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    (Nos. 52818, 52828, 52903 cons.
    CATERPILLAR TRACTOR CO. et al., Appellants and Cross-Appellees, v. DANIEL J. LENCKOS, Director of Revenue, et al., Appellants and Cross-Appellees.

      Opinion filed February 20, 1981.

    Rehearing denied March 27, 1981.

      SIMON, J., took no part.
    Emroy S. Naylor, Jr., Don S. Harnack and Richard A. Hanson, of Chicago (McDermott, Will & Emery, of counsel), for appellants and cross-appellees Caterpillar Tractor Co. et al.

    William P. Sutter and Richard Bromley, of Chicago (Hopkins, Sutter, Mulroy, Davis & Cromartie, of counsel), for appellants and cross-appellees Coca-Cola Company et al.

    William J. Scott, Attorney General, of Springfield (John D. WhiteNack and Lloyd B. Foster, Special Assistant Attorneys General, of Chicago, of counsel), for the Director of the Department of Revenue et al.

    Frank M. Keesling, of Loeb & Loeb, of Los Angeles, California, amicus curiae.

    Edward C. Rustigan, David K. Staub, and Martin G. Rosenstein, of Chicago (Mayer, Brown & Platt, of counsel), for amici curiae Continental Illinois National Bank & Trust Co. et al.

    William D. Dexter, of Olympia, Washington, pro se, amicus curiae.

   MR. JUSTICE WARD

delivered the opinion of the court:

The plaintiffs, Caterpillar Tractor Company and four of its corporate subsidiaries, filed separate Illinois corporate income tax returns for 1969 through 1974 inclusive. Each corporation, whose business income is generated through multistate and multinational business operations, in preparing its return applied the apportionment formula set out in section 304(a) of the Illinois Income Tax Act (Ill. Rev. Stat. 1969, ch. 120, par. 3 — 304(a)) for the use of corporations deriving business income from transactions in Illinois and in one or more other States. A purpose of the apportionment formula is to confine taxation to the portion of corporate income attributable to business operations within Illinois.

Under section 304(a), the Director of Revenue (Director) applies a three-factor (sales, payroll and property) apportionment formula which separately compares the total value of a corporation’s in-State and out-of-State sales, payroll, and property, both tangible and intangible, with the total value of the corporation’s inState sales, payroll, and property alone. To illustrate: if the total multistate sales of a corporation are $10 million and its total Illinois sales are $ 1 million, the Illinois sales would represent one-tenth of the total multistate sales of the corporation, giving a sales factor of 10%. Once the percentage of the other factors, payroll and property, is calculated, the three factors are averaged. This average is then multiplied by the total amount of business income generated by the corporation’s in-State and out-of-State operations. If, for example, the sales, payroll and property multistate factors of the corporation are each 10% and its combined business income is $20 million, the amount of business income attributable to Illinois is $2 million.

This method of apportionment was applied by each of the plaintiff corporations in order to determine the portion of income upon which Illinois could properly impose its corporate income tax. (Ill. Rev. Stat. 1969, ch. 120, par. 2 — 201(b)(2).) The Illinois tax paid by the five corporations for the six years in question totaled $37,238,681.60. The separate returns filed by each of the plaintiffs showed deductions claimed for taxes paid to foreign governments in other countries which had been credited for Federal income tax purposes. The plaintiffs also deducted certain dividend income includable in Federal taxable income (26 U.S.C. sec. 78 (1976)) as well as income obtained under subpart F of the Internal Revenue Code. 26 U.S.C. secs. 951 through 964 (1976).

Between February of 1974 and May of 1976, each of the plaintiffs filed separate claims with the Director for refunds covering 1969 through 1974. They claimed that for the period of 1970-74, by using separate apportionment they misapplied the apportionment formula of section 304(a) and, instead, should have applied the unitary method of apportionment when calculating the percentage of each plaintiff’s business income attributable to operations within Illinois. Because of this misapplication, or failure to apply the unitary method, the plaintiffs claimed that each of them paid a greater tax than it was hable for under the Illinois Income Tax Act.

The unitary apportionment method or as it is described in the case of a group of commonly owned and controlled corporations, the combined reporting method of reporting the income of the plaintiffs from what are literally worldwide sources, should have been applied, the plaintiffs said, since they qualified as a unitary business group. A unitary business operation is one in which there is a high degree of interrelationship and interdependence between, typically, one corporation, which generally is a parent corporation, and its corporate subsidiaries or otherwise associated corporations, which group is usually engaged in multistate, and in some cases in international, business operations. Because of this integrated relationship, which is reflected in all phases of the business operations, it is extremely difficult, for purposes of taxation, to determine accurately the measure of taxable income generated within a State by an individual corporation of the unitary group which is conducting business in the State. Typically, the corporation’s transactions and the income derived from them actually represent; the business efforts of the individual corporation, plus efforts of other and possibly all members of the unitary business operation. As a result, the claimed income of each member of the group standing alone does not, in a real sense, reflect the conducting of a unitary business operation because the income is not attributable solely to the effort of the particular corporation.

The plaintiffs in their separately filed claims for refunds maintained that, in order to fairly measure the taxable business income of each unitary member, a unitary method of apportionment should have been applied. They argued that under this formula, which they asserted was authorized under section 304(a) of the Illinois Income Tax Act, each corporation’s in-State, i.e., Illinois, data for its property, payroll and sales should have been compared with the combined worldwide totals of the entire unitary group, which included the plaintiffs and 21 other corporate subsidiaries of Caterpillar Tractor. The plaintiffs, in their State returns, compared only the in-State totals of each corporation with the in-State and out-of-State totals for property, payroll and sales of the same corporation and not of the unitary business group.

The plaintiffs argued that the unitary method of apportionment should be applied for each of the plaintiffs for the years 1970 through 1974 but not as to 1969. The basis for excluding 1969 was the contention that the unitary method of reporting did not accurately reflect the amount of taxable income for that year since the Illinois Income Tax Act did not take effect until August of 1969 (Ill. Rev. Stat. 1969, ch. 120, par. 1 — 101 et seq.). The proposed application by the plaintiffs of the unitary method of apportionment, and the claimed deductions for dividend income, subpart F income, and foreign income taxes paid, were denied by the Director. Timely protests were filed by the plaintiffs.

At the later administrative hearing, the plaintiffs introduced extensive evidence showing a strong integrated relationship between Caterpillar Tractor, the parent corporation, and its multistate and multinational subsidiaries. Based on this and on a strict policy of Caterpillar Tractor to maintain worldwide uniformity in all phases of its operations, including production, marketing and employer-employee relationships, all of which were kept subject to the central control of the parent corporation, the plaintiffs contended that they should be considered members of a unitary business group. The Director agreed and then applied a unitary apportionment formula under section 304 of the Illinois Income Tax Act (Ill. Rev. Stat. 1977, ch. 120, par. 3 — 304), using the combined worldwide business income of Caterpillar Tractor and its 25 subsidiaries in order to determine the appropriate percentage of business income attributable to Illinois for each corporate plaintiff for all six years in question, 1969 through 1974. The Director, however, denied the deductions claimed for the foreign income taxes, the deemed dividend income and the subpart F income.

The plaintiffs appealed to the circuit court of Peoria County (Ill. Rev. Stat. 1977, ch. 120, par. 12 — 1201) on the ground that unitary apportionment should not have been applied to their 1969 taxable income and on the ground that the Director erred in denying the various deductions claimed. The circuit court allowed the petitions of 16 corporations, including the Coca Cola Company, to intervene, but limited intervention to the issue of whether unitary apportionment is authorized under the Illinois Income Tax Act (Ill. Rev. Stat. 1977, ch. 120, par. 1 — 101 et seq.).

The circuit court subsequently held that combined reporting was authorized in Illinois and affirmed the Director’s decision to combine the worldwide income of Caterpillar Tractor and its 25 subsidiaries for purposes of apportioning each plaintiff’s Illinois taxable income for 1970 through 1974. With respect to 1969, it held that the unitary method of apportionment was, in general, inapplicable. The court held also that the plaintiffs could claim as deductions dividend income, subpart F income, and also foreign income taxes paid by domestic subsidiaries, as well as foreign income taxes paid by foreign subsidiaries.

The appellate court, on appeals by the plaintiffs, the Director, and the interveners, affirmed the judgment as to the application of the unitary method for 1970-74 but held that the unitary method of apportionment was applicable for 1969. (77 Ill. App. 3d 90, 101.) The court affirmed also the allowance of the petitions to intervene. It, however, also reversed the circuit court’s allowance of the deductions claimed by the plaintiffs. We granted and consolidated petitions for leave to appeal filed by the plaintiffs, the Director and the intervenors and allowed the filing of a number of amicus curiae briefs. The plaintiffs did not seek an appeal from the holding that the unitary method was to be applied to 1969. They did not seek an appeal either from the appellate courts adverse holding as to deducting dividend income and subpart F income.

We first address the issue of whether the trial court erred, as the Director contends, in permitting the petitions to intervene. The question of when a third party may intervene is governed by section 26.1 of the Civil Practice Act (Ill. Rev. Stat. 1979, ch. 110, par. 26.1). This section provides that a party may intervene as a matter of right: “(a) when a statute confers an unconditional right to intervene; or (b) when the representation of the applicant’s interest by existing parties is or may be inadequate and the applicant will or may be bound by an order or judgment in the action; or (c) when the applicant is so situated as to be adversely affected by a distribution or other disposition of property ***.” (Ill. Rev. Stat. 1979, ch. 110, par. 26.1(1).) In the alternative, the court in its discretion may permit intervention: “(a) when a statute confers a conditional right to intervene; or (b) when an applicant’s claim or defense and the main action have a question of law or fact in common.” Ill. Rev. Stat. 1977, ch. 110, par. 26.1(2).

The circuit court, in permitting intervention, stated it was being allowed as a matter of right and as a matter of discretion. It refused, however, to address the question of whether the intervenors were to be deemed to be conducting unitary business operations.

