author: MR. JUSTICE CLARK

text:
    (No. 53280.
    RUTHIE BROOKS, Appellant, v. THE INDUSTRIAL COMMISSION et al. (St. Francis Hospital, Appellee).

      Opinion filed March 18, 1981.

      Philip J. Schmidt, of Chicago, for appellant.
    Gifford, Detuno & Gifford, Ltd., of Chicago (Thomas W. Gifford, of counsel), for appellee.
   MR. JUSTICE CLARK

delivered the opinion of the court:

This case involves a claim filed under the Workmen’s Compensation Act (Ill. Rev. Stat. 1973, ch. 48, par. 138.1 et seq.). The arbitrator found that petitioner, Ruthie Brooks, 57 years old at the time of the hearing, failed to prove that she sustained accidental injuries arising out of and in the course of her employment or that her present condition of ill-being was caused or aggravated by her employment. The Industrial Commission adopted the decision of the arbitrator. The circuit court of Cook County confirmed the decision of the Commission, Ruthie Brooks filed this appeal pursuant to our Rule 302(a) (73 Ill. 2d R. 302(a)), contending that the Commission’s decision was against the manifest weight of the evidence-.

At the hearing before the arbitrator, Ruthie Brooks, the claimant, Dr. George Farah, the claimant’s current physician, and Kathleen Van Dermere, one of claimant’s supervisors at the time of the alleged accident, testified.

Claimant testified that she was a housekeeper for St. Francis Hospital of 10 or 11 years’ standing. Her job required her to clean patients’ rooms, and it involved some lifting. On January 18, 1976, she entered the hospital linen closet near or soon after the end of her working day, in accordance with her duties, and, while pulling out a linen cart, she tripped and fell. Her back “hit the linen cart, right straight *** on the corner [of the cart] — between the shoulders ***.” No one saw her fall, claimant said, because her accident occurred between work shifts. She did not then notify anyone of her injury because she had already worked one-half hour of overtime.

For the next three days she did not work, using one of her days off and calling in sick. Her nephew drove her to work on January 22, and, after she informed her supervisor that she had fallen and was sick, she was examined by two doctors at St. Francis Hospital. One doctor, according to the claimant, recommended hospitalization. Dr. Thomas Campbell, however, who had treated her for a long time previously, - advised against it and told her, after an examination, that there was nothing wrong with her.

Claimant was examined by Dr. Far ah in early February. Soon thereafter, she was admitted to Henrotin Hospital under his supervision.

Prior to January 18, 1976, claimant said she did not have any pain in her back. For a year after the alleged incident she was unable to work or even “to fix a meal.” At the time of the hearing, almost two years later, she was “still suffering from [her] back problems, not able to work, [or] lift anything.” Prior to the hearing she was hospitalized under Dr. Far ah’s care at least two separate times after the initial hospitalization.

On cross-examination, claimant was asked whether she had had back trouble before and she denied having prior back trouble that prevented her from working. She had seen a doctor at St. Francis Hospital in 1968 about a backache, however, but explained that prescribed medication had cured the problem. It also was revealed, under questioning, that claimant had reported pain in her back and legs in 1972 and that, in 1973, she had been admitted into St. Francis Hospital because her knees and feet had “swollen up.” She claimed that her back “wasn’t hurting.” Respondent’s attorney continued the questioning, however, and elicited the admission that Dr. Campbell had prescribed a back brace for her in 1973 which she wore while working. Claimant stated, however, that she had not had an accident involving her back in 1973.

Claimant also related that she had a conversation over the telephone with Mrs. Van Dermere of St. Francis Hospital and that she had obtained from her a leave of absence with pay for two weeks after the alleged accident. She had not visited Mrs. Van Dermere personally but had sent her daughter.

Dr. George Farah testified for the claimant, stating that he was very familiar with her case, having seen her approximately 30 times since he first examined her early in February 1976. He was able to testify without reference to his notes because of his familiarity with the case. He testified that claimant, during her first visit to him in February, told him that her injuries — low back pain and ambulatory difficulties — “happened after a fall sustained at work.” She was hospitalized for these difficulties on February 14, 1976. Assuming the truth of claimant’s story about the accident, he believed it was the cause of her back condition. In addition, it was his opinion that her immobilization resulting from the accident “might have been” the main cause of her thrombophlebitis, a condition for which she also apparently sought compensation. Thrombophlebitis is also caused by obesity.

On cross-examination, Dr. Farah admitted that claimant was hospitalized for obesity and hypertension, in addition to the asserted lumbosacral sprain. Other ailments, including hyperthyroidism, bleeding associated with a peptic ulcer, peptic esophagitis, carotid insufficiency, myocardial ischemia, hiatus hernia and a distended bladder with urinary tract involvement, were discovered during her hospitalization. Only the latter condition could be related to trauma, according to Dr. Farah.

Respondent’s attorney also questioned the doctor about his failure to write down claimant’s alleged fall in his notes and about the X rays taken of her back. Dr. Farah said that claimant told him of the fall but that he omitted to put it down, conceding he “should have mentioned it.” Regarding the X rays, Dr. Farah related that they showed “some congenital defect, some narrowing of the L-5, S-l.” The congenital defect was one in the “pars interarticularis.” Such a defect could exist without compression of the L5 and SI. Claimant’s noncongenital condition, which he called spondylolisthesis, was usually “caused by some type of trauma.” (But see 1C R. Gray, Attorney’s Textbook of Medicine pars. 1772(3) through 1772(3)(l) (1980).) He was then asked whether he would change his opinion regarding the cause of claimant’s injury if he were informed that claimant had previously received treatment for her back. His conclusion under those facts was that her condition was “aggravated by the accident.” (Claimant had informed Dr. Farah, however, in response to his question, that she had not received treatment from any other doctor») The doctor concluded that claimant could not work because of a lumbosacral sprain.

Respondent called Kathleen Van Dermere to testify. She was employed at St. Francis-, where her duties included supervising, in some capacity-, health care for sick employees and the administration of employee leaves of absences. She, too, was very familiar with claimant, but testified with the aid of her records. On February 6,1976, she signed a leave of absence for the claimant. Claimant had requested it because “she felt so bad” that she was “unable to work at [that] time.” When asked what her problem was, claimant replied, “I don’t know. I am tired, can’t work anymore.” Mrs. Van Dermere was never informed of the alleged accident at work. On cross-examination she said claimant was a “good worker, very slow, difficult to get around, shuffled slowly.”

Both sides have introduced various hospital records, consisting of more than 500 pages on this record, into evidence. Many of them are indecipherable. Others are only indirectly relevant to this case, for claimant admits that her hospital treatment for syncope, hypertension, gastric ulcer, esophagitis, myocardial ischemia, hiatus hernia, sickle-cell anemia, and marked obesity were not conditions compensable under the Act.

The records show that in July 1973 X rays of claimant’s lumbosacral spine taken at St. Francis Hospital were the basis of an impression that claimant had “bilateral osteitis condensaos ilii.” In August of that year, additional X rays taken at St. Francis Hospital revealed “what appears to be a defect in the pars articularis of the vertebral segment of L5.” Furthermore, “ [o]blique views of the lumbosacral spine reveal definite evidence of spondylolysis on L5.” The records also confirmed that claimant had complained of and was treated for back pain prior to the accident alleged here.

More X rays were taken at St. Francis Hospital on January 23, 1976, five days after the alleged accident. They revealed “a questionable very minimal forward slipping of L5 on SI,” and the impression, as relevant here, was that claimant had “bilateral osteitis condensans ilii” and a “questionable 1st degree spondylolisthesis of L5 on SI.” Thus, it can be seen that, according to the X rays taken at St. Francis Hospital, claimant’s condition, as revealed on the X rays, changed only infinitesimally, if at all, after the alleged accident. See 1C R. Gray, Attorney’s Textbook of Medicine pars. 1772(3) through 1772(3)(l) (1980).

More important are the records relating to claimant’s version of the accident. One record of January 27, 1976, somewhat corroborative of claimant’s testimony, noted that claimant’s pain was severe for three days. In the records relating to claimant’s February-March hospitalization, however, assertedly the result of the work accident, it was noted once that claimant stated she fell on ice on the street once three years previously, injuring her back and neck. In another record relating to that same hospitalization, claimant stated that her pain began two years previously after a fall. Again, in her July 1976 hospitalization, it was noted in a record that claimant said she had fallen two years before and had been having back pain ever since. It was not until her November 1976 hospitalization, nine months after the alleged accident, that it was first noted that claimant said she fell at work, or had a bad fall in J anuary.

“It is the province of the Industrial Commission *** to draw reasonable inferences and conclusions from competent evidence in the record. On review, the function of this court is limited to a determination of whether findings of the Commission are against the manifest weight of the evidence ***.” (Pazara v. Industrial Com. (1980), 81 Ill. 2d 76, 83-84.) The Commission in this case could reasonably have concluded that claimant’s testimony regarding her alleged accident was less than candid, in view of Mrs. Van Dermere’s testimony and the hospital records previously discussed. In addition, the Commission could reasonably have concluded that claimant’s current condition of ill-being was a result of non-work-related problems and that, from the X rays taken at St. Francis Hospital, the spondylolisthesis existing prior to the alleged accident was not aggravated by claimant’s employment. We do not say these conclusions are compelled from the record or even that this court would have drawn the same inferences were we presented with the same testimony in the first instance. The Commission has drawn reasonable inferences from this record, however, and its decision will not be disturbed.

