text:
    (No. 49560.

      In re JOSEPH C. SALADINO, Attorney, Respondent.

      Opinion filed April 3, 1978.

      RYAN, J., took no part.
    Sidney Z. Karasik, of Chicago (Michael Kreloff, of counsel), for respondent.
    Philip Schickedanz, of Springfield, for the Administrator of the Attorney Disciplinary Commission.
   MR. JUSTICE CLARK

delivered the opinion of the court:

In two separate but related complaints, the Administrator of the Attorney Registration and Disciplinary Commission has charged respondent, Joseph C. Saladino, an attorney since his admission to the Illinois bar in June 1950 and presently practicing in South Beloit, Illinois, with conduct which tends to bring the legal profession into disrepute. In the first complaint, count I charged respondent with taking title to premises without the prior approval or consent of the complainant, Mrs. Metha M. Van Hoveln, who had retained respondent to represent her in the real estate transaction; count II charged respondent with failure to provide the complainant with evidence or security for a loan she made, upon respondent’s advice, to United Tool and Engineering Company; and count III charged respondent with the preparation of a series of wills or codicils for the complainant, without her knowledge, under which bequests to him, through the residuary clause, increased substantially. The Hearing Board found no misconduct as to count II, but recommended a reprimand for count I and censure for count III. During its hearing, the Review Board raised questions concerning the preparation and execution of a warranty deed which purportedly transferred title from the respondent to complainant, and concerning his answers before that board. The second complaint was filed as a result of the Review Board’s continuance and the Administrator’s investigation. On this complaint, the Hearing Board found respondent had given false testimony. The Review Board concluded that the second complaint was “filed as an ancillary” proceeding to the first and “does not warrant separate discipline,” and recommended a one-year suspension.

Respondent first met complainant in 1957 when her husband asked respondent for advice. Subsequently, respondent prepared wills for them for which he was paid. In 1959, the husband died. Thereafter the relationship, while remaining that of attorney-client, grew into one of friendship. Indeed, respondent did not charge her for his services. Respondent visited complainant during her hospitalizations, having driven her to the hospitals on occasion. He was listed by her as the individual the hospital authorities should notify if they found it necessary. Apparently, Mrs. Van Hoveln grew dependent on respondent for some things. She had no relatives and few friends in the Rockford-Beloit area where she resided.

Evidence, apropos of count I, discloses that complainant, then 73, asked respondent to represent her in a real estate transaction in 1971. Respondent had handled the sale of a house for her previously. Growing dissatisfied with apartment living, she asked him to look at a small residence, in Beloit, Wisconsin, in which she was interested. Respondent recommended complainant buy it and prepared the deed. The closing was effected in his office September 7, 1971. Present were the sellers, not represented by an attorney; the complainant — the Hearing Board incorrectly found she was not there (the record shows this and the Administrator does not deny it); respondent; and his secretary. Title was taken in respondent’s name and in his wife’s, Lois Saladino, and the deed was recorded. Until delivery of the warranty deed conveying the property to her on January 5, 1972, a year and a half before the complainant filed a disciplinary grievance, complainant received no document or other evidence of ownership. Respondent maintains, but complainant denies, that before and again after the transaction she was fully informed of and assented to his taking title to the house with his wife. They were acting as trustees for her. He testified that, for her benefit, he compared this “trust-like” procedure to her profitable loan to United Tool which had been under a trust agreement. Respondent testified he was acting in this manner because Wisconsin does not recognize passive or land trusts; yet he was concerned that the “acquisition of this asset” might jeopardize her eligibility for governmental assistance for payment of medical expenses. He was also concerned that her physical condition — she had been hospitalized several times in the previous 10 years — might require a sale of the property at a time when she was incapable of participating in the sale. To protect her interests, respondent said that at the same time (September 7, 1971) he prepared the deed conveying the Beloit house from the sellers to him and his wife, he prepared another warranty deed conveying the same property to the complainant. That deed he placed in her file in his office. He also prepared a closing statement in which he showed her as purchaser. When she demanded the property be placed in her name, after discovering, she testified, it was in the Saladinos’ name, he told her to come to his office the next day, January 5, 1972. He delivered the deed to her then.

While respondent maintains that his actions were motivated only by his friendship with and concern for Mrs. Van Hoveln, we cannot condone them. We believe respondent may have had good intentions, but we conclude that his actions establish a prima facie case of abuse of a fiduciary relationship. In McFail v. Braden (1960), 19 Ill. 2d 108, 117-18, this court held:

“Where a fiduciary relation exists, the burden of proof is on the grantee or beneficiary of an instrument executed during the existence of such relationship to show the fairness of the transaction, that it was equitable and just and that it did not proceed from undue influence. [Citation.] The same rule has application where an attorney engages in a transaction with a client during the existence of the relation and is benefited thereby. [Citation.] Conversely, an attorney is not prohibited from dealing with his client or buying his property, and such contracts, if open, fair and honest, when deliberately made, are as valid as contracts between other parties. [Citation.] *** [I]mportant factors in determining whether a transaction is fair include a showing by the fiduciary (1) that he made a full and frank disclosure of all the relevant information that he had; (2) that the consideration was adequate; and (3) that the principal had independent advice before completing the transaction.” (Accord, In re Anderson (1972), 52 Ill. 2d 202, 206.)

Even if we were to characterize respondent’s actions as well intentioned, without hint of abuse of trust and confidence, it is clear he exercised poor judgment in taking title to complainant’s house. Complainant was without any indicia of ownership. We agree with the boards below that complainant was therefore without adequate protection, for example, from respondent’s creditors. Moreover, respondent’s claim that a resulting trust could be inferred is weak at best, since that would entail litigation, perhaps extensive litigation.

As to count II, it is clear that complainant did deliver $15,000 to the respondent for him to invest in United Tool, a company he represented. However, both the promissory note and trust deed were payable to him as trustee for complainant. There was, in other words, a trust instrument sufficiently protecting complainant, who received repayment on the loan at 8% interest. On this record, we agree there was no wrongdoing with respect to count II.

The facts of count III of the first complaint are that respondent, who prepared several previous wills or codicils in which he was to receive bequests, was to receive all the residue, after specific bequests, including a diamond ring to Mrs. Saladino, in the last will he prepared for complainant. She signed that on January 5, 1972, the same day the deed for the Beloit house was delivered to her. The complainant, who was seemingly confused or uncertain about other matters in her testimony, did not recall previous wills respondent prepared for her and denied respondent was to be a beneficiary. Respondent, however, asserted that on several occasions, the last time being when complainant was hospitalized in November 1971, complainant had expressed her desire to make changes in the will and to leave the balance of her estate, after specific bequests, to respondent. He testified that he ignored her requests until she appeared at the office on January 5, 1972, at which time she signed and took the will.

Again, we concur with the boards below. We further specifically agree with the findings of the Review Board that the evidence is not clear and convincing that respondent was actually carrying out complainant’s wishes. In Dial v. Welker (1927), 328 Ill. 56, 63, this court held:

“Proof of the relationship of attorney and client, and of the fact that the beneficiary, in whom trust and confidence were reposed by the , testator, prepared or procured the preparation of the will by which he profits, raises the presumption that undue influence induced the execution of the will. Such proof casts upon the proponents, if the will is to be sustained, the necessity of producing evidence to show that its execution was the result of free deliberation on the part of the testator and of the deliberate exercise of his judgment.” (Accord, In re Anderson (1972), 52 Ill. 2d 202, 206.)

We do not see that execution of this will “was the result of free deliberation” or that complainant received independent advice regarding this will.

We do not wish to discourage attorneys from developing close relationships with or from undertaking more responsibility on behalf of clients. Given the position of attorneys in our society, it is not surprising that frequently they become indispensable to their clients. Their advisory role may come to transcend merely the dispensation of legal counsel. Having undertaken such responsibility, however, an attorney is under a duty not to abuse such a relationship and an obligation to avoid even the appearance of impropriety. In the instant case, respondent maintained such a relationship. (In fact, during the more-than-a-year interval between the acts complained of (on September 7, 1971, and January 5, 1972) and the initial filing of a complaint (on April 30, 1973), complainant continued to rely on respondent. For example, she sought his counsel regarding an urban renewal project in Beloit she thought might affect her, and she named him as “the next responsible person” when she was hospitalized in November 1972.)

The second complaint, and amended complaint, alleged respondent attempted to mislead the hearing and review boards. As evidence of his claim that Mrs. Van Hoveln’s interest in her property was protected even though title to it was in his and his wife’s names as joint tenants, respondent testified that at the time of the closing and at the same time the deed, conveying the Beloit house from the sellers to the Saladinos, was prepared, September 7, 1971, respondent prepared a second deed conveying the house from him and his wife to the complainant. When it was pointed out that the two deeds had a common witness (Christine Dimmel), but had a different second witness (John Kightlinger on the first and Peggy Telfair on the second) and a different notary public (Christine Dimmel on the first and Peggy Telfair on the second) respondent agreed this was so but added “they were all three in my office at the time.” He said, at the first hearing on February 28, 1975, that the different notaries were necessary “because my wife came later after the transaction was closed.” Then one deed “was recorded and the other one was put in her file.”