The overall design of section 26.1 of the Civil Practice Act was to liberalize the- practice of intervention so as to avoid, upon timely application, the relitigation of issues in a second suit which were being litigated in a pending action. (See Dowsett v. City of East Moline (1956), 8 Ill. 2d 560; Ill. Ann. Stat., ch. 110, par. 26.1, Joint Committee Comments, at 317-18 (Smith-Hurd (1968).) A party need not have a direct interest in the pending suit but it must have an interest greater than that of the general public (see Mensik v. Smith (1960), 18 Ill. 2d 572, 590; Cooper v. Hinrichs (1957), 10 Ill. 2d 269, 270), so that the party may stand to gain or lose by the direct legal operation and effect of a judgment in the suit. In re Appointment of Special State’s Attorneys (1976), 42 Ill. App. 3d 176, 181.

In their petitions for intervention (Ill. Rev. Stat. 1977, ch. 110, par. 26.1(1)) before the circuit court, Coca Cola and the 15 other corporate intervenors maintained that the plaintiffs’ representation on the issue of whether the Director may require the unitary method of apportionment as a means to determine business income allocable to Illinois as stated above would be inadequate, since the plaintiff only challenged its use for the tax year 1969 and not for the years 1970 through 1974. The intervenors argue that the plaintiffs have not raised on appeal any issue as to 1969, thus making the necessity of intervention more urgent. The intervenors currently are engaged in a similar dispute with the Director as to whether the Director may determine their liability for income tax using the combined income of their corporate branches and subsidiaries or whether it must calculate the tax, as the intervenors claim, based on separate corporate returns. They also say that this appeal and the intervenors’ dispute before the Director involve a common question of law, i.e., whether combined reporting is even authorized under the Illinois Income Tax Act.

The Director contends that the intervenors’ position may be fully protected by their appearance as amici curiae and that intervention in this instance was improper. The Director argues that the intervenors, in actuality, are seeking a declaratory judgment as to their rights under the Illinois Income Tax Act, which may not be granted unless they can establish a right to injunctive relief. This relief, the Director contends, citing Illinois Bell Telephone Co. v. Allphin (1975), 60 Ill. 2d 350, 358-59, overruling Owens-Illinois Glass Co. v. McKibbin (1943), 385 Ill. 245, which had provided an exception in equity to the exhaustion rule, is not permitted in a tax case unless a party has exhausted its administrative remedies or has shown special circumstances to avoid this requirement. The Director also maintains that the protest act (Ill. Rev. Stat. 1979, ch. 127, par. 172) provides a means to contest the Director’s position regarding the application of the unitary apportionment method under the Illinois Income Tax Act without the necessity of exhausting administrative remedies. The Director says, too, that the Illinois Administrative Procedure Act (Ill. Rev. Stat. 1977, ch. 127, par. 1001 et seq.) does not allow intervention at the administrative level since to do so would permit a taxpayer to circumvent the protest act.

We do not consider the intervenors to be seeking a declaratory judgment. The declared purpose of the intervention is to raise the questions of whether a unitary method of apportionment is authorized and whether it may be required. The resolution of these issues will not necessarily decide the intervenors' disputes with the Director regarding claimed tax deficiencies. Furthermore, were this court to hold that unitary apportionment is authorized under the Illinois Income Tax Act, that holding would not decide whether each of the 16 corporations may properly be regarded as a unitary business group so that this method of apportionment might be applied. The contention of the Director that to permit intervention here would open an avenue for taxpayers to “evade” the tax protest act does not persuade. Intervention under section 26.1 of the Civil Practice Act is not granted as a matter of course. Where one has satisfied the burden to intervene as a matter of right or where a court has not abused discretion in allowing intervention there should be no artibrary denial of it. (See L.S. Health & Sons, Inc. v. Marathon Oil Co. (1977), 56 Ill. App. 3d 440.) The circuit court did not abuse discretion when it granted the petition for intervention. We need not decide if intervention was to be allowed as a matter of right. See Mensik v. Smith (1960), 18 Ill. 2d 572; Standard Bank & Trust Co. v. Village of Oak Lawn (1978), 61 Ill. App. 3d 174.

We consider now the question the intervenors raise as to whether the provisions of the Illinois Income Tax Act (Ill. Rev. Stat. 1979, ch. 120, par. 1 — 101 et seq.) authorize the Director to use the unitary apportionment or combined method of reporting business income for Illinois income tax purposes. The Illinois Income Tax Act became effective on August 1, 1969, and was held constitutional by this court in Thorpe v. Mahin (1969), 43 Ill. 2d 36. The plaintiffs filed income tax returns for the years 1969 through 1974 and, as stated above, they later filed separate claims for refunds for almost $11,000,000 covering this six-year period. It was the Director’s agreeing with the plaintiffs that Caterpillar Tractor and all of its subsidiaries should be considered a unitary business group and further that the combined method of apportionment should be applied in order to determine the percentage of income attributable to Illinois activities for each corporate plaintiff that led the intervenors to seek to enter the case. They sought to present their contention that the Illinois Income Tax Act does not provide for reporting as a member of a unitary business group and authorizes only the reporting of the separate taxable income of a corporation through returns filed under section 203(d)(2)(E) of the Illinois Income Tax Act (Ill. Rev. Stat. 1977, ch. 120, par. 2 — 203(d)(2)(E)). This section provides that where “a member of an affiliated group of corporations [files] a consolidated income tax return for the taxable year for federal income tax purposes ***,” the Director shall determine taxable income “as if such corporation had filed a separate return for federal income tax purposes for the taxable year and each preceding taxable year for which it was a member of an affiliated group.” They erroneously claim that this section shows a legislative intent to bar the unitary or combined reporting method.

There are two basic methods of accounting used by State tax officials to determine net taxable income in such a way as to avoid the constitutional problems which arise when a State attempts to tax that portion of a corporation’s business income which clearly has been earned in other States or countries. The first method, called separate accounting, attempts to segregate and identify the sources or transactions which account for the generation of business income. This attempt to isolate the income-producing sources becomes extremely complex in the case of business transactions where members of a unitary business group located in different States, and even countries, contributed to the completion of the business transaction. Even where a unitary operation has attempted to identify and separate the contributions of each member to the completed transaction and the generation of income by using a separate accounting method, there have been difficulties. The Supreme Court has pointed out that “while it purports to isolate portions of income received in various States, [separate accounting] may fail to account for contributions to income resulting from functional integration, centralization of management, and economies of scale.” (Mobil Oil Corp. v. Commissioner of Taxes (1980), 445 U.S. 425, 438, 63 L. Ed. 2d 510, 521, 100 S. Ct. 1223, 1232.) The court went on to say that “it becomes misleading to characterize the income of the business as having a single identifiable ‘source.’ Although separate geographical accounting may be useful for internal auditing, for purposes of state taxation it is not constitutionally required.” (445 U.S. 425, 438, 63 L. Ed. 2d 510, 521, 100 S. Ct. 1223, 1232.) (See also Hellerstein, State and Local Taxation, 400 (3d ed. 1969); Dexter, “The Unitary Concept in State Income Taxation, 10 Urb. Law. 243 (1978).) Recently the Supreme Court in Exxon Corp. v. Wisconsin Department of Revenue (1980), 447 U.S. 207, 65 L. Ed. 2d 66, 100 S. Ct. 2109, held that where a State has enacted an apportionment statute, the existence and use by a company of an internal auditing or accounting method did not bind the State to employ the same technique for computing taxable income.

The other method of accounting, which the Director agreed should apply here, and which has been described, is the combined or unitary apportionment method of reporting. In order to apply this method to the tax returns of a corporate taxpayer, it must first be determined that it is a member of a unitary business group. As was briefly discussed, the term “unitary business group,” when applied to a corporation which has subsidiaries or other associated corporations in other States or countries, is used to describe a group of functionally integrated corporate units which are so interrelated and interdependent that it becomes relatively impossible for one State to determine the net income generated by a particular corporation’s activities within the State and therefore allocable to that State for purposes of taxation. A classic illustration of a unitary business is the Caterpillar Tractor Company. This corporation, with its national and international subsidiaries, forms a network of companies whose combined operations make Caterpillar Tractor the world’s largest construction and earth-moving manufacturer. Caterpillar Tractor and its 25 subsidiaries employ over 82,000 individuals at locations around the world. Its net worldwide income for the taxable years 1969 through 1974 was calculated by the Director to be $1.8 billion. Despite the magnitude and diversity of these multistate and multinational operations, there is an overriding corporate design to maintain strict uniformity in areas such as product design, control maintenance, accounting procedures, research and development and even a uniform standard or code of the conduct for its personnel throughout the world. Any suggested changes or departures from these uniform procedures are subject to final approval from the corporation’s principal headquarters in Peoria.

In determining whether the Illinois Income Tax Act authorizes and, indeed requires, as the Director contended and as the appellate court held, combined reporting for unitary business groups, we must analyze the legislative history of this and other related income tax acts both before and after the Illinois Income Tax Act became effective in August of 1969. In the “Official Commentary on the Illinois Income Tax Act” which was issued by the Department of Revenue shortly after the Act’s effective date, it is stated under the discussion of article 3: “Article 3 of the Act provides rules for the allocation and apportionment of business and non-business income between Illinois and other states. For the most part this is accomplished by embodying *** the principles of the Multistate Tax Compact which was adopted by Illinois effective July 1, 1967. At present 16 States (including Illinois) have adopted this Compact and 11 other States are associate members. Adoption of the provisions of the Compact was believed desirable in the interests of interstate uniformity and consistency with existing Illinois law.” Ill. Tax Rptr. (CCH), par. 18 — 000, at 1901; par. 18 — 006, at 1903; par. 18-023, at 1911.

The first major attempt in promoting uniformity among the States with respect to taxing interstate business was the drafting and adoption of the Uniform Division of Income for Tax Purposes Act (UDITPA). UDITPA was incorporated into article IV of the Multistate Tax Compact (MTC) (Ill. Rev. Stat. 1973, ch. 120, par. 871 et seq.) and as stated in the Official Commentary cited above, the MTC became effective in Illinois on July 1, 1967. The questions before us now are: (1) whether UDITPA authorizes the use of the unitary method of apportionment; and (2) if it does, whether this method has been incorporated into the Illinois Income Tax Act.

