text:
    (No. 55040.

      In re FRED MANDELL, Petitioner.

      Opinion filed January 21, 1982.

      Charles J. O’Laughlin, of Jenner & Block, of Chicago, for petitioner.
    Charles S. Morgan, of Chicago, for the Administrator of the Attorney Registration and Disciplinary Commission.
   JUSTICE WARD

delivered the opinion of the court:

The petitioner, Fred Mandell, who was admitted to the bar of Illinois in 1952, was disbarred on consent on April 30, 1975. He subsequently filed a petition for reinstatement before the Attorney Registration and Disciplinary Commission of this court. After hearing, a panel of the Hearing Board of the Commission recommended to this court that the petition be denied. The Review Board of the Commission affirmed the recommendation.

The petitioner was found guilty in 1975, after a jury trial in the United States District Court for the Northern District of Illinois at Chicago, of knowingly using the United States mail and wire communications in interstate commerce to commit fraud, of transporting property obtained by fraud in interstate commerce, and in aiding and abetting in these offenses. Upon conviction he was sentenced to three five-year terms, which were to run concurrently. He served SVz years after his sentence had been reduced.

Enid Mandell, who at the time was the wife of the petitioner, and Ernest F air child also had been named as defendants in the indictment. Enid Mandell was convicted on all counts and given a two-year concurrent sentence on each count, with provision for parole under 18 U.S.C. section 4208(a)(2) (1976). Fairchild, who was not convicted on the transportation count, was sentenced to a term of one year and one day on each of his convictions, to run concurrently. The convictions were affirmed on appeal in the United States Court of Appeals for the Seventh Circuit. (United States v. Mandell (7th Cir. 1975), 525 F.2d 671.) That court adopted the district court’s summary of the evidence presented to the jury as its own statement of facts:

“There was overwhelming credible testimony which showed that Fred Mandell, an attorney, importuned first his office associate, Harold Kriv, and then a gambling acquaintance, Ira Leon, to invest in personal injury judgments which Mandell represented he had obtained against the City of Chicago in behalf of certain of his clients. Evidently Mandell had actually obtained two nominal judgments of $1,000 against the City. He took certified copies of those judgments, altered them by dismantling the certification and substituting spurious pages showing that each judgment was in the amount of $120,000. These he flashed to Kriv, a distressingly eager victim, and regrettably, also a member of the bar, telling Kriv that he could enjoy half of the judgments for an investment of $75,000 in cash. Kriv’s $75,000 was to have added to it $15,000 from Mandell, which was to be distributed $40,000 each to the two clients who had been persuaded by Mandell to sell their ‘judgments’ for $40,000, and $10,000 to a state court judge who was to preside over the bilking of Mandell’s clients.
According to Mandell, the $240,000 in judgments would be. ‘discounted’ with a judgment broker in Waukegan, Illinois who would pay within a matter of days $211,000. This would be divided between Mandell and Kriv 50-50 after the repayment to Kriv of his $75,000 investment and another $12,500 which he had invested with Mandell in regard to certain personal injury cases in which Mandell had contingent fee contracts.
Kriv came up with his $75,000 with amazing alacrity. One of the ingredients of the scheme was the need for speed, cash and no writing. Kriv went from bank to bank cleaning out his accounts and one belonging to his wife and gave Mandell the $75,000 in $100 bills and that was the last he ever saw of it.
The scheme was hopeless. There were no judgments that could be turned into $211,000 and Mandell needed some explanation for the whereabouts of Kriv’s money when Mandell couldn’t produce. Either fortuitously or as a part of the scheme, an explanation presented itself when Kriv was shot in his office on a Saturday afternoon by a black man who came to the office posing as a prospective client. Kriv was hospitalized and underwent major surgery. His wife was then involved by Mandell, Mandell’s wife, Enid, and Ernest Fairchild who told Mrs. Kriv that her husband had been shot by irate blacks whom he had been cheating; that a black gang was out to get Kriv, Mrs. Kriv, their children, the Mandells and their children unless the $75,000 could be used to pay them off. She gave her consent ignorant of the transaction in which her husband had engaged with Mandell. Thereafter Kriv and his wife were pressured into contributing yet another $58,000 to the non-existent black gang, a portion of which was raised by a telephone call to Kriv’s father in Iowa, and his mailing of a $15,000 check to Kriv in Chicago, hence the wire and mail involvements in the scheme, and that money was never seen again, after it was delivered to the two Mandells and Fairchild for payment to the black gang.
The Mandells represented to the Krivs that Enid had contributed $23,000 to the final payoff. This was another fiction. Following a disagreement some months later, Enid demanded repayment of her money threatening Kriv to send the same ‘guy’ to do it again, only this time ‘he’ll complete the job.’
Leon was the second victim. The scheme was the same although some of the techniques were a bit different. He was importuned to invest $65,000 in a similar quick discount of judgments against the City. Mandell used the same names of clients, same judgment amounts, only this time he involved an unknown person who played the role of a lawyer for the City who flashed at Leon phony checks in large amounts which were to be Leon’s and Mandell’s for ready cashing in a few days. So generous was the man from the City that he offered a second check with a face value of $300,000 to Mandell and Leon if they could come up with an additional $75,000. Mandell ‘contributed’ $17,000 and Leon parted with another $58,000. Leon has yet to see any of the total $123,000 he invested.
When Leon became insistent, he was told by Mandell that Mandell had become involved in an argument with the City lawyer, had killed him, that the lawyer’s body was in the trunk of a car driven by Fairchild, that Fairchild wanted $50,000 to dispose of the body in Colorado, and Mandell needed $50,000 to escape the country. At that point Leon suspected something was amiss. But he went through the motions of raising the money, timing it in such a way that the checks he obtained could not be converted to cash until the next business day (which was a Monday) and over the inter-' vening weekend he contacted his lawyers who in turn contacted the Government who in turn arranged for the apprehension of Mandell, in whose possession was found the spurious checks and other incriminating documents.
Enid Mandell’s role in the Leon fleecing was that of a courier and passer of messages between Leon and. her husband. Fairchild participated directly in the portion of the scheme that involved a dead body in Fairchild’s trunk, etc.
Clearly, as the indictment alleged, Mandell devised a scheme to defraud Leon and Kriv and Enid Mandell and Ernest Fairchild embraced it and aided and abetted in its perpetration. The scheme was successful. The mails and interstate wire were used and some of the proceeds were transported in interstate commerce, all as alleged in the indictment.” United States v. Mandell (7th Cir. 1975), 525 F.2d 671, 673-74.