At the hearing by the Review Board on the first complaint, for which there is no transcript, the case was continued, pending further investigation by the Administrator. The Review Board was troubled by the discrepancy involving the deeds and by respondent’s alleged testimony that the second deed could only have been signed by respondent and his wife and acknowledged by a notary on September 7, 1971.

The deed recites that it was witnessed and acknowledged by Peggy Telfair on September 7, 1971. The notary’s certificate shows that her commission expired November 10, 1975. Since a commission is issued for four years and Ms. Telfair had not previously been a notary, she could not have validly witnessed the deed until November 10, 1971, or thereafter. (Her discovery deposition indicates she did not remember the deed, but she testified she would not have signed it until after she became a notary.) Moreover, evidence shows she was not employed by respondent until September 18, 1971.

Before the Hearing Board on the second complaint, a member of the first review board testified that respondent had stated that the deed had been signed by him and Mrs. Saladino and acknowledged by a notary on September 7, 1971; and that respondent had replied it was not possible that the deed could have been signed then but notarized later. Respondent denied, as did one of. his attorneys for the proceedings on the first complaint, that he had testified that the second deed was signed and notarized on the same date. He said that the deed had been signed by him on September 7, 1971, but signed by his wife later. He did not know when nor did he see her sign it. It was not acknowledged by a notary or otherwise completed until December 1971, he said. Finally, respondent, at the hearing on the second complaint, stated that Peggy Telfair was employed by him after the closing of September 7, 1971 — and, by implication, could not have been present; and he denied he ever attempted to mislead the members of the various boards in the proceedings.

We do not find the evidence clear and convincing that respondent intentionally misled the boards. While the second hearing board properly accorded great weight to the testimony of the member of the first review board, we believe the second hearing panel actually failed to take into account the findings and testimony of the first hearing board although it took “judicial notice” of the transcript of the first hearing board. Respondent conceded at the first hearing that the deeds had different witnesses and different notaries; and that he and Mrs. Saladino did not sign the deed at the same time. His testimony that the deed was prepared by him on September 7, 1971, has remained unchanged. His mistaken testimony that Peggy Telfair, the notary and witness on the second deed, was present at the September 7 closing, could be explained by the almost four-year interval between the closing and hearing. Thus we concur in the Review Board’s finding of “no separate discipline,” and we interpret that to mean there was no intentional misrepresentation.

Although appropriate factors may always be considered in mitigation, predictability and fairness require a degree of consistency in the selection of sanctions for similar types of misconduct. That degree of consistency can only be achieved if sanctions are based on articulated standards of conduct. These standards must be “derived from the underlying purposes of our disciplinary process, which are to safeguard the public, maintain the integrity of the profession, and protect the administration of justice from reproach.” (In re Kien (1977), 69 Ill. 2d 355, 366 (Clark, J., concurring in part and dissenting in part); In re Nowak (1976), 62 Ill. 2d 279, 283.) Safeguarding the public includes shielding the public from attorneys who fail to protect adequately the pecuniary interests of or who abuse their confidential relationship with clients. (Cf. Disciplinary Rule 9—102(B), Illinois Code of Professional Responsibility (1970).) Respondent’s actions of taking titile to the house (count I of the first complaint) and of naming himself the sole legatee under the residuary clause of complainant’s will without advising her to get independent legal advice (count III of the first complaint) fall into the realm of safeguarding the public.

To safeguard the public, sanctions, which have been imposed, include disbarment, suspension and censure. Where there is intentional fraud, disbarment is warranted. On the other hand, an attorney’s lack of care would justify imposition of a sanction less than disbarment. Such sanctions are censure and suspension. The length of the suspension would, of course, depend on the circumstances of the case. However, it should be closely linked to the harm caused or the unreasonable risk created by the lack of care.

Respondent did not cause actual harm; that is, complainant did not suffer any financial loss. However, she was needlessly exposed to risk of such loss: her interest in the house was unprotected, and a significant part of her estate could have gone to respondent. Where an attorney exposes a client to the risk of loss, jeopardizes the freedom or the pecuniary or privacy interests of a client, or otherwise abuses his or her relationship with a client, whether or not the attorney receives an intended advantage, the attorney has breached a duty, owed to a client, of safeguarding the public. Such is the case here. We note that respondent, who is now 58, did not have a prior history of disciplinary action since his admission to the bar in 1950.

The appropriate sanction is that respondent be suspended from the practice of law for a period of 3 months.

Respondent suspended.

MR. JUSTICE RYAN took no part in the consideration or decision of this case.


source: Caselaw Access Project

author: MR. JUSTICE GOLDENHERSH

license: Public Domain

text:
    (No. 49764.

      In re ESTATE OF SCOTT W. LUCAS, Deceased.-(Scott W. Lucas, Jr., Appellant, v. David F. Alexander, Appellee.)

      Opinion filed April 3, 1978.

      William M. Giffin and Thomas J. Immel, of Burditt & Calkins, of Springfield, for appellant.
    David F. Alexander, of Havana, pro se.

   MR. JUSTICE GOLDENHERSH

delivered the opinion of the court:

Scott W. Lucas, Jr., surviving executor of the estate of Scott W. Lucas, Sr., deceased, appealed from the order of the circuit court of Mason County appointing a special administrator of the estate with will annexed to prosecute an action for the recovery of certain damages and from a second order removing him as executor of the estate. The appellate court affirmed (48 Ill. App. 3d 1009), and we allowed the executor’s petition for leave to appeal. The pertinent facts are fully set forth and the circuit court proceedings are described in sufficient detail in the opinion of the appellate court and will be reviewed here only to the extent necessary to discuss the issues.

Scott W. Lucas, Sr., died testate on February 22, 1968, naming Scott W. Lucas, Jr. (hereafter the executor), and Allen T. Lucas, Sr., co-executors. The will, inter alia, provided for the creation of a testamentary trust, the income from which was to be payable to the executor for life, with the remainder, upon his death, to be distributed to his children. Allen T. Lucas, Sr., the co-executor, a practicing lawyer of Springfield, died on November 19, 1973. The executor obtained the assistance of other counsel and prepared, filed and presented to the court a final account and a supplement thereto which were approved respectively on August 5, 1974, and October 10, 1975.

On September 5, 1975, the executor filed a “petition to extend time for closing of estate and leave to file suit and employ counsel.” It was alleged in the petition that the executor had discovered transactions with relation to the sale and purchase of certain of decedent’s stocks which were made during the administration of the estate, in violation of the Illinois Probate Act. David F. Alexander, the guardian ad litem appointed to represent the. minor remaindermen in the proceedings to approve the executor’s final account, filed an objection to the petition, alleging that the executor might be liable for the acts of those against whom he sought to institute action, and therefore was not the proper party to institute the suit. On December 1, 1975, the executor, individually and as executor of the estate, filed suit in the United States District Court for the Southern District of Illinois against a brokerage firm, alleging certain improprieties in the purchase and sale of stocks in the decedent’s portfolio. On December 2, 1975, the circuit court entered an order allowing the executor’s motion to extend the time for closing the estate, denying the motion for leave to file suit, and appointing the guardian ad litem as special administrator with will annexed for the purpose of filing the action which the executor sought to file. On December 22, 1975, the executor filed notice of appeal from that order.

On December 31, 1975, the circuit court, on its own motion, filed a supplemental order revising the order of December 2. It struck from the order that portion which appointed the special administrator, and ordered a citation to issue against the executor to show cause why he should not be removed as executor. On February 11, 1976, the circuit court, holding that the executor was in a position of conflict of interest, entered an order removing him as executor and appointed Mr. Alexander as administrator with the will annexed. The executor filed a notice of appeal from that order.

We consider first the executor’s contention that the circuit court was without jurisdiction to enter the orders of December 31, 1975, and February 11, 1976. He argues that following the filing of the notice of appeal from the order of December 2 the circuit court was without jurisdiction and that its purported revision of its earlier order was a nullity. He argues, too, that the appellate court erred in its statement that “ [n] o procedural question was raised on appeal concerning the order[s] ***” and in treating them as a series of orders to be considered in their entirety (48 Ill. App. 3d 1009, 1013).

Although the jurisdiction of the appellate court attached upon the filing of the notice of appeal (City of Chicago v. Myers (1967), 37 Ill. 2d 470, 472), the circuit court clearly retained jurisdiction to hear and determine matters independent of and collateral to the subject matter of the order from which the appeal was taken. Proceedings seeking the appointment of a special administrator are separate and distinct from those seeking the removal of an executor and are governed by different provisions of the Probate Act (Ill. Rev. Stat. 1975, ch. 3, pars. 200, 276). Section 276 provided that the court, on its own motion, could remove the executor. The fact that the order for the issuance of the citation to show cause was contained in the order of December 31, 1975, which also purported to vacate the earlier order appointing the special administrator, rather than in a separate order, would not serve to deprive the circuit court of jurisdiction.

We need not and do not consider the effect of that portion of the order entered subsequent to the filing of the notice of appeal which vacated the appointment of the special administrator. The administrator with the will annexed had all the powers and duties of the executor (Ill. Rev. Stat. 1975, ch. 3, par. 81), including those of the special administrator, and the order appealed from became moot.