Considering whether UDITPA authorizes the use of unitary apportionment, we first observe that UDITPA does not make any reference to unitary apportionment or combined reporting. The absence of specific reference to the unitary method is not, however, critical, for in a number of jurisdictions that adopted UDITPA and in some of them, the MTC as well, courts have held that unitary apportionment or combined reporting was authorized though the particular income tax statute made no reference to this method of reporting. In Coca Cola Co. v. Department of Revenue (1975), 271 Or. 517, 533 P.2d 788, the Oregon Department of Revenue applied a unitary or combined apportionment method of accounting to the income tax returns of the plaintiff corporation and its wholly owned subsidiaries, which had filed separate returns using Oregon’s three-factor apportionment formula, which is similar to that set out in the Illinois statute. The Department argued that the combined method, though not specifically provided for in the tax statutes into which UDITPA had been incorporated, would more accurately reflect the income of what it contended was a unitary business operation. Concluding that the company’s syrup and bottling operations were so inextricably connected as to constitute a unitary business, the court stated: “The combined method of apportionment reporting is wholly consistent with, and a natural extension of, the apportionment method.” (271 Or. 517, 528, 533 P.2d 788, 793.) The court held that the plaintiff and its subsidiaries “are all part of the same unitary operation and were required to use the combined method of reporting for the tax years in question.” 271 Or. 517, 529, 533 P.2d 788, 794. See also American Smelting & Refining Co. v. Idaho State Tax Com. (1979), 99 Idaho 924, 592 P.2d 39; Montana Department of Revenue v. American Smelting & Refining Co. (1977), 173 Mont. 316, 567 P.2d 901.

The Supreme Court has also held that the absence of any statutory reference to the unitary method of reporting does not forbid its use. In Butler Brothers v. McColgan (1942), 315 U.S. 501, 86 L. Ed. 991, 62 S. Ct. 701, the plaintiff, an Illinois corporation conducting a wholesale goods and general merchandise business, was licensed to conduct business in Calfomia. The company had wholesale distributing divisions located in seven states, including California, each serving a district area and each controlling its own sales force, accounting procedures, sales operations and credit and financing procedures as well. Though the California tax statute did not specifically authorize the combined method of reporting or make any references to unitary operations, the court upheld the State’s decision to apply the unitary method to the combined income derived from the operations of the seven divisions. In its holding the court stated that “this Court has recognized that unity of the use and management of a business which is scattered through several states may be considered when a State attempts to impose a tax on an apportionment basis. As stated in Hans Rees’ Sons, Inc. v. North Carolina, [(1931), 283 U.S. 123, 133, 75 L. Ed. 879, 905, 51 S. Ct. 385, 389], ‘the enterprise of a corporation which manufactures and sells its manufactured product is ordinarily a unitary business, and all the factors in that enterprise are essential to the realization of profits.’ ” 315 U.S. 501, 508, 86 L. Ed. 991, 996, 62 S. Ct. 701, 704-05.

In a later case, Northwestern States Portland Cement Co. v. Minnesota (1959), 358 U.S. 450, 3 L. Ed. 2d 421, 79 S. Ct. 357, the court addressed a similar challenge to the use of a unitary apportionment method, and in citing Hans Rees’ and other apportionment decisions (e.g., Bass, Ratcliff & Gretton, Ltd. v. State Tax Com. (1924), 266 U.S. 271, 69 L. Ed. 282, 45 S. Ct. 82; Underwood Typewriter Co. v. Chamberlain (1920), 254 U.S. 113, 65 L. Ed. 165, 41 S. Ct. 45) the court upheld the use declaring: “These cases stand for the doctrine that the entire net income of a corporation, generated by interstate as well as intrastate activities, may be fairly apportioned among the States for tax purposes by formulas utilizing in-state aspects of interstate affairs.” 358 U.S. 450, 460, 3 L. Ed. 2d 421, 428, 79 S. Ct. 357, 363. See also Exxon Corp. v. Wisconsin Department of Revenue (1980), 447 U.S. 207, 65 L. Ed. 2d 66, 100 S. Ct. 2109; Mobil Oil Corp. v. Commissioner of Taxes (1980), 445 U.S. 425, 63 L. Ed. 2d 510, 100 S. Ct. 1223.

The intervenors contend that even though the legislature adopted UDITPA, and thus may have authorized combined reporting, when it enacted article IV of the MTC, UDITPA was not made a part of the Illinois Income Tax Act. To support this argument, the intervenors maintain that when Illinois withdrew from participation on the Multistate Tax Commission and repealed the Multistate Tax Compact in 1975, it repealed UDITPA as well and, as a result, there no longer is authority in Illinois for the combined or unitary apportionment method. That Illinois withdrew from the Multistate Tax Commission in 1975, however, did not mean that the authority to use the unitary method was also terminated. An examination of various relevant provisions of UDITPA, the MTC, and the Illinois Income Tax Act shows that the language in each pertaining to the allocation and apportionment of business income is very similar and in some instances virtually identical. For example, the term “business income” is defined in section 1501(a)(1) of the Illinois Income Tax Act (Ill. Rev. Stat. 1979, ch. 120, par. 15 — 1501(a)(1)) in language, except for one additional sentence not concerned in this case, identical to the language used in section 1(e) of UDITPA and article IV, section 1(a), of the MTC to define the same term. An example of even greater significance and persuasiveness is that the three-factor apportionment formula of sales, property and payroll in the Illinois Income Tax Act, apart from some minor change not relevant here, is identical to the formula set out in UDITPA which, as we have already determined, authorizes the use of the unitary method. Considering that these provisions taken from UDITPA are part of the Illinois Income Tax Act and that the official commentary on the Act states that the rules for allocation and apportionment under sections 301 through 307 of the Act (Ill. Rev. Stat. 1979, ch. 120, pars. 3 — 301 through 3 — 307) have embodied the principles underlying article IV of the MTC, which is UDITPA, it is clear that the use of the combined or unitary apportionment method is authorized under the Act and could be required by the Department in the case of unitary business groups. The purpose of this method, as had been said, is to permit the fair determination of the portion of business income that is attributable to business activity in Illinois by the reporting member of the unitary group. The concern, it is emphasized, is in making a fair determination of tax liability. This is why the legislature provided that, if the calculation of liability made by using the combined or unitary reporting method does not accurately and fairly represent the taxable business activity in Illinois, under section 304(e) of the Illinois Income Tax Act the taxpayer may petition that another method of determination be used. Ill. Rev. Stat. 1979, ch. 120, par. 3 — 304(e).

The intervenors say that if the combined method of reporting is required under the Illinois Income Tax Act, its imposition will be contrary to the decision in Japan Line, Ltd. v. County of Los Angeles (1979), 441 U.S. 434, 60 L. Ed. 2d 336, 99 S. Ct. 1813, which, they argue, held that the combining of worldwide income for purposes of State taxation was unconstitutional. There, a Japanese shipping company challenged an ad valorem property tax imposed upon certain types of containers which were within the State on March 1, the tax lien date in California. The containers also were subject to a property tax in Japan under the law of that country. The Supreme Court said that the issue was “whether instrumentalities of commerce that are owned, based, and registered abroad and that are exclusively in international commerce, may be subjected to apportioned ad valorem property taxation by a State.” (441 U.S. 434, 444, 60 L. Ed. 2d 336, 345, 99 S. Ct. 1813, 1819.) The court was concerned with whether the California tax scheme resulted in multiple taxation of foreign commerce and therefore constituted an impermissible intrusion into an area which the court described as one that was “preeminently a matter of national concern.” (441 U.S. 434, 448, 60 L. Ed. 2d 336, 347, 99 S. Ct. 1813, 1821.) The court, in holding that the tax was invalid, judged that, first, the tax scheme “produce [d] multiple taxation in fact” and, second, it prevented “this Nation from ‘speaking with one voice’ in regulating foreign trade.” (441 U.S. 434, 452, 60 L. Ed. 2d 336, 350, 99 S. Ct. 1813, 1823.) This was especially true since Japan and the United States had entered into an agreement entitled “Customs Convention on Containers,” which was designed to prevent the imposition of all duties and taxes upon containers deemed “instruments of international traffic” (19 U.S.C. sec. 1322(a) (1976)) which were imported into the United States on a temporary basis.

Japan Line is obviously distinguishable from the case here. The purpose of the apportionment formula is to confine the taxation of business income to that portion which is attributable to activities in Illinois. This appeal does not involve the multiple taxation of items or instrumentalities of foreign commerce, nor does unitary reporting affect Federal authority in governing foreign commerce. The concern here is only with the taxation of business income fairly attributable to activities within the taxing State. See Mobil Oil Corp. v. Commissioner of Taxes (1980), 445 U.S. 425, 63 L. Ed. 2d 510, 100 S. Ct. 1223; Complete Auto Transit, Inc. v. Brady (1977), 430 U.S. 274, 51 L. Ed. 2d 326, 97 S. Ct. 1076;Northwestern States Portland Cement Co. v. Minnesota (1959), 358 U.S. 450, 3 L. Ed. 2d 421, 79 S. Ct. 357.

The intervenors’ argument that the unitary reporting method violates due process also fails to persuade. In Exxon Corp. v. Wisconsin Department of Revenue (1980), 447 U.S. 207, 65 L. Ed. 2d 66, 100 S. Ct. 2109, the Supreme Court considered the issue of whether a State, in applying its method of formulary apportionment to a corporate taxpayer’s total corporate income, violates the due process clause where the corporation employs a functional separate accounting method to separate the sources of income so as to reflect its claimed division of operations. In upholding Wisconsin’s apportionment statute and the decision of the Department of Revenue that the corporation’s Wisconsin marketing division was an integral unit of its unitary operation, the court stated: “The Due Process Clause of the Fourteenth Amendment imposes two requirements for such state taxation: a ‘minimal connection’ or ‘nexus’ between the interstate activities and the taxing State, and ‘a rational relationship between the income attributed to the State and the intrastate values of the enterprise.’ ” (447 U.S. 207, 219-20, 65 L. Ed. 2d 66, 79, 100 S. Ct. 2109, 2118.) The nexus requirement is satisfied if the State tax is imposed upon a company which has availed itself of the privilege of conducting business within the State. (Wisconsin v. J.C. Penny Co. (1940), 311 U.S. 435, 85 L. Ed. 267, 61 S. Ct. 246; Bass, Ratcliff & Cretton, Ltd. v. State Tax Com. (1924), 266 U.S. 271, 69 L. Ed. 282, 45 S. Ct. 82; Underwood Typewriter Co. v. Chamberlain (1920), 254 U.S. 113, 65 L. Ed. 165, 41 S. Ct. 45.) Illinois has a statute to this effect. Ill. Rev. Stat. 1979, ch. 120, par. 2-201.