The judgment of the circuit court to this effect is affirmed.

Judgment affirmed.


source: Caselaw Access Project

author: MR. JUSTICE WARD

license: Public Domain

text:
    (No. 53566.
    CENTRAL ILLINOIS LIGHT COMPANY, Petitioner, v. J. THOMAS JOHNSON, Director of Revenue, et al., Respondents.

      Opinion filed March 18, 1981.

    SIMON, J., took no part.
    Terry F. Moritz, Vicki A. Thompson, and Richard A. Angell, of Rudnick & Wolfe, of Chicago, and Thomas M. Atherton, of Frings, Bagley, Atherton & Clark, of Pekin, for petitioner.

      Tyrone C. Fahner, Attorney General, of Springfield (Michael Paschon and John Brunsman, Assistant Attorneys General, of counsel), for respondent J. Thomas Johnson.
    Thomas J. Homer, State’s Attorney, of Lewiston (James Lloyd, Special Assistant State’s Attorney, of Canton, of counsel), for respondents Vernon Thompson et al.

    James L. Donnelly, Jr., and Wayland B. Cedarquist (Boodell, Sears, Sugrue, Giambalvo & Crowley, of Chicago, of counsel), for amicus curiae Illinois Manufacturer’s Association.
    Laurence D. Lasky, Paul F. Hanzlik, William P. Suriano, and John W. Treece, of Isham, Lincoln & Beale, of Chicago, for amicus curiae Commonwealth Edison Company.
    Brent S. Bohlen, of Springfield, for amicus curiae Taxpayers’ Federation of Illinois.
    Froehling, Taylor & Weber, of Canton, for amicus curiae Canton Union School District No. 66.
    Frederic S. Lane, Ralph E. Loomis, and Thomas W. Dressler, of Sonnenschein, Carlin, Nath & Rosenthal, of Chicago; Charles R. Zalar, State’s Attorney, of Morris; and Eugene W. Hayes, of Dunn & Hayes, of Morris, for amici curiae Certain Zion Township (Lake County) and Grundy County Taxing Bodies and Assessing Officials.
   MR. JUSTICE WARD

delivered the opinion of the court:

In February of 1980, the Department of Revenue and the supervisor of assessments of Fulton County reclassified as real property certain machinery and equipment of the Central Illinois Light Company (CILCO) that had been previously assessed for purposes of taxation as personalty by both of the governmental bodies.

In response, CILCO filed a motion in this court for leave to file an original action “relating to revenue” under Supreme Court Rule 381 (73 Ill. 2d R. 381), in which it petitioned for declaratory and injunctive relief. We granted the motion for leave to file the action.

The petitioner is a privately owned public utility engaged in producing, transmitting and distributing electrical energy. Duck Creek Station, a steam electrical generating facility located in Fulton County, is one of several plants owned and operated by CILCO. Duck Creek Station began operations in 1974. For that year and for succeeding years, CILCO filed certain schedules with the Department of Local Government Affairs on the basis of which that department classified and assessed the utility’s pollution-control equipment as personal property. The assessments were then forwarded to the Fulton County supervisor of assessments and used as a basis for the county’s classifying, assessing, and taxing of property at Duck Creek Station, that was subject to ad valorem personal and real property taxes.

The statutory quadrennial assessment of property in Fulton County was scheduled for 1975, and in anticipation of it CILCO and the county’s supervisor of assessments, Vernon Thompson, agreed that the following formula would be applied in assessing CILCO’s property at its Duck Creek Station: 60% of the property would, for purposes of taxation, be considered to be personal property and 40% would be considered to be real property and so assessed, based on 25% of the actual book cost of all the property located at the Duck Creek Station. The agreement, however, did not identify each item of property listed on property schedules as being real or personal. The personal property taxes imposed on the Duck Creek Station property were based upon the valuations assigned by CILCO to its machinery and equipment. A letter directed by CILCO to Fulton County officials confirming this assessment arrangement included the statement: “This classification will be subject to review and possible adjustment when the effect of the abolition of personal property taxation on or before January 1, 1979 on the amount of property or replacement taxes paid by CILCO to Fulton County is known.”

The Fulton County taxing officials followed the 60%/40% assessment formula for the years 1975 through 1978. As stated, the assessments for the personal property taxes were based upon CILCO’s declared value of its machinery and equipment at Duck Creek, which were itemized in personal property schedules and filed with the county.

After the abolition of the ad valorem tax on personal property (see Client Follow-Up Co. v. Hynes (1979), 75 Ill. 2d 308), Fulton County, in preparation for the 1979 quadrennial assessment, for the first time conducted an on-site inspection at Duck Creek for the purpose of determining the value of the real and personal property at the facility. The Real Estate Analysis Corporation, which had been retained by the county to conduct the inspection, gave an appraisal of $206,939,000. Machinery and equipment accounted for approximately $120 million of the valuation, and the structural improvements, reservoirs, and dams were appraised at $86.4 million.

On February 8, 1980, after the abolition of the personal property tax, the Fulton County board of review reclassified all of the property at Duck Creek as realty, including CILCO’s machinery and equipment which had previously been assessed and taxed as personal property. This action came after the Department of Revenue had acted to reclassify CILCO’s pollution-control equipment at Duck Creek as real property for the purpose of taxation. As a result of Fulton County’s reclassification it was calculated that the county would derive an additional $1.7 million from the real property tax imposed on CILCO’s machinery and equipment at the Duck Creek Station.

To support this reclassification, the respondents point to the Illinois Property Tax Manual, which was prepared by the Department of Revenue in 1980 as “a guide to all local officials that are involved in administering the Illinois Property Tax System.” It was published in compliance with statutory directions to the Department to “[p] rescribe general rules and regulations, not inconsistent with law, for local assessment officers relative to the assessment of property for taxation, which general rules and regulations shall be binding upon all local assessment officers and shall be obeyed by them respectively until reversed, annulled or modified by a court of competent jurisdiction.” Ill. Rev. Stat. 1979, ch. 120, par. 611(3).

The manual declares that the determination of whether property is to be classified as real or personal is a “matter of law.” It states, too:

“If the Revenue Act, as it existed on January 1, 1979, specified that a certain kind of property shall be considered personal property for purposes of taxation then the assessor must rely on that specification. Property that has been statutorily classified as personalty as of January 1, 1979, cannot be reclassified as real estate. In those cases where no rule is provided by statute, the determination of whether a particular property shall be considered real or personal shall be made from a consideration of the distinguishing characteristics of real and personal property.”

The petitioner acknowledges that there is no provision in the Revenue Act of 1939 (Ill. Rev. Stat. 1979, ch. 120, par. 482 et seq.) which specifies or requires that “machinery and equipment” be considered to be personalty. The manual does set out various characteristics as a guide to what is to be considered “real estate.” One of those provisions, and one upon which the Department of Revenue and Fulton County relied in reclassifying CILCO’s machinery and equipment at Duck Creek Station as real property, is the following:

“If machinery is intended for permanent use in carrying on the business for which the building was erected or is used, it becomes part of the realty on being installed and it is immaterial that the machines may be removed without injury to the building. This rule has special application to heavy machinery intended for the building and not intended to be moved from place to place, though resting in position by its own weight, and to machinery which is part of a factory or shop and indispensable thereto, though not actually fastened.”

If this guide or rule is to be applied uniformly across the State, the parties say “virtually all property classified as machinery and equipment for personal property tax purposes and owned by public utilities and others in 1970 and 1978 will be subject to ad valorem taxes as real property in 1979 and later years.”

CILCO contends that the rule referred to in the manual is not applicable because under the terms of section 18.1 of the Replacement Tax Act (Ill. Rev. Stat. 1979, ch. 120, par. 499.1) reclassification of the machinery and equipment at the Duck Creek Station as real property is prohibited. That portion of section 18.1 which is relevant here provides:

“No property lawfully assessed and taxed as personal property under this Act prior to January 1, 1979, shall be classified as real property subject to assessment and taxation under this Act after January 1, 1979. No property lawfully assessed and taxed as real property under this Act prior to January 1, 1979, shall be classified as personal property subject to assessment and taxation after January 1, 1979.” (Ill. Rev. Stat. 1979, ch. 120, par. 499.1.)

The petitioner declares that its machinery and equipment at Duck Creek were “lawfully assessed and taxed” as personal property prior to January 1, 1979, and that reclassification is prohibited, unless the original classification was fraudulent.

Fulton County contends that the agreement with CILCO under which the petitioner’s property at Duck Creek was assessed as being 60% personal property and 40% real property, while not fraudulent, was unlawful within the meaning of section 18.1. The county claims that this ratio of assessment was improper because it was applied to only 25% of the book value of the property at Duck Creek rather than 33 1/3%, which it says was required by statute (Ill. Rev. Stat. 1979, ch. 120, par. 501(1)).

The Department of Revenue, which in 1979 initially reclassified CILCO’s machinery and equipment as realty, acknowledges that it erred in doing so. The Department now agrees with CILCO that, under section 18.1 of the Replacement Tax Act, the petitioner’s machinery and equipment at Duck Creek were lawfully assessed and taxed as personal property prior to January 1, 1979, and therefore could not now be reclassified as realty. The Department declares, however, that any new machinery or equipment or other property acquired after January 1, 1979, and which falls under the statutory or common law definition of real property will be subject to the ad valorem tax on real property. Similarly, the Department states that any new utility construction completed after January 1, 1979, should be considered as real property, assuming of course that the property falls within the legal definition of real property. These contentions are disputed by the petitioner. It says, inter alia, that such action by the Department or the county would be illegal as converting the Replacement Tax Act into a “prohibited revenue generating measure.” These contentions and countercontentions are, however, for another day. There has not been an attempt to reclassify by the Department or county any property acquired or constructed by CILCO subsequent to January 1, 1979. As a result, there is no existing controversy, and we will not consider contentions beyond the issue of this case.