We consider next the question whether the record supports the order for the executor’s removal. We agree with the appellate court that the power to remove an executor may only be exercised for good cause reflected in the record and that “[o] nee ‘reasonable grounds’ to support the removal are introduced into the record, the executor will have the burden of proving his fitness to retain office.” (48 Ill. App. 3d 1009, 1014.) There is no question that the estate lay dormant for some period of time resulting in the late filing of tax returns and the incurring of some penalties, and that the stockbrokerage firm upon which the testator had relied may, during that period, have perpetrated some frauds against the estate. The record shows, however, that during that period the executor shared the responsibility for the administration of the estate with a co-executor who was also an attorney, and with the attorney for the estate, who was a long-time associate of the testator. The record reflects that upon the death of his co-executor, the executor promptly employed other counsel and took such action as was necessary to complete the administration of the estate and the transfer of the assets to the trustees. He prepared and filed, and the circuit court approved, a final account and a supplement thereto. The record shows that the interests of the executor are identical to the interests of the estate and that it was to his best interests to preserve the assets of the estate and realize the maximum recoverable therefrom.

The rule to show cause charged that the executor “wasted or mismanaged the Estate or mismanaged the assets of said Estate by making unauthorized investments,” “filed suit *** after having been advised by the Court prior to that time that said executor would be denied such authority,” and that “said executor has conflicting interests as found in the Court’s order of December 2, 1975.” There was no evidence to support the charge contained in the rule to show cause, and we do not consider that the citation constituted “reasonable grounds” for the removal. We do not agree with the appellate court that it was sufficient to shift to the executor the burden of proving his fitness to retain office.

Although concededly there is some possibility that the executor might ultimately be held liable for some of the stock transactions which resulted in the losses to the estate, the record does not support the removal of any of the grounds enumerated in section 276 of the Probate Act. As stated in the dissenting opinion in the appellate court, “the possibility that the surviving executor might have personal liability” was not sufficient basis for discharging him as executor. 48 Ill. App. 3d 1009, 1015.

For the reasons stated, the judgment of the appellate court is reversed and the cause remanded to the circuit court of Mason County with directions to vacate the orders appealed from, and for further proceedings.

Reversed and remanded, with directions.


author: MR. JUSTICE CLARK

text:
    (No. 49028.
    GEORGINA FERNANDEZ, Appellant, v. THE INDUSTRIAL COMMISSION et al.—(Zenith Radio Corporation, Appellee.)

      Opinion filed April 3, 1978.

      McGuire & Haney, of Chicago (John A. McGuire and Philip J. McGuire, of counsel), for appellant.

      Burges on, Laughlin, Cunningham 8c Smith, of Chicago (Richard W. Baum, of counsel), for appellee.
   MR. JUSTICE CLARK

delivered the opinion of the court:

The question presented is whether the petitioner, Georgina Fernandez, has established that she is suffering from an “occupational disease” as that term is defined in section 1(d) of the Workmen’s Occupational Diseases Act (Ill. Rev. Stat. 1971, ch. 48, par. 172.36(d)) (the Act). Every tribunal which has heard her case has concluded that she has not. We agree; we affirm.

The petitioner had been employed by the respondent, Zenith Radio Corporation, for a total of 17 years, though apparently not continuously. For at least the four years prior to the onset of the symptoms from which this cause arose, her position was that of “floating relief operator,” which involved assembling, lacing, soldering, and even lifting the chassis of television sets. “Lacing” required the use of pliers to grasp and twist the wire leads from electronic components into place for soldering. This operation was performed at approximately the rate of two such connections per minute. On March 18, 1971, petitioner was involved in a lacing operation when she began to experience numbness in two of the fingers of her right hand, followed by pain in her right arm and shoulder, and in her neck. This condition prevented her from grasping the pliers necessary for the lacing operation.

The next day she was reassigned to soldering, but experienced the same symptoms, and after two days was unable to perform the soldering operation. However, while she consulted both the company nurse and her own doctor, she did continue to work until June 18, 1971, at which time she could no longer perform the soldering operation.

Petitioner also testified that, two years prior to the onset of these symptoms, she had complained about a lump in her right index finger. It is not clear from the record, however, what connection petitioner was attempting to demonstrate between the lump on her finger and her present claim of disability.

In due course, petitioner filed the instant claim for compensation under the Act. In the hearing before the arbitrator, petitioner admitted that on September 18, 1970, just a few months prior to the onset of the symptoms which gave rise to the instant case, she was involved in an automobile accident. Her car was struck from the rear in that accident, and she was admitted to the emergency room of Grant Hospital. The records from that incident indicate that at that time she was diagnosed as suffering from chronic, old and unhealing cervical strain.

Petitioner’s own expert witness further testified that, while her present condition may be connected with her work, it also might have been the result of the automobile accident. Respondents’ expert witness testified that petitioner was not even suffering any significant, measurable disability.

The arbitrator found that petitioner had not proved that she was suffering from an occupational disease, and both the Industrial Commission and the circuit court refused to set aside that determination. So do we.

On this record the Industrial Commission could have found that petitioner’s symptoms were the result of normal degenerative processes aggravated by the automobile accident, and were not causally connected with her employment. It even could have found that she was not suffering any disability. We do not know which rationale its decision was based upon, because petitioner failed to request specific findings on these points. (See Ill. Rev. Stat. 1971, ch. 48, par. 172.54(e).) Either basis would be adequate and not against the manifest weight of the evidence. Where there is conflicting medical evidence regarding whether a particular disability is sufficiently connected with employment to constitute an “occupational disease” (Ill. Rev. Stat. 1971, ch. 48, par. 172.36(d)), it is the province of the Industrial Commission to resolve those differences. (Saldana v. Industrial Com. (1972), 53 Ill. 2d 222, 225.) Where, as here, that resolution is not against the manifest weight of the evidence, neither this court nor the circuit court will overturn that resolution. Saldana v. Industrial Com. See also Parris v. Industrial Com. (1977), 69 Ill. 2d 31, 37.

F or the foregoing reasons the judgment of the circuit court is affirmed.

Judgment affirmed.


author: MR. JUSTICE RYAN

text:
    (No. 49742.
    THE BOARD OF TRUSTEES OF THE UNIVERSITY OF ILLINOIS, Appellee, v. THE INDUSTRIAL COMMISSION et al.—(Clifton Hill, Appellant.)

      Opinion filed April 3, 1978.

      Warren E. Danz, of Peoria, for appellant.
    James J. Costello, Timothy O. Madigan, and Warren H. Glockner, of Urbana, for appellee.
   MR. JUSTICE RYAN

delivered the opinion of the court:

Claimant, Clifton Hill, filed a claim with the Industrial Commission pursuant to section 19(h) of the Workmen’s Compensation Act (Ill. Rev. Stat. 1973, ch. 48, par. 138.19(h)), alleging an increase in the disability that had formed the basis of a previous award. The Commission found that Hill’s disability had increased to the extent of 60% loss of use of his right leg and 15% loss of the use of his left leg. The Commission also allowed Hill’s claim for accrued medical expenses. The circuit court of Champaign County reversed the Commission’s decision in its entirety. This appeal followed.

Hill was employed as a construction laborer for the University of Illinois. On September 7, 1973, while on the job mixing concrete, he felt a hard pinch in his lower back as he lifted a sack of rocks. He immediately began to experience pain in his legs, and he felt numbness in both feet. This condition persisted throughout the remainder of the day, and the next morning he sought treatment at the Carle Medical Clinic. He was referred to the university hospital, where he was placed under the care of Dr. Marion Kinzie. Hill received treatment from Dr. Kinzie as an outpatient, but his condition failed to improve. He was referred to Dr. James Nauman, an orthopedic specialist, who treated Hill with physical therapy and medication until mid-October 1973, at which time Hill attempted to return to work. This proved unsuccessful, and Hill returned to Dr. Nauman, who admitted him to Mercy Hospital on November 12, 1973.

Dr. Nauman recommended that a myelogram be performed on Hill in order to determine whether his problems could be the result of disc disease. However, according to Dr. Nauman’s testimony adduced at the arbitration hearing, the results of the myelogram were diagnostically without value because of extra injection of the dye used in the test. Based on his previous evaluation and diagnosis, Dr. Nauman concluded that Hill’s problems were not caused by disc disease, and because of possible complications with repeat myelograms did not recommend another such test. Rather, he continued to prescribe a conservative mode of treatment for Hill, consisting primarily of rest and medication. Hill did not satisfactorily respond to such treatment, however, and he was referred by Dr. Naum an to Dr. Robert Mussey, an orthopedic specialist at the Carle Clinic.

Dr. Mussey first saw Hill on June 18, 1974. He treated him with a back support and medication, and also prescribed gymnastic therapy. Dr. Mussey did not make any objective findings as to the precise cause of Hill’s problems, and did not feel that Hill’s problems were serious enough in nature to require further medical treatment. He suggested that Hill find a lighter type of work, and released him from his care on August 18, 1974.