In next examining whether a rational relationship exists between the business income claimed by the State for activities within the State and the actual value of the taxpayer’s intrastate activities, the courts have looked to the reasonableness of the method used in attempting to determine fairly the level of income generated by business operations within the State. (See Butler Brothers v. McColgan (1942), 315 U.S. 501, 506-07, 86 L. Ed. 991, 995-96, 62 S. Ct. 701, 704. See also Exxon Corp. v. Wisconsin Department of Revenue (1980), 447 U.S. 207, 65 L. Ed. 2d 66, 100 S. Ct. 2109; Mobil Oil Corp. v. Commissioner of Taxes (1980), 445 U.S. 425, 63 L. Ed. 2d 510, 100 S. Ct. 1223.) We consider that the overall design of section 304 is calculated to determine that amount of business income fairly attributable to Illinois. (Hans Rees’ Sons v. North Carolina ex rel. Maxwell (1931), 283 U.S. 123, 75 L. Ed. 879, 51 S. Ct. 385.) That such a formula may include income derived from international activities is not of consequence in determining whether the statute satisfies the requirements of due process. See Mobile Oil Corp. v. Commissioner of Taxes (1980), 445 U.S. 425, 63 L. Ed. 2d 510, 100 S. Ct. 1223; Bass, Ratcliff & Gretton, Ltd. v. State Tax Com. (1924), 266 U.S. 271, 69 L. Ed. 282, 45 S. Ct. 82. See also United States Steel Corp. v. Multistate Tax Com. (1978), 434 U.S. 452, 54 L. Ed. 2d 682, 98 S. Ct. 799.

The other arguments presented by the intervenors against recognition of the combined apportionment method of filing are not convincing. The intervenors contend that the prohibition in Illinois against the filing of a consolidated return (Ill. Rev. Stat. 1977, ch. 120, par. 2 — 203(d)(2)(E)) demonstrates a legislative intention to prohibit the use of this method of reporting. We consider that the appellate court correctly stated that the ban on filing consolidated returns in Illinois was “irrelevant to a determination of whether the unitary method of apportionment is to be used in Illinois.” (77 Ill. App. 3d 90, 99.) That Illinois does not permit the filing of consolidated returns does not mean that it therefore prohibits the use of the unitary apportionment method. In permitting the filing of a consolidated tax return, Federal law only requires that an affiliated group of corporations meet certain stock-ownership requirements which show interrelationship among the corporations. (26 U.S.C. sec. 1504(a) (1976).) Whether this group may also qualify as a unitary business group is irrelevant to the determination of whether it may file a consolidated Federal income tax return. The purpose of the combined method is solely to permit an accurate determination of income attributable to and taxable by Illinois in the case of a member of a unitary business group.

Finally, the intervenors’ citation of a 1975 Illinois Tax Bulletin (ITIB 1975 — 1) as support for its argument that unitary reporting was proscribed upon repeal of the MTC is misleading. The 1975 bulletin is entitled: Withdrawal of Bulletin ITIB 1974 — 1 Relating to Combined Reporting for Unitary Business. The quotation from this 1975 bulletin, upon which the intervenors rely, is that “combination, as a method of reporting unitary business income, is not authorized.” This 1975 bulletin was prematurely issued after the MTC was repealed and at a time when it was not known what changes in the Illinois Income Tax Act might follow. There were amendments passed in 1975, but they did not affect section 304 or any of the rules relating to allocation and apportionment, which, as we have observed above, allow the combined or unitary method of reporting. This was made clear in a second bulletin issued in 1975, ITIB 1975 — 2, which declared: “Repeal of the Compact provisions has no substantive effect on current allocation and apportionment provisions of the Illinois Income Tax Act.”

We turn now to a question raised by the plaintiffs. It is whether domestic corporations which elected to claim a tax credit on their Federal returns for income taxes paid to foreign governments could have deducted the amount of these foreign taxes from the taxable incomes reported on their Illinois returns. Under the Internal Revenue Code, a domestic corporation which has paid foreign income taxes has the option of claiming a tax credit under sections 901 and 960 of the Code (26 U.S.C. secs. 901, 960 (1976)), or taking a deduction under sections 164(a) and 275(a) (26 U.S.C. secs. 164(a), 275(a) (1976)). The plaintiffs argue that they were entitled to claim a deduction on their State returns for these taxes paid to foreign governments regardless of whether they claimed a tax credit or a deduction on their Federal income tax returns.

The Director disagrees, saying that if a domestic corporation elected to take a tax credit on its Federal return for foreign income taxes paid, as opposed to claiming a deduction from taxable income, it is bound by this election for State tax purposes and may not deduct these foreign tax payments from the amount of Federal taxable income reported on the State tax return.

We consider that the Director’s statement is correct. The taxpayer had the election of taking a tax credit or a deduction on its Federal return. The election was binding. It would not be permitted to take a tax credit to reduce the Federal tax liability and also take a deduction from the Federal taxable income reported on the State return so as to reduce State taxable income. (Albany International Corp. v. Halperin (Maine 1978), 388 A.2d 902; Commonwealth v. Westinghouse Electric Corp. (1978), 478 Pa. 164, 386 A.2d 491.) Moreover, as we will next discuss, Illinois did not permit corporations to claim a deduction for the payment of foreign taxes until 1975 and the plaintiffs had a right only to deductions specifically authorized under the Illinois Income Tax Act. See Ill. Rev. Stat. 1977, ch. 120, par. 2 — 203(g).

The plaintiffs make another contention regarding the payment of foreign taxes. They argue that foreign taxes paid by a foreign subsidiary of a domestic corporaton in a unitary group are deductible by the domestic corporation on its Illinois tax return when computing the combined income of the unitary group. Section 203(b) of the Illinois Income Tax Act provides:

“(1) In general. In case of a corporation, base income means an amount equal to the taxpayer’s taxable income for the taxable year as modified by paragraph (2).
(2) Modifications. The taxable income referred to in paragraph (1) shall be modified by adding thereto the sum of the following amounts:
* * *
(D) *** and by deduction from the total so obtained the sum of the following amounts:
***
(F) An amount equal to any amount included in such total under Section 78 of the Internal Revenue Code ***.” (Ill. Rev. Stat. 1977, ch. 120, par. 2 — 203(b).)

It is of course true that the effect of section 203(b) as applied through section 78 of the Internal Revenue Code is to allow a domestic corporation to claim under the Illinois Income Tax Act a deduction for foreign taxes paid by its foreign subsidiary. This provision, however, did not become effective until January 1, 1975. A corporation could qualify for this deduction only in 1975 and thereafter. The tax returns involved in this case are for years prior to 1975, and therefore the plaintiffs did not qualify for the deduction.

For the reasons given, the judgment of the appellate court on the questions raised on this appeal is affirmed.

Judgment affirmed.

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


source: Caselaw Access Project

author: MR. CHIEF JUSTICE GOLDENHERSH

license: Public Domain

text:
    (Nos. 52771, 53288 cons.
    HARRY DeBRUYN, Appellee, v. RICHARD J. ELROD, Sheriff, et al., Appellants.

      Opinion filed February 3, 1981.

    Modified on denial of rehearing March 27, 1981.

      SIMON, J., took no part.
    Bernard Carey and Richard M. Daley, State’s Attorneys, of Chicago (Paul P. Biebel, Jr., Jane Clark Casey, Henry A. Hauser, James F. Henry, and Stuart D. Gordon, of counsel), for appellants.
    Block, Levy & Becker, Chtd., of Chicago (Alvin R. Becker and Harry A. Young, Jr., of counsel), for appellee.
   MR. CHIEF JUSTICE GOLDENHERSH

delivered the opinion of the court:

Plaintiff Republic Bank of Chicago initiated this action in the circuit court of Cook County against defendants, the County of Cook, Richard J. Elrod and Edward Rose-well, respectively its sheriff and treasurer. The complaint sought a declaration that section 1 of “An Act to provide for the fees of the sheriff ***” (Ill. Rev. Stat. 1977, ch. 53, par. 71) was violative of article VII, section 9(a), of the 1970 Constitution, certification as a class action, the' enjoining of further collection and disbursement of fees under the Act, and the establishment of a segregated fund for fees collected. Plaintiffs South Side Bank and Bank of Commerce and Industry filed a separate two-count complaint against defendants Elrod and the County of Cook seeking substantially similar relief. That complaint was later amended to include, in a separate count, plaintiff Harry DeBruyn, who had previously been granted leave to intervene. These separate actions were consolidated by the trial court. On defendants’ motions the counts pertaining to the plaintiff banks were dismissed on the ground that they lacked standing to bring the action. Defendants’ motion to dismiss was denied as to plaintiff DeBruyn. A preliminary injunction order was entered which declared the sheriff’s fee provision of the Act unconstitutional, required defendants to deposit all fees collected thereafter in a protest fund, and enjoined defendants from disbursing moneys in the protest fund. The circuit court also found that pursuant to section 57.2 of the Civil Practice Act (Ill. Rev. Stat. 1977, ch. 110, par. 57.2) the cause could be maintained as a class action. It found that the class consisted of all persons who had paid the fee and had not been reimbursed by redemption and those persons who by redemption had “suffered the economic burden or incidence” of the fees. Thereafter judgment was entered on the pleadings in favor of plaintiff DeBruyn and all members of the class of persons who paid the “illegal fee” on or after March 23, 1979. The court found that plaintiff DeBruyn and all class members paid the sheriff’s fees involuntarily and were entitled to an accounting. Defendants Elrod and Cook County appealed directly to this court pursuant to Supreme Court Rule 302(a) (73 Ill. 2d R. 302(a)) and plaintiffs DeBruyn, South Side Bank, Bank of Commerce and Industry, and Republic Bank of Chicago cross-appealed from portions of the judgment. Defendants also appealed to the appellate court from the order granting the preliminary injunction and plaintiff Republic Bank of Chicago appealed to the appellate court from the order dismissing certain counts of its complaint. Upon allowance of defendants’ motion, the appellate court dismissed the appeal of Republic Bank. On motion of plaintiff DeBruyn, filed pursuant to Rule 302(b), we ordered the appeal transferred to this court and consolidated the two causes for further proceedings.