The findings of the hearing panel of the Commission on the petition for reinstatement included findings that the petitioner had not made restitution and that he “was less than candid and forthright in presenting evidence as it related to misconduct, restitution and compliance with Supreme Court Rule 764.”

Considering the shocking character of the crimes of which the petitioner stands convicted, it may be questioned whether he ever should be restored to good standing in the profession.

We need not, however, address this question in view of the action we take here on the recommendations of the hearing panel and the Review Board.

At the hearing, Mandell emphatically denied guilt of any offense against Harold Kriv or J acob Kriv. His attorney stated in closing argument before the panel that “the whole Harold Kriv matter was an unbelievable, bizarre theory and it just simply did not happen.” The petitioner did admit the substance of the scheme to defraud Ira Leon, testifying variously that he had wrongfully obtained either $56,000 or $68,000 from Leon. He, however, denied telling Leon about the “killing” of the attorney for the city of Chicago and denied that his wife had been involved in any way in criminal conduct.

Here, the petitioner argues that he has recognized the nature and seriousness of his conduct. As to Ira Leon, he says that he forthrightly explained to the Commission his efforts to make restitution and to comply with the client-notification procedures set out in Rule 764 (73 Ill. 2d R. 764), which apply upon an attorney’s suspension or disbarment.

In his petition for reinstatement, Mandell stated that restitution had been made to Ira Leon. Later he said that this claim had been made through error. He subsequently moved to amend that portion of his petition to read: “Restitution has been made to Jacob Kriv in the amount of $15,000. Subsequent settlements of civil suits brought by Harold Kriv and Ira Leon have resulted in payment to them of $15,000 and $25,000 respectively.” The petitioner said that the statement that payment had been made to Harold Kriv was error and that in fact no restitution was made to him. It should be pointed out that the reference above to the “settlements of civil suits” concerns a settlement apparently made by Enid Mandell. No settlement has been made by the petitioner. Still later the petitioner filed an amended petition, which in part stated: “So-called restitution has been made to Jacob Kriv in the sum of $15,000 as set forth in the answer to question 8 as a condition of Enid Mandell’s probation.” (Question 8 on the petition form was an inquiry as to all financial obligations of a petitioner for reinstatement at the time of filing the petition.)

In answering Question 8, the petitioner declared these obligations:

Internal Revenue Service: $230,000. He noted that he had been paying the IRS $150 per month for the past two years.
Allen Mandell: $16,800. This debt was incurred in 1974 and 1975 during his trial and represented attorneys’ fees and costs. The petitioner stated that he paid this indebtedness in full in 1978.
Birdie Kwate, his ex-mother-in-law: $5,800. He said that this was repaid in full in 1978.
Harold Kriv: The petition stated that Kriv had obtained judgments in the amount of $1,062,943. At the hearing, however, his counsel said that this entry was erroneous and that the judgment obtained by Kriv was in the amount of $102,000.
Ira Leon: A judgment for $123,000.
Cerwe Builders vs. Mandell: A judgment for $17,138.67 was obtained against the petitioner and Enid Mandell in November 1977.
Marshall Field 8c Company: A judgment in June 1977 for $48,896.29 against the petitioner and Enid Mandell.

(The petitioner testified that the debts involved in the Cerwe Builders and the Marshall Field & Co. judgments were incurred by Enid Mandell and that he had been sued on the ground that they represented family expenses.)

In the answer to Question 8, it was also stated: “Enid Mandell paid Jacob Kriv, father of Harold Kriv, $15,000 restitution on August 5, 1976. Restitution was made with funds provided by petitioner.”

Our Rule 767 (73 Ill. 2d R. 767), in part, states factors to be considered by a hearing panel of the disciplinary commission upon the filing of a petition for reinstatement as attorney. The stated factors are:

(a) the nature of the misconduct;
(b) the maturity and experience of the petitioner at the time of discipline;
(c) whether the petitioner recognizes the nature and seriousness of the misconduct;
(d) when applicable, whether the petitioner has made restitution;
(e) the petitioner’s conduct since discipline;
(f) the petitioner’s candor and forthrightness in presenting evidence in support of the petition.

In addition the panel will consider other factors that it deems appropriate.