On September 18, 1974, Hill began working at the Ramada Inn, where he performed assorted maintenance tasks. During his third day on the job, he experienced a painful pinch in his back while moving furniture. He sought emergency treatment at the Carle Clinic and was seen by the attending physician, who ordered him to stay home from work for a few days and rest in bed.

Hill had filed a claim with the Industrial Commission on December 10, 1973, seeking compensation in addition to that which had already been paid by his employer, the University of Illinois. Hill also sought reimbursement from his employer for the payment of medical bills. The arbitration hearing took place on October 15, 1974 (after the Ramada Inn incident). All the medical testimony presented at the hearing was by way of deposition. Drs. Naum an and Mussey testified for the employer, and Dr. Horacio Rivero, an examining physician, testified for Hill. In addition to the medical testimony, Hill testified in his own behalf. The arbitrator awarded Hill compensation for 20% loss of use of his right leg, 43 weeks of lost time from work, and additional medical expenses. Neither party appealed from the decision of the arbitrator.

Hill’s condition continued to deteriorate subsequent to the arbitration hearing. In March of 1975, he sought treatment from Dr. Donald Rumer, an orthopedic specialist in Champaign. On May 26, 1975, Dr. Rumer admitted Hill to Mercy Hospital. There he performed a lumbar myelogram on Hill, which showed the existence of at least one herniated disc. On the basis of the disc disease indicated by the myelogram, Dr. Rumer performed a lumbar laminectomy, during which two herniated discs were removed from Hill’s back.

On June 2, 1975, Hill filed a petition with the Industrial Commission pursuant to section 19(h) of the Workmen’s Compensation Act (Ill. Rev. Stat. 1973, ch. 48, par. 138.19(h)), alleging that the disability which he had incurred as a result of the accident of September 7, 1973, had increased. Accordingly, Hill sought additional compensation and payment of the medical bills which had accrued as a result of his treatment by Dr. Rumer. As was the case at the arbitration hearing, all the medical testimony was by deposition. Dr. Rumer and Dr. Rivero, the examining physician who had testified at the arbitration hearing, testified for Hill. Dr. Kinzie, the university doctor who had treated Hill immediately after the September 7, 1973, accident, and Max Pike, supervisor of accident compensation at the University of Illinois, testified for the employer. As indicated above, the Commission awarded Hill additional compensation for an increase in disability and also allowed his claim for accrued medical expenses. Upon reversal of the Commission’s decision by the circuit court of Champaign County, Hill sought direct review by this court pursuant to our Rule 302(a) (58 Ill. 2d R. 302(a)). The sole issue on appeal is whether the Commission’s finding of an increase in disability and its allowance for accrued medical expenses are against the manifest weight of the evidence.

The original finding of disability by the arbitrator was that “the injuries sustained caused the permanent and complete loss of the use of the right leg to the extent of 20% thereof.” The employer argues that since the arbitrator found only an injury to the right leg the Industrial Commission, under a section 19(h) proceeding wherein an increase in disability is alleged, cannot make an award for an injury to his left leg also. The cases which the employer cites, which preclude recovery for a different injury under a section 19(h) proceeding, are not in point. The arbitrator did not find that the injury was to Hill’s right leg, but found that the injury Hill received caused a disability to the right leg. All of the evidence was that the injury had been to Hill’s back. The section 19(h) finding by the Industrial Commission that the injury had caused the increased disability now extending to his left leg does not constitute an award for a separate and distinct injury from that found by the arbitrator.

In a similar argument, the employer also contends that the Industrial Commission cannot now make an award under section 19(h) for a disability caused by a herniated disc because a herniated disc was ruled out on arbitration. The decision of the arbitrator did not rule out the existence of a herniated disc as the employer contends. In fact, the decision of the arbitrator makes no finding with regard to a disc injury, but, as noted above, found that Hill suffered an injury which caused the disability to his right leg. Although the medical testimony before the arbitrator generally concluded that Hill’s pain and disability were due to back strain, it did not preclude the possibility of a herniated disc. Dr. Naum an, under whose direction the first myelogram was performed, stated that it was not satisfactory and was of no value in diagnosing a disc injury. He was asked to give his opinion as to whether, when he last saw Hill, he had a “protruded or herniated disc in his back.” In reply, Dr. Naum an stated:

“I felt at that time he did not have a disc problem or a herniated disc, at least of the degree that surgery was appropriate. ” (Emphasis added.)

This inconclusive evidence before the arbitrator concerning a disc injury could properly be considered by the Industrial Commission in light of the testimony given at the section 19(h) hearing. At that hearing, Dr. Rumer, who performed the surgery on Hill, described the conditions which he found during surgery, and testified that Hill could have been suffering from a herniated disc from the time of the original injury, regardless of the testimony of the doctors who testified to the contrary on arbitration. Furthermore, Dr. Rivero, who testified on arbitration that Hill’s problems were caused by back strain, testified at the section 19(h) hearing before the Commission that the herniated disc could have been caused by the rock-lifting incident on September 7, 1973.

This testimony is competent evidence on the question of whether Hill’s disability had increased since the time of the hearing, and is not evidence which was contrary to the previous finding of the arbitrator. Consequently, it was proper ..to consider the medical evidence elicited before the Commission to the effect that the herniated disc existed from the time of the initial accident, and to weigh that testimony against that of the doctors who testified to the contrary at the arbitration hearing.

We do not agree with the employer that the hypothetical question put to Dr. Rivero was improper and without probative value because it failed to include the relevant facts of the Ramada Inn incident of October 1973, or of an incident that occurred in Hill’s garden in May 1975. A disputed issue raised by the section 19(h) proceeding was whether these two incidents were factually and causally connected to Hill’s disability or whether they were painful episodes which followed from the injury that Hill had suffered on September 7, 1973. Because the factual significance of these incidents was disputed, they were properly excluded from the hypothetical, since it would be unreasonable to require Hill’s counsel to include in his question every painful episode that Hill experienced. The employer, who disputed Hill’s contention that these episodes were not causally connected to Hill’s back condition, had the prerogative to include his version of the facts upon cross-examination of Dr. Rivero, or to present them in a hypothetical question put to his own witness. (Sanitary District v. Industrial Com. (1931), 343 Ill. 236, 243; see McCormick, Evidence sec. 14, at 34 (2d ed. 1972).) He chose the latter strategy. The result is a conflict in medical testimony that focused on the two episodes and their possible causal connection to Hill’s disability. As we have repeatedly declared, where the evidence is conflicting, or of such a nature that different inferences may be reasonably drawn therefrom, we will not disregard permissible inferences drawn by the Commission merely because it or we might have drawn other inferences from the facts. (Meade v. Industrial Com. (1971), 48 Ill. 2d 215.) We think that the hypothetical question put to Dr. Rivero was proper, and that the Commission finding was premised on reasonable inferences drawn from this and other testimony elicited during the proceeding.

The question whether an increase in disability has occurred is one of fact and not of law. (Franklin County Mining Co. v. Industrial Com. (1926), 323 Ill. 98.) The resolution of factual disputes is squarely within the province of the Commission, and its determination should not be disturbed unless against the manifest weight of the evidence. (Barricks Corp. v. Industrial Com. (1969), 44 Ill. 2d 9.) In arriving at the factual determination of whether an increase in disability has occurred, the Commission must examine the entire record (Belleville Brick & Title Co. v. Industrial Com. (1922), 305 Ill. 577), and this court must, in turn, review the entire record to ascertain whether the Commission’s decision is against the manifest weight of the evidence (United States Steel Corp. v. Industrial Com. (1966), 35 Ill. 2d 506). We have examined all the evidence in this case, and we think the Commission’s finding of an increase in disability is supported by competent evidence and is not against its manifest weight. The circuit court order reversing that portion of the Commission’s decision must accordingly be reversed.

However, we can find no evidence in the record to support the decision of the Commission that the employer should be responsible for the payment of medical bills for the services of Dr. Rumer. Pursuant to the statute in effect when the services were rendered, an employee could “secure his own physician, surgeon and hospital services at his own expense.” (Ill. Rev. Stat. 1973, ch. 48, par. 138.8(a).) While there is no argument that Dr. Rumer was Hill’s private physician, Hill nevertheless maintains that the university should be responsible for the medical bills because he was referred to Dr. Rumer by the university, at least by implication. The record does not support this contention. Dr. Kinzie is the only university doctor to have examined Hill. Dr. Kinzie referred Hill to Dr. Naum an, who, in turn, referred him to Dr. Mussey. We can find no referral connection whatever between these doctors and Dr. Rumer. Rather, Hill saw Dr. Rumer on his own initiative. Hill clearly stated this on cross-examination during the section 19(h) proceeding. There is no evidence that the university was aware that Hill required further medical treatment at the time he first saw Dr. Rumer, nor did the university refuse him medical treatment at any time during this period. In fact, according to testimony given at the section 19(h) proceeding by Max Pike, a university employee, continuing medical services were offered Hill at the university hospital. Hill knew about this and had taken advantage of this service in the past. The fact that he did not return in March of 1975 can only be interpreted as his choice to secure his own physician. For these reasons, Hill should be responsible for these medical bills. The portion of the circuit court order disallowing the claim for accrued medical expenses is affirmed. The fact that the statute has since been amended to provide that the employee may elect to secure his own physician, etc., “at the employer’s expense” (Ill. Rev. Stat. 1975, ch. 48, par. 138.8(a)) does not alter our conclusion. The effective date of this amendment was July 1, 1975. The disputed medical expenses were all incurred before that date, and Hill does not urge that amended section 8(a) applies.