The statute in question set a number of specific fees for the services performed by sheriffs in counties of the third class and provided further:

“In addition to the above fees, there shall be allowed to the sheriff a commission of 3% on all sales of real and personal estate which shall be made by virtue of any execution or any judgment of a court, where the money arising from such sales shall not exceed $200, and in all cases where the amount of such sale shall exceed $200, 3% on the first $200 and IVá per cent on the balance shall be allowed. On any sale of real estate which shall be made by virtue of any judgment of a court such commission shall not exceed $400. In all cases where the execution shall be settled by the parties, replevied, stopped by injunction or paid, or where the property levied upon shall not be actually sold, the sheriff shall be allowed his fee for levying and mileage, together with half the commission on all money collected by him which he would be entitled to if the same was made by sale on execution.” (Ill. Rev. Stat. 1977, ch. 53, par. 71.)

This portion of the Act was amended (Pub. Act 81 — 473, eff. Sept. 7, 1979), and the amendments are not at issue here.

Article VII, section 9(a), of the 1970 Constitution provides:

“(a) Compensation of officers and employees and the office expenses of units of local government shall not be paid from fees collected. Fees may be collected as provided by law and by ordinance and shall be deposited upon receipt with the treasurer of the unit. Fees shall not be based upon funds disbursed or collected, nor upon the levy or extension of taxes.”

It is alleged in the amended complaint that plaintiff DeBruyn, as the judgment creditor of a mortgagor against whom a decree of foreclosure had been entered, effected a redemption of the foreclosed real estate. He paid the redemption price to the defendant sheriff, which sum included the commission fee paid to the defendant in the sale conducted under the decree of foreclosure. It is also alleged that, in the sale conducted in connection with the redemption (Ill. Rev. Stat. 1977, ch. 77, par. 20), he paid the defendant sheriff an additional fee of $234.68. The prayer for relief seeks the refund of both fees. The other plaintiffs alleged the payment of fees to the sheriff in connection with sales under decrees of foreclosure and pursuant to writs of execution.

Defendants contend that the circuit court erred in holding that section 1 of the Act violated article VII, section 9(a), of the 1970 Constitution for the reason that “section 9(a) was not intended by the drafters of the 1970 Illinois Constitution to apply to the collection of non-tax funds.” In addition they argue that “the commission allowed pursuant to section 71 is based upon the establishment of a sales price, at auction, and not upon the collection or disbursement of funds.”

In support of their argument that section 9(a) of article VII does not apply to the collection of nontax funds, defendants assert that section 9(a) was intended to remedy the problem of “skim off” of tax revenues which was addressed by this court in Flynn v. Kucharski (1970), 45 Ill. 2d 211. In Flynn this court held unconstitutional a statute which enabled taxpayers outside the city of Chicago to divert tax funds to local township purposes. This could be done by exercising the option of paying taxes levied by Cook County to their township collector rather than to the county collector. Those taxes paid to the township collector were subject to a 2% commission, the proceeds of which were placed in the township fund and used for township purposes. This diversion of funds was held to be in violation of the requirement of uniformity of taxation found in the 1870 Constitution. (Ill. Const. 1870, art. X, secs. 9, 10.) Defendants call our attention to a number of cases involving a construction of section 9(a) as it relates to fees based upon the collection of taxes. (Goldstein v. Rosewell (1976), 65 Ill. 2d 325; City of Joliet v. Bosworth (1976), 64 Ill. 2d 516; Century Community Unit School District No. 100 v. McClellan (1975), 27 Ill. App. 3d 255; Board of Trustees v. Webb (1974), 24 Ill. App. 3d 183) and argue that these cases compel the conclusion that section 9(a) applies only to “those fees collected in connection with the process of tax collections.”

We disagree. None of the cited cases involved a commission comparable to the one here, and we find no language in them which controls the case before us. Defendants, referring to the proceedings of the 1970 constitutional convention (Report of the Local Government Committee, 7 Record of Proceedings, Sixth Illinois Constitutional Convention 1724-25; 4 Proceedings 3404-05), argue that article VII, section 9(a), was not intended to apply to the collection of nontax funds. Although the proceedings reflect that the delegates were primarily concerned with the type of fees involved in Flynn v. Ruchar ski, the language of section 9(a) does not so limit its scope. As the court said in Hills v. City of Chicago (1871), 60 Ill. 86,90-91:

“[T]he doctrine is firmly established, that where the words employed, when taken in their ordinary, natural signification, and the order of their grammatical arrangement given them by the framers, embody a definite meaning which involves no conflict with other parts of the same instrument, then that meaning which is apparent upon the face of the instrument is the only one we are at liberty to say was intended to be conveyed, and there is no room for construction. ***
* * *
When a particular act is inhibited by the clear and unambiguous language of the constitution, the policy of such inhibition, or the inconvenience that may ensue its enforcement, is a matter with which the court has no concern; its duty is simply to reverently recognize and faithfully enforce.”

The constitutional provision at issue here provides that “Fees shall not be based upon funds disbursed or collected ***.” (Ill. Const. 1970, art. VII, sec. 9(a).) No distinction is made between tax and nontax funds. We cannot add such a distinction to the plain language before us, and we hold that article VII, section 9(a), applies both to tax and nontax funds.

Defendants argue that the funds in question here are not “collected” so as to come within the ambit of the constitutional prohibition. An examination of the statutes governing the conduct of the sheriff demonstrates the contrary. Section 1 of the Act itself makes reference to moneys “collected” in the context of executions which do not move to completion. (Ill. Rev. Stat. 1977, ch. 53, par. 71.) In addition, the statute defining the general duties of sheriffs provides for a penalty where “any sheriff unreasonably neglects to pay any money collected by him on execution” (Ill. Rev. Stat. 1977, ch. 125, par. 23), and grants authority for a sheriff to collect “any execution or fee bill which he may have levied but not collected,” after his term has expired (Ill. Rev. Stat. 1977, ch. 125, par. 25). We hold that funds received by the defendant sheriff in connection with foreclosure sales, execution of judgments, and redemptions were “collected” funds within the contemplation of the constitutional prohibition.

In view of the foregoing, we hold that section 1 of “An Act to provide for the fees of the sheriff ***” (Ill. Rev. Stat. 1977, ch. 53, par. 71) contravenes article VII, section 9(a), of the 1970 Constitution.

We consider next defendants’ contention that the payments to the sheriff were voluntary and were not made as the result of duress or compulsion. Plaintiffs here were in a situation similar to the plaintiff class in Ross v. City of Geneva (1978), 71 Ill. 2d 27. They were confronted with the choice of payment of the sheriff’s fees or his refusal to effect the requested sale, execution or redemption, and as the court said in Ross, “plaintiff, in making the payment, acted with prudence and is not barred from recovery of the sums paid.” 71 Ill. 2d 27, 33-34.

We consider next defendants’ contention that they were “significantly harmed” by plaintiff DeBruyn’s delay in filing his action and that it should therefore be barred by operation of laches. Laches is not simply a matter of delay, and to bar the action “it must appear that a plaintiff’s unreasonable delay in asserting his rights has prejudiced and misled the defendant, or caused him to pursue a course different from what he would have otherwise taken.” (People ex rel. Casey v. Health & Hospitals Governing Com. (1977), 69 Ill. 2d 108, 115; People ex rel. Griffin v. City of Chicago (1943), 382 Ill. 500, 504.) The record provides no basis on which to invoke laches in bar of plaintiffs’ action.

We consider plaintiffs’ contention that the circuit court erred in limiting the recovery to fees collected by defendants on and after March 23, 1979. The effective date of an order requiring the repayment of fees illegally collected is governed by the application of equitable principles to the facts in each case. In Flynn v. Kucharski (1971), 49 Ill. 2d 7, the court affirmed the order of the circuit court holding that only funds distributed subsequent to December 15, 1969, were affected by its judgment. The rationale for the “cut off date” was that “This is an action seeking equitable relief, and as such, the court is endowed with broad discretion to grant such relief as equity may require. [Citations.] It should be remembered that this is an action affecting county municipalities and units of local government pertaining to the application and division of tax revenue. This is not a situation in which a fixed pecuniary harm has befallen an ascertained individual.” (49 Ill. 2d 7, 11.) Unlike Flynn, “pecuniary harm” did befall certain identifiable entities who were required to pay the fee exacted by the sheriff, and no equitable reason presents itself to hold that reimbursement should not be made from the effective date of article VII, section 9(a), of the Constitution of 1970.

We consider next defendants’ contention that the action here is a collateral attack upon the prior decree entered in the foreclosure proceeding. The fees involved three situations: sales under a decree of foreclosure, sales in connection with execution of judgments, and redemptions. The final order in an action to foreclose a mortgage on real estate is the order approving the sale and distribution. (King City Federal Savings & Loan Association v. Ison (1980), 80 Ill. App. 3d 900.) Thus any fees paid to the sheriff for services in the sale of the real estate under the decree of foreclosure were approved in the final order. Plaintiffs’ complaint, seeking to recover fees paid under a statute later held unconstitutional, contained no allegations attacking the jurisdiction of the court which entered the judgment of foreclosure and therefore failed to state a cause of action as to the fees paid for effecting the sales under the foreclosure decree. Johnson v. City of Bloomington (1979), 77 Ill. 2d 108.

This holding does not, however, affect fees paid into the protest fund in connection with mortgage foreclosure proceedings in which orders approving the sale and distribution were entered after July 10, 1979. In such cases, the circuit court’s adjudication of unconstitutionality of the statute will have preceded the final order and there was, therefore, no necessity to attack the jurisdiction of the court entering such orders.

The pertinent statutes did not require that fees paid the defendant sheriff in connection with sales in the execution of judgments and redemptions be reported to and approved by the circuit court. Concerning those fees, we hold that the circuit court did not err in entering judgment for their repayment.