The following observations are relevant here: It is clear that a petitioner for reinstatement cannot seek to try again the issue of guilt after he has been convicted. Proof of conviction is conclusive of the attorney’s guilt of the crime. (In re Gold (1979), 77 Ill. 2d 224, 226; 73 Ill. 2d R. 761.) A petitioner’s continuing assertion of innocence of the offense, however, is of itself insufficient to bar reinstatement; the court must look further. (In re Wigoda (1979), 77 Ill. 2d 154, 161.) (The petitioner acknowledges his guilt of the crime against Leon but not against the Krivs.) A petitioner must establish his or her rehabilitation sufficient for' reinstatement by clear and convincing evidence. Findings made by a hearing panel of the disciplinary commission are “ ‘entitled to virtually the same weight as the findings of any initial trier of fact.’ ” In re Wigoda (1979), 77 Ill. 2d 154, 158, quoting In re Hallett (1974), 58 Ill. 2d 239, 250.

We do not consider that the recommendation here of the hearing panel and Review Board was inappropriate. The offenses of which the respondent was convicted were calculated and grave crimes. Admitted to the bar in 1952, he was a person of maturity and experience. His testimony relative to his claim that he had made restitution was not persuasive. The petitioner testified that he assumed the $25,000 paid to Leon by his wife was his money. The reasoning for the assumption was unconvincing. When Enid was divorced from her first husband, she realized $40,000 from the sale of their house. When she married the petitioner, a house was purchased and Enid put up the $40,000 as a down payment. The title to the house was in the name of Enid. The house was later sold when the Man-dells were divorced and sold for a profit, it may be assumed. When the respondent was asked to explain the contention that he had “put money into the house” he testified: “I made improvements; construction, furniture. *** It was always my belief that the restitution was made with my money.” The respondent was asked whether the judgment of Ira Leon against him for $123,000 included the $68,000 that he had wrongfully taken from Leon. He said that it did. He stated that he had never contacted Leon because during the pendency of the trial there was a charge that the petitioner had threatened Leon and that the court enjoined him from communicating with Leon. He said that he had been brought in court three times during the preceding year on Leon’s motions for citations to discover assets. He testified that he had let Leon’s attorney know that if Leon would like to get together with the respondent, he would sit down and try to make arrangements for payment. He testified that he had not spoken to Leon or to Harold Kriv since the time of the trial. He stated that he did not owe Kriv anything. At another place in the hearing, however, he testified that he had obtained $12,500 from Harold Kriv. Kriv had given him the money when the petitioner, who was in need of funds, “sold” an interest in two personal injury cases to Kriv. Parenthetically, it appears from the record that it was stipulated that Harold Kriv had recently pleaded guilty to six counts of mail fraud. The petition for reinstatement stated that the restitution in the amount of $15,000 made by Enid Mandell to Jacob Kriv, the father of Harold Kriv, was made with funds provided by the petitioner; one may presume that the petitioner’s reasoning that he had provided the $15,000 was the same as offered by the petitioner to support his statement that the $25,000 restitution to Leon made by Enid Mandell was made with funds provided by the petitioner.

Rule 764 directs that, within 21 days after disbarment or disbarment on consent, the attorney shall notify by registered or certified mail all clients with pending matters of the fact that he cannot continue to represent them. (73 Ill. 2d R. 764.) The rule further requires that, within 35 days after disbarment, the attorney shall file with the clerk of this court an affidavit stating that he has fully complied with the provisions of the rule. The rule states that it shall be the further responsibility of the attorney to keep and maintain records evidencing his compliance with the rule so that upon any subsequent proceeding proof of his compliance will be available.

The testimony of the petitioner with regard to Rule 764 was not persuasive. Admittedly he did not file the affidavit of compliance with the clerk of the court as the rule requires. To summarize the various relevant parts of his testimony: He stated that his office was burglarized; that every file in the office and every index card was taken. He and a lawyer friend endeavored to reconstruct files so that the clients could be protected. His listing in the telephone directory as an attorney, he testified, was continued after his disbarment so that the clients would be able to communicate with his office or with his lawyer friend who was endeavoring to reconstruct the files. This was done without his knowledge, he said. The petitioner stated that he notified clients whose files were “reconstructed” that he was no longer in the practice of law. He said he notified some of these clients but that his lawyer friend did the bulk of the notifications because he had been sent to prison.

In the respondent’s petition for reinstatement, however, in answering Question No. 16 pertaining to his compliance with Rule 764, the petitioner stated that he went to prison a day or two following his disbarment. He stated that his files were turned over to other attorneys and his clients were notified by registered mail within 21 days of his inability to continue to represent them. His testimony was that he had gone to prison on April 4, 1975, which was prior to his notification of disbarment. He was notified on April 30, 1975. Too, the suggestion that the petitioner was unable to comply with Rule 764 as he “went to prison a day or two following his disbarment” contradicted his own statement that he was incarcerated on April 4, 1975, and remained incarcerated only until April 21. Then his bond was reinstated and he returned to his home in Highland Park and resided there approximately 156 days. This, it would certainly appear, would have given ample time for him to comply with the provisions of Rule 764. In the petition for reinstatement no mention was made by the petitioner of the burglary of his office and the loss of his files.

