint seeking injunctive relief and a declaration that section 27(c) of the Public Utilities Act (Ill Rev Stats 1969, c 111⅔, § 27 (c)) does not confer jurisdiction on the Illinois Commerce Commission to control the Railroad’s sale, transfer, lease, mortgage, or other disposition of real estate in Illinois if such disposition was neither necessary nor useful to the public. The Railroad also sought to restrain the defendants from enforcing section 27 of the Act.

The Attorney General filed a motion to dismiss the Complaint and the Railroad then made a motion for summary judgment. The Circuit Court denied the Attorney General’s motion to dismiss and granted the Railroad’s motion for summary decree. The court found that section 27 of the Act did not apply to real estate and provided no standards; therefore, was in violation of Article 3 of the Constitution of the State of Illinois. The defendants were enjoined from enforcing or attempting to enforce section 27 of the Act.

On June 30, 1969, the defendants filed a notice of appeal to the Supreme Court of Illinois, and on January 21, 1970, the Supreme Court transferred the case to the Appellate Court of Illinois on the ground that it had no jurisdiction on direct appeal. The basis of the direct appeal was that the case involved questions arising under the Constitutions of the United States and of the State of Illinois. (Supreme Court Rule 302 (a) (2).)

The first question to be decided in this court is the import of the order of transfer as it concerns the constitutional issues raised by the litigants. In Sarelas v. Illinois Bell Tel. Co., 42 Ill App2d 372, 192 NE2d 451, the plaintiff filed a direct appeal to the Illinois Supreme Court. The case was transferred to the Appellate Court, and in its opinion this court said at page 374:

“In his brief filed there he set forth eight separate grounds involving constitutional questions. The cause was transferred without opinion by the Supreme Court, but implicit in its transfer order is a rejection of plaintiff’s constitutional arguments and a holding that there are no debatable constitutional questions involved in the case.”

The Sarelas case was cited in Barnes v. Peoples Gas Light & Coke Co., 103 Ill App2d 425, 243 NE2d 855, where the court said at 427:

“The appeal was taken to the Supreme Court which transferred it to this court without comment, thus disposing of a claim by plaintiff that the orders referred to had deprived him of constitutional rights because of his color.”

After both Sarelas and Barnes had been transferred, the Appellate Court treated the issues as having been disposed of; consequently, in neither case was any further reference made to the alleged constitutional questions.

In People v. Valentine, 60 Ill App2d 339, 208 NE2d 595, this court noted at page 348 that the then existing rule was

“. . . if a case in which constitutional questions were raised was transferred to this court, it was presumed that the Supreme Court had determined that the constitutional questions were not genuine or that the questions were not material to the disposition of the appeal. [Citing cases.] There now must be an extension of this rule because of the possible alternative presumption that the constitutional questions are deemed well settled by the prior decisions of the court.”

We cannot hold that such a transfer is an adjudication by the Supreme Court on the merits of the constitutional issues.

In the instant case the Circuit Court accepted the plaintiff’s view of the manner in which section 27 of the Public Utilities Act should be interpreted, and therefore entered judgment for the plaintiff. On the direct appeal to the Supreme Court, several constitutional issues are raised by the plaintiff regarding its assertions of the invalidity of the section under review, but the Railroad also urges its view of the proper statutory construction of the Act. Constitutional issues are not reached in a case unless necessary to its disposition.

In People ex rel. Milos v. Kutschke, 42 Ill2d 405, 247 NE2d 423, the Supreme Court said at page 407:

“In addition to the constitutional questions which constitute the major argument here, plaintiffs urge the conversion proceedings were invalid because of failure to comply with the notice and publication requirements .... We agree, and for this reason do not reach the constitutional questions, since it is our established rule that constitutional questions will not be considered unless necessary to the disposition of the case. In re Estate of Ersch, 29 Ill2d 572, 577, and cases there cited.”

In the case before us, it is possible that the Supreme Court transferred it because there existed the possibility that constitutional questions might never be reached. If this court were to accept plaintiff’s argument on statutory construction, there would be no necessity for considering the constitutional questions. This view treats the transfer as an abstention from taking the case to avoid considering the constitutional arguments since they may prove unnecessary to resolve the appeal.

Although in the present case one constitutional issue was passed upon by the lower court, the case had already been disposed of on a nonconstitutional ground. Whether such an unnecessary constitutional ruling can confer direct appeal jurisdiction is at least questionable. In People v. Board of Education Tp. High School Dist. No. 201, 399 Ill 204, 77 NE2d 200, the court stated at page 210:

“The established rule, which needs no citation of authorities, is that to warrant a direct appeal on the ground that a constitutional question is involved, the record must affirmatively disclose that the constitutional question was not only presented in the trial court for decision, but was passed upon by it, and that even though the constitutional question was raised in the trial court, if a final judgment was rendered on other issues, no constitutional question is presented for review on appeal to this court.”

The City of Watseka v. Wilson, 11 Ill2d 265, 142 NE2d 24, was another case in which the trial judge ruled on the basis of statutory construction and not on the constitutionality of the particular statute. A direct appeal was sought in the Supreme Court. In transferring the case to the Appellate Court the Supreme Court said, at page 267, concerning jurisdiction in direct appeal:

“That jurisdiction does not exist even if, as here, a constitutional question was raised in the trial court, if the judgment was based on other issues. [Citing cases.] ‘A constitutional question is not so presented as to give this court jurisdiction on direct appeal simply because a judgment or decree might have been entered that would have given appellants a right to rely on a constitutional question on appeal.' (People ex rel. Templeton v. Board of Education, 399 Ill 204, 211; Hawley Products Co. v. May, 377 Ill 506, 509; see also People ex rel. Kurtz v. Meyer, 328 Ill 122, 124-5.)”

See also Interstate Bakeries v. Teamsters 734, 31 Ill2d 317, 319, 201 NE2d 452; Beatrice Foods Co. v. Lyons, 12 Ill2d 274, 283, 146 NE2d 68.