In view of our holding that the defendants must account for only those funds received as commissions on sales in connection with executions and redemptions not thereafter approved by orders of court, it becomes necessary to redefine the plaintiff class. The class must be defined as those persons who (1) paid fees under the provisions of section 1 of “An Act to provide for the fees of the sheriff ***” (Ill. Rev. Stat. 1977, ch. 53, par. 71) on and after the effective date of article VII, section 9(a), of the 1970 Constitution for sales in connection with executions and redemptions not thereafter approved in subsequent orders or decrees; (2) paid fees in connection with mortgage foreclosure proceedings in which orders of sale and distribution were approved subsequent to July 10, 1979; (3) have not been reimbursed therefor by redemption; and (4) are the persons who suffered the burden or incidence of the illegal fee. The judgment of the circuit court must further be modified to provide that the plaintiffs and the class members are entitled to an accounting of all of said illegal fees involuntarily paid from and after the effective date of article VII, section 9(a), of the 1970 Illinois Constitution.

The judgment of the circuit court of Cook County is modified in the manner stated and as modified is affirmed. The cause is remanded to the circuit court for further proceedings.

Affirmed as modified and remanded.

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


author: MR. JUSTICE RYAN MR. CHIEF JUSTICE GOLDENHERSH,

text:
    (No. 53323.
    CHESTER HORN et al., Petitioners, v. GAIL RINCKER et al., Respondents.

      Opinion filed February 20, 1981.

    Rehearing denied March 27, 1981.

      SIMON, J., took no part.
    GOLDENHERSH, C.J., dissenting.

      Stephen R. Ryan, of Ryan, Grabb, Cini & Bennett, of Mattoon, for petitioners.
    Robert D. Owen and Darrel F. Parish, of Owen, Roberts, Susler & Murphy, of Decatur, for respondents Gail Rincker and Dale Rincker.
    C. E. Heiligenstein, of Belleville, for respondent Lynette Anne Bass, administratrix of the estate of Earl James Bass, Jr.
    Glen A. Featherstun, of Armstrong, Winters, Prince, Featherstun & Johnson, of Decatur, for respondent Electric Wheel Co., a division of the Firestone Tire & Rubber Co.
    Craig A. Randle, of Londrigan & Potter, P.C., of Springfield, for respondent Kenneth Eugene Robertson, administrator of the estate of Crystal Rose Robertson.
    Wayne Plaza and Robert Bush, of Rooks, Pitts, Fullagar & Poust, of Chicago, for respondent White Farm Equipment Co., a division of White Motor Co.
   MR. JUSTICE RYAN

delivered the opinion of the court:

The petitioners, Chester Horn and Rita Horn, were granted leave to file an original petition in this court requesting it to exercise its general administrative and supervisory authority and also praying for a writ of prohibition and for a writ of mandamus. Petitioners are defendants in three separate actions filed in Shelby, St. Clair, and Madison counties. Those actions, described in more detail below, seek relief for personal injuries and death resulting from a collision in Shelby County. Various motions in the several causes to transfer venue or consolidate these cases having been denied, petitioners filed their original petition in this court. Named as respondents are all the parties, both plaintiffs and defendants, involved in the three actions, with the exception of the corporate defendants joined in various products liability counts. Judge Thomas P. O’Donnell, circuit judge of St. Clair County, Judge Joseph J. Barr, circuit judge of Madison County, and Judge Vernon L. Plummer II, circuit judge of Shelby County, were also named as respondents herein. Basically, the petitioners seek an order from this court transferring the cases pending in St. Clair and Madison counties to Shelby County and consolidating all those cases with the Shelby County case.

On November 19, 1976, Earl Bass was operating a motor vehicle along a road approximately one mile southwest of the town of Cowden, in Shelby County. He was accompanied by a passenger, Crystal Rose Robertson. While proceeding in a northerly direction, the Bass vehicle sideswiped a disabled farm wagon standing on the east side of the road. The wagon was owned by Chester and Rita Horn, and contained corn owned by them, as well as by Tennessee Sollis. At the time of the accident, the corn was being hauled to a grain elevator. After this first collision the Bass vehicle crossed the center of the road and collided with a southbound vehicle being driven by Dale Rincker, who was also accompanied by a passenger, Gail Rincker. Bass and his passenger, Robertson, died as a result of injuries received in the accident.

On March 10, 1978, the Rinckers filed the first lawsuit arising out of this accident in the circuit court of Shelby County. That suit named as defendants Chester Horn; Rita Horn; the administrator of the Bass estate; and Tennessee Sollis. The administrator of the Bass estate then filed an action in the circuit court of St. Clair County on March 16, 1978, naming as defendants Chester Horn; White Farm Equipment Company; Sears, Roebuck and Company; and Electric Wheel Company. The actions against these three corporate defendants are based on the theory of products liability, the three corporate defendants being in the chain of manufacture and distribution of the farm wagon and its component parts. The administrator of the Robertson estate then filed suit on July 13, 1978, in the circuit court of Madison County. That action named as defendants Chester Horn; Dale Rincker; the administrator of the Bass estate; White Farm Equipment Company; and Sears, Roebuck and Company. Finally, the Rinckers filed a separate cause of action in Shelby County on November 16, 1978, naming as defendants White Farm Equipment Company; Sears, Roebuck and Company; and Electric Wheel Company. This last action, based upon a products liability theory, was consolidated with the first suit previously filed by the Rinckers.

At the time of the accident, Earl Bass, Lynette Anne Bass, administrator of the estate of Earl Bass, Chester Horn, Rita Horn, Dale Rincker, Gail Rincker, Crystal Rose Robertson, Kenneth Eugene Robertson, administrator of the estate of Crystal Rose Robertson, and Tennessee Sollis were all residents of Shelby County, and all of these parties now living still reside in Shelby County except Lynette Anne Bass, administrator of the estate of Earl Bass, who moved to St. Clair County before her suit was filed in that county. The three corporate defendants are residents of all three counties in that they are “doing business” in those counties. (See Ill. Rev. Stat. 1977, ch. 110, par. 6.) All of the pre-occurrence witnesses and post-occurrence witnesses, and all of the authorities who investigated the accident, reside in Shelby County.

Discovery depositions of the Homs were taken by the attorney for the plaintiffs Rincker in the Shelby County case on July 7, 1978. On April 23, 1979, Chester Horn was served with a notice to take a discovery deposition in the St. Clair County case. On March 8, 1978, the attorney for the defendants Rincker in the Madison County case filed a notice to take evidentiary depositions of three witnesses who resided in Shelby County. The attorney for the Horns decided to take discovery depositions of the same three witnesses. It was necessary to obtain a court order to continue the evidentiary deposition of these witnesses until after the discovery depositions were taken. The discovery depositions of these three witnesses were taken, and later evidence depositions of two of the same witnesses were taken. Thereafter, notices were served to take the evidence depositions of these same witnesses by the attorney for the plaintiff in the St. Clair County case. There are several other witnesses who will be subject to both discovery and evidence depositions in each of the three counties.

The petitioners (Horns) filed a motion in Shelby County to consolidate the pending cases and filed motions in St. Clair County and Madison County to transfer venue in those cases to Shelby County. The motions were denied by each court in its respective case. It is approximately 100 miles from Shelby County to both Madison and St. Clair counties. In addition to the hardship entailed in the taking of multiple depositions of each witness because of the three separate cases in three separate counties, it is also argued that, should the three cases go to trial separately, there will be a considerable waste of time and inconvenience caused by the traveling of the witnesses to the different courts, and it is argued there would be a generally unsatisfactory presentation should it be necessary to use the evidence depositions instead of having the witnesses testify personally. It is also argued that by trying the three cases separately, inconsistent verdicts may result.

It appears from the allegations of the petition and the answers filed by respondents that the ruling of each court below with regard to transferring venue to Shelby County was correct. The petitioners sought to “transfer venue” in the St. Clair and Madison County cases by motions made long after their answer had been filed in each case. The motions were therefore untimely, and any objection to improper venue was waived. (Ill. Rev. Stat. 1977, ch. 110, par. 8(2); United Biscuit Co. v. Voss Truck Lines, Inc. (1950), 407 Ill. 488, 501.) In fact, there appears to be no basis for such a motion, however timely, since venue was proper in both the Madison and St. Clair County actions. There are no allegations that the corporate defendants were joined in bad faith for the purpose of fixing venue in those counties. Our venue statute provides:

“Except as otherwise provided in this Act, every action must be commenced (a) in the county of residence of any defendant who is joined in good faith and with probable cause for the purpose of obtaining a judgment against him and not solely for the purpose of fixing venue in that county, or (b) in the county in which the transaction or some part thereof occurred out of which the cause of action arose.
If all defendants are nonresidents of the State, an action may be commenced in any county.” (Ill. Rev. Stat. 1977, ch. 110, par. 5.)

For purposes of venue, a private corporation is considered to be a resident of any county in which it is “doing business.” (Ill. Rev. Stat. 1977, ch. 110, par. 6.) No substantial challenge was made to the apparent fact that each corporate defendant in this case was a “resident” of each county involved.

Similarly, to the extent that these motions sought to consolidate the several actions, they were properly denied. The Civil Practice Act provides that actions pending “in the same court” may be consolidated. Section 51 of the Civil Practice Act states:

“An action may be severed, and actions pending in the same court may be consolidated, as an aid to convenience, whenever it can be done without prejudice to a substantial right. (Emphasis added.) (Ill. Rev. Stat. 1977, ch. 110, par. 51.)

In People ex rel. Phillips Petroleum Co. v. Gitchoff (1976), 65 Ill. 2d 249, this court ordered rescission of a Madison County court order which prevented compliance with a consolidation order entered by a Macon County judge. Our decision in Gitchoff turned on the propriety of one circuit court ignoring an order of another circuit court. In that case we specifically stated that we were not deciding the question of whether the Madison County counterclaim and the Macon County action were “pending in the same court.” Under the provisions of section 51 of the Civil Practice Act, a trial judge is given authority to consolidate cases only when they are pending in the same court.