The legislative background to the Replacement Tax Act shows an awareness by the legislature of agreements which existed between certain utilities and local taxing officials regarding the classification of property as personal or real and reveals the legislative reasoning underlying section 18.1. Illustrating, in response to a question by Senator Adeline Geo-Karis as to whether section 18.1 would place any restrictions upon county assessors with respect to the classification of property as real or personal, Senator Terry Bruce responded:

“Yes, it has, Senator Geo-Karis ***. [G]oncem was expressed by many in the House and an amendment was added which clarifies *** that property that was legally classified in prior years cannot be reclassified, and frankly that works both ways. Some assessors would give utilities a break if it were assessed as real property as opposed to personal property, some would give the break if it were personal rather than real. And now some utility companies seeing that they would not have to pay any taxes if they could get it reclassified quickly to personal property and not as real property, wouldn’t pay. The decision was made that the best thing is to freeze everybody with the deals that they’ve made with their local assessor. If they went to them and said, look, let’s assess this as personal property so I can get a lower rate, that’s fine, they’re stuck with that and now they’re off the rolls. If they went through in the other way and said, let’s classify it as real estate and they enjoyed that advantage for several years at a lower rate than the personal property tax rate, I don’t think it would be fair now to allow them to change that. So the bill just says, if it were legally classified prior to the enactment of this bill, it cannot be reclassified.”

It is clear it was the legislature’s intent through section 18.1 to “freeze” classifications of property that had been made by assessing officials pursuant to agreements such as that involved here.

This court has consistently held that the assessment of property is not a judicial function but a legislative one, the propriety of which courts will not review absent charges that the assessment was a product of fraud. (See La Salle National Bank v. County of Cook (1974), 57 Ill. 2d 318, 323; Clarendon Associates v. Korzen (1973), 56 Ill. 2d 101, 104-05; People ex rel. Joseph v. Schoenborn (1968), 41 Ill. 2d 302, 304; People ex rel. Frantz v. M.D.B.K.W., Inc. (1966), 36 Ill. 2d 209, 211.) None of the parties contend that fraud was involved in the agreement in 1974 as to the classification and valuation of CILCO’s Duck Creek Station. We, accordingly, hold that property of CILCO at the Duck Creek Station, which was classified and taxed as personalty prior to January 1, 1979, may not, under the Replacement Tax Act, now be reclassified as real property for purposes of taxation. (Ill. Rev. Stat. 1979, ch. 120, par. 499.1.) If there was in fact a variance from the terms of the statute in the assessment, as Fulton County states, we do not consider it would affect this holding. The property was assessed and taxed as personal property. This was the fundamental consideration, and under section 18.1 the property cannot now be reclassified. We would add, parenthetically, that it was Fulton County itself that made the 25% assessment and that this assessment was made not only in CILCO’s case but apparently generally throughout the county.

For the reasons given, the respondents are permanently enjoined from reclassifying the property involved as real property for purposes of taxation.

Injunction entered.

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


text:
    (No. 53059.
    BRUCE H. DODDS et al., Appellants, v. PETER GIACHINI, Appellee.

      Opinion filed March 18, 1981.

    MORAN and SIMON, JJ., took no part.

      Sidney R. Zatz, Nathan M. Cohen, Roger G. Fein, and Malcolm S. Kamin, of Arvey, Hodes, Costello & Burman, of Chicago, for appellants.
    William J. Harte, Ltd., of Chicago (William J. Harte, of counsel), for appellee.
   MR. JUSTICE WARD

delivered the opinion of the court:

The plaintiffs, Bruce H. Dodds and Douglas W. Dodds, filed a complaint in the circuit court of Cook County to “cancel” an agreement with the defendant, Peter D. Giachini, granting the latter an option to purchase stock from the plaintiffs. The defendant filed a counterclaim seeking specific performance of the agreement. After a trial without a jury, judgment was entered in favor of the plaintiffs on their complaint, and the counterclaim was dismissed. The appellate court reversed (79 Ill. App. 3d 358), and we allowed the plaintiffs’ petition for leave to appeal under Rule 315 (73 Ill. 2d R. 315).

Disposition of the complaint and of the counterclaim turn on the same issues. An understanding of the latter requires an account of the circumstances leading to the execution of the agreement, dated May 7, 1976, and the conduct of the parties thereafter prior to the filing of the complaint on September 29, 1977. The case was tried on a stipulation that recitals of certain facts made therein were true, and that various pieces of correspondence between the parties which were admitted as exhibits were sent and received on the dates indicated by the persons shown as the senders and addressees. The defendant also testified on his own behalf, but his testimony did not figure in the decisions below. The stipulation does not represent that no communications, meetings, or conversations concerning the agreement took place between the parties other than those included in the stipulation and the exhibits, and the exhibits themselves show that that is not the case, since several of them refer to other communications of which no evidence was introduced.

In 1970 Bruce H. Dodds and Douglas W. Dodds, his father, the plaintiffs, organized the Toll way Arlington National Bank, which was located in Arlington Heights, a suburb of Chicago. They controlled over 51% of the 3,000 shares of the bank’s stock that was outstanding. The elder Dodds was then a director of six other banks, and had been engaged in the banking business since 1930. In 1974 the plaintiffs became the beneficial owners of a parcel of real estate in Arlington Heights, which was at that time improved with a partially completed office building.

In October 1975 the bank moved into the building, occupying the entire first floor and one-half of the basement. No formal lease was executed at that time, but the bank was occupying the premises at a monthly rental of $7,900, a figure which was calculated on the basis of a specified charge per square foot of space occupied.

At least as early as November 1975 the bank was having discussions with the regional administrator of national banks for the Chicago area, whose office is part of the Federal Bureau of the Comptroller of the Currency. Correspondence between the bank and the administrator shows that the latter was concerned that the rentals being paid were excessive in relation to the bank’s income, and that this disproportion might lead to a net operating loss. When a lease was drawn for the bank, to become effective May 1, 1976, the monthly rental, at the administrator’s suggestion, was reduced to $5,100.

In 1975 and 1976 the plaintiffs were engaged in completing the building. In the spring of 1976 they concluded that additional funds were required for this purpose, and they entered into negotiations with the defendant, who was then the president of the Maywood-Proviso State Bank, which was located in Maywood, another Chicago suburb. The defendant had held this position for 24 years.

These negotiations culminated in a written agreement dated May 7, 1976, which is the subject of this action. The defendant was to lend the plaintiffs $450,000 for a period of eight months at 8 3/4% interest, payable monthly, and he was given an option, to be exercised in eight months, to purchase from the plaintiffs an amount of the bank’s stock sufficient to give him majority control. These shares were to be held by the defendant in the meantime as collateral security for the loan. The plaintiffs further agreed to grant the bank a five-year lease of space in their building at $5,100 per month, with optional renewals for seven successive periods. The bank was not a party to the agreement. Since the construction of the agreement is in dispute, its pertinent provisions are set forth below:

“1. LOAN. Purchaser [the defendant] agrees to loan to Sellers [the plaintiffs] the sum of $450,000 for a period of 8 months at 8 3 /4% interest. It is agreed by the parties that 1583 shares approximately, but not less than 51% of all outstanding shares will be placed with Purchaser as collateral security for said loan. It is agreed that interest will be payable each month with the exception that at maturity any interest then due shall be paid by Sellers together with the principal which then remains unpaid.
2. OPTION TO PURCHASE CONTROLLING INTEREST IN TOLLWAY ARLINGTON NATIONAL BANK. Sellers represent that they own or control 1583 shares representing approximately 53% of the outstanding stock of said Bank and hereby grant to Purchaser an unrestricted option to purchase such shares at $300 per share. The option shall be effective on this date and shall remain effective for a period of 8 months, from the date hereof and in the event that the option is not exercised, then the stock pledged as collateral will be returned to Sellers upon payment by Sellers of the then outstanding loan balance.
3. LEASE TO BANK. Bruce Dodds represents that he is the owner of the beneficial interest in the trust holding title to a building commonly known as the Tollway Arlington National Bank building located at the Tollway and Arlington Heights Road. Bruce Dodds also represents that the $450,000 being borrowed from Purchaser will be used as follows:
$250,000 will be paid to Harris Trust and Savings Bank $200,000 will be used to complete the building.
Sellers agree to grant to the Bank a lease for a 5 year term with 7 options for renewal at a rental acceptable to the Comptroller of the Currency of the United States and also acceptable to Purchaser. Rental for the first 5 years is to be $5100 per month. The rental shall increase as the deposits increase. When deposits reach $20,000,000 the rent shall increase to $5723.00 per month. Thereafter with each $5,000,000 increase the rent shall increase $311.50.
***
4 ***
***
b. *** Delivery of the Bank shares to the Purchaser in accordance with this agreement will on exercise of the option vest title to 53% of the issued and oustanding shares of capital stock of the Bank in the Purchaser free and clear of all liens, encumbrances, claims of every kind. Purchaser agrees to purchase up to 100% of the shares if so desired by Sellers at the same price of $300 per share.
* * *
***
c. Sellers agree to repurchase on exercise of the option any loans.in default or any loans listed as substandard by the. Comptroller of the Currency in its regular examination of the Bank.
* * *
IQ^ ***
* * *
g. In the event of exercise of the option, PETER D. GIACHINI may use the note signed by BRUCE DODDS and DOUGLAS DODDS as part of the purchase price.”