In First Nat. Bank & Trust Co. v. Evanston, 30 Ill2d 479, 197 NE2d 705, the Supreme Court transferred a zoning case to the Appellate Court on the ground that no substantial question arising under the Constitution was presented. The Supreme Court acknowledged (at page 483) that the “ultimate issues to be determined in a typical zoning case are constitutional — . . .” but, in effect, read the element of substantiality into the constitutional provision for direct appeals to the Supreme Court in cases involving a question arising under the Constitution of the United States or of this State. It can hardly be said, then, that the Supreme Court’s transfer of a zoning case to the Appellate Court serves as an indication that the constitutional issues are frivolous, irrelevant or well-settled. Rather, it serves as an indication that the case presents no “novel and substantial constitutional issues of concern to every community in the State” (page 486). It is further said at page 486 that “the question of the authority of the municipality to apply the questioned provision of the ordinance to the particular property involved can be determined, as well as the reasonableness of the ordinance when so applied, and if warranted, there may be further review in this (Supreme) court.”

There is no reason for distinguishing between transfers in zoning cases and in other cases; consequently, we believe it would be improper to presume any substantive ruling by the Supreme Court from the mere fact of a transfer which provides no instructions and says nothing more than that in the Supreme Court’s opinion no direct appeal jurisdiction existed. We must disagree with the statement in Sarelas v. Illinois Bell Tel. Co., supra, that “implicit in its (Supreme Court’s) transfer order is a rejection of plaintiff’s constitutional arguments and a holding that there are no debatable constitutional questions involved in the case.” We also disagree with other cases which have so held.

It would seem that there can exist many bases for a transfer other than that the Supreme Court has ruled on the constitutional aspects. As indicated in the First Nat. Bank case, the Supreme Court may deny direct appeal jurisdiction because in its judgment there exist no “substantial” constitutional questions in the sense of state-wide impact. The Supreme Court may deny direct appeal because the particular constitutional question may not have been ruled upon by the trial court, or because there may exist nonconstitutional bases for disposing of the case. Any or all of these reasons could well justify a transfer of a cause to the Appellate Court, and unless in the transfer the Supreme Court expressly indicates the basis of the transfer, this court will not treat the constitutional aspects of the case as having been ruled upon by the Supreme Court.

In the instant case, the Circuit Court ruled that section 27 (c) does not apply to real estate, and issued a memorandum indicating that the only basis of its ruling was that section 27(c) did not “empower the Commission to demand of a public utility prior approval of sales of its real estate.” Nevertheless, the summary decree which was entered in the plaintiff’s favor included two bases of decision — “that Section 27 of the Public Utilities Act of Illinois does not apply to real estate; that Section 27 of the Public Utilities Act of Illinois as it applies to real estate provides no standard and violates Article 3 of the Constitution of the State of Illinois; 99

We should note that the Attorney General maintains that the plaintiff’s suit filed in the Chancery Division of the Circuit Court is a collateral attack upon an order of the Commerce Commission. The basis of this assertion is that the plaintiff first filed a petition with the Commission seeking approval of a particular transaction, the sale of coal rights to an individual for a total purchase price of $489,970. The Railroad then filed a motion to dismiss, asking that the Commission enter an order disclaiming jurisdiction of the subject matter, based on a finding that section 27 did not confer jurisdiction in the Commission over the transfer of real property by a public utility. The Commission denied the motion and denied approval of the sale. However, prior to the date the Commission entered its order, the Railroad filed its complaint in the Circuit Court seeking injunctive relief against the Commission to restrain it from enforcing section 27(c).

The Circuit Court properly entertained the suit. The plaintiff’s complaint was not that the Commission had denied approval of the sale, but that plaintiff was being compelled to seek Commission approval at all. The injury complained of was not that the Commission had improperly denied approval of the sale, but that it had accepted jurisdiction of the matter; and the Railroad sought an injunction to restrain the Commission from taking such jurisdiction. It is apparent that the plaintiff’s complaint was not a collateral attack upon a Commission order; therefore, the issues brought to the Circuit Court were entitled to judgment.

One basis of the trial court’s ruling was its construction of the statute involved; in its view, section 27 (c) (which we have already set out) did not confer jurisdiction upon the Illinois Commerce Commission regarding the disposition of real estate by a public utility. However, we hold that section 27 (c) of the Public Utilities Act does confer jurisdiction upon the Illinois Commerce Commission over public utility real estate transactions.

In support of its argument the Railroad invokes the rules of strict construction, ejusdem generis, the maxim of expressio unius est exclusio alterus. The Railroad contends that the legislative intent is clear that jurisdiction not be conferred.

In 1928 the Illinois Supreme Court decided Chicago & Western I. R. Co. v. Englestein, 333 Ill 117, 164 NE 189, a case involving negotiations between the Wabash Railway Company and Harry M. Englestein for the purchase by Englestein of some railway real estate in the amount of $180,000. Englestein alleged that he had a contract with the railroad while the railroad denied having entered into a contract with him. The railroad sought Commission approval to sell the land to a third party and Englestein intervened to prevent the sale, alleging that he had an interest in the land by way of a contract to purchase. No Commission approval had been obtained for the sale to Englestein. In the course of the opinion, the court pointed out the provisions of section 27 of the Public Utilities Act, and the language of section 27 (c) at that time was the same as its present form; the phrase “real estate” did not appear. The court held that since the Commission had not authorized the contract between the railroad and Englestein, it was void; that the contract involved was for the sale of real estate and would not be valid unless it had Commission approval. That rule requiring Commission approval is controlling in the instant case.

The Railroad here urges that section 27 provides no standards to guide Commission decision regarding its power over approving or withholding approval of real estate transactions by a public utility. That section provides, in part, however: “. . . if the Commission is satisfied that such petition should reasonably be granted, and that the public will be convenienced thereby, the Commission shall make such order in the premises as it may deem proper .... The Commission shall impose such conditions as will protect the interest of minority and preferred stockholders.”

The Railroad argues that the quoted language leaves the Commission “free to grant or withhold its approval at its whim.” With this we cannot agree; we hold that the statute provides sufficient guidelines for the Commission, and that the grant of power is not an unconstitutional delegation of authority.