The judgment of the circuit court of Champaign County is affirmed with respect to its disallowance of the payment of medical expenses. The judgment is reversed insofar as it set aside the award for increased disability. The cause is remanded to the Industrial Commission with directions to enter an award in accordance with the views expressed herein.

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


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    (No. 49202.
    HIGHWAY & CITY TRANSPORTATION, INC., Appellant, v. THE INDUSTRIAL COMMISSION et al.-(Will Phillips, Jr., Appellee.)

      Opinion filed April 3, 1978.

      Tim J. Harrington, of Chciago (Robert Guilfoyle, of counsel), for appellant.
    Lipnick, Barsy & Joseph, of Chicago (Clarence S. Lipnick and Jack Joseph, of counsel), for appellee.
   MR. JUSTICE RYAN

delivered the opinion of the court:

In this workmen’s compensation case, the employee, Will Phillips, Jr., received an award from the arbitrator granting him compensation for 55 percent permanent disability of his left arm. His employer, Highway and City Transportation, Inc., sought review of the award. Upon consideration. of additional evidence the Industrial Commission reduced the award to 45 percent permanent disability of the left arm. The employer sought review in the circuit court of Cook County, which confirmed the Commission’s award. The employer has appealed to this court.

The essence of the employer’s argument in this court is that the award of the Commission is against the manifest weight of the evidence since the claimant concealed that he had an injury to his left shoulder subsequent to the injury for which the award was made and prior to the hearing before the arbitrator. This second injury occurred in a non-work-related automobile accident. The employer did not learn of it until after the hearing before the arbitrator and now contends that because Phillips testified falsely concerning the subsequent injury his entire testimony should be disregarded. The employer further argues that the award was not based on competent medical evidence since a doctor’s report introduced by the claimant did not consider the effect of the second injury.

Phillips was employed as a freight handler. The injury for which compensation is claimed occurred on the morning of August 19, 1974, when his car collided with another employee’s car in a parking lot provided by the employer. Phillips was jolted, and his left shoulder struck the inside of the car. He then worked for four hours until noon, reported the accident to his supervisor, and sought treatment at Bethany-Garfield Hospital. X rays were taken at the hospital, and he was told to see his family doctor. He was subsequently treated on five separate occasions by Dr. Risher Watts, Jr. He was absent from work for three weeks.

On September 9, 1974, Phillips filed a claim with the Industrial Commission. At the employer’s request, he was examined by Dr. H. C. Coblens in January 1975. On May 16, 1975, he had the second accident in which he reinjured his left shoulder. As a result of the reinjury, he was hospitalized for five days. On August 8, 1975, he was examined by Dr. Leonard Smith, who was apparently unaware of the second injury.

The hearing before the arbitrator was held on August 27, 1975. At this time, the employer had no knowledge that the claimant had reinjured the shoulder on May 16, 1975. During the hearing, Phillips testified as to how the first injury had occurred and his treatment by Dr. Watts and examinations by Dr. Coblens and Dr. Smith. He stated that he suffered pain from the shoulder and only had limited movement, affecting both his personal life and ability to work at his job. During direct examination, the following dialogue took place:

“Q: Did you ever hurt that shoulder since the date of this accident?
A: Not at the time. It hadn’t been hurt, but it has been giving me pain since then.
Q: Have you injured that shoulder again since the accident?
A: No, sir.”

The attorney for Phillips then introduced a medical report of Dr. Smith based on the August 8, 1975, examination. As noted above, it appears that Dr. Smith was then only aware of the initial accident of August 19, 1974. The report stated that Phillips complained of tenderness in the acromioclavicular joint. It noted:

“The patient incurred a subluxation of the left acromio-clavicular joint, which has healed with residual evidence of intermittent synovitis of the left acromioclavicular joint. This condition is productive of the discomfort, and the only effective treatment would be excision of the distal end of the clavicle. The patient, in any event, will have residual disability involving usage of the left upper extremity.”

The employer introduced a medical report by Dr. Coblens dated January 10, 1975, based on X rays taken the previous day. Dr. Coblens noted the absence of soft tissue swelling, atrophy or bony pathology and concluded: “There are no objective abnormal findings to account for the subjective symptoms. There is no reason why this individual should not continue working.” On September 4, 1975, the arbitrator entered his award for 55 percent permanent disability of the left arm.

After the award, the employer discovered that Phillips had reinjured his shoulder in the unrelated accident on May 16, 1975. On review, the employer introduced evidence before the Commission which indicated that, as a result of the second accident, Phillips was hospitalized for five days, absent from work for more than two months, and treated by Dr. Milton Miller for traumatic myositis of the lumbar spinal muscle and traumatic tendonitis of his left shoulder. Phillips did not testify before the Commission on review. The only additional evidence submitted on his behalf was a letter by Dr. Leonard Smith, dated March 16, 1976, addressed to Phillips’ attorney, which states: “Dear Mr. Lipnick:

With regard to your letter of February 3, 1976, I have reviewed the X-rays taken March 25,1975 of the left shoulder, which do show some widening of the acromioclavicular joint and an upward shift of the distal end of the clavicle. This would seem to indicate that this condition was present in March of 1975.”

On June 29, 1976, the Commission entered a decision modifying the award of 55 percent disability to 45 percent disability.

The employer urges that since Phillips testified falsely that he did not subsequently injure his left shoulder, his testimony concerning his injury should be disregarded. In McDonald v. Industrial Com. (1968), 39 Ill. 2d 396, this court rejected the argument that the claimant’s false testimony mandated that his entire testimony be disregarded, except insofar as it may be corroborated by other credible evidence. The court stated that the correct rule is that, under such circumstances, the trier of fact may disregard the uncorroborated testimony. Thus, in our case the fact that Phillips may have testified falsely did not require that the Industrial Commission disregard his other testimony concerning his injury, which it obviously did not. Whether or not, under these facts, Phillips’ credibility was impeached and whether any credence should be given to his testimony were matters to be determined by the Commission.

The employer attaches considerable significance to the fact that Phillips did not appear at the hearing before the Commission and did not offer evidence explaining his earlier testimony. It is the employer’s position that this failure creates a presumption against Phillips, citing Shumak v. Shumak (1975), 30 Ill. App. 3d 188. In that case the court stated:

“ [W] here a party has the means in his power of rebutting and explaining evidence adduced against him the omission to do so furnishes a strong presumption or inference that he cannot do so. [Citation.]” (30 Ill. App. 3d 188, 190.)

We do not find Shumak to be on point or the principle of law quoted helpful. Whatever inferences were permissible from Phillips’ failure to testify were to be drawn by the Industrial Commission and not by a court. It would appear that the most severe inference that could have been drawn from the failure to testify would be that Phillips had, in fact, testified falsely, which, as we earlier indicated, does not require that all of his testimony be rejected. The employer argues that several developments adverse to Phillips would have occurred had he appeared, testified and subjected himself to cross-examination at the hearing before the Commission. The answer to this argument is that if the employer thought Phillips’ testimony was indispensable, his presence could have been compelled by the use of a subpoena (Ill. Rev. Stat. 1975, ch. 48, par. 138.16).

The employer further argues that since Dr. Smith was not aware of Phillips’ subsequent injury, the medical evaluation of Dr. Smith as to Phillips’ injury and condition, which was presented to the arbitrator, was meaningless. This, coupled with the negative findings of Dr. Coblens as to Phillips’ condition, the employer argues, leaves the employee with no medical support for his claimed injury. It is the employer’s position that, in light of the absence of supportive medical testimony and Phillips’ false testimony before the arbitrator, the finding of the Industrial Commission is against the manifest weight of the evidence. We do not find Deere & Co. v. Industrial Com. (1970), 47 Ill. 2d 144, relied upon by the employer, to be helpful. In that case, the issue was whether the claimant’s injury was due to an industrial accident. The entire course of the employee’s conduct indicated the injury was not related to work. The only evidence in his favor was his own testimony, which was contradicted by two treating physicians, his foreman, the director of employment relations, medical records of the employer, and a claim for nonoccupational insurance benefits. No other witness gave any evidence in that case which supported the claimant’s position that an industrial accident caused his injury.

In our case we do not consider Dr. Smith’s testimony to be unsupportive of Phillips’ claim. Although there is no indication that Dr. Smith was ever informed of the subsequent injury, his note dated March 16, 1976, quoted earlier in this opinion, specifically refers to X rays taken March 25, 1975, which was subsequent to the first injury but prior to the second injury. He concludes in that note that Phillips’ condition was present at that time. The Industrial Commission was free to construe the conclusions stated by Dr. Smith in this note in conjunction with his previous medical report of August 8, 1975, which had been introduced before the arbitrator.