The trial court has broad discretion in considering a motion to consolidate. (See Prince v. Atchison, Topeka & Santa Fe Ry. Co. (1979), 76 Ill. App. 3d 898, 909.) We need not decide, however, whether denying the motions to consolidate these cases would have been an abuse of that discretion had all the cases been pending before the same court, because here the cases were pending in three different counties, in three different circuits, and, consequently, in three “different courts.”

It is plain that the Civil Practice Act does not give a circuit court the authority to consolidate actions pending in any county in the State. If that were the intent of the legislature, there would be no reason for limiting the authority to consolidate to actions pending in the same court. Also, the use of the phrase “in the same court” is an indication that the Civil Practice Act considers that the State has several courts at the trial level. This is consistent with the provisions of our 1970 Constitution. Article VI, section 7, provides that each circuit shall have one circuit court. Article VI, section 1, although providing that the judicial power is vested in a supreme court and appellate court, uses the term “courts” when it refers to the circuit courts. Also, article VI, section 9, refers to courts and not to a single circuit court. A reading of these various sections of article VI of our constitution leads to the conclusion that the circuit courts are administratively organized on a geographical basis and that there is one circuit court for each circuit. Section 51 of the Civil Practice Act, by authorizing consolidation of actions pending in the same court, does not authorize the entry of an order by a court in one circuit consolidating cases pending in other circuits. Madison County is in the third circuit, Shelby County is in the fourth circuit, and St. Clair County is in the twentieth circuit. Any attempt by one of the courts to consolidate these cases would require an intercircuit consolidation order, which is not authorized by the Civil Practice Act. Therefore, regardless of the need for consolidating these cases, no circuit court had the power to order it.

Normally, the proper course for petitioner would have been to move for involuntary dismissal under section 48 of the Civil Practice Act. (Ill. Rev. Stat. 1977, ch. 110, par. 48.) Since the Shelby County action was filed first, petitioners might have moved to dismiss the St. Clair and Madison County actions by claiming in both of those cases that the same cause was pending, involving substantially the same parties, in Shelby County. (Ill. Rev. Stat. 1977, ch. 110, par. 48(1)(c).) In Gitchoff, we held that substantial similarity between parties and causes is sufficient to support a section 48(1)(c) motion to dismiss. (People ex rel. Phillips Petroleum Co. v. Gitchoff (1976), 65 Ill. 2d 249, 255.) Here, the plaintiffs in the Madison County case and the St. Clair County case added additional counts against the corporate defendants based on the theory of products liability. However, we need not decide whether a motion to dismiss under section 48(1)(c) of the Civil Practice Act should be allowed under these circumstances.

Petitioner, as previously noted, has prayed for relief by way of the writ of mandamus. The writ of mandamus will issue only where a clear right to the writ is shown. (People ex rel. Hoagland v. Streeper (1957), 12 Ill. 2d 204, 218; People ex rel. Norwegian-American Hospital, Inc. v. Sandusky (1961), 21 Ill. 2d 296, 300.) Also, the writ is not available to correct mere judicial errors. (Baltimore & Ohio R.R. Co. v. Mosele (1977), 67 Ill. 2d 321, 334; People ex rel. Continental Air Transport Co. v. Strouse (1969), 41 Ill. 2d 567, 570.) In this case there was not a clear duty of the circuit court of Shelby County to enter an order consolidating the cases pending in the other counties. In fact, as indicated above, there was no authority to do so. A writ of mandamus is therefore not appropriate.

The petitioners have also asked this court to exercise its general administrative and supervisory authority granted by article VI, section 16, of our constitution and order the St. Clair County and Madison County cases transferred to Shelby County and consolidated with the case pending in that court. (See People ex rel. Kelly, Ketting, Furth, Inc. v. Epstein (1974), 61 Ill. 2d 229, 231; People ex rel. Bowman v. Woodward (1974), 61 Ill. 2d 231, 232.) It is our holding that this prayer be granted, and in the exercise of our general administrative and supervisory authority we order the St. Clair County and the Madison County cases involved herein transferred to Shelby County and consolidated with the case pending in that court. We are persuaded to do so by the reasoning underlying the doctrine of forum non conveniens.

Succinctly stated, the doctrine is founded in considerations of fairness to the litigants and effective administration of justice. In applying these considerations, a court may decline to exercise jurisdiction over a case properly before it, whenever it appears that there is another forum that can better serve the convenience of the litigants and promote the ends of justice. (People ex rel. Compagnie Nationale Air France v. Giliberto (1978), 74 Ill. 2d 90; Adkins v. Chicago, Rock Island & Pacific R.R. Co. (1973), 54 Ill. 2d 511; Lonergan v. Crucible Steel Co. of America (1967), 37 Ill. 2d 599; Cotton v. Louisville & Nashville R.R. Co. (1958), 14 Ill. 2d 144; Whitney v. Madden (1948), 400 Ill. 185, cert. denied (1948), 335 U.S. 828, 93 L. Ed. 382, 69 S. Ct. 55.) Factors to be weighed in considering application of the doctrine of forum non conveniens are stated in Gulf Oil Corp. v. Gilbert (1947), 330 U.S. 501, 508, 91 L. Ed. 1055, 1062, 67 S. Ct. 839, 843:

“An interest to be considered, and the one likely to be most pressed, is the private interest of the litigant. Important considerations are the relative ease of access to sources of proof; availability of compulsory process for attendance of unwilling, and the cost of obtaining attendance of willing, witnesses; possibility of view of premises, if view would be appropriate to the action; and all other practical problems that make trial of a case easy, expeditious and inexpensive. ***. The court will weigh relative advantages and obstacles to fair trial. It is often said that the plaintiff may not, by choice of an inconvenient forum, ‘vex,’ ‘harass,’ or ‘oppress’ the defendant by inflicting upon him expense or trouble not necessary to his own right to pursue his remedy.”

We are not here reviewing the trial court’s granting or denying of a motion to dismiss based on forum non conveniens. Indeed, such a motion may not have been appropriate in this case. (See Cotton v. Louisville & Nashville R.R. Co. (1958), 14 Ill. 2d 145, 159; Lonergan v. Crucible Steel Co. of America (1967), 37 Ill. 2d 599, 606.) Nevertheless, we find the underlying principles of the doctrine helpful in deciding whether to exercise our supervisory powers and in what manner. Here, all of the factors recognized in Gulf Oil Corp. as being indicative that the doctrine should apply weigh heavily in favor of consolidating these cases in Shelby County. As was stated earlier, the parties, most of the witnesses, proofs, and the accident itself are local to Shelby County, with one exception: the administratrix of the Bass estate has moved to St. Clair County since the accident. Maintenance of three separate actions in three separate counties, when those actions arose out of a single accident, would frustrate the efficient administration of justice. Moreover, to allow the plaintiffs to proceed with the St. Clair and Madison County actions, independent of the Shelby County proceedings, would facilitate the possibility of inconsistent verdicts, cause unnecessary duplication of trials and proofs, waste countless hours of judicial effort, and would promote no foreseeable advantage. The needless confusion and duplication of effort and expense caused by the multiple deposing of the same witnesses should be avoided. This can best be accomplished if the entire litigation is under the supervision and direction of one court.

Accordingly, it is ordered that case No. 78 — L—209 of the circuit court of St. Clair County and case No. 78 — L—587 of the circuit court of Madison County be transferred to Shelby County and consolidated with Shelby County cases Nos. 78 — L—3 and 78 — L—26, which have been heretofore consolidated. The circuit court of Shelby County will be free to sever for trial so many or such parts of these consolidated cases as it deems necessary in order to promote the efficient administration of justice.

Since the oral argument of this case in this court, we have been informed that petitions have been filed under the Bankruptcy Act (11 U.S.C. sec. 101 et seq. (Supp. II 1978)) in the United States Bankruptcy Court for the Northern District of Ohio wherein White Farm Equipment Company is named as a debtor. White Farm Equipment Company is a defendant in some of the cases involved in this proceeding. Section 362 of the Bankruptcy Act (11 U.S.C. sec. 362 (Supp. II 1978)) provides that a petition filed under sections 301, 302, or 303 operates as a stay of certain proceedings pending against a debtor. The order which we have entered is directed to the courts wherein these cases are pending and not against the debtor White Farm Equipment Company. The circuit court of Shelby County, however, must make appropriate provisions for complying with section 362 of the Bankruptcy Act when these cases are consolidated in that court.

For the reasons herein stated, the petition for a writ of mandamus or prohibition is denied, and the supervisory order of this court is entered transferring the named cases to the circuit court of Shelby County and consolidating the cases as above indicated.

Writ denied; supervisory order entered.

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

MR. CHIEF JUSTICE GOLDENHERSH,

dissenting:

I dissent. I opposed the granting of leave to file the original petition and am of the opinion that it should now be dismissed.

With admirable candor the majority concedes that there is no basis to be found in the venue statutes for the order and that the doctrine of forum non conveniens has never been applied to effect transfer of a cause within the State. Nevertheless, without supporting authority it has issued a supervisory order consolidating these cases in a county selected by one of the litigants over the objections of the others.

Multiple actions arising out of the same transaction are not new in the annals of this State. The venue provisions and the absence of a provision for mandatory counterclaims in the Civil Practice Act clearly indicate that such suits are not only permissible but are to be expected. Lawyers have ordinarily been able to determine by agreement an orderly procedure for the taking of depositions without repetitive examinations of the witnesses, and there is no reason to believe that absent this order they would not have managed to do so in this case. Furthermore, this court has seen fit to leave to the discretion of the circuit courts the determination of the qualifications of expert witnesses, the granting of continuances, and, more importantly, the question of the severity of a sentence imposed as a criminal sanction. I fail to see why we cannot leave to that same judicial discretion the determination of whether orders to expedite or stay the pending proceedings may be required in order to effect a just result.

It is clear from the opinion that the circuit courts are without power to effect the kind of transfer and consolidation effected by this order. The end result of this opinion is that this court will of necessity be required to entertain original actions with wholly inadequate records and make the determination as to which county is to be the place of trial. With the numbers and types of cases pending before us, I respectfully submit this court is far too busy to spend its time refereeing races to the courthouse.


author: MR. JUSTICE CLARK

text:
    (No 53309.
    LAWRENCE D. JACOBSON, Appellant, v. THE INDUSTRIAL COMMISSION et al. (Service Woodworking Co., Appellee).