The Railroad argues in its brief that the term “reasonably” affords no protection against the exercise of favoritism and discrimination, and asks: “What is the Commission supposed to take into consideration when deciding whether the petition should reasonably be granted ? Is it the legal terms of the mortgage? Is it the financial responsibility of the tenant or buyer ? Is it the necessity or usefulness of the real estate in the performance of duties to the public? Is it the amount of the rental or mortgage loan or purchase price ? Or, is it the terms of payment? Is it the protection of stockholders or is it the convenience to the public ?”

These questions, although unintentionally, clearly illustrate that the situation varies depending upon the particular circumstances of the transaction, and it is apparent that the legislature properly used the term “reasonably.” A precise formula which will cover all potential situations cannot be adopted. The Commission, however, has been given one constant factor to consider; namely, that the public will be convenienced by the approval of a particular transaction under its consideration. Once it is satisfied that such is the case, and that the particular transaction should reasonably be granted it will give its approval.

The Railroad complains that under this system “buyer and seller have no means of knowing whether their sale will be approved,” and its complaint appears to be that it should not have to undergo periods of uncertainty regarding proposed transactions; that it should be given the same business freedom as afforded to private companies. However, that disregards the fact that a public utility receives certain benefits, and because of that fact, owes certain obligations.

Section 41 of the Public Utilities Act states that “. . . the Commission shall determine the just, reasonable or sufficient rates or other charges, . . . .” This standard of “reasonableness,” closely related to the section 27(c) standard here under attack, is repeatedly commented upon by the Illinois Supreme Court in Village of Apple River v. Commerce Commission, 18 Ill2d 518, 165 NE2d 329, where the Commission had allowed a telephone company to increase its rates. On appeal to the Circuit Court the decision was reversed, since it was the view of .the trial court that the Commission’s order was unreasonable. In the opinion the court said at page 523 that the Commission “is to determine that the rates are just and reasonable and that the services are adequate. In order to perform its public function, the legislature has given the Commerce Commission very broad powers, indeed. The Commission, on its own initiative, can promulgate orders, rules or regulations fixing adequate service standards and requiring adequate facilities.” (Emphasis supplied.) This statement places its stamp of approval upon the standard “just and reasonable” and points out and approves the broad powers which have been delegated to the Commission.

The Railroad next urges that if section 27 is construed as including real estate, then the section is in violation of section 13 of Article 4 of the Illinois Constitution, which provides in pertinent part:

“No act hereafter passed shall embrace more than one subject, and that shall be expressed in the title. But if any subject shall be embraced in any act which shall not be expressed in the title, such act shall be void only as to so much thereof as shall not be so expressed . . . .”

That aspect of section 27 dealing with real estate transactions is properly related to the other portions of the Act, and thus, the Railroad’s argument is baseless. Public Service Co. v. Recktenwald, 290 Ill 314, 319, 125 NE 271; Central Illinois Public Service Co. v. Vollentine, 319 Ill 66, 70, 149 NE 580; Co-ordinated Transport, Inc. of Illinois v. Barrett, 412 Ill 321, 325-29, 106 NE2d 510.

The Railroad further argues that if section 27 is construed to include real estate, it includes all real estate owned by a public utility; that since not all such real estate is necessary or useful in the performance of its duties to the public, the public utility should not be required to seek Commission approval of transactions of real estate which is neither necessary nor useful in the performance of its duties to the public. The Railroad contends that if section 27 is construed to include real estate, “the legislature failed to make allowance for real estate not devoted to the public utility business and as a result it has restricted the use and enjoyment of such real estate. The restriction is without reason and foundation and arbitrary.” The Railroad even argues that such restriction is in violation of section 2 of Article 2 of the State Constitution, providing that “no person shall be deprived of life, liberty or property, without due process of law.”

The Railroad fails to take into consideration that if there were no Commission control the decision as to whether retention of any particular real estate were necessary or useful to the public would be left entirely in the hands of the Railroad. In other words, the argument presumes that the property in question is not affected in the public interest, the yery essence of what is to be properly determined by the Commission. We think that before the Railroad can make the argument it here seeks to assert, it would need to have received a ruling from the Commission that the property was in no way affected with the public interest, but that the Commission was still going to withhold approval. That, of course, is not the present situation.

Finally, the Railroad pleads that the State is not entitled to act through section 27 to control public utilities engaged in interstate commerce. It argues that the Federal government has preempted the field, and it points to section 94 of the Public Utilities Act, which states:

“Neither this Act nor any provision thereof shall apply or be construed to apply to commerce with foreign nations or commerce among the several states of this Union, except to the extent permitted under the provisions of the Constitution of the United States and Acts of Congress, and the applicable decisions of the Supreme Court of the United States.”

No section of the Interstate Commerce Act requires Interstate Commerce Commission approval for sales such as are here under consideration.

The Railroad argues that notwithstanding Federal silence, the area is preempted because State control over transactions such as this would seriously hamper the commerce of the country, and that the exercise of section 27(c) will create a “ ‘prospect of interference with the federal regulatory power’ ” such as was found in Natural Gas Pipeline v. Commerce Commission, 33 Ill2d 214, 223, 210 NE2d 490. It does not appear to us that there is any such danger, nor do we see why the State should not be entitled to regulate the disposition of property within its own borders.

We disagree with the Circuit Court’s reading of the section under review, and hold that the Illinois Commerce Commission is vested with jurisdiction by section 27(c) to grant or withhold approval of real estate transactions by public utilities pursuant to the standards provided. We further hold that adequate standards are provided and that the statutory provision is constitutionally sound.

Accordingly, the order of the Circuit Court is reversed and the cause is remanded with directions to dissolve, expunge and set aside the injunction heretofore entered.

Reversed and remanded with directions.

LYONS and BURKE, JJ., concur.

       The pertinent portions of the section are:
      Intercorporate relations and transactions — Approval by commission — Procedure-—-Waiver.] § 27. 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, but this shall not be construed to prevent the sale, lease, assignment or transfer by any public utility of any tangible personal property which is not necessary or useful in the performance of its -duties to the public.


author: MR. JUSTICE McNAMARA

text:
    People of the State of Illinois, Plaintiff-Appellee, v. Uwe K. Jansen, Defendant-Appellant.
    Gen. No. 54,859.
    First District, Third Division.
    October 1, 1970.
    Herman M. Garvin, of Chicago, for defendant-appellant.