In A. O. Smith Corp. v. Industrial Com. (1972), 51 Ill. 2d 533, part of a letter by the treating physician was introduced on review before the Commission. It stated: “I have not changed my opinion concerning the relationship of his subcutaneous disease to the original trauma.” (51 Ill. 2d 533, 535.) This court there held that the Industrial Commission was within its province in construing this sentence in light of a previous deposition by the doctor and in choosing between conflicting interpretations. In our opinion, the Industrial Commission could have reasonably interpreted Dr. Smith’s letter to mean that the condition of Phillips’ shoulder, as diagnosed by him in August 1975, was essentially the same as it had been in March 1975, before the second accident. Thus, the letter would not only corroborate Phillips’ testimony as to the injury, but also would tend to negate the effect of the accident in May 1975.

The fact that Dr. Coblens found no objective reasons for the claimant’s symptoms does not indicate the Commission’s award is against the manifest weight of the evidence. In Meade v. Industrial Com. (1971), 48 Ill. 2d 215, we held that in compensation cases where there is conflicting medical testimony, it is the function of the Industrial Commission to choose between conflicting views and to determine the facts.

We therefore affirm the judgment of the circuit court of Cook County.

Judgment affirmed.


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    (No. 49812.
    ROY J. SMILEY et al., v. MANCHESTER INSURANCE & INDEMNITY COMPANY OF ST. LOUIS.-(Manchester Insurance & Indemnity Company of St. Louis, Appellee, v. William D. Knight, Jr., Appellant.)

      Opinion filed April 3, 1978.

      GOLDENHERSH and MORAN, JJ., took no part.
    Reno, Zahm, Folgate, Skolrood, Lindberg & Powell, of Rockford (Robert K. Skolrood, Robert A. Fredrickson, and Mark W. Boswell, of counsel), for appellant.
    Barrick, Jackson, Switzer, Long & Balsley, of Rockford (Peter S. Switzer, of counsel), for appellee.
   MR. JUSTICE RYAN

delivered the opinion of the court:

In this third-party proceeding in the circuit court of Winnebago County, Manchester Insurance & Indemnity Company of St. Louis (hereinafter referred to as Manchester) sued attorney William D. Knight, Jr., for malpractice, alleging that his negligent acts in defense of an insured, Charles Toney, resulted in its liability for damages in excess of the policy limits. Knight counterclaimed, seeking fees allegedly due him for legal services rendered. After trial, the jury found for Knight on the malpractice issue and for Manchester on the issue of fees. Manchester appealed, alleging alternatively that the trial court had erred in failing to grant a directed verdict, a judgment notwithstanding the verdict, or a new trial. The appellate court held that the trial court erred in denying Manchester’s motion for a directed verdict or judgment notwithstanding the verdict and ordered a new trial on the issue of damages alone. (49 Ill. App. 3d 675.) We granted Knight’s petition for leave to appeal.

The original lawsuit was brought against the estate of Charles Toney for damages arising from an automobile accident on February 13, 1967. The accident occurred when Toney’s car crossed the center line of the road and collided with a vehicle in which Roy J. Smiley and Byron Emanuel were riding. Smiley was injured, and Emanuel was killed, as was Toney. Toney’s two passengers, Lemeau and Isizia Arnold, were injured.

' Attorney Bernard P. Reese was retained to represent Smiley and the administrator of Emanuel’s estate. After discovering that the only asset in Toney’s estate was a Manchester insurance policy with limits of $10,000 per person and $20,000 per accident, Reese attempted to settle for policy limits with William Eastman, an insurance adjuster representing Manchester. During the course of their communications, Reese told Eastman he hoped the insurance company would refuse to settle so that he could establish bad faith refusal to settle within policy limits and thus support an attempt to collect from the insurance company any verdict he would recover in excess of the policy limits. Eastman made a full report of his investigation and Reese’s comments to Manchester; however, they refused to settle or make a counteroffer. On October 4, 1967, Reese brought suit against Toney’s estate, seeking $100,000 for the wrongful death of Emanuel and $50,000 for Smiley’s personal injury. Manchester assigned the case to attorney Knight on November 16, 1967, and sent him the complete case file, including Eastman’s reports of the investigation and conversations with Reese. On November 27, 1967, Knight received notice that Toney’s passengers, the Arnolds, had also been injured and were represented by attorney Clifford Stoner, although no suit had been filed on their behalf.

William Blackwell, claims supervisor for Manchester, testified that he had a phone conversation with Knight on November 27, 1967, in which he suggested that Knight try to get all the claimants together and “see if some settlement couldn’t be made.” On December 6, 1967, Blackwell sent Knight a letter stating:

“[W] e should probably make some effort to get the claimants together, and make some disposition of all of the claims, and effect whatever savings of the policy limit possible for a final disposition, as far as we are concerned.
Please proceed with your handling, with the above in mind and keep us advised.”

In December 1967 Knight took the deposition of an occurrence witness, Glenn Carpenter, which indicated that Toney, the insured, was on the wrong side of the road when the accident occurred. In January 1968 he mailed this deposition to Manchester. On June 4, 1968, the case was set for trial on June 24, 1968. At this time, he wrote Manchester for instructions. On June 18, 1968, Knight took a deposition from plaintiff Smiley. According to the deposition, Smiley had suffered a multiple fracture of his jaw, a fractured ankle requiring screw fixation, a concussion, and loss of teeth, had spent approximately $1,600 in medical expenses, and had missed work for 2Vá months, thereby losing approximately $2,000 in wages. At some time after June 4, 1968, but prior to June 18, 1968, Knight also took a deposition from Emanuel’s widow. This deposition indicated that at the time of his death, Emanuel was 26 years old, in good health and married, with a 3V2-year-old son. He had graduated from high school, attended DeVry Electrical School for advanced training, and netted approximately $125 per week at his job. The expenses in connection with his death were approximately $3,200. Knight also discovered that the Arnolds had never made a demand to settle, nor had they filed suit on their claims.

At 2 p.m. on June 18, 1968, Blackwell had a telephone conversation with Knight. At that time he authorized Knight to use $20,000 to settle all claims arising from the accident; $17,000 to dispose of the Smiley and Emanuel claims and $3,000 for possible claims of the Arnolds. Knight spoke with Reese on June 18, at 4 p.m., at which time Reese renewed his demand to settle both claims for $10,000 each. Knight did not make a counteroffer.

Knight also had a conversation with Blackwell on June 21, 1968, at 4:20 p.m. regarding Manchester’s instructions for handling the case. Each testified to conflicting versions of the conversation. Blackwell testified that Knight explained Reese’s demands to settle both claims for the policy limits, but was unable to remember whether Knight had told him he had not offered the $17,000 settlement to Reese. Blackwell further testified that he specifically authorized Knight to settle the Smiley and Emanuel claims for the full policy limit of $20,000 in order to avoid a jury verdict against Manchester.

According to Knight’s version of the conversation, he informed Blackwell that he had not offered the $17,000 and Blackwell instructed him to “try the case, go all the way.” He maintained that Blackwell never gave him authority to settle the Smiley and Emanuel cases for $20,000. Knight also testified that he requested written confirmation of the conversation from Blackwell.

On June 24, 1968, prior to the jury selection, Knight and Reese met in conference with the trial judge. The following conversation took place:

“Mr. Reese: Is there any offer of settlement in this case, for the record?
Mr. Knight: I have no comment on that.
Mr. Reese: I want to know on behalf of Roy Smiley, whether the injuries and the liability is clear and we offer to settle Mr. Roy Smiley’s case for $10,000.00.
Mr. Knight: I have no comment.
Mr. Reese: We do likewise, with reference to Patricia Emanuel [Emanuel’s widow].
Mr. Knight: I have no comment on that.”

The case proceeded to trial, and on June 25, 1968, at about 3 p.m., while the jury was deliberating, Knight received the following written memorandum from Blackwell:

“6/21/68
Dear Mr. Knight
Confirming our conversation this date, you do have auth. to offer our policy limit of 20,000 to dispose of the pending suits should the need arise.
/s/W.C. Blackwell”

After receipt of this message, Knight did not make an offer of any type to Reese, nor did he call Blackwell. He later explained that he felt the memo was consistent with his authority to use $17,000 and hold $3,000 in reserve for the Arnolds. About two hours after Knight received this letter, the jury returned verdicts in favor of Smiley for $25,000 and in favor of Emanuel’s estate for $50,000, the latter being reduced by the court to the $30,000 then-maximum statutory amount. Manchester paid the judgments to the extent of the policy limit of $20,000 plus interest. Reese then obtained an assignment, from the insured’s estate to his clients, of all claims against Manchester. In November 1968 he brought an action against Manchester to recover the amount of the judgments in excess of policy limits, alleging abad faith refusal to settle the cases within policy limits. Summary judgment was entered against Manchester for $35,000 plus interest. On appeal, the summary judgment was affirmed. (Smiley v. Manchester Ins. & Indem. Co. (1973), 13 Ill. App. 3d 809.) Prior to appeal, however, the instant third-party action was commenced by Manchester, charging Knight with negligence resulting in liability in excess of the policy limits.