This court observed in In re Cohen (1981), 83 Ill. 2d 521, that while the court has the ultimate responsibility to impose and enforce attorney discipline, the findings and recommendations of the Hearing Board and Review Board are entitled to and do receive the court’s serious consideration. It was noted that the panel of the Hearing Board sees and hears the witnesses and plays an important role in hearing cases and in making factual findings in contested matters. The court said that the Hearing Board had an opportunity to appraise the petitioner’s candor and sincerity. The observations made by the court there have application here. We consider that the conclusion of the Hearing Board panel that the petitioner had not made restitution and was less than candid and forthright in presenting evidence as it related to misconduct, restitution and compliance with Supreme Court Rule 764 was proper. The petitioner has not discussed the question of restitution with Leon, much less made arrangements with him to make or attempt to make restitution of the fraudulently obtained monies. He denies that he is indebted to Harold Kriv but acknowledges that he received $12,500 from Kriv for “an equity interest” in two personal injury cases he was handling. We have detailed above the unsatisfactory answers he gave as .to whether he had made restitution. It is not inappropriate to note that in 1976 and 1977, while in prison, the petitioner received a total of $65,000 in accrued attorney’s fees. There was no verification of his broad statement that most of the money was spent for legal fees and support for his ex-wife. The hearing panel had an opportunity to appraise the petitioner’s candor and sincerity.

This court has stated: “Rehabilitation, the most important consideration in reinstatement proceedings, is a matter of one’s ‘return’ to a beneficial, constructive and trustworthy role.” (In re Wigoda (1979), 77 Ill. 2d 154, 159.) We agree with the Hearing Board and Review Board that the petitioner has not sufficiently made his case through clear and convincing evidence. Accordingly, his petition for reinstatement to the roll of attorneys admitted to practice law in this State is denied.

Petition denied.


source: Caselaw Access Project

author: JUSTICE UNDERWOOD

license: Public Domain

text:
    (No. 54648.
    C. O. FUNK & SONS, INC., et al., Appellants, v. SULLIVAN EQUIPMENT, INC., et al. (First National Bank and Trust Co., Appellee).

      Opinion filed January 21, 1982.
    Rehearing denied March 25, 1982.

      Miller & Tracy Law Offices, P.C., of Monticello, for appellants.
    Perry S. Albin, of Tuscola, and Terry Mulligan, law student, for appellee.
   JUSTICE UNDERWOOD

delivered the opinion of the court:

This case involves a Uniform Commercial Code issue not heretofore considered by this court.

In March 1978 plaintiff C. O. Funk & Sons, Inc. (Funk), sold its farm implement business to defendant, Sullivan Equipment, Inc. (Sullivan). The unpaid balance of the purchase price was secured by a security agreement covering specified inventory, equipment and the proceeds. That agreement with Sullivan authorized the sale of certain inventory, but required that Sullivan deposit 90% of the sale price in an escrow account from which Funk would receive installment payments. Sullivan financed its inventory purchases in part with a loan from the intervenor, First National Bank and Trust Company of Tuscola (bank). This loan was secured by a security agreement covering inventory, equipment, after-acquired property, and accounts receivable. Both security agreements were perfected by the filing of financing statements pursuant to Code sections 9 — 401 and 9 — 402, with Funk’s the first filed. (Ill. Rev. Stat. 1977, ch. 26, pars. 9 — 401,9—402.) Between June 1978 and December 1979 Sullivan was in arrears in its payments to the escrow account; a total of $29,673.73 which should have been deposited in it was instead deposited in its general business account. From the latter account Sullivan purchased inventory during this same period which far exceeded in value the amount of arrearage.

By December 1979 Sullivan was experiencing financial difficulty and planned an auction of some of its inventory. Funk then sought and obtained a temporary restraining order requiring that the net proceeds of the auction be deposited with the court, and amended its complaint to include an action for breach of contract, demanding damages in the amount of the arrearage. The bank sought and received leave to intervene to protect its interests. At that time Sullivan owed the bank $425,596.78, which was secured in part by the inventory sold at auction.

The auction produced some $115,000. Of this, the portion resulting from the sale of specific items described in the Funk-Sullivan sales agreement is concededly Funk’s. Funk claims in addition only the $29,673.73 arrearage, and the circuit court of Piatt County held it was entitled to the funds. The appellate court reversed and remanded with directions to distribute the funds to the bank. (92 Ill. App. 3d 659.) We granted leave to appeal. The controlling issue before us is whether the proceeds of the collateral sold by Sullivan were sufficiently identified to subject them to Funk’s security interest when the proof of identity consists only of a showing that the account into which they were deposited was also used for the purchase of new inventory.

Funk claims that under sections 9 — 306 and 9 — 312 of the Uniform Commercial Code (Ill. Rev. Stat. 1977, ch. 26, pars. 9 — 306, 9 — 312) it has a prior perfected security interest in certain inventory sold at auction because that inventory represents proceeds of the sale of inventory which was the subject of its initial security interest. Section 9 — 306, in pertinent part, provides:

“(1) ‘Proceeds’ includes whatever is received upon the sale, exchange, collection or other disposition of collateral or proceeds. Insurance payable by reason of loss or damage to the collateral is proceeds, except to the extent that it is payable to a person other than a party to the security agreement. Money, checks, deposit accounts, and the like are ‘cash proceeds’. All other proceeds are ‘non-cash proceeds’.
(2) Except where this Article otherwise provides, a security interest continues in collateral notwithstanding sale, exchange or other disposition thereof unless the disposition was authorized by the secured party in the security agreement or otherwise, and also continues in any identifiable proceeds including collections received by the debtor.” Ill. Rev. Stat. 1977, ch. 26, pars. 9 — 306(1), (2).