      Edward V. Hanrahan, State’s Attorney of Cook County, of Chicago (Robert A. Novelle and Anthony Montemurro, Assistant State’s Attorneys, of counsel), for plaintiff-appellee.
   MR. JUSTICE McNAMARA

delivered the opinion of the court.

Defendant, Uwe K. Jansen, was charged with driving a vehicle while under the influence of intoxicating liquor, and also with following a vehicle too closely. After a bench trial, he was found not guilty of following a vehicle too closely, but was found guilty of driving under the influence of intoxicating liquor. He was fined $200 and costs, and his driver’s license was revoked. He appeals, contending that he was not proved guilty beyond a reasonable doubt.

Prior to the taking of testimony, the assistant State’s Attorney asked defendant if he would stipulate to the breatholyzer reading; and counsel for defendant replied “as to the score.”

The arresting police officer testified that at about 4:30 p. m. on October 22, 1969, he was called to investigate an accident. When the officer arrived, defendant and the driver of the other vehicle were present. Defendant talked in a loud voice, and the officer noticed the odor of alcohol on his breath. He swayed when he walked and turned, and his clothes were soiled. However his eyes were normal.

At the police station, defendant took certain tests. He swayed when he walked and turned; he completely missed the finger-to-nose test with his left hand, and was hesitant with his right hand. He picked up coins slowly. Defendant told the officer that he drank three bottles of beer. In the police officer’s opinion, defendant was under the influence of intoxicating liquor. Defendant took the breatholyzer test, and the reading was .160.

On cross-examination, the officer testified that he parked defendant’s car and returned the auto keys to him after placing him under arrest. Defendant was gentlemanly and cooperative, and had no difficulty in getting in the squad car.

Defendant testified that he had finished work at 3:00 p. m. on the day in question. After work, he and two fellow employees went to a tavern and each had three 12-ounce bottles of beer over a period of one hour. He left the tavern and was proceeding home. As he drove, the car in front stopped suddenly, and his car came in slight contact with it. He and the other driver drove to an auto parts store to get an estimate of the damage to the other car, which defendant promised to pay. Defendant then called the police. When the officer arrived, he was arrested.

At the police station, he was told to hold his arms straight out, his head up and to walk. He was nervous, and may have swayed while so walking. Defendant also testified that he had no difficulty in touching his finger to his nose, or in picking up the various coins. Defendant had part of his lung removed and a bronchial condition; as a result he was short-winded. Defendant further testified that the beer which he drank prior to the accident did not affect him in any way; he normally drank several bottles a day.

Frank Janosek testified in behalf of defendant that he was a fellow employee and had known defendant for five years. On the day in question, he, defendant and another employee each had three bottles of beer at a tavern near work. When defendant left for home, he spoke normally and coherently. His eyes were not bloodshot nor was his face flushed. He had no difficulty in walking, and, in the opinion of the witness, was sober.

On appeal, defendant contends that he was not proved guilty beyond a reasonable doubt. Under this heading, he argues that the failure of the State to lay a foundation for the results of the breatholyzer test negated any presumption of guilt which may have arisen from that test; that the State’s evidence was weak; and that the uncontradicted and unimpeached testmony offered by the defense could not be disregarded.

The Uniform Act Regulating Traffic on Highways, Ill Rev Stats 1967, c 95½, § 144, provides that the results of chemical analysis of breath, urine, saliva or other bodily substance are admissible, and if such analysis indicates that there is more than .10 percent by weight of alcohol in the person’s blood, a presumption that the person was under the influence of alcohol arises. The section also provides that, to be considered valid, the tests must be performed according to uniform standards and by persons authorized by the State Department of Public Health.

We find no merit in defendant’s argument that his agreement as to the introduction of the results of the breatholyzer test did not constitute a proper stipulation, thus waiving the need of any foundation evidence by the prosecution as to the testing. When defendant stipulated that the reading of .160 might be introduced into evidence, he conceded that the reading in fact was correct, and that the test had been given in a proper manner. This is also made evident by what occurred at trial. The results of the test were introduced without objection, and in closing argument, the primary contention of defendant’s counsel was that the testimony introduced by the defense had successfully rebutted the statutory presumption created by the test. Defendant registered a reading of .160, approximately 60% over the minimum set forth in the statute, and the trial court properly considered that result in coming to the conclusion that defendant was guilty of the charge.

Defendant has pointed out that certain testimony offered by the defense was unimpeached and uncontradicted, and correctly states that such testimony could not be disregarded by the trier of fact. People v. Skelly, 409 Ill 613, 100 NE2d 915 (1951). However the testimony of the police officer as to his observations and as to the results of the tests performed by defendant, coupled with the presumption allowed to be drawn from the results of the breatholyzer test, was clearly sufficient to establish defendant’s guilt beyond a reasonable doubt. The testimony of the police officer was clear, positive and credible, and defendant has not called our attention to any inconsistencies or discrepancies in that testimony.

The judgment of the Circuit Court is affirmed.

Judgment affirmed.

DEMPSEY, P. J. and SCHWARTZ, J., concur.


author: JUSTICE DRUCKER.

text:
    Peter J. Vlahakis, Plaintiff-Appellant, v. Erick W. Kuntze, Sr., Erick W. Kuntze, Jr., E. W. Kuntze & Sons Contractors, Country Acres Apartments, as Agent for Beneficiaries of LaSalle National Bank Trust No. 29385 and Unknown Owners, J. Kuntze Bldg. Corporation, Defendants-Appellees.
    Gen. No. 54,864.
    First District, Fourth Division.
    October 21, 1970.
    Peter J. Vlahakis, pro se, of Des Plaines, appellant; Heinze, Downs & Cussen, of Palatine (George E. Downs, of counsel), for appellee.
   Opinion by

JUSTICE DRUCKER.

Not to be published in full.


text:
    G & S Mortgage & Investment Corporation, an Illinois Corporation, Plaintiff-Appellant, v. City of Evanston, a Municipal Corporation, Defendant-Appellee.
    Gen. No. 54,974.
    First District, Second Division.
    October 13, 1970.