During the trial on this third-party complaint, Knight and Blackwell testified as to the various developments, as heretofore mentioned. Blackwell also testified as to reports of the accident investigation and early correspondence with attorney Reese as relayed to him by the adjuster, William Eastman. Knight indicated that he had never bothered to offer the $17,000 because he felt it would be a useless gesture in light of Reese’s continual demand for $10,000 apiece for both claims. He also testified that he felt the memo he received on June 24, 1968, was consistent with the June 18 instruction to spend $17,000 and reserve $3,000 and the June 21 instruction to “try the case, go all the way.”

Attorney Reese also testified at the malpractice trial. He stated that although he noticed nothing unusual about Knight’s actions, he was puzzled by Manchester’s refusal to settle. In addition, while he confirmed Knight’s statement that he would not have settled for less than $10,000 each for both claims, he admitted that he might have changed his position if Knight had not said “no comment” when asked about his authority to settle.

Manchester called Larry E. Ohlson, an attorney from the area, to testify as an expert witness as to what a reasonable attorney would have done. He testified that, based on his knowledge of the case file and even assuming that the attorney actually had only $17,000 authority and no memo had been sent, he had failed to exercise the degree of reasonable care usually exercised by lawyers in the area. He further stated that if the attorney had received the memo during jury deliberations, his failure to notify the plaintiff’s attorney or the court, or to contact the insurance company, constituted a failure to exercise reasonable care, particularly since the claims appeared to be worth the policy limits and an adverse verdict might expose the insurer to excess liability.

Attorney Clifford E. Stoner, who had represented the Arnolds, testified that Knight had never contacted him regarding his clients’ claims. Knight himself testified that he had not been given the responsibility to handle the Arnolds’ claims. At the close of the trial, the jury returned a verdict for Knight on the malpractice suit and a verdict for Manchester on the counterclaim.

On appeal by Manchester, the appellate court reviewed the testimony and reversed the jury verdict for Knight on the grounds that such a verdict could never stand, even when the facts were viewed in the aspect most favorable to Knight.

Knight contends that the appellate court, in finding him negligent as a matter of law, misapplied the standard for a directed verdict or judgment notwithstanding the verdict in light of the factual questions presented at trial. He further argues that even if he were negligent, the appellate court erred in equating a finding of negligence with liability. He contends that since the appellate court only found he was negligent as a matter of law and reversed on that basis, without considering contributory negligence or proximate cause, in effect, the court eliminated the requirement that Manchester prove due care and proximate causation.

We deal first with the issue of whether the evidence justifies a directed verdict or judgment notwithstanding the verdict on the question of Knight’s negligence.

It is clear that an attorney is liable to his client only when he fails to exercise a reasonable degree of care and skill; he is not liable for mere errors of judgment. (Brown v. Gitlin (1974), 19 Ill. App. 3d 1018; Dorf v. Relles (7th Cir. 1966), 355 F.2d 488.) In viewing the evidence in this case most favorably to Knight, we must affirm the decision of the appellate court that as a matter of law he failed to act as a reasonable and skillful attorney in the area. The uncontroverted evidence at trial shows that as early as November 1967 he was instructed to attempt settlement with all of the claimants. He never contacted the Arnolds, nor did he ever discuss settlement with their attorney, Clifford Stoner, testifying that he had not been hired to handle their claims. The undisputed evidence also shows that on June 18, 1968, Knight was expressly authorized to settle the Smiley and Emanuel claims for $17,000 and to reserve $3,000 for the Arnolds. In spite of this authority, he never offered any amount to settle the claims, nor did he disclose his authority to Reese or to the trial judge. On June 24, 1968, at the start of the trial when Reese asked if there was any offer and renewed his demand to settle the cases for policy limits, Knight replied “no comment.” Even if we accept Knight’s testimony that he only had $17,000 authority, his complete inaction when he had knowledge of the seriousness and probable liability of the claims clearly did not comport with the actions of a reasonable attorney. In addition, the evidence shows that Knight had the complete file, including the adjuster’s report of Reese’s plan to sue in an attempt to collect any judgment in excess of policy limits. His failure to make even a token offer on the record constituted strong proof of bad faith in support of the claim for recovery of the excess. Even if Reese would not have accepted $17,000 in settlement, such an offer would at least support a claim by Manchester of a good faith attempt at settlement. Attorney Ohlson also testified that even if Knight only had $17,000 authority, he had not acted reasonably in failing to offer it.

We note that Knight’s testimony as to his June 21, 1968, conversation with Blackwell was contradictory to Blackwell’s version. According to Knight, he was instructed to take the case to trial and was never authorized to use $20,000 to settle the Smiley and Emanuel claims. He stated that he asked for written confirmation of these instructions. However, the written confirmation Knight received on June 25, 1968, was clearly inconsistent with his version of the conversation. The memorandum did not direct him to settle the Smiley and Emanuel claims for $17,000, reserving $3,000, nor did it instruct him to “try the case, go all the way.” It expressly authorized Knight to offer the policy limits of $20,000, if needed, to dispose of the pending suits. Since the Smiley and Emanuel claims were the only suits pending, it is plain that Knight’s interpretation that the memorandum only confirmed his $17,000 authority and instructions to try the case is unreasonable. The memorandum clearly authorized him to use $20,000 to settle the only claims at suit. At the time Knight received the memorandum, Reese’s offer to settle both cases for $20,000 was still open. Ohlson testified that since cases can be settled at any stage of the proceedings, assuming that Knight received the memo during jury deliberations, he acted unreasonably in failing to tender the policy limits to Reese. Even Reese admitted that if Knight had authority to settle for $20,000, the absence of any offer would be unusual. Under these facts, we hold as a matter of law that the evidence, when viewed most favorably to Knight, clearly indicates that he breached his duty to Manchester, thus exposing it to excess liability. As to the issue of Knight’s negligence, therefore, we affirm the appellate court decision.

Knight also contends that even if he were found to be negligent as a matter of law, the appellate court erred in reversing the jury verdict in his favor. He argues that even if the jury had found him to be negligent, it could have decided that Manchester had been contribuíorially negligent or that his negligence was not the proximate cause of damage.

The evidence adduced at trial showed that Manchester was aware that the case may have been one of liability as early as March 1967. Blackwell testified that he had determined, as early as March 1967, that the possible value of Smiley’s and Emanuel’s claims was probably in excess of the policy limits, although he did not conclude that the insured was liable until December 1967. The vice-president and general counsel of Manchester wrote a letter to a reinsurer on August 4, 1967, which indicated he was aware of the extent of injuries, the likelihood of liability and the probability that liability would exceed the policy limits. Apparently it is Knight’s theory that the jury could have concluded from these facts that Manchester was contribuí orially negligent in failing to settle the claims at an early stage. Such a conclusion would be erroneous. The mere fact that an insurer makes a preliminary evaluation of liability based on an adjuster’s investigation does not mandate immediate settlement of the claims. The evidence shows that one eyewitness was not located until December 1967. In fact, depositions were not taken of the two claimants until June 1968. Under Knight’s theory, an insurer would have a duty to immediately settle a case as soon as it became aware of facts indicating fault. This theory ignores the realities of the settlement and litigation process. In addition to investigating the factual occurrence, both parties must research the applicable legal principles, ascertain the possibility of success at trial, and determine the nature and extent of damages to a reasonable certainty. Thus, we hold that Manchester’s failure to settle at an early stage did not constitute contributory negligence.

Knight also argues that certain specific behavior by Manchester indicates its contributory negligence. This contention is without merit. In our opinion, any acts by Manchester substantially prior to trial are irrelevant. The evidence clearly shows that Reese’s offer to settle for $20,000 was open from 1967 through the trial. Knight received $17,000 authority to settle on June 18, 1968, almost a week before trial, yet he never made an offer to settle. Without repeating the various acts of Knight which we have found to constitute negligence as a matter of law, we hold that, under these facts, it is clear that the excess liability was proximately caused by Knight’s inaction, not Manchester’s behavior.

Knight cites Knobloch v. Royal Globe Insurance Co. (1976), 38 N.Y.2d 471, 344 N.E.2d 364, 381 N.Y.S.2d 433, for the proposition that a last-minute tender of policy limits by an insurance company does not preclude a finding of bad faith if the case is not settled. The facts of Knobloch are quite different from those in our case. In Knobloch, not only had the plaintiff withdrawn his offer to settle within policy limits before trial, but it was also a continuing course of conduct on the part of the insurer toward the insured prior to trial that evidenced bad faith. Here, however, at the beginning of the trial plaintiff’s counsel requested if there was any offer to settle. Although Knight at that time, according to his own testimony, had authority to offer $17,000, he remained intransigent and replied “no comment.” Plaintiff’s counsel then offered to settle each claim for $10,000, and that offer was never withdrawn. When the written memorandum arrived while the jury was deliberating, Knight plainly had the authority to meet this demand, and he made no effort to do so. We cannot now seriously consider the tenuous argument that the offer might not have been accepted at this late date if made. It was Knight’s complete failure to make any offer or to attempt any negotiations that firmly established the excess liability case against Manchester. On the facts of this case we must hold as a matter of law that the evidence viewed most favorably to Knight so overwhelmingly favors Manchester that a verdict for Knight could never stand. Accordingly, we affirm the judgment of the appellate court.

Judgment affirmed.