On May 10 the plaintiffs executed their promissory note for $450,000, and delivered to the defendant 1,558 shares of bank stock to be held as collateral, slightly less than the number specified in the agreement, but over 51%, together with executed stock powers in blank. The stipulation recites that from May 10, 1976, until August 1977 the parties engaged in negotiations over the terms of the lease to the bank by way of telephone conversations, meetings, and correspondence. The earliest contact between the parties reflected in the stipulation and the exhibits, however, is a letter of October 12, 1976, in which the defendant asked the plaintiffs to approve a proposed lease with the bank which was sent to them with the letter.

The proposed lease contained provisions relating to subletting, alterations, and other matters which are customarily covered in a commercial lease, but had not been dealt with in the May 7 agreement. The initial five-year term of the lease was to begin November 1, 1976. The monthly rent was to be reduced from $5,100 to $4,000, a reduction which the defendant indicated in his transmittal letter had been suggested by the regional administrator of national banks previously referred to in this opinion. The provisions in the agreement for renewals and for increases in rent contingent upon increases in the bank’s deposits were included in the lease. Neither the stipulation nor the exhibits show any response by the plaintiffs to the defendant’s proposal.

On November 5 the defendant sent the plaintiffs a request for payment of the installments of interest due or to become due for the months of July through November, which aggregated $13,270. The defendant sent a second notice on November 29. The record does not show that the plaintiffs paid these sums or made any response to these notices.

On December 7, according to the stipulation, the plaintiffs sent the defendant a proposed lease of their own, which differed in important respects from both the defendant’s draft and the provisions of the agreement regarding the term of the lease and the amount of the rent to be paid. Although the stipulation states that the lease was accompanied by a transmittal letter, that letter does not appear among the exhibits which are included in the record. Subsequent letters from the defendant to the plaintiffs establish, however, that the defendant did receive the lease.

In the plaintiffs’ proposed lease the term was to be for two years only and was to begin January 1, 1977. There were to be seven optional renewals, the first for a three-year period and the others for periods of five years each. Although a monthly rent of $4,000 was specified for the initial two-year term, the rent during each of the renewal periods was to be negotiated, with no provision for an escalation of rent conditioned upon an increase in the bank’s deposits.

Although the stipulation does not refer to it, correspondence between the regional administrator and the bank included in the exhibits shows that the terms of a new lease from the plaintiffs to the bank had been the subject of discussion as early as May 10, 1976, when the administrator again advised the president of the bank of his concern with unduly high occupancy costs. On June 9 the administrator wrote the bank’s board of directors commenting adversely on a draft of the plaintiffs’ proposed lease, and requesting written assurances that the board would not “enter into any long-range arrangements which might, in fact, be to the detriment of the institution.” He added, “I would consider executing this lease under burdensome conditions to be an unsafe and unsound banking practice which would warrant administrative action.” The bank supplied the requested assurances on July 13, and undertook that it would not enter into a lease without first discussing its terms with the administrator. On November 2, the president of the bank wrote the administrator to advise him that the proposed lease would be forwarded shortly and stated again that the bank would not sign the lease until the administrator had had an opportunity to review it. The exhibits show that the president of the bank kept the plaintiffs informed of his correspondence with the administrator.

Following his receipt of the plaintiffs’ proposed lease the defendant, on December 9, sent a letter that the defendant asserts was an exercise of his option to purchase stock, which was to expire January 7, 1977. The letter was as follows:

“I wrote to you on October 10 and suggested that we get together on the lease for the Tollway Arlington National Bank without further delay.
After almost two months since my letter to you I received a proposed lease which varies from our agreement. However, I hereby serve notice of exercise of option to purchase the controlling shares in Tollway Arlington National Bank under the terms of the agreement dated May 7, 1976.
Under the terms of the agreement, you agreed to grant to Tollway Arlington National Bank a lease for a five year term, with seven options for renewal at a rental acceptable to the Comptroller of the Currency and to me. Since that date you advised me that the Comptroller of the Currency stated that in his opinion the rental of $5100 per month was excessive and that $4000 per month would be a proper rental. I accept the suggestion and under the terms of our agreement it is my belief that in the first five years the lease should call for a rental of $4000 per month. The rental for the renewal periods should be arrived at by agreement between us or by arbitration.
In accordance with the agreement above dated, I agree to purchase up to 100% of the shares of stock in Tollway Arlington National Bank at a price of $300 per share with a minimum of 51% of the outstanding shares. Please advise me as to how many shares you are prepared to deliver at closing. I will accept the shares now at Harris Trust & Savings Bank. Any other shares which you want me to purchase should be made available within the following 30 days. Any shares not offered within the 30 day period following will then be purchased by me and my associates at my option.
The agreement also provides: that the Bank’s reserve for loan losses is to be adequate; that all doubtful loans are to be written off against the reserve for loan losses; that the loans in the Bank portfolio are current and collectible. I will expect the two of you to purchase all loans listed as “doubtful” or “loss”. This will be a credit against my purchase price.
I am prepared to see you at your early convenience to work out any problems that exist or may arise in connection with the transfer of controlling interest in the Bank.”

The agreed price for the 1,558 shares of stock at $500 per share was $467,400. Although the plaintiffs’ promissory note did not fall due until January 10, 1977, the agreement provided that the defendant might use the note as part of the purchase price, and the stipulation states that the total indebtedness on the note as of December 10, 1976, including both the principal of $450,000 and the unpaid interest, would become either $466,647 or $466,407, depending on whether or not interest was compounded on past due installments. In order to consummate the purchase, therefore, the defendant would have had to tender the full price of the stock in cash or else tender the cancelled promissory note and enough cash to make up the difference. The defendant did not make this tender on December 9, nor did he do so at any subsequent point.

The defendant commented further on the plaintiffs’ proposed lease in a letter to them of December 14. He stated that, although the lease differed from what was contained in the May 7 agreement, he was willing to compromise, and he listed those provisions of the lease which he found acceptable and those which he did not.

The plaintiffs did not respond to the defendant’s letters of December 9 and December 14. January 7, 1977, was the last day for the exercise of the option, and, as just noted, January 10 was the date when the plaintiffs’ note fell due. The defendant did not make a tender on the former date, and the plaintiffs did not repay their loan on the latter.

On January 27, however, the plaintiffs and the bank executed the lease of which the plaintiffs had sent the defendants a copy on December 7. It was stipulated that the defendant had not been advised and did not know that the lease was to be presented to the bank for execution on that date. The lease was to become effective January 1, 1977, and was to terminate December 31, 1978. A copy of the lease had been sent to the regional administrator a short time before its execution, and the lease was not executed until receipt of a letter from him advising that his office had no objection to it. The administrator also stated in his letter, however, that he did not deem it advisable to execute a lease for more than a two-year period until the impact of the present lease on the bank’s future income could be assessed.

On February 24 the plaintiffs and the defendant effected a transfer into the defendant’s name of 10 of the 1,558 shares of bank stock being held by him as collateral, and on the same date the defendant was elected to the bank’s board of directors to fill a vacancy. No reason for the plaintiffs’ placing the defendant on the board appears in either the stipulation or the exhibits.

There was subsequent correspondence between the parties, as appears from the exhibits, in which the defendant raised additional objections to the lease, including a complaint that the lease had reduced the amount of space occupied by the bank at the time when the May 7 agreement was executed. In letters of March 2 and March 9 the defendant stated that he was withdrawing the offer to compromise that he had made on December 14, 1976. In these and in further letters the defendant adhered to the position that he had exercised his option; that he was prepared to “close” the transaction as soon as the plaintiffs had executed a lease with the bank which conformed to the May 7 agreement, and had performed various other actions which he claimed were required under that agreement; but that until those events came to pass he would continue to accrue interest on their loan. It may be inferred from the absence of any statement to the contrary in the stipulation that the plaintiffs made no payments on their indebtedness, did not modify the lease, and took no action to meet any of the defendant’s other demands.

On September 20, 1977, the plaintiffs met with the defendant and tendered a cashier’s check in the amount of $514,008 as payment of the amount due on their loan, including interest from May 10, 1976, to date, and requested the return of their cancelled note and the 1,548 shares of stock held as collateral. The defendant declined the tender, stating again that he had exercised his option to purchase the stock. On September 23, at the direction of the defendant, pursuant to the stock powers given him, the bank issued certificates to him for the 1,548 shares of stock. The plaintiffs filed their complaint on September 29, and the court issued a temporary injunction restraining the defendant from transferring the stock to his name pending a hearing on the merits.

In their complaint the plaintiffs asked that the defendant be required to return their promissory note as paid, as well as the 1,548 shares of stock, and that the court declare the agreement of May 7 to be of no further force or effect. The defendant’s counterclaim sought an order requiring the plaintiffs to perform the agreement in its entirety and to transfer the optioned stock to the defendant. It was alleged that the defendant’s remedy at law was inadequate. The plaintiffs do not contest that allegation.