      Samuel Morgan, of Chicago, for appellant.
    Jack M. Siegel, Corporation Counsel of City of Evanston, for appellee.
   MR. PRESIDING JUSTICE McCORMICK

delivered the opinion of the court.

In 1925, the City of Evanston (defendant) . issued a permit authorizing the construction of a 10-unit apartment building at 1003-1009 Greenleaf Street. The building now contains 12 units. In 1968, the defendant conducted an intensive check for zoning violation of various sections of the City, as a result of which a quasi-criminal complaint was filed on September 11, 1968, against G&S Mortgage & Investment Corp. (plaintiff). This complaint charged a violation of the Evanston Zoning Ordinance in that three units more than allowed were maintained in the building. (Since that action, one of the three excess units has been vacated.)

On November 22,1968, plaintiff was found guilty of the violation of a zoning ordinance and fined $100, plus costs. Four days later, the plaintiff filed a complaint asking for a temporary restraining order to prevent the defendant from instituting any further quasi-criminal proceedings based upon the alleged violation. After a hearing the chancellor denied the restraining order. The plaintiff appeals, asking that the order refusing issuance of the temporary injunction be reversed.

The defendant argues that plaintiff is barred from proceeding with its complaint seeking a temporary injunction on the ground that on November 22, 1968, plaintiff was found guilty of a zoning violation; that at that time it paid the fine but took no appeal from that judgment. In its brief defendant states: “The law is of course well settled that a former adjudication is a bar to a subsequent action on the same point between the same parties. The very allegations of the plaintiff in this action with respect to nonconforming use status and the validity of the zoning ordinance were affirmative defenses in the suit before the magistrate.”

The defendant had filed a motion to dismiss plaintiff’s complaint, and when the plaintiff filed an amended complaint, defendant filed another motion to dismiss that complaint. The theory underlying that motion was that all defenses available to the plaintiff could have been raised in defense of the prior quasi-criminal action; that the finding of guilty in that action bound both parties to the litigation, and that those issues could not be relitigated. This is an attempt to apply the rule of res adjudicata. However, that doctrine requires that the parties to subsequent litigation be the same as those previously involved, and that the cause of action be the same.

In City of Elmhurst v. Kegerreis, 392 Ill 195, 64 NE2d 450, the court said at page 203:

“. . . if the first suit was between the same parties and involved the same cause of action, the judgment in the former suit is conclusive, not only as to all questions actually decided but as to all questions which might properly have been litigated and determined in that action.” (Emphasis supplied.)

Here the cause of action in the chancery division was not the same as that in the quasi-criminal proceeding; thus res adjudicata is inapplicable.

The doctrine of estoppel by verdict does not require that the cause of action be the same.

“When some specific fact or question has been actually and directly in issue and has been adjudicated and determined by a court of competent jurisdiction in a former suit, and the same fact or question is again put in issue in a subsequent suit between parties or their privities who were parties in the former suit, its determination in the former suit, if properly presented and relied upon, is conclusive upon the parties and persons in privity with them in the latter suit, without regard to whether or not the cause of action is the same in both suits, and it cannot be again litigated in the subsequent suit upon the same or a different cause of action whatever may have been the nature of the first action or of the second action in which the estoppel is set up: . . . .” Rose v. Dolejs, 7 Ill App2d 267, 275, 129 NE2d 281.

In the instant case, neither the verdict nor the report of proceedings in the quasi-criminal action was before the chancery division, and they are not before this court; therefore, it is difficult to know what issues were litigated, and the doctrine of estoppel by verdict cannot be employed. See City of Chicago v. Provus, 115 Ill App2d 176, 180, 253 NE2d 182, for the proper procedure to be followed in raising an estoppel by verdict.

At the hearing on the complaint for temporary restraining order, the following facts were disclosed. In 1925, the City of Evanston issued a building permit authorizing 10 units to be included in the projected building. Although the complaint states that “the building which was actually constructed on the said premises in 1925 contained thirteen apartments; that the defendant made no objection to the additional number of apartments upon their completion in 1925 or in any subsequent year prior to 1968; . . .” no evidence was introduced to prove these assertions.

The plaintiff seeks to prevent the City of Evanston from prosecuting it for the zoning violation, because it received a letter from a City official indicating that there were no violations other than a plumbing violation. A manually-operated check valve in the basement apartment had to be replaced due to a malfunction. The City learned of this through a complaint about the valve received on September 19, 1966. The supervisor of the Property Standards Division, who was responsible for directing the area inspections in Evanston, testified that as a result of the complaint a standard inspection was made of the premises. He explained that pursuant to such a complaint “we go directly to the area of the complaint. This is the only area we are interested in.”

After the inspection was completed, a letter was mailed to the then owner of the building, which letter read in part: “An inspection of the building controlled by you at 1003 Greenleaf Street on October 14, 1966 revealed the following violations of Ordinances, of the City of Evanston: . . . .” The violation pointed out was that the plumbing fixture was not in a good sanitary working condition. The plaintiff argues that it relied on this letter when purchasing the building; that the letter is tantamount to a statement by a City official that the only ordinance violation in the building was the valve leak, since the letter states that an inspection “revealed the following violations” and lists only the valve leak.

Under Illinois law a municipality cannot be es-topped unless it has engaged in positive acts by municipal officers which “may have induced the action of a party, and where it would be inequitable to permit the corporation to stultify itself by retracting what its officers had done, but mere nonaction is not sufficient to work an estoppel.” Trustees of Schools v. Village of Cahokia, 357 Ill 538, 543, 192 NE 565. The letter in the instant case was not a “positive act” by a City official; therefore, it does not fall within the rule.

When the plaintiff purchased the building in January 1967, the most obvious thing to have done prior to the purchase would have been to inquire of the City concerning any and all ordinance violations in the building. This apparently was not done. Carl Weiner, president of plaintiff company, testified that he could not remember whether he had made any direct inquiry of the City of Evanston before buying the building. Benjamin Seaman, the secretary, was asked: “Prior to its acquisition, did you make any specific inquiry to any officer in the City of Evanston with respect to the legal use of this property, you personally ?” He replied, “No, I did not.”