GOLDENHERSH and MORAN, JJ., took no part in the consideration or decision of this case.


text:
    (No. 49214.
    BILLIE GILLESPIE, Appellant, v. R. D. WERNER CO., INC., Appellee.

      Opinion filed April 3, 1978.

    Rehearing denied May 26, 1978.

      G. Edward Moorman, of Smith, Allen, Moorman & Larson, of East Alton, for appellant.
    Wagner, Bertrand, Bauman & Schmieder, of Belleville (Bernard H. Bertrand, of counsel), for appellee.
   MR. JUSTICE CLARK

delivered the opinion of the court:

Plaintiff, Billie Gillespie, was injured in July 1972 as the result of a fall due to the collapse of an aluminum ladder, manufactured by the defendant, R. D. Werner Company (hereafter Werner), while he was doing electrical work. A jury in Madison County found for Gillespie and awarded damages ($72,500) to him. The circuit court denied Werner’s motion for judgment notwithstanding the verdict. The appellate court, with a dissent, reversed, finding the trial court had erred in denying that motion. (43 Ill. App. 3d 947.) We allowed Gillespie’s petition for leave to appeal. 58 Ill. 2d R. 315.

The issue is whether or not there was sufficient evidence to establish a prima facie case of strict liability in tort. We find there was. The facts are set forth in the opinion of the appellate court and will not be repeated here except as is necessary.

For a manufacturer to be liable for injuries resulting from the use of its product, the “plaintiffs must prove that their injury or damage resulted from a condition of the product, that the condition was an unreasonably dangerous one and that the condition existed at the time it left the manufacturer’s control.” (Suvada v. White Motor Co. (1965), 32 Ill. 2d 612, 623. Accord, W. Prosser, Torts 671-72 (4th ed. 1971).) Neither of the parties disputes the fact of Gillespie’s injury; nor do they disagree that one of Werner’s ladders was involved. Testimony by both Gillespie and one of his witnesses, aiding him at the time of the injury, established that Gillespie was on the ladder, near the top, doing electrical work when he fell. Both said the ladder fell “to the left” while Gillespie fell “to the right,” on his elbow.

Gillespie’s expert testified that, based on his examination of the ladder, the left front rail buckled and, for this to happen, there had to be prior damage — “prior structural damage or a structural defect.” The damage occurred near the bottom of the rail where the lowest step is riveted to the rail. Werner’s chief engineer, Larry Kocina, called by plaintiff under section 60 of the Civil Practice Act (Ill. Rev. Stat. 1973, ch. 110, par. 60), testified that this particular ladder was manufactured in 1971. He said that during this period a slight crack was sometimes detected in the flange of the side rail of ladders at the point where the side rail begins to flair out near the top of the ladder. This infrequent defect was corrected in 1973, he added. When testifying during the defendant’s case, Kocina said the damage to the ladder could only have been caused by an impact force, such as a falling body; it could not have been caused, without more, by a man properly balanced on the ladder.

Werner argues, rightly, that proof of plaintiff’s injury while using a ladder manufactured by Werner is not enough. The plaintiff must give evidence of a defect in the product which existed when the product left the manufacturer’s control. Werner maintains there “was no evidence of a defect for which the manufacturer was responsible” nor evidence that the ladder was defectively constructed. At the close of its brief, Werner directs our attention to a case similar to the case at bar—Coyne v. John S. Tilley Co. (1975), 368 Mass. 230, 331 N.E.2d 541. Gillespie wishes to persuade us that Tweedy v. Wright Ford Sales, Inc. (1976), 64 Ill. 2d 570, and Dunham v. Vaughan & Bushnell Mfg. Co. (1969), 42 Ill. 2d 339, are dispositive.

In Tweedy, this court held that a “prima facie case that a product was defective and that the defect existed when it left the manufacturer’s control is made by proof that in the absence of abnormal use or reasonable secondary causes the product failed ‘to perform in the manner reasonably to be expected in light of [its] nature and intended function.’ ” (64 Ill. 2d 570, 574.) There the plaintiff offered no expert testimony regarding the presence of a specific defect in the brake system of a car. This court affirmed the jury verdict for the plaintiff, who was injured when the brakes failed, and rejected the contention of defendant Ford Motor Company that the evidence failed to show any defect in the brake system of the car, manufactured by Ford and driven only 7,500 miles. Dunham was cited and quoted from with approval in Tweedy.

The Dunham court stated, “Although the definitions of the term ‘defect’ in the context of products liability law use varying language, all of them rest upon the common premise that those products are defective which are dangerous because they fail to perform in the manner reasonably to be expected in light of their nature and intended function.” (42 Ill. 2d 339, 342.) Moreover, “the requirement that the defect must have existed when the product left the manufacturer’s control does not mean that the defect must manifest itself at once.” (42 Ill. 2d 339, 342.) This court affirmed the jury verdict for the plaintiff, who suffered the loss of one eye when a chip from a hammer, manufactured by the defendant, struck his eye. He had used the hammer for 11 months in the course of doing farmwork. Each party offered the testimony of an expert, each of whom found no flaws in the forging and no metallurgical defects due to the manufacturing process. (The experts disagreed as to what carbon content in the steel was likely to prevent chipping.)

Here the evidence does not show “abnormal use or reasonable secondary causes.” Gillespie and his aide, finding the ladder to be “new” and nothing wrong with it, used it while doing electrical work above a drop ceiling. The helper handed tools to Gillespie, who was working almost directly overhead, so he did not have to descend. The various tools, when not in use, were apparently placed on a table in the room in which they were working. Gillespie denied he worked to the side in such a way as to cause an imbalance. The concrete floor was level and covered with tiles. The owner and operator of the company renting the ladder to Gillespie’s employer testified that it was his practice “to check and inspect all equipment” he rented out. Given this evidence, it was reasonable for the jury to conclude there was an absence of abnormal use and that the ladder failed “to perform in the manner reasonably to be expected in light of” its “intended function.” (Dunham v. Vaughan & Bushnell Mfg. Co. (1969), 42 Ill. 2d 339, 342.) For Werner to be liable, it was not necessary that the defect manifest itself before the ladder left Werner’s control.

Moreover, we find Coyne v. John S. Tilley Co. (1975), 368 Mass. 230, 331 N.E.2d 541, distinguishable. There the plaintiff recovered for injuries suffered in a fall from an aluminum ladder manufactured by the defendant. The findings were vacated by the appellate division, which was affirmed by the reviewing courts. The Massachusetts high court believed “the occurrence of this accident will support an inference of negligence” but felt that inference alone would not support a finding for the plaintiff. (368 Mass. 230, 236, 331 N.E.2d 541, 545.) The evidence exonerated “intermediate handlers as a cause of the ladder’s collapse,” the court said, but the evidence as to the plaintiff’s use was sparse. (368 Mass. 230, 237, 331 N.E.2d 541, 546.) “There is no evidence that the plaintiff put the ladder to the normal use for which it was intended.” (368 Mass. 230, 238, 331 N.E.2d 541, 547.) The court speculated the plaintiff could have overloaded the ladder or placed it so that the leg bore too much of the weight. Finally, the court reasoned, “ ‘The plaintiff need not exclude every possible cause for his injuries. He is only required to show a greater likelihood that his injury was caused by the defendant’s negligence than by some other cause.’ [Citations.]” 368 Mass. 230, 239, 331 N.E.2d 541, 547.

We believe here there was sufficient evidence for the jury to infer that Gillespie could be eliminated as a cause of his injuries, unlike in Coyne. In addition to the testimony by both parties’ experts — in Coyne, the plaintiff presented no expert testimony — there was testimony by both Gillespie and the aide who was present when Gillespie was injured. Their testimony evidenced the following: the concrete floor was level and covered with tile; before climbing, Gillespie inspected the ladder — coupled with the previous statement, an inference could be made that, the ladder was properly spread and standing; while on the ladder, he was not working off to either side but slightly in front and overhead — an inference could be made that the weight was evenly distributed on the ladder; the aide watched Gillespie in order to hand him equipment from the nearby table — an inference could be made that the ladder was not overloaded; and the ladder “shot out,” to the left, from under Gillespie. As in Coyne, we “believe that a trier of fact could infer as matter of common knowledge that a relatively new *** [and] properly fabricated and designed aluminum ladder which had received proper care and usage would not collapse if put to the use for which it was intended.” 368 Mass. 230, 235-36, 331 N.E.2d 541, 545.

We therefore find the circuit court was justified in denying Werner’s motion for judgment notwithstanding the verdict. As this court ruled in Pedrick v. Peoria & Eastern R.R. Co. (1967), 37 Ill. 2d 494, 510, “verdicts ought to be directed and judgments n.o.v. entered only in those cases in which all of the evidence, when viewed in its aspect most favorable to the opponent [Gillespie here], so overwhelmingly favors movant [Werner] that no contrary verdict based on that evidence could ever stand.” We cannot say that the evidence so favored Werner as to warrant a judgment n.o.v. Accord, Lindroth v. Walgreen Co. (1950), 407 Ill. 121, 135.

Hence the judgment of the appellate court is reversed and the judgment of the circuit court affirmed.

Appellate court reversed; circuit court affirmed.