      Opinion filed February 3, 1981.

    Rehearing denied March 27, 1981.

      SIMON, J., took no part.
    Arnold and Hennessy, of Chicago (Robert A. Hennessy and Thomas M. Doyle, of counsel), for appellant.
    John F. Power III of Roddy, Power & Leathy, Ltd., of Chicago, for appellee.
   MR. JUSTICE CLARK

delivered the opinion of the court:

An arbitrator for the Industrial Commission awarded the claimant, Lawrence D. Jacobson, compensation of $124.30 per week for 47 2/7 weeks, or $5,877.62 as temporary total disability of which $2,858.90 has been paid to the claimant. The arbitrator also awarded the claimant $2,748.01 for health care services. The Industrial Commission reversed and held for naught the arbitrator’s award. On a writ of certiorari, the circuit court of Cook County confirmed the Commission’s decision. The matter comes to this court on direct appeal pursuant to Rule 302(a). 73 Ill. 2d R. 302(a).

The claimant worked as a janitor for the respondent, Service Woodworking Co. He alleges he injured his left knee at work on May 6, 1978. Part of his duties included carting 55-gallon drums filled with scrap wood, sawdust and wood chips, out behind the shop and dumping the contents of the drums into a dumpster or large trash container.

The claimant alleges that on Saturday, May 6, 1978, at approximately 12:30 p.m., as he lifted a three-quarter-full 55-gallon drum into the dumpster, the drum slipped and fell, striking the interior of his left knee. The claimant did not report the incident to anyone. He left work at 1 p.m., the time he was supposed to leave that day. The claimant testified that there was no pain or swelling until the next day, Sunday. Near midnight on May 7, 1978, the defendant went to Ingalls Memorial Hospital in Harvey where he was treated, issued a pair of crutches, and discharged. On Monday morning, May 8, the claimant went to work to notify his employer of his injury, and to state that it was caused by the accident on Saturday.

Medical records were admitted at the hearing before the arbitrator and the Commission which indicated that the claimant suffered a tear of the left medial meniscus of the knee. The hospital records also corroborated claimant’s assertion that the injury occurred as he said it did.

One of the claimant’s supervisors, John Palmer, testified before the Commission that the claimant had help dumping the drums a “majority” of the time. Celestino Antonini, another supervisor, testified in the same hearing that the claimant needed help to empty the drums because they were too heavy to dump alone when they were full.

At the hearing before the Commission two 55-gallon drums were admitted into evidence. One drum was approximately one-half full; the other was described as full by both the claimant and John Palmer.

We will not reverse a decision of the Industrial Commission unless it is against the manifest weight of the evidence. This is true even if, had we been the triers of fact, we would have reached a conclusion different from the Commission’s. (Caterpillar Tractor Co. v. Industrial Com. (1980), 81 Ill. 2d 416, 421.) It is for the Commission to resolve conflicting testimony, judge the credibility of the witnesses, and make inferences. Pazara v. Industrial Com. (1980), 81 Ill. 2d 76, 80.

Our review of the record reveals that the claimant’s version of his accident is uncontradicted. Palmer testified that claimant received help in dumping the drums a “majority” of the time. Obviously, the claimant dumped some of them with no help. Antonini testified that the claimant needed help when the drums were full. The drum which struck the claimant was only three-quarters full. Additionally, the claimant was only required to lift the three-foot-high drum one foot in order to place it on the rim of the four-foot-high container, and then tip in the contents. Thus, it is highly plausible that the effort required to empty the drum was not beyond the ability of the 155-pound claimant. Moreover, the claimant’s version of the accident is corroborated by the medical records introduced into evidence. Finally and most importantly, it is undisputed that the claimant did suffer a knee injury which required medical treatment, including surgery, and no other reasonable explanation has been offered or is readily inferable as to how the claimant was injured. We think that, under these circumstances, the Commission was incorrect to discount the claimant’s version of events. The Commission’s decision is therefore contrary to the manifest weight of the evidence which clearly indicates that the claimant injured his knee at work when the drum he was lifting struck him. See General Time Corp. v. Industrial Com. (1975), 60 Ill. 2d 32. 36.

Accordingly, for the reasons stated, the judgment of the circuit court of Cook County is reversed and the matter is remanded to the Industrial Commission for further proceedings consistent with this opinion.

Reversed and remanded, with directions.

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


text:
    (No. 53510.
    PAUL A. NUSSBAUM, Appellant, v. THE INDUSTRIAL COMMISSION et al. (Kenneth W. Greenwald et al., Appellees).

      Opinion filed January 20, 1981.

    Rehearing denied March 27, 1981.

      SIMON, J., took no part.
    Swain, Johnson & Card, of Peoria (Tim Swain, of counsel), for appellant.
    Jordan A. Fifield and Robert W. Bach, of Peoria (Goldsworthy & Fifield, of counsel), for appellee Kenneth W. Greenwald.

      Julian E. Cannell and Phillip B. Lenzini, of Peoria (Kavanagh, Scully, Sudow, White & Frederick, of counsel), for appellee James D. Cole.
   MR. CHIEF JUSTICE GOLDENHERSH

delivered the opinion of the court:

An arbitrator for the Industrial Commission found that at the time of his injury petitioner, Paul A. Nussbaum, was an independent contractor and that the relationship of employee and employer did not exist between him and respondents, Kenneth W. Greenwald, doing business as Kenneth W. Greenwald Construction, Ellis Dawkins, and James D. Cole, either jointly or individually. He dismissed petitioner’s application for adjustment of claim and denied his claim for compensation. On review, after hearing additional testimony, the Industrial Commission affirmed and adopted the decision of the arbitrator. On certiorari the circuit court of Peoria County confirmed the decision of the Industrial Commission and petitioner appealed. 73 Ill. 2d R. 302(a).

Petitioner contends that the decision of the Industrial Commission that he was not an employee of the respondents was against the manifest weight of the evidence. He argues, too, that under the circumstances of this case, because respondent Dawkins did not carry compensation insurance, either respondent Greenwald or Cole is, or both of them are, responsible for his injuries. Respondents contend that at the time of the injury petitioner was an independent contractor and not an employee. Respondent Cole also argues that he had not elected to come under the provisions of the Workmen’s Compensation Act, and that under the authority of White v. Industrial Com. (1966), 35 Ill. 2d 293, the provisions of the Act for automatic coverage do not apply. See Ill. Rev. Stat. 1977, ch. 48, par. 138.3.

The record shows that, while assisting Dawkins in severing the remaining connections between a stump and tree which the two had previously felled, petitioner sustained injuries requiring the amputation of his right hand. The tree was situated on a lot on which Greenwald, as contractor, was constructing a home for Cole. Greenwald had employed Dawkins to remove the tree.

Dawkins had previously done work for Greenwald and had been paid varying sums depending upon the size of the job. He was paid a total of $125 for the removal of the tree. Greenwald did not think that it would be necessary for Dawkins to obtain any help to remove the tree. In the past when he had required help, his sons had assisted him in the work.

Dawkins talked with petitioner and it was agreed that petitioner would help Dawkins for $25. Dawkins agreed to supply a cable and petitioner agreed to use his one-ton dump truck to pull the tree down. When petitioner arrived at the scene a cable was already hooked to the top of the tree. Dawkins told petitioner that, in order to prevent the tree’s falling on the house under construction, he wanted to put “a little tension” on the cable. The cable was attached to the front bumper of petitioner’s truck so that he could reverse the truck as Dawkins sawed the tree. The tree was felled in that manner. It was not, however, completely disconnected from the trunk, and petitioner and Dawkins pushed or “rocked” the tree in order to disconnect it from the trunk. While they were doing so the tree came forward on petitioner, crushing his right hand, necessitating its amputation.

In Morgan Cab Co. v. Industrial Com. (1975), 60 Ill. 2d 92, 97-98, in considering the question whether the evidence showed that the claimant there was an employee or an independent contractor, the court said:

“No one factor may determine what the reationship is between parties in a given case. It may be necessary to consider a number of factors with evidentiary value, such as the right to control the manner in which the work is done, the method of payment, the right to discharge, the skill required in the work to be done, and who provides tools, materials, or equipment. Of these factors the right to control the manner in which the work is done is the most important in determining the relationship. Greenberg v. Industrial Com., 23 Ill. 2d 106; Henn v. Industrial Com., 3 Ill. 2d 325; see also Weidner, The Workmen’s Compensation Act, 1967 U. Ill. L.F. 21, 24-25.”

In Kirkwood Brothers Construction v. Industrial Com. (1978), 72 Ill. 2d 454, 459, in defining the scope of judicial review of the decision of the Industrial Commission concerning whether a claimant is to be regarded as an employee or an independent contractor, the court said:

“The scope of judicial review of the Commission’s decision in these cases, as in others where the claimant’s status is drawn in question, was described in Lawrence v. Industrial Com. (1945), 391 Ill. 80, 85: '[W] here the evidence affecting such question is undisputed and is reasonably susceptible of but a single inference, the question what relation is thereby shown to exist is one of law. If the undisputed facts permit an inference either way, *** then the commission alone is empowered to draw the inference and its decision as to the weight of the evidence will not be disturbed on review.’ (See also Henn v. Industrial Com. (1954), 3 Ill. 2d 325, 327; Greenberg v. Industrial Com. (1961), 23 Ill. 2d 106, 108; Mastercraft Co. v. Industrial Com. (1974), 58 Ill. 2d 155, 157). This principle is of course subject to the qualification that a finding by the Commission is to be set aside if it is against the manifest weight of the evidence. Lawrence v. Industrial Com. (1945), 391 Ill. 80, 84. See also 3 A. Larson, Workmen’s Compensation sec. 80.20, at 15 — 413, sec. 80.41, at 15-452.”

Applying the rules enunciated in the foregoing cases to this record, we are unable to say that the decision of the Industrial Commission is against the manifest weight of the evidence. In view of our conclusion we need not determine whether the respondents Greenwald and Cole are responsible for petitioner’s injuries because of Dawkins’ failure to carry workmen’s compensation insurance. The judgment of the circuit court is affirmed.

Judgment affirmed.

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