Plaintiff argues that the City has allowed this violation to continue for 43 years, and that in making 17 inspections of the property during that time, it had never registered a complaint. Plaintiff further argues that the City is now estopped from complaining. The chief inspector for the Property Standards Division of the City testified that prior to 1964 there was no department authorized to conduct door-to-door inspections of existing buildings, and no staff to handle such a job. The only inspections then carried out were those of new construction sites or on complaints received of specific violations. This division was created to inspect existing buildings in Evanston to determine whether they were in compliance with the City’s Housing and Zoning Codes.

Regarding the plaintiff’s assertion that the building had been inspected 17 times, City records disclosed that 10 of those inspections were from the Fire Department, one from the Health Department, one from an Air Pollution Control Division, three from the Building Department, and only two from the Property Standards Division. The Fire Department inspections were made annually, that program having begun in 1959. None of the inspectors went through the whole building, but rather, looked for particular violations in particular parts of the building. However, in 1964, the City started a program whereby an entire area was singled out for full inspection by the Property Standards Division to uncover any housing or zoning violations. The property in question was inspected during one such occasion, and it was then that the zoning violation was discovered.

In Logan County Board of Sup’rs v. City of Lincoln, 81 Ill 156, 159 (written in 1876), the Supreme Court said: “It would be a pernicious doctrine to establish that public rights of municipalities could be cut off by the neglect of the appointed officers for an unreasonable time to enforce them.” The opinion further stated that “mere nonaction of its (a municipality’s) officers is not sufficient to work an estoppel as against a municipal corporation.” This is still true.

The plaintiff cites City of Evanston v. Robbins, 117 Ill App2d 278, 254 NE2d 536, in support of its argument. In that case the City had filed a quasi-criminal complaint against a property owner for maintaining a multiple dwelling in a district zoned for single-family dwellings. The defendant was found not guilty, and the City took an appeal. This court noted at page 280 that the multiple-family use had been in existence for 25 years and that “the City had inspected the residence as a multiple-family residence and had affirmatively directed defendant to make corrections based upon multiple-residence requirements.” The court felt the doctrine of estoppel was properly invoked. However, the case differs from the one before us, since in Robbins it was “clear that the City indulged in positive acts of enforcement which required improvements by defendant consistent with multifamily use” (page 286). In the instant case, it is clear that the City did not indulge in such “positive acts.”

The Robbins opinion held that under the facts presented, the defendant was entitled to the benefit of the doctrine of equitable estoppel. However, under the facts in the instant case, the plaintiff failed to show any positive acts of the City which reasonably induced a detrimental financial investment. In other words, plaintiff’s predicament is not the fault of the City, and plaintiff cannot now seek to restrain the City from performing its duties.

Plaintiff cites Westfield v. City of Chicago, 26 Ill2d 526, 187 NE2d 208, for the proposition that the City was required to present evidence of a public interest which would be served by plaintiff’s complying with the zoning ordinance. That case involved a declaratory judgment action, and the court balanced the interests of the property owner against the public interest and concluded that the ordinance as applied to plaintiff was unreasonable and confiscatory. However, as pointed out on page 531, the presumption of validity of the ordinance is not overcome until “it is shown that there is no reasonable basis in public welfare requiring the restriction and that there is a resulting loss to the property owner.” In the case before us, the presumptive validity of the ordinance in question has not been overcome, and there was no necessity for the City to show the public interest involved.

Finally, the plaintiff urges it was entitled to a temporary restraining order to prevent a multiplicity of suits. After its complaint was filed in the chancery division, a second complaint was filed by the City against the plaintiff for the ordinance violation here involved. Plaintiff argues that it is entitled to a restraining order to prevent the filing of a series of suits against it.

It must first be noted that the general rule is that a court of equity will not interfere with criminal processes. “The only exceptions to the rule that a court of equity will not interfere by injunction to restrain the enforcement of the ordinances of the village or city, are, 1) to prevent a multiplicity of suits, and 2) to prevent irreparable injury.” Delta Die Casting Co. v. Village of Schiller Park, 17 Ill App2d 543, 545, 150 NE2d 843. However, in the instant case, the plaintiff has been found guilty of violating a City Housing Code, and now asks a court of equity to restrain the City from prosecuting it again, although the statute under which the City filed the complaint provides in pertinent part: “. . . each day’s failure to comply with any such provisions shall constitute a separate violation.” Section 23-13, Evanston Housing Code. Therefore, the City cannot give any assurances as to the number of suits it will file, and it remains for the plaintiff to put an end to its own injury and all of the City’s suits by complying with the ordinance.

The issuance of a restraining order under these circumstances would be tantamount to a collateral attack upon the former judgment of conviction. We conclude that the chancellor properly denied the injunctive relief sought. The order of the Circuit Court is affirmed.

Affirmed.

LYONS and BURKE, JJ., concur.


author: MR. JUSTICE ABRAHAMSON

text:
    Marion Wanzer, Charles Lewis, Elisabeth Lewis, Thomas Raines, Nannie Raines, Renetta Schmitz, Unity School of Christianity, and Hazel Hurst Foundation for the Blind, Inc., Plaintiffs-Counterdefendants-Appellants, v. Smorgas-Brickan Developers, Inc., Thompson’s Carpets, a Corporation, Acapco, Inc., a Corporation, Wilson Electric Co., a Corporation, S. J. Carlson & Sons, Inc., a Corporation, Commercial Refrigeration Co., a Corporation, Raymond Kooyer, P. H. Van Steenwyk, Lennart Dahlberg and Sun-Ray Fixture Mfg. Co., a Corporation, Defendants-Counterplaintiffs-Appellees.
    Gen. No. 70-47.
    Second District.
    November 4, 1970.
    Rehearing denied December 23, 1970.

      Williams, McCarthy, Kinley and Rudy, of Rockford, for appellants.
    Berry, Simmons & Coplan, Thomas & Thomas, and Welsh, Welsh, Holmstrom & Hyzer, of Rockford, for appellees.
   MR. JUSTICE ABRAHAMSON

delivered the opinion of the court.