Section 9 — 306(2) clearly provides that Funk’s security interest would continue in proceeds of the sale of the original inventory, if Funk could identify those proceeds. (See Hawkland, The Proposed Amendments To Article 9 Of The UCC. Part II: Proceeds, 77 Com. L.J. 12 (1972).) Once identified, Funk’s claim to the proceeds, in whatever form, would be superior to the bank’s, because Funk held a purchase money security interest in the original inventory (Ill. Rev. Stat. 1977, ch. 26, par. 9 — 312(3)) and was also the first to file (Ill. Rev. Stat. 1977, ch. 26, pars. 9 — 312(5), (6)). That security interest, however, continues only in “identifiable proceeds.” Should Funk fail to identify those proceeds, the bank’s security interest in inventory and after-acquired property entitles it to the balance of the auction proceeds.

Although the Code provides no guidance as to how proceeds might be identified, section 1 — 103 directs that the Code be supplemented by “principles of law and equity,” and this provision has been construed to permit application of a tracing theory known in the law of trusts as the “lowest intermediate balance” rule. (Michigan National Bank v. Flowers Mobile Home Sales, Inc. (1975), 26 N.C. App. 690, 217 S.E.2d 108; see Brown & Williamson Tobacco Corp. v. First National Bank (7th Cir. 1974), 504 F.2d 998; Universal C. I. T. Credit Corp. v. Farmers Bank (E.D. Mo. 1973), 358 F. Supp. 317; Associates Discount Corp. v. Fidelity Union Trust Co. (1970), 111 N.J. Super. 353, 268 A.2d 330; In re C. E. Pontz & Son, Inc. (E.D. Pa. 1965), 2 U.C.C. Rep. Serv. 1120; Girard Trust Corn Exchange Bank v. Warren Lepley Ford, Inc. (1958), 25 Pa. D. & C. 2d 395; see generally Skilton, The Secured Party’s Rights In A Debtor’s Bank Account Under Article 9 of the Uniform Commercial Code, 1977 So. Ill. U.L.J. 120,140-43,152-57.) As Professor Skilton notes (1977 So. Ill. U.L.J. 120,133 n.21), the argument that a proceeds security interest terminates when those proceeds are deposited in a bank account since they can no longer be identified has found little favor with the courts.

The rule, which operates on a common-sense view that dollars are fungible and cannot practically be earmarked in an account, provides a presumption that proceeds remain in the account as long as the account balance is equal to or greater than the amount of the proceeds deposited. The proceeds are “identified” by presuming that they remain in the account even if other funds are paid out of the account. If Sullivan is likened to the trustee of a constructive trust imposed because he commingled funds, then the lowest-intermediate-balance rule directs that Funk’s proceeds in Sullivan’s account are preserved to the greatest extent possible as the account is depleted. (See, e.g., People v. Barrett (1950), 405 Ill. 188; People ex rel. Nelson v. Peoples Bank & Trust Co. (1933), 353 Ill. 479.) Under the rule, however, if the balance of the account dips below the amount of deposited proceeds, Funk’s security interest in the identifiable proceeds abates accordingly. This lower balance is not increased if, later, other funds of the debtor are deposited in the account, i.e., the added amounts are not subject to an equitable lien, unless the latter deposits are made in restitution. (Restatement of Restitution sec. 212 (1937).) Thus the claimant has no priority over other creditors to any amount in excess of the lowest intermediate balance. (See Skilton, The Secured Party’s Rights In A Debtor’s Bank Account Under Article 9 of the Uniform Commercial Code, 1977 So. Ill. U.L.J. 120, 140.) In this case, Funk cannot assert a security interest in proceeds superior to that asserted by the bank unless Funk can show that those proceeds were preserved in Sullivan’s commingled account or that other inventory was purchased with those proceeds at a time, and to the extent, that those proceeds were identified in the account. The identification of the funds, as stated, is subject to the lowest intermediate balance of the account.

Funk offered no evidence of the balance of Sullivan’s account during the 18 months Sullivan was in arrears in payments to the escrow account. As a consequence, the lowest intermediate balance remains unknown, and the proceeds to which Funk was entitled have not been identified as remaining in the account.

Funk argues that it established a prima facie case by showing that secured property was sold, that the proceeds were deposited into an account, and that other items of inventory were purchased from that account, and that upon such showing the burden should shift to another to segregate the wrongfully commingled funds. (See Robert P. Butts & Co. v. Estate of Butts (1970), 119 Ill. App. 2d 242.) Were we concerned here with the rights of Funk against Sullivan this argument would have considerable merit. The bank, however, was neither responsible for Funk’s position nor for the commingling and is at least as innocent as Funk. We find no principles in law or equity which dictate that the innocent third party must suffer the consequences of Funk’s predicament. Section 9 — 306 says that the security interest attaches to identified proceeds. Since Funk is claiming a prior security interest in property which is otherwise identified as collateral belonging to the bank under its after-acquired property clause, the burden of identifying the proceeds is properly upon Funk. (Chrysler Credit Corp. v. Bank of Wiggins (Miss. 1978), 358 So. 2d 714, 718-19; cf. American National Bank & Trust Co. v. Mar-K-Z Motors & Leasing Co. (1974), 57 Ill. 2d 29; Bell v. School District No. 84 (1950), 407 Ill. 406, 416; General Foods Corp. v. Hall (1976), 39 Ill. App. 3d 147, 151 (party asserting a fact or issue has burden of proof as to such fact or issue).) Funk failed to offer the proof required to identify the claimed proceeds and is not now entitled to a second opportunity to do so.

Accordingly, we affirm the judgment of the appellate court.