A judgment in favor of the plaintiffs would thus leave them in control of the bank, the defendant would receive the amount found owing to him under the note, the plaintiffs would be relieved of any obligation to grant a new lease to the bank, and the latter would continue to occupy space in the plaintiffs’ building under the terms of the lease executed on January 27, 1977. A judgment for the defendant, on the other hand, would give him control of the bank, and would require the plaintiffs to grant a new lease conforming to the provisions of the agreement.

In rendering judgment for the plaintiffs on May 9, 1978, the circuit judge filed a memorandum opinion in which he articulated the reasons for reaching his decision. To begin with, the opinion stated, the letter of December 9 did not purport to be an exercise of the option but only a notice of its exercise. Secondly, there had been no effective exercise of the option, because the defendant had conditioned his purchase upon conditions not contained in the agreement, notably those relating to the lease, and because he did not tender the purchase price. Thirdly, the agreement’s provisions with respect to the lease, particularly as to the amount of space to be occupied, were so indefinite as to make the entire agreement unenforceable. Finally, since the defendant had not made the bank a party to the suit when he filed his counterclaim, the bank would not be bound by the court’s judgment and it might refuse to accept a new lease offered by the plaintiffs, thus making a decree of specific performance ineffectual.

In reversing the circuit court, the appellate court concluded that the December 9 letter both purported to and did exercise the option, and that the requirement of tender had been satisfied because the defendant, in the court’s words, “had made numerous sincere efforts to fulfill his duties under the agreement.” (79 Ill. App. 3d 358, 363.) The appellate court agreed with the circuit court that the absence from the agreement of any specification of the space to be leased made the lease too indefinite to permit its enforcement by a decree of specific performance. The appellate court held, however, that a judgment granting specific performance of the remainder of the agreement would be proper, and it remanded the cause with directions to enter such a judgment. While the court did not specify what particular actions by the plaintiffs the judgment would require, the transfer of the 1,548 shares of stock to the defendant would presumably be among them.

Our own analysis of the evidence, which differs in some respects from that made by the appellate court, leads us to conclude that the defendant did not exercise his option within the period allowed by the agreement, and that the plaintiffs’ promise to grant a lease to the bank was too indefinite to be enforceable. For these reasons we reverse the judgment of the appellate court.

We consider first whether the defendant’s option lapsed after January 7, 1977, the last day upon which ft could be exercised under the agreement of May 7, 1976. The exercise of the option would of course consist of the transfer of ownership of the shares to the defendant and the payment to the plaintiffs of the purchase price. The defendant already had possession of the shares and had been given blank stock powers, so that no further action on the part of the plaintiffs was required. All that remained to be done was for the defendant to pay the plaintiffs the full $467,400, or whatever lesser sum would be due if the defendant chose to apply to the purchase price the amount of the plaintiffs’ indebtedness. The defendant concedes that no such transaction took place prior to the expiration of the option, but he urges that his letter of December 9, 1976, prevented the option from lapsing. We do not agree.

The trial judge attached some significance to the defendant’s use of the words “I hereby serve notice of exercise of option to purchase,” rather than “I hereby exercise the option to purchase.” While that choice of words would not in itself negate an intention to exercise the option immediately (Kadansky v. Fickett (1973), 54 Ill. 2d 14, 15-16), the defendant’s words, when read in the context of the entire letter, may have meant only that he planned to exercise his option despite the plaintiffs’ deviation from the terms of the agreement, and would do so in the future once they should tell him how many additional shares, if any, they wished to sell. The plaintiffs did not state that they had additional shares to offer, however, and when the defendant failed to make or tender payment for the 1,558 shares of optioned stock by January 7, the option lapsed. We do not agree with the appellate court’s view that the various actions taken by the defendant after January 7 to which the court refers could retroactively serve as a substitute for timely payment of the purchase price.

The plaintiffs also contend that the defendant’s letter of December 9 did not constitute an exercise of the option because it was not an unconditional acceptance of the terms of the May 7 agreement (Morris v. Goldthorp (1945), 390 Ill. 186). Since we conclude that the option lapsed for the failure of the defendant to pay for the stock, the question whether he also conditioned his purchase upon new conditions might seem to require no consideration. Both the appellate court and the defendant, however, rely on events occurring after the letter of December 9 as showing that the parties treated the option as having been exercised, or that they at least implicitly waived the deadline for its exercise, and discussion of this issue is thus appropriate.

The plaintiffs first contend that the December 9 letter was not an unconditional, exercise of the option because it specified a monthly rental of $4,000, whereas the agreement called for one of $5,100. This contention overlooks that it was the plaintiffs themselves who first proposed the reduction to $4,000 in order to comply with the suggestion of the regional bank administrator. The defendant’s letter merely registers his consent to this alteration of the agreement. The defendant’s letter also states that upon renewal of the lease the amount of the rental should be negotiated, whereas the agreement specified a formula for escalation if the bank’s deposits should increase. Here again, however, that alteration had already been proposed by the plaintiffs as the result of their conversations with the administrator.

Finally, the letter of December 9 states that the defendant expected the plaintiffs to purchase all loans listed as “doubtful” or “loss,” and that “this will be a credit against my purchase price.” The appellate court construed this statement as no more than a reminder to the plaintiffs of their contractual obligation “to repurchase any loans in default or any loans listed as substandard by the Comptroller of the Currency in its regular examination of the Bank.” 79 Ill. App. 3d 358, 362.

If the letter of December 9 alone is considered, therefore, the claim that the defendant imposed conditions upon the exercise of the option is not warranted. On December 14, however, the defendant wrote the plaintiffs again concerning their proposed lease, and in this letter he stated that it should reinstate the provisions of the agreement as to the length of the initial lease and the number and duration of the successive renewals, which had been altered by the plaintiffs. He also asked for restoration of the original provision for rent escalation, which, as noted above, had been dropped from the plaintiffs’ lease.

The plain implication of this letter is that, unless the defendant’s objections to the lease were met, he would not purchase the optioned stock. That position was made explicit in two letters written in March 1977 in which the defendant made the objection that the space allotted to the bank by the lease was less than what had been occupied at the time the agreement was made, and the same position was taken in subsequent letters with regard to other objections to the lease. The defendant, according to the plaintiffs’ brief, “considered plaintiffs’ acquiescence in his version of the lease a pre-condition to his obligation to purchase the shares.” That position is diametrically opposed to the position which the defendant now takes in this litigation, where his brief states that “[t] he lease was to materialize only at some point after the exercise of the option.”

Disagreement between the parties over whether negotiation of a lease acceptable to the defendant was a condition to the exercise of the option lies at the center of this litigation. The stipulated facts and exhibits do not disclose the economic considerations underlying the agreement, but it may be supposed that the offer of a stock option was a necessary inducement to the defendant to lend money to the plaintiffs. As a corollary the plaintiffs would have to provide the defendant with assurance that the bank could continue to occupy its present premises under a lease which he would deem acceptable, for while the defendant would have no concern with the terms of the lease unless he became the owner of the bank, he would surely take those terms into account in deciding whether or not to purchase the stock.

The parties may have anticipated that the eight months allowed in which to exercise the option would afford ample time in which to settle upon the terms of the lease, but in any event their agreement, which was drafted by the defendant, did not require that the lease be executed before or upon the exercise of the option. If, when that time arrived, no lease acceptable to the defendant had been drawn, he would be fully protected, since he could simply decline to purchase the stock.

The defendant offers a different analysis of the transaction. In his verified answer to the complaint he states that he had viewed the location of the bank as undesirable, and that the bank should move, and within a few years probably would move, to other premises. He contends that the plaintiffs did not enter into good-faith negotiations over the lease, and on oral argument his counsel charged that the plaintiffs never intended to go through with the sale of the stock but delayed the closing in order to enjoy the use of the funds that the defendant had lent them.

The picture of the dealings between the parties which emerges from the evidence does contain elements that may raise a question as to the plaintiffs’ motives: their long delay in drawing up the draft of a lease and in submitting it to the defendant, their failure to keep him fully advised of the critical discussions with the regional bank administrator, the failure to make payments on their loan, and their agreement to place the defendant on the bank’s board of directors. The communications between the parties on which the parties chose to try the case, however, are not and do not purport to be a complete chronicle of the transaction. From the fitful glimpses of events which the exhibits afford, we cannot discern, nor could the trial court, any evidence that the plaintiffs misled the defendant.

The next question raised by the plaintiffs’ appeal is whether the agreement of May 7 was susceptible of enforcement by a decree for specific performance. Both the appellate court and the circuit court concluded that the plaintiffs’ obligation to grant a lease to the bank was unenforceable because the agreement did not define the space to be covered by the lease, either by location or by amount of square footage. Although neither the agreement nor the stipulation so states, the defendant contends that the parties must have intended that the bank be allowed the same space as that which it occupied when the agreement was negotiated. The difficulty with this theory is that none of the exhibits specifies what that space was, and that while the negotiations were going on the possibility of reducing the existing space was itself the subject of discussions between the plaintiffs and the regional administrator as a possible means of reducing the amount of the rent.

While the specificity required of a contract to make a lease may be less than that required of the lease itself, we agree that the present agreement was too vague to be enforceable by specific performance. The appellate court concluded that the plaintiffs’ obligation to grant a lease could nevertheless be severed from the rest of the agreement, and that specific performance should be directed of their commitment to transfer the bank stock. The defendant, although stating that he has no objection to a decree thus limited, also maintains that the appellate court erred in failing to require specific performance of the lease, and we turn initially to that claim.