The plaintiffs sold real estate formerly occupied by the Bishop Cafeteria, in Rockford, Illinois, to Smorgas-Brickan Developers, Inc., under Agreement for Deed. Smorgas-Brickan, thereafter, contracted with various contractors to renovate the building. Smorgas-Brickan, soon after occupying the building as a cafeteria, found itself in financial difficulties and went into bankruptcy.

With this as the background, the plaintiffs (owners of the property), on December 8, 1967, filed suit to restrain each of the contractors, who took part in renovating the building, from removing property from plaintiff’s building and for an accounting of all claims and for judgment against Smorgas-Brickan. The defendant-contractors each answered and filed counterclaims, asserting mechanics’ liens against the real estate owned by the plaintiffs.

The Circuit Court of Winnebago County, on October 31, 1969, entered a decree finding that the plaintiffs, by and through their agents and representatives, had knowledge of the improvements, alterations and modification contemplated by the defendant Smorgas-Brickan, and of the necessity therefor, and knowingly permitted the improvements involved in the lien claims of the defendants; that Smorgas-Brickan had become bankrupt and gone through bankruptcy in Federal Court and had forfeited all interest in and into the premises which it had contracted for; and ordered that the plaintiff’s complaint be denied and granted liens against the premises for the work performed by the contractor-defendants.

The owners have appealed to this court on the basis that the original Agreement for Deed did not permit Smorgas-Brickan to authorize work which would result in mechanics’ liens, and the owners did not consent or knowingly permit the work of the claimants to be done.

We first dispose of the issue of whether the contractors are bound by a provision in the original Agreement for Deed which stated that:

“The buyer ... 2. Shall not permit to be done upon said premises anything out of which a mechanic’s lien could arise or attach thereto except with the previous written consent of sellers.”

The owners did not record the Agreement for Deed. A provision in a lease of which third parties have no knowledge that a lessor’s interest shall be exempt from mechanics’ liens is void as against such third parties. Friebele v. Schwartz, 164 Ill App 504, 507, 508; Boyer v. Keller, 258 Ill 106, 112, 101 NE 237; Love, Illinois Mechanics’ Liens, 2nd edition, pages 94 and 95. As these contractors had no knowledge of the agreement provision, it is void as to them.

As to the owner’s contention that they did not consent or knowingly permit the work of the claimants to be done, it is clear that if they did consent or knowingly permit the work of the claimants to be done, the land in question would be subject to the liens for work done, under the provisions of chapter 82, section 1, entitled: “Person entitled to lien — Extent of lien,” Ill Rev Stats 1967.

When the Agreement for Warranty Deed in question was entered into on March 15, 1967, the building was over 40 years old and had been used for 37 years by Bishop Cafeteria, the lessee. Also, at the time the Agreement for Deed was entered into, the owner of the premises had died and the new owners were all nonresident devisees. These devisee owners were represented by a Rockford Lawyer and a Chicago lawyer with regard to the legal matters pertaining to the sale, and by a Rockford realtor, a Mr. Levis, who had been manager of the building since 1961, and represented them in the sale. It does not appear that any of the devisees had ever seen the inherited premises. The Contract for Deed was negotiated by a Mr. Dahlberg, a realtor representing Smorgas-Brickan Developers, Inc., with Mr. Levis.

Mr. Levis testified that he has had 16 years of experience as a real-estate broker, and had managed the building up until April 1, 1967, when he was informed by the owners that his services as a manager were no longer needed. His office was located about half a block north of the building in question, and as managing agent, it was his responsibility to be familiar with this property. He also stated that Bishop Cafeteria, the former tenant, had only done minor upkeep work on the premises for many years.

Mr. Levis was first contacted by Smorgas-Brickan in December, 1966, and he was given a document setting forth the prospective lessee’s requirements concerning renovating the building, but the lease was never signed. Instead, the sales contract was negotiated by Mr. Levis, representing the seller, and Mr. Dahlberg, representing Smorgas-Brickan. Mr. Levis testified that they had discussed, in general terms, the repairs to the interior that the purchaser intended to make after he took possession.

The seller’s Chicago attorney expressed concern about the proposed sales contract, and Mr. Dahlberg furnished Mr. Levis with a letter from Sun-Ray Manufacturing Co. This letter quoted a figure of $85,000 which, supposedly, was to represent the sum total that Smorgas-Brickan intended to spend to refurbish the interior of the building.

Mr. Levis also testified that he knew there would be refurbishing and renovating and work done which would be necessary in order for Smorgas-Brickan to open for business. Mr. Levis further stated that he knew Smorgas-Brickan was going to put the building back in good shape, but he did not inquire into what way or to what extent.

Mr. Levis wrote a letter to the sellers dated February 8, 1967, advising them of his concern with this vacant property and the necessity of an Agreement for Deed rather than an outright sale, because the buyer was under-capitalized. Improvements were also mentioned in this letter. Part of this letter is as follows:

“The buyer’s cash position what with the required building restoration that will be necessary, is limited and therefore the reason for the limited down payment and future monthly payments.”

The seller’s Chicago attorney also pointed out that the transaction presented a number of hazards. His letter to the Rockford attorney of the seller, of February 13, 1967, states in part:

“I have no knowledge of the conditions of the area surrounding the building or of the building itself— Furthermore I believe the sellers should know more about the purchasers’ ideas with regard to renova^tion of the building, for this is apparently the excuse for offering to sign a contract instead of an outright purchase.”

The Chicago attorney also noted in his letter other undesirable features of the transaction and recommended that Mr. Levis continue to represent the seller after the Agreement had been signed. The advice to continue to retain Mr. Levis after the Agreement of Sale was only followed up to April 1, 1967, when Mr. Levis’s agency was terminated.

Each of the mechanic lien claimants testified as to the shabby condition of the building and that Bishop Cafeteria had removed all of its restaurant equipment and air-conditioning system.

Work was started by defendant lien claimants in April, 1967, and continued through September, 1967, with the new restaurant opening in October, 1967. Smorgas-Brickan closed and went into bankruptcy in December, 1967, and no lien claimant has received any payment. The trustee in bankruptcy had disclaimed the Agreement for Deed, and the owners reclaimed the building.