Judgment affirmed.


author: JUSTICE SIMON JUSTICE WARD,

text:
    (No. 54507.
    THE PEOPLE OF THE STATE OF ILLINOIS, Appellant, v. CINDY HELM, Appellee.

      Opinion filed December 18, 1981.

      WARD, UNDERWOOD, and MORAN, JJ., dissenting.
    Tyrone C. Fahner, Attorney General, of Springfield, and Basil Greanias, State’s Attorney, of Decatur (Robert J. Biderman and Debra A. Buchman, of the State’s Attorneys Appellate Service Commission, of Springfield, of counsel), for the People.
    Baird, Latendresse, McCarthy & Rowden, of Decatur (Lloyd F. Latendresse, of counsel), for appellee.
   JUSTICE SIMON

delivered the opinion of the court:

Decatur police arrested the defendant, Cindy Helm, at her home at 3 a.m. on a battery charge filed by her ex-husband. He claimed she had hit him in the eye with her fist. The defendant was in bed when police arrived, and when told that she would have to go to the station, Helm dressed, picked up her purse, and accompanied the officers to the station. There, a female desk clerk took her purse and searched it. The clerk, who was not a police officer, found three small diet pills in Helm’s coin pouch, which was inside the purse. The defendant was not personally searched, either at her home or at the station, until after her purse was searched. Later lab tests showed that the pills were amphetamines, and Helm was charged with felony possession of a controlled substance. (Ill. Rev. Stat. 1979, ch. 56½, par. 1402(b)). The circuit court of Macon County granted her motion to suppress the pills. The appellate court, in an unpublished order (73 Ill. 2d R. 23), affirmed (89 Ill. App. 3d 1206), and this court granted leave to appeal under Rule 315 (73 Ill. 2d R. 315).

The search of the defendant’s purse was made without a warrant and so was banned by both the fourth, amendment to the Federal Constitution and section 6 of the Illinois bill of rights (Ill. Const. 1970, art. I, sec. 6) unless it was both reasonable and within one of the exceptions to the warrant requirement. Arkansas v. Sanders (1979), 442 U.S. 753, 759-60, 61 L. Ed. 2d 235, 242, 99 S. Ct. 2586, 2590-91.

Helm did not consent to the search. (Cf. People v. Nunn (1973), 55 Ill. 2d 344, 347.) And, her purse was not being searched under the authority of the “stop and frisk” statute (Ill. Rev. Stat. 1979, ch. 38, par. 108 — 1.01), for the arresting officers could not reasonably have suspected by the time they reached the station that they were in danger of attack from Helm.

Nor were the terms of section 108 — 1 of the Code of Criminal Procedure of 1963 (Ill. Rev. Stat. 1979, ch. 38, par. 108 — 1) for a search incident to an arrest fulfilled. The purse was not searched to protect the officers from attack, for if that were in fact the rationale, the officers would not have waited to search Helm until after arriving at the police station. They would instead have searched her on the spot of the arrest or would have patted her down in a weapons frisk upon arriving at the station. The purse was not searched to prevent Helm from escaping or passing on its contents to other persons. The purse was being taken away from her and its contents would never go with her into the jail, and so could not be contraband which might fall into the hands of other prisoners or pose a threat to jail security. It was not searched to discover the fruits of Helm’s crime — battery, which has no seizable fruits. It was not searched to discover instruments used in the commission of her crime, for she had used only her fist. Because the purse was being taken away from Helm, it was outside the area of immediate control in which a search incident to an arrest is justified. (Cf. New York v. Belton (1981), 453 U.S. 454, 462-63, 69 L. Ed. 2d 768, 776, 101 S. Ct. 2860, 2865; United States v. Robinson (1973), 414 U.S. 218, 38 L. Ed. 2d 427, 94 S. Ct. 467.) The pills, secreted in the coin pouch which was inside the purse, were not in “plain view.” Cf. Chimel v. California (1969), 395 U.S. 752, 23 L. Ed. 2d 685, 89 S. Ct. 2034.

The State seeks to justify the search as an attempt to inventory Helm’s possessions incident to a lawful custodial arrest. The normal procedure in the Decatur police station was for the desk clerk to put an arrestee’s belongings in a locked strong box under the counter after they were inventoried. They were kept there until the arrestee was released. A police officer here testified that he had read an inventory slip prepared by the desk clerk pursuant to the search of Helm’s purse, but no inventory slip was presented into evidence or appears in the record.

Inventory searches are recognized by statute (Ill. Rev. Stat. 1979, ch. 38, par. 108 — 2), but are different from other searches exempted from the warrant requirement. The inventory search is not justified by law-enforcement exigencies which threaten the safety of police or make resort to a judge for a warrant impracticable. Instead, an inventory search is made to protect the arrestee’s property by putting it in safekeeping while the arrestee is being booked or incarcerated and to insulate the police from later claims by arrestees that their property was stolen or mishandled while in police custody. People v. Bayles (1980), 82 Ill. 2d 128; People v. Hamilton (1979), 74 Ill. 2d 457, 469.