In addition to the obstacle already discussed regarding the space to be leased, a further difficulty arises as to what the rent should be. The lease to the bank executed on January 27, 1977, terminated on December 31, 1978, and the appellate court filed its opinion in this case on November 30, 1979. Under the terms of the lease the bank had an option to renew it for a three-year period ending December 31, 1981. The record does not disclose whether the bank did renew or, if it did renew, at what rent. Under the lease the amount of rent was to be negotiated. Under the agreement of May 7 the rent was made subject to an escalation clause and also to the approval of the regional bank administrator. The passage of time has made obsolete the prescriptions of the 1976 agreement on which this action is founded, and the record is barren of facts from which a substitute for the promised performance could be fashioned.

In holding that the plaintiffs should be required to transfer the shares of stock the appellate court relied on the rule that one who has contracted to sell land but is unable to convey the entire property may be ordered to convey whatever interest he has, with an abatement of the purchase price. (See, e.g., Laegeler v. Bartlett (1957), 10 Ill. 2d 478, 483.) The plaintiffs question the applicability of that rule to the present case, where the agreement calls for the performance of two different but related acts. It is unnecessary to decide that question, however, for the defendant’s claim to the stock derives only from the option, which, we have held, was never exercised.

For the reasons given in this opinion, the appellate court’s decision that the defendant was entitled to relief was in error. As the parties concede, the same reasons require that the relief sought by the plaintiffs’ complaint be granted. The judgment of the appellate court is accordingly reversed, and the judgment of the circuit court of Cook County is affirmed.

Appellate court reversed; circuit court affirmed.

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


author: MR. JUSTICE UNDERWOOD

text:
    (No. 53592.
    DONALD P. GOURLEY, Appellant, v. THE INDUSTRIAL COMMISSION et al. (Interlake, Inc., Appellee).

      Opinion filed March 18, 1981.

    Roger D. Lapan, of Bloomington, for appellant.
    Jeremy P. Sackmann, of Seyfarth, Shaw, Fairweather & Geraldson, of Chicago, for appellee.
   MR. JUSTICE UNDERWOOD

delivered the opinion of the court:

The sole issue in this case is whether an injury suffered by an employee while playing basketball arose out of and in the course of his employment within the meaning of section 2 of the Workmen’s Compensation Act (Ill. Rev. Stat. 1975, ch. 48, par. 138.2) so as to entitle him to compensation thereunder. The arbitrator and Industrial Commission held it did not, and that decision was confirmed by the circuit court of McLean County.

Claimant, Donald Gourley, was employed by respondent, Interlake, Inc., at its Pontiac plant. He was one of eight or nine individuals, including four or five Interlake employees, who played basketball on a team in a local industrial league composed of some six teams from local businesses. He had begun playing in 1971 when one of the Interlake plant foremen asked him whether he would like to play. He played each year thereafter, although not specifically invited to do so. He injured his knee during a game on December 16, 1976, and was off work for approximately seven months, during which'surgical repairs were made to the knee. He received during this period 26 weekly payments of group insurance benefits in amounts of $100, and subsequently returned to work at respondent’s plant.

Since the employer’s connection with the team is crucial in determining the compensability of this injury, the details of that relationship are significant. The uniforms worn by the team were paid for by respondent and bore on the back the word “Interlake.” “A couple” basketballs may have been purchased by the company, and it paid the league entry fee amounting to $125 to $175. These charges were paid from the company’s community relations fund, as were contributions to the Pontiac Boy Scouts, Little League and Pontiac Boys Club of America. Undisclosed amounts were also used from this fund for employee bowling activities. The Pontiac daily paper carried box scores and stories about the league teams under the heading “Pontiac Area League.” The team on which claimant played was identified in the league stories as “Interlake Steel.” Team practice was held at Pontiac Central gym, and the company paid a nominal rental of $3 to $5 for each practice session. Notices regarding the team could be put on the company bulletin board. Prior to the 1975-76 season all members of the basketball team had been Interlake employees, but apparently a lack of employee interest during that season made it necessary to recruit “outsiders” in order to field a team. On an earlier occasion the company’s insurer may have paid for dental expense in connection with a basketball injury, but it is unclear whether, if made, the payment was from group health insurance or workmen’s compensation coverage.

Neither games nor practice sessions were played on company property. Employees were not paid or given time off to practice or play, and games were always played at night or on Sunday. There were no admission charges for the games, although contributions would be solicited at half time to keep the league going. Attendance at the games consisted principally of friends and relatives of the players, players from other teams, and some school children. A former plant superintendent and his children had attended some games prior to his transfer, and the present manager of administrative services, including personnel, had attended some games when the league was first organized in 1970.

No particular recognition was accorded the team members by the company except in 1971-72, when they won the league championship in a game broadcast over the local radio station. On that occasion the company took the team members and their wives out for “dinner and drinks.” Any trophies won were kept in a glass case in the main company cafeteria. The team was coached by an employee apparently chosen by the members; another employee served as coach when the regular one was absent. There is no evidence of company participation in these selections or any coaching decisions. Claimant agreed that no one had “twisted his arm” to get him to play, and there is no indication of any company official making any particular attempt to recruit players or influence employees to become team members. The evidence established that Interlake is not engaged in the manufacture or distribution of consumer products; rather, its products are designed for and sold to industrial users.

Professor Larson, in his treatise (1A A. Larson, Workmen’s Compensation sec. 22, at 5 — 71 (1979)), states that recreational activities are within the course of employment when:

“(1) They occur on the premises during a lunch or recreation period as a regular incident of the employment; or
(2) The employer, by expressly or impliedly requiring participation, or by making the activity part of the services of an employee, brings the activity within the orbit of the employment; or
(3) The employer derives substantial direct benefit from the activity beyond the intangible value of improvement in employee health and morale that is common to all kinds of recreation and social life.”

He notes that injuries may or may not be compensable depending on the differing “mix” found in the factual content:

“Most of the same variables occur: on or off the premises and in or out of working hours; varying shades of employer initiative; differences in amount of employer contribution of money or equipment; differing quantities and types of employer benefit.” 1A A. Larson, Workmen’s Compensation sec. 22.24, at 5 — 106 (1979).

The relevant cases decided by this court consider the same factors. Jewel Tea Co. v. Industrial Com. (1955), 6 Ill. 2d 304, relied upon by claimant, involved an employee who was injuried during an intracompany-league softball game. The significant differences between the degree of company involvement in Jewel and here can best be demonstrated by reciting the facts of that case.

“*** Kenneth Lejman, hereinafter referred to as plaintiff, sustained certain serious injuries while participating in a Jewel Tea Company league softball game. This league consisted of 15 teams, organized from among the employees of defendant’s 153 stores in the Chicago area. The stores were divided in three divisions, each consisting of five districts, and teams were established in each district. The district teams played each other to establish a divisional champion, and ultimately the divisional champions competed to determine the league champion of the year. The divisional championship teams were awarded small trophies and the league champions were presented with larger trophies by the executives of the Jewel Tea Company at a special function. Each team was named in part after the district manager, and the team on which plaintiff played was known as ‘Jeffrie’s Gems,’ since Paul Jeffreys was the district manager. He appointed the manager-captain of the team, who, in turn, selected the players from among the full-time employees in stores within the particular district. The company, since 1949, provided balls, bats, and T-shirts bearing the district team name on the front, and the emblem ‘Jewel Food Stores’ on the back. The employees furnished their own shoes, jackets, caps, and pants. There were no facilities for playing on company premises in most districts, and the games were held at public ball parks, with no admission charge or accommodations for the spectators, who were mostly friends and relatives of the players. No money was received by the team for playing, nor were they granted any time off from their work for practice.
After the teams were organized there was an annual dinner meeting, held on the company premises and paid for by the company, and attended by all the managers of the teams and the personnel chief of the company, at which the season schedule was arranged and rules adopted for games among the Jewel teams. These scheduled games were the only games played by the teams, since the company discouraged the teams from joining the Industrial Soft Ball League. The former company personnel chief testified that the ball games were not used as any advertising media, but that it was part of the program of maintaining a good state of welfare that the athletic activities were encouraged. He stated, ‘We felt that anything that drew Jewel people together in a social way promoted cooperation and furthered the joint effort of all of us.’
Information about the games was disseminated through a weekly company publication, The Flash, distributed to all employees, and also by announcements on the special program for Jewel Tea Company employees each morning on the company operated FM radio station, WMOR, which was listed in the newspaper. The championship game was further publicized by photographs and written accounts in the company’s monthly publication, The Crusader, delivered to all employees.
With reference to the particular team on which plaintiff played, it appears that the district manager, Paul Jeffreys, who, as part of his duties, is charged with recommending promotions among employees in the district, designated Woody Woodruf, an employee in one of the stores in the district, to organize and run that team: Jeffreys also made up a schedule of games for the entire division. According to the evidence there was some difficulty in getting enough men out for the team, and Woodruf, on his day off, called upon the employees in the various stores in the district, during business hours, asking them to participate. When Woodruf asked plaintiff, he replied, ‘Not this year.’ Whereupon Woodruf said, ‘Why not? Don’t you want to play any more? Haven’t you any spirit?’ Plaintiff stated that Woodruf ‘made me feel like a fool, so I went out for the team.’ ” (6 Ill. 2d 305-07.)

In holding that the Commission had properly awarded compensation, this court, in Jewel, emphasized the degree of company support and encouragement given the teams, the benefit derived by the company through improved employer-employee relations, and development of an esprit de corps among the employees. Also viewed as significant was the subtle compulsion inherent in the identification with their teams of the district managers who recommended promotions.