The defendant lien claimants, aside from testifying to the shabby condition of the building, point out that the floors were dangerous; that the tile ceiling, which was not fireproof, violated the City Code; that new air conditioning was needed; that heavier wiring was needed to comply with the code; and that, in effect, the building needed a complete restoration and refurbishing.

Although we have not detailed the voluminous evidence, we believe that the trial court correctly determined that the owners “knowingly permitted” the work to be done. Mr. Levis was the owner’s agent up until April 1, 1967, and this is not disputed. His knowledge of the contemplated improvements is imputable to the owners. See Mutual Const. Co. v. Baker, 237 Ill App 596, 601; Johns-Manville Corp. of Delaware v. LaTour D’Argent Corp., 277 Ill App 503, 517. In Matot v. Barnheisel, 212 Ill App 489, 494, which is a case somewhat similar to this one, it was held that where the lessee had sublet his property and where a contractor was performing work on the property, that when the lessee testified he “supposed they were doing work in there, but I didn’t know,” the law will fasten upon him knowledge of that fact and subject the land to a lien. Furthermore, since the lien claimants have complied strictly to the statutory requirements to establish their lien, the mechanics’ lien statute should be given a liberal construction so that justice will be done. Gunther v. O’Brien Bros. Const. Co., 293 Ill App 28, 34, 12 NE2d 23.

It appears that the defendant-contractors performed their contracts in good faith. It also appears that the owners did not choose to record the Agreement for Deed, which included the no-lien provision; failed to follow their lawyer’s advice, and discharged Mr. Levis, the managing agent as of April 1, 1967. Although they may not have done it intentionally, it would seem that these absentee owners made certain that they would be in ignorance of what was done to renovate and refurbish the building after April 1, 1967. Although many of the cases cited pertain to lessees contracting for improvements to be made upon property, the same law applies to a vendee under an Agreement for Deed. See Henderson v. Connelly, 23 Ill App 601, affirmed 123 Ill 98, 103, 14 NE 1; Paulsen v Manske, 126 Ill 72, 78, 18 NE 275.

As to the lien claim of S. J. Carlson & Sons, Inc., it appears that Carlson bought stock in Smorgas-Brickan Developers, Inc., after Carlson began plumbing work on the property involved herein. The owners claim that by doing so, Carlson is charged with notice of the conditions of the Agreement for Deed which Smorgas-Brickan entered into with the plaintiffs. The plaintiffs cite no cases, and without more than the mere fact that said stock was bought, does not make Carlson bound by the Agreement for Deed.

The plaintiffs further contend that the carpeting, furnished by the lien claimant Thompson’s Carpets, does not fall within the scope of the Mechanics’ Lien Act because it was considered personal property throughout the entire transaction, and thus is not a lienable fixture.

From the testimony elicited, it appears that the owner did have knowledge prior to the execution of the Agreement for Deed that Smorgas-Brickan intended to install new carpeting and that Mr. Levis had knowledge that they were going to install carpeting. Even if the owners did not have actual knowledge, the knowledge of Mr. Levis, the owner’s agent, is binding on the owners. JohnsManville Corp. of Delaware v. LaTour D’Argent Corp., 277 Ill App 503, 517. This knowledge is not based on the agent’s authority but on his knowledge and his duty to communicate that knowledge to the owners. Mutual Const. Co. v. Baker, 237 Ill App 596, 601.

The condition of the floor was that it was in a state of disrepair, aged, torn and broken up in pieces. Apparently asphalt tile, which had been put over the original ceramic tile, had been worn through in many places. Furthermore, it is revealed that the old floor was not usable because it would be impossible to match the existing tile for replacement.

Thompson installed rubber padding, which was glued to the existing floor, and the wall-to-wall carpeting was installed by drilling holes in the tile floor, attaching strips thereto, and then tacking the carpeting to the strips. The carpeting was cut to the dimension of the floors. This carpeting was subsequently sold at the bankruptcy sale, and it was cut into pieces in order to remove it. Both the owners and Thompson had notice of the bankruptcy sale, and neither objected. However, Thompson previously had properly filed its statement for a claim of mechanics’ lien. Many factors must be considered in determining whether personal property remains personal property or becomes a fixture within the meaning of “fixture” as used in the Mechanics’ Lien Act. In Owings v. Estes, 256 Ill 553, 555, 100 NE 205, the court stated:

“The sole question to be determined in this case is, are said cases, racks and hangers fixtures, and did the title thereto pass to the appellant, as real estate, at the master’s sale? It is generally held that what is annexed to the land becomes a part of the land, but it is often said it is not always easy to determine what constitutes an annexation sufficient for such purpose. Mr. Justice Breese, in discussing that question in Arnold v. Crowder, 81 Ill 56, on page 58 said: ‘Perhaps the true rule is that articles not otherwise attached to the land than by their own weight are not to be considered as part of the land unless the circumstances are such as to show that they were intended to be part of the land, the onus of showing they were so intended lying on those who assert that they have ceased to be chattels; and that, on the contrary, an article which is affixed to the land, even slightly, is to be considered as part of the land unless the circumstances are such as to show that the article was intended all along to continue a chattel, the onus similarly lying on those who contend that it is a chattel.’ ”
Page 557:
“In the case at bar all of the articles sought to be removed from the building were attached, more or less securely, to the building, and they were all purchased or made for the particular use to which they were appropriated in the building and were specially adapted to that use, and it is clear, we think, that it was the intention of Jesse Estes, at the time he attached the cases, racks and hangers to his building, that they should permanently become a part of the building. Each of said articles was specially adapted to the use to which it was appropriated in the building.”

Under the factual situation present here, we cannot say that the trial court erred in holding, in effect, that the carpeting was a fixture under the Mechanics’ Lien Act, and thus a mechanic’s lien is attached to the property for the claim of Thompson Carpets. A reviewing court will not set aside the determination of a trial court unless the determination of the trial court is clearly and manifestly against the weight of the evidence or is based on obvious error. Linn Farms, Inc. v. Edlen, 111 Ill App2d 294, 300, 250 NE2d 681.

For the reasons hereinabove stated, the decree below is affirmed.

Decree affirmed.

MORAN and SEIDENFELD, JJ., concur.