In Bayles, the defendant was trapped under his car after a one-car accident. His luggage was strewn about a nearby field, and a sheriff’s deputy inventoried a suitcase and found marijuana. The inventory search was held invalid because the objectives of the inventory could have been achieved in a less intrusive manner. (82 Ill. 2d 128, 143.) In Hamilton, the defendant had been injured in an automobile accident and was taken to a hospital. The State trooper investigating the accident found the defendant’s briéfcase on the scene and took it with him to the hospital, where he was going to interview the defendant for his accident report. The defendant was not under arrest. The trooper searched the briefcase while inventorying its contents and found heroin. The drugs were suppressed, the court noting that the purposes of the inventory search could have been served by placing the briefcase in a locked locker or storage room, to protect the defendant’s goods, and by sealing it with tape in the presence of a third party, to guard against later claims of theft. (74 Ill. 2d 457, 471-72.) The court found no reasonable justification for searching the briefcase.

Likewise there was no reasonable justification here. That Helm was under arrest makes no difference; as already noted this was not a search incident to arrest under section 108 — 1 of the Code of Criminal Procedure of 1963 (Ill. Rev. Stat. 1979, ch. 38, par. 108 — 1). The police station to which Helm was taken had a locked strongbox which was immediately available for storage to protect her belongings; witnesses (the arresting police officers) were present and could have verified a sealing of the purse by the desk clerk without examination of its contents, as suggested in Hamilton. In view of the availability of the strongbox and the minor nature of the charge against Helm, this is the procedure which should have been followed here. Had it been, it would have accomplished everything the inventory of the contents did. One commentator has even pointed out that taking inventory item-by-item does not afford protection against false claims that property was stolen while in police custody.

“False claims cannot be avoided, and seem more likely when the contents are handled and inventoried (a time when, the owner might later claim, some of his property was taken), as compared to when the container is immediately sealed.” 2 W. LaFave, Search and Seizure sec. 5.5, at 360 n.50 (1978).

Under the circumstances presented in this case, the purposes of the inventory could easily have been accomplished in a less intrusive way; having the desk clerk, instead, rummage through Helm’s purse was under these circumstances an impermissible search.

Because the warrantless search here did not reasonably fall under an exception to the warrant requirement, the pills were properly suppressed and the judgment must be affirmed. The conclusion we reach makes it unnecessary to address Helm’s contention that the pills were correctly suppressed because she was not informed she had a right to post bail in the amount pre-set for a charge of battery under Rule 528(c) (73 Ill. 2d R. 528(c)). See generally People v. Seymour (1979), 80 Ill. App. 3d 221, rev’d (1981), 84 Ill. 2d 24.

Judgment affirmed.

JUSTICE WARD,

dissenting:

I must dissent from the majority’s holding, which I consider shows a misunderstanding of the important question involved here and which unrealistically interferes with booking procedures for persons under custodial arrest at police stations. The majority, in holding the drugs in the purse to have been illegally seized, says that a station inventory could be accomplished in a less intrusive way. That statement gratuitously and erroneously assumes that the search of the purse here was not to be considered as a part of the search of the person and of the inventory process. Too, our inquiry should be whether inventorying the contents of the purse was unreasonable as a matter of law and therefore unconstitutional. The question is not whether a search could be less intrusive. Talk of less intrusive inventory station searches following arrest has been advanced but not accepted. Professor LaFave in his treatise notes that it has been sometimes suggested that the purposes of an inventory could be accomplished by a less intrusive means, but he states: “Currently, such evidence is admissible, and this is generally so even when the inventory has been most thorough. It is customary for the booking inventory to involve an item-by-item examination of everything in the arrestee’s pockets or otherwise on his person, including looking into his wallet or into containers on the person; it may even extend to a strip search.” (2 W. LaFave, Search and Seizure sec. 5.3, at 307 (1978).) (I would observe that we, excepting Justice Simon, who did not participate, very recently held that strip searches at the police station may be reasonable. Following holdings of the Supreme Court, we held that a full search of a person incident to a lawful custodial search may be made without a warrant and that it may be made even if there is not probable cause to believe that the suspect may have a weapon or destroy evidence. People v. Seymour (1981), 84 Ill. 2d 24.)

If we were interested only in reducing the intrusiveness of inventory searches, while barring weapons and contraband from the interior of the jail, the practice of having persons under arrest empty pockets, turn over wallets and the like for purposes of inventory could be abolished. Instead pants, coats and other clothing and property could be sealed in garment bags and jail clothing provided. Pockets and wallets may contain possessions that are as private in character as possessions found in purses. The absurdity, however, of such a procedure is reflected in the practical comment of the court in People v. Walker (1975), 58 Mich. App. 519, 525, 228 N.W.2d 443, 446: “It would be naive and pointless to assume that law enforcement officials may store an arrestee’s personal effects without first determining what it is they are inventorying.”

I suspect that police and other law-enforcement officers will judge that the majority’s holding discloses an innocence of situations that police encounter on an everyday basis. The court in United States v. Berry (7th Cir. 1977), 560 F.2d 861, 864, made the common sense observation that a purse “might be characterized as ‘immediately associated with the person of the arrestee’ ***.” Who is able to say what a purse of one under arrest may contain? “Growing Up Underground,” an autobiographical reminiscence of Jane Alpert, who was described as a woman radical of the 1960’s, was reviewed in December 1981 in a Chicago newspaper. A portion of the review reads: “Several weeks later, as Alpert transported a purse full of dynamite to the New York City Federal Building, she felt, ‘as I imagined I would on my wedding day.’ ” In October 1981, in New York, a gun battle followed a robbery attempt on an armored truck. Two police officers and a security guard were murdered. Two women members of the so-called radical underground were among those arrested at the time. The public and police would be astonished to find that the search of the women’s purses incident to their arrest or when making an inventory at their booking at the police station might be held an unreasonable search and any evidence seized declared to be inadmissible.