Also relied upon by claimant are Illinois Bell Telephone Co. v. Industrial Com. (1975), 61 Ill. 2d 139, Mid Central Tool Co. v. Industrial Com. (1978), 72 Ill. 2d 569, Lybrand, Ross Bros. & Montgomery v. Industrial Com. (1967), 36 Ill. 2d 410, and Anderson v. Foray, Inc. (1963), 42 Ill. App. 2d 1. In each of those cases, however, the factual context in which the injury occurred differs markedly from that before us. Illinois Bell involved a large, intracompany league of 38 teams composed entirely of Bell employees; all costs of the league’s operation were paid by the company; meetings were held on company premises and on company time; and the company newspaper carried news stories of the games and pictures of the players and trophies. Of significance, too, was claimant’s testimony that his district superintendent had repeatedly talked to him regarding playing and asked him to join the team. Mid Central Tool is not truly apposite, for it involved an employer-financed Christmas party. The injured employee had been asked by the foreman, in a conversation at which the general foreman and company president apparently were present, to bring his wife to the party so that they could talk to her about employment with the company. Similarly, Lybrand, Ross involved an award for the death of an employee on his way home from the company’s annual golf outing at which both employees and firm partners, as well as clients, were in attendance. Attending employees were given paid time off while non-attending employees were required to work. This court, in upholding the award of compensation, emphasized the employer compulsion to attend the outing inherent in the fact that those who did not were required to work. The court indicated this subtle compulsion, also present in Jewel and Illinois Bell, distinguished the compensable from the noneompensable cases.

We do not believe the cases relied upon by claimant support his position, for they all involve substantially greater employer involvement and pressure to participate than is evident here. More nearly in point, in our opinion, are Keystone Steel & Wire Co. v. Industrial Com. (1968), 40 Ill. 2d 160, and Minnesota Mining & Manufacturing Co. v. Industrial Com. (1979), 78 Ill. 2d 182. In Keystone, despite an intracompany league much like that in Jewel, an award of compensation was reversed even though the degree of company involvement was substantially greater than here. Similarly, in Minnesota Mining a majority of this court, relying on Keystone, reversed an award of compensation under circumstances indicating significantly more company financing and support than is established by the evidence before us.

Hendren v. Industrial Com. (1960), 19 Ill. 2d 44, and Hydro-Line Manufacturing Co. v. Industrial Com. (1958), 15 Ill. 2d 156, are not particularly helpful. While in Hendren an employee who was injured while playing baseball on a company-sponsored team in an industrial league was awarded compensation, the court’s concern appears to have been with the question of whether the shoulder injury actually resulted from the baseball activity. The sketchy factual statement as to company involvement does, however, indicate company sponsorship, time off work to play, and company officer attendance at every game, a pattern of company support and participation significantly greater than that in the case before us. Hydro-Line is inapposite, for there the award was reversed because, while a company team was going to be organized, it had not been, and the employee was merely batting balls in a vacant lot next to the company property.

Nor are our recent opinions in Board of Education v. Industrial Com. (1980), 81 Ill. 2d 17, and Eagle Discount Supermarket v. Industrial Com. (1980), 82 Ill. 2d 331, helpful to claimant, for there awards were sustained because in Board of Education the teacher was injured in an on-premises practice volleyball game played with school equipment in preparation for a student-faculty game viewed as part of the school program, and in Eagle the injury suffered by an employee during a frisbee game constituted a known lunchtime activity on company premises in which the company acquiesced or, perhaps, participated.

We have detailed the factual settings of our earlier decisions in order to demonstrate why it is that we believe the evidence before us, whether measured by the standards of our earlier decisions or those delineated by Professor Larson, is insufficient to establish compensability. The activity here obviously did not occur on the premises as in Eagle Discount and Board of Education or as an incident of the employment as in Lybrand, Ross. The absence of the employer compulsion found in Illinois Bell, Lybrand, Ross and Jewel is demonstrated by the fact that so few employees were willing to play in this case that outsiders had to be utilized. And, considering the limited number of participating employees and that respondent’s products are sold only to industrial users, it is difficult to find any direct benefit accruing to respondent from improved employee health and morale or improved customer relationships.

Considering that the factual variations are infinite, it is apparent that no combination of words will so clearly demarcate the boundary line between compensability and noncompensability as to readily resolve every case. However, given the facts which here establish only minimal company financing, the absence of employer compulsion to join the team and the lack of any direct, substantial company benefit, the Commission’s denial of compensation is surely not contrary to the manifest weight of the evidence. United Airlines, Inc. v. Industrial Com. (1980), 81 Ill. 2d 85.

The judgment of the circuit court of McLean County is accordingly affirmed.

Judgment affirmed.


text:
    (No. 53424.

      In re CUSTODY OF CHARLES SEXTON (Donnie E. Sexton, Appellant, v. Janice S. Sexton, Appellee).

      Opinion filed March 18, 1981.

      Kritzer, Stansell, Critser & Whitman, of Monmouth (Greg McClintock, of counsel), for appellant.
    Michael J. Mannino, of the West Central Illinois Legal Assistance, of Galesburg, for appellee.
   MR. JUSTICE CLARK

delivered the opinion of the court:

This case involves the validity of a child-custody modification under section 610 of the Illinois Marriage and Dissolution of Marriage Act (Ill. Rev. Stat. 1977, ch. 40, par. 610). At the time of plaintiff’s and defendant’s divorce, custody of their son was awarded to defendant, Janice S. Sexton. After a hearing on plaintiff Donnie E. Sexton’s subsequent petition for modification of the custody decree, the circuit court of Warren County found in part that “ [t] he minor child’s present environment endangers seriously his mental, moral and emotional health and the harm likely to be caused by a change in environment is outweighed by its advantages to the minor child.” Accordingly, the divorce decree was modified and custody of the child was awarded to the plaintiff.

Defendant appealed the decision of the trial court, contending that the decision was against the manifest weight of the evidence, but a divided appellate court found (82 Ill. App. 3d 482), sua sponte, that the trial court’s decision was void because plaintiff had failed to file affidavits as required by section 610(a) of the Act (Ill. Rev. Stat. 1977, ch. 40, par. 610(a)). We granted leave to appeal. We reverse.

The parties were divorced on August 10, 1976. Custody of their minor son was awarded to the defendant, Janice S. Sexton. On December 16, 1976, defendant’s motion (agreed upon by both parties) to modify the visitation requirements was granted. (The motion’s catalyst was a dispute, resulting in the filing of disorderly conduct charges against both parties, which arose on one occasion when plaintiff exercised his visitation privileges.)

On April 25, 1977, plaintiff petitioned to modify the decree. Alleging in a verified complaint that defendant was not a fit and proper person to care for the child, plaintiff prayed that the care, custody, and control of the child be awarded to him, with visitation rights granted to defendant. On that same day, a guardian ad litem was appointed for the child by the court. Defendant’s motion for a continuance was granted over plaintiff’s objection. Defendant petitioned for a rule to show cause on December 19, 1977. The court found, after a hearing on December 28, 1977, that plaintiff had not complied with the divorce decree, in that he had temporarily retained custody of the child against defendant’s wishes, but it did not find plaintiff in contempt of court. At the same time, the guardian ad litem’s motion to appoint the Warren County juvenile probation office to make an investigation of the parties was granted.

Defendant’s answer and affirmative response to the petition to modify the decree was filed on March 27, 1978. On April 25, 1978, a hearing was held. After an objection was sustained as to evidence regarding occurrences happening after the date of plaintiff’s petition, plaintiff moved for a continuance, and leave was granted for him to file an amended petition. The amended petition, filed on May 9, 1978, and verified by the plaintiff, stated in pertinent part:

“3. The present environment for Charles [the minor child] endangers seriously his physical, mental, moral and emotional health such that it is in his best interests that a change of custody to Donnie be made based on the following:
a. On October 22, 1976, Janice took Charles with her to the First Street Tap, a tavern, where they stayed for several hours while she consumed alcoholic beverages.
b. On October 22, 1976, Charles had fallen and received several stitches and despite his injury and contrary to his well-being Janice took Charles to the First Street Tap as alleged in Paragraph 3(a).
c. That on several occasions Janice has been late in dropping Charles off for visitation or picking him up for visitation, as much as one day late.
d. In the summer of 1977, Janice Sexton took Charles to C.J.’s Pub, a tavern, in Monmouth, Illinois, where she stayed for over an hour and consumed alcoholic beverages.
e. On October 27, 1977, Janice brought Charles to Donnie in a state of health which necessitated that Donnie take Charles to Community Memorial Hospital in the early morning hours of October 28, 1977, where Charles was hospitalized with pneumonia for six days.
f. While Charles was in the hospital as set out in Paragraph 3(e) Janice came to visit Charles for no more than 5 minutes per day with the exception of Sunday when she stayed with Charles for approximately 15 minutes.
g. During the winter of 1977-1978, Charles has consistently had colds while in Janice’s custody and would be delivered to Donnie for visitation without medication.
h. In March of 1978, Janice was hospitalized at Community Memorial Hospital for a period of approximately one week during which time she refused to disclose to Donnie the whereabouts of his son, Charles, and told him that Chuck’s well-being was none of Donnie’s business.
i. While in the custody of Janice, Charles has been neglected, in that he is not properly washed, does not have clean clothes and is not properly fed.
j. While in the custody of Janice, Charles has received scratches and bites about the face, head, ears, and hands apparently from a dog.
k. Since at least October of 1977, to the present Janice has lived in an open and notorious relationship with another man not her husband, to-wit: Gary Peterson.
l. In open court, while under oath, Janice committed the criminal offense of perjury on December 22, 1977, in that she lied when she said that she did not at that time live with Gary Peterson.
m. Gary Peterson, with whom Janice lives, has a serious criminal record as shown by the records of the Warren County Circuit Clerk, and has, in fact served time in prison for the offense of forgery and is currently on parole.
4. The petitioner, Donnie, has remarried and can provide a suitable home for Charles.
5. Courtney Cox, an officer of the Court, has conducted an investigation of the homes and persons of Donnie E. Sexton and Janice S. Sexton and found that it is in the best interests of Charles that custody of Charles be changed to Donnie.
WHEREFORE, Donnie E. Sexton, asks that the Court enter an Order modifying the Decree to provide that the custody, care and control of Charles be placed with Petitioner.”

A response to this amended petition was filed on May 19, 1978, and hearings were held on June 15 and 19 of that year. No objections to this petition grounded on the affidavit requirement of section 610(a) were ever filed in this case by the defendant or the guardian ad litem. The order changing custody was signed on June 20, 1978, after which the instant appeals were taken.

Section 801(b) of the Act (Ill. Rev. Stat. 1977, ch. 40, par. 801(b)) provides for the Act’s application “to aU pending actions and proceedings commenced prior to its effective date with respect to issues on which a judgment has not been entered.” Subsection (c) of this same section (Ill. Rev. Stat. 1977, ch. 40, par. 801(c)) specifically indicates that the new act is applicable “to all proceedings commenced after its effective date for the modification of a judgment or order entered prior to the effective date of this Act.” The effective date of the Act, October 1, 1977, feU between the filing of the original and the amended petition in this case. Here, no judgment was rendered on the plaintiffs original motion for custody modification before October 1, 1977. Therefore, we must apply the new act.

The provision of the new act primarily at issue is section 610(a) (Ill. Rev. Stat. 1977, ch. 40, par. 610(a)), which states: “No motion to modify a custody decree may be made earlier than 2 years after its date, unless the court permits it to be made on the basis of affidavits that there is reason to believe the child’s present environment may endanger seriously his physical, mental, moral or emotional health.” Section 610(a) paraUels section 409(a) of the Uniform Marriage and Divorce Act (9A Unif. Laws Ann. sec. 409(a) (1973).) It represents a legislative policy strongly favoring the finality of child-custody judgments. See In re Custody ofHarne (1979), 77 Ill. 2d 414, 420-21.

Defendant contends, and the appellate court held, that the affidavit requirement of section 610(a) was jurisdictional and, therefore, that the trial court’s modification order was void. This section is a mandatory, rather than a directory, provision, because the consequence of noncompliance, that the child-custody modification motion be disallowed, is clearly provided in the Act. (See Hernandez v. Department of Labor (1981), 83 Ill. 2d 512; Zimmerman Brush Co. v. Fair Employment Practices Com. (1980), 82 Ill. 2d 99, 106, and authorities therein cited.) Holding the provision mandatory, however, does not establish that section as a jurisdictional requirement in the sense that it cannot be waived. See, e.g., Springfield-Sangamon County Regional Plan Com. v. Fair Employment Practices Com. (1978), 71 Ill. 2d 61, 68-69 (mandatory statutory provision subject to waiver).

“Jurisdiction is of two kinds, — jurisdiction of the subject matter and of the person, — and both must concur or the judgment will be void in any case in which a court has assumed to act. The difference is that jurisdiction of the subject matter is given by law and cannot be conferred by consent, but jurisdiction of the person may be obtained by consent.” (Rabbitt v. Frank C. Weber & Co. (1921), 297 Ill. 491, 497.)

(Here, there is no question of jurisdiction over the parties.) To the same effect is People ex rel. Compagnie Nationale Air France v. Giliberto (1978), 74 Ill. 2d 90, 105, in which it was stated that lack of subject-matter jurisdiction could not be waived by a defendant’s appearance and participation in a trial.

Article VI, section 9, of the Illinois Constitution (Ill. Const. 1970, art. VI, sec. 9) states in relevant part: “Circuit Courts shall have original jurisdiction of all justiciable matters ***.” Under section 601 of the Act (Ill. Rev. Stat. 1977, ch. 40, par. 601; now see Ill. Rev. Stat. 1979, ch. 40, par. 2104), as even a cursory examination of that section reveals, the circuit court of Warren County had jurisdiction of the subject matter of this case. There is nothing unusual about this. Children of divorced parents traditionally have been considered wards of the divorce-granting court, which has continuing jurisdiction over matters affecting them. See Kelley v. Kelley (1925), 317 Ill. 104.

Reference to the Uniform Marriage and Divorce Act (Uniform Act) leads to the same result. In the Uniform Act, section 401 (9A Unif. Laws Ann. sec. 401 (1973)) is the jurisdiction provision. The affidavit requirement of section 409 of the Uniform Act (9A Unif. Laws Ann. sec. 409 (1973)), the counterpart to Illinois’ section 610, was not mentioned as a jurisdictional requisite in section 401 of the Uniform Act, and it is clear that this requirement was not intended as a limitation of the subject-matter jurisdiction of a court otherwise competent to hear and decide the case.

Defendant has cited cases from other jurisdictions which, considering statutes similar to our own, have labeled the affidavit requirement jurisdictional. Merely labeling the requirement as such, however, does not answer the question posed by this case. None of the cited cases involved the failure of a party to object to the filing of an affidavit. Many did not even involve the failure to file one, and it is far from clear that these courts used the term “jurisdictional” in the subject-matter sense or that the requirement was considered nonwaivable. Accordingly, they cannot be considered authority for the proposition that the failure to file affidavits as section 610(a) requires renders a subsequent judgment void in every circumstance.

We conclude, in view of the foregoing, that failure to file affidavits in accordance with section 610(a) does not render a judgment subsequently entered in the same proceeding void for lack of jurisdiction. This conclusion, however, merely sows the seeds for the further analysis necessary to determine whether this requirement should be considered waived under the facts of this case. See 73 Ill. 2d R. 366(a)(5); cf. Hux v. Raben (1967), 38 Ill. 2d 223, 224-25.

In People v. Bradford (1975), 62 Ill. 2d 21, a complaint had not been verified in accordance with the statutory requirements (Ill. Rev. Stat. 1971, ch. 38, par. Ill — 3(b)). The court noted that a verified complaint was not a jurisdictional prerequisite to the prosecution of a criminal offense and was waived by the failure of the defense to object to the complaint until its cross-examination of the complaining witness, “after the complainant-police officer had in open court testified to all of the facts alleged in the complaint.” (62 Ill. 2d 21, 22.) In In re Greene (1979), 76 Ill. 2d 204, the State filed petitions for adjudications of wardship alleging that specific criminal offenses had been committed prior to respondents’ 17th birthdays. The court stated that general denials to the petitions “did not place in issue respondents’ ages and the court’s authority to proceed” (76 Ill. 2d 204, 215), despite the age requirement specified in the delinquency provision of the Juvenile Court Act (see Ill. Rev. Stat. 1977, ch. 37, par. 701 — 1 et seq.). The court held that “[i]f the respondent does not challenge the authority of the court to proceed under the provisions of the Act, the respondent has consented to the court’s authority and has waived any objection to his treatment as a juvenile.” 76 Ill. 2d 204, 218.

The instant case, in which neither the guardian ad litem nor the defendant objected to holding the hearing, is as strong as Bradford and far stronger than Greene. Here, as in Bradford, facts not sworn to in the manner required by statute were testified to in open court. As in Bradford, the proceedings here resulted in an adjudication on the merits. In Greene, as here, parties sought to gain advantage on appeal from their silence in the trial court. Nor can it be said that the reasons for the verification requirement at issue in Bradford and for the age requirement at issue in Greene are less compelling than the affidavit requirement at issue here.

In addition to the Bradford and Greene analogies, considerations of judicial economy and simple justice support holding that the affidavit requirement was waived here. It is difficult to discern what useful purpose would be served by relitigating this case, in which the standard for changing custody is identical to the standard by which the required affidavits were to be judged. The verified complaint, moreover, was specific and informed the court, the defendant, and the guardian ad litem of the facts relied upon for a custody change. The uselessness of an objection grounded upon section 610(b) must have been apparent to the defendant and the guardian ad litem, where plaintiff was certainly capable of obtaining the affidavits setting forth the allegations contained in the complaint and where those sworn allegations would have been sufficient to justify a hearing on plaintiff’s motion. Obviously, too, neither defendant nor the guardian ad litem regarded plaintiff’s motion as indicative of bad faith. Nor would it be likely that such a contention could be sustained in a situation where the trial court, applying the rigorous standards of section 610(b), after hearing the evidence, has agreed that a change is warranted. For the same reason, this is not a situation where this court should intervene to enforce this requirement where neither the trial court nor trial counsel have done so.

The affidavit requirement of section 610(a) generally can be enforced adequately by competently represented parties and by trial courts. That the parties elected to forgo its protections and proceed to the merits, under the circumstances here, does not render the decision void. We therefore reverse the judgment of the appellate court and remand the cause to it for consideration of the merits of defendant’s appeal, intimating no view as to what the result should be.

Appellate court reversed; cause remanded, with directions.