The Supreme Court has made it clear that a full search of a person is authorized upon a custodial arrest. In United States v. Robinson (1973), 414 U.S. 218, 235, 38 L. Ed. 2d 427, 440-41, 94 S. Ct. 467, 477, the court stated: “A custodial arrest of a suspect based on probable cause is a reasonable intrusion under the Fourth Amendment; that intrusion being lawful, a search incident to the arrest requires no additional justification. It is the fact of the lawful arrest which establishes the authority to search, and we hold that in the case of a lawful custodial arrest a full search of the person is not only an exception to the warrant requirement of the Fourth Amendment, but is also a ‘reasonable’ search under that Amendment.” In United States v. Edwards (1974), 415 U.S. 800, 803, 39 L. Ed. 2d 771, 775, 94 S. Ct. 1234, 1237, the court said that “searches and seizures that could be made on the spot at the time of arrest may legally be conducted later *** at the place of detention.” (See also 2 W. LaFave, Search and Seizure sec. 5.3 (1978).) When the arrested person has been taken to the place of the detention, there may be a search of his person without warrant, and no justification for the individual search is necessary other than that the person was lawfully arrested and is being lawfully detained. Such searches are conducted as searches incident to the arrest, as the taking of an inventory to protect the property of the arrestee, to insure the security of the place of detention and its occupants, and to protect police officers from false claims of appropriating property of the arrestee.' (See 2 W. LaFave, Search and Seizure sec. 5.3 (1978).) A purse may be searched in the course of a search under authority of Robinson and Edwards. The court in United States v. Berry (7th Cir. 1977), 560 F.2d 861, 864, noted that a purse “might be characterized as ‘immediately associated with the person of the arrestee’ because it is carried with a person at all times.” United States v. Chadwick (1977), 433 U.S. 1, 53 L. Ed. 2d 538, 97 S. Ct. 2476, does not restrict the force of Robinson and Edwards here. There it was held that the opening of a footlocker following the arrest of the defendants without a search warrant wa_s improper. The court said, “Once law enforcement officers have reduced luggage or other personal property not immediately associated with the person of the arrestee to their exclusive control *** a search of that property is no longer an incident of the arrest.” (Emphasis added.) (433 U.S. 1, 15, 53 L. Ed. 2d 538, 551, 97 S. Ct. 2476, 2485.) As we noted in United States v. Berry, it was said in discussing Chadwick that a purse may be characterized as being immediately associated with the person of the arrestee. A footlocker certainly is not immediately associated with the person and unlike a purse is not carried with a person at all times. Too, and importantly, in Chadwick the justification claimed for the search was that it was incident to the arrest. Here, the search of the defendant and her purse were part of an inventory process at the police station.

In State v. Sabater (1979), 3 Kan. App. 2d 692, 601 P.2d 11, the court held that a woman’s pocketbook is immediately associated with the person and the search of the pocketbook and wallet incident to her arrest was a lawful search. The court rejected the defendant’s contention that the search was improper under Chadwick. The court said: “The custodial arrest of defendant was a seizure of her person. The search of her pocketbook and wallet was lawful. United States v. Robinson (1973), 414 U.S. 218, 38 L. Ed. 2d 427, 94 S. Ct. 467. We do not view defendant’s pocketbook to have been a repository of personal property coming within the rule enunciated in Chadwick ***. We hold defendant’s pocketbook was immediately associated with the person of defendant, the arrestee, and the search of the pocketbook involved no greater reduction in her expectations of privacy than that caused by the arrest itself. Accord, Dawson v. State, 40 Md. App. 640, 395 A.2d 160, 164-67 (1978).” (3 Kan. App. 2d 692, 694, 601 P.2d 11, 13-14.) LaFave observes that in Dawson v. State the court adopted the reasoning of United States v. Berry (7th Cir. 1977), 560 F.2d 861. (2 W. LaFave, Search and Seizure sec. 5.5 (1978).) Other decisions upholding searches of purses even on incident-to-arrest grounds (as opposed to the inventory basis) include Daigger v. State (1980), 268 Ark. 249, 595 S.W.2d 653, and Sumlin v. State (1979), 266 Ark. 697, 587 S.W.2d 571.

The majority’s citation of People v. Bayles (1980), 82 Ill. 2d 128, and People v. Hamilton (1979), 74 Ill. 2d 457, simply misses the mark. What the appellate court in People v. Keath (1981), 101 Ill. App. 3d 652, 660, said of these decisions is particularly applicable here:

“Suffice to say that search in each case was not associated with searches of the person upon custodial arrest, or incident to booking for purposes of custodial detention. Those cases [Hamilton, Bayles] were concerned solely with the inventory of baggage obtained following motor accidents.”

In Keath the court, after an impressively reasoned discussion of the search question, held that drugs, found in a key case and cellophane bag in the defendant’s pockets during a routine inventory search at the jail, where the defendant’s property was to be stored in a locker, were admissible in evidence.

Though the record is not revealing in this regard, it is not inappropriate to observe that the case here may be of the sad type in which police are called by a friend or relative for the protection and welfare of the defendant. The defendant’s former husband complained to the police that the defendant had struck him with her fist. That the police would go to the defendant’s home at three o’clock in the morning and take her into custody would be remarkable if it were not for the purpose of seeking to protect the defendant possibly from the drugs she apparently routinely carried with her.

I respectfully submit that the majority has misapprehended and erred.

UNDERWOOD and MORAN, jj., join in this dissent.