author: JUSTICE UNVERZAGT

text:
    KELSO-BURNETT CO., Plaintiff-Appellee, v. ZEUS DEVELOPMENT CORPORATION et al., Defendants-Appellants.
    Second District
    No. 81-759
    Opinion filed June 17, 1982.

      Fischel and Kahn, of Chicago (David W. Inlander, Norman A. Shubert, and Terrie A. Rymer, of counsel), for appellants.
    Brian J. Mulhem, of Gorham, Metge, Bowman and Hourigan, of Chicago, for appellee.
   JUSTICE UNVERZAGT

delivered the opinion of the court:

This is an interlocutory appeal from an order of the trial court denying a motion to stay proceedings and to compel arbitration.

On October 17, 1978, plaintiff, Kelso-Burnett Co. (hereinafter “Kelso”), entered into a subcontract with the general contractor of the Briar-wood Lakes project in Oak Brook, defendant Zeus Development Corporation (hereinafter “Zeus”), wherein Kelso agreed to perform electrical work for the project. The contract included an arbitration clause which provided that:

“Unless otherwise agreed, all claims, disputes, and other matters in question arising out of, or relating to, this sub-contract agreement or a default hereunder shall be arbitrated in mode and manner as set forth in Paragraph 7.10 of the latest edition of General Conditions of Contracts for Construction, AIA document A-201.11.”

Notwithstanding that provision, when a dispute arose which resulted in Zeus’ termination of the contract upon Kelso’s default pursuant to another provision of the contract, Kelso filed a three-count suit on March 23,1981; two counts to foreclose its mechanics’ lien against Zeus and other defendants alleged to have an interest in the property, and a separate count for breach of contract against only Zeus. The other parties named in the lien counts were the record titleholder and its beneficiary, the mortgagee, and other subcontractors who had recorded claims against the property.

Kelso’s complaint alleged, inter alia, that it performed electrical work pursuant to its contract with Zeus during the period October 1978 through July 1980; that invoices submitted to Zeus throughout much of 1979 and through June 1980 remain unpaid and that Zeus had not made any specific objections or disputed the correctness of any unit price or invoice for the work covered by the invoices; that Zeus had induced Kelso to submit certain final waivers of lien and waivers of lien to date on the express condition that it would immediately pay Kelso the full amounts due as represented by the waivers upon receipt of funds from its financing sources; and, further, that such payments were not made. Prior to filing of the complaint for foreclosure, and following unsuccessful attempts to resolve their differences, Zeus had notified Kelso that it was regarded as being in default of the contract. Kelso was allowed two days to cure the default and, upon Kelso’s failure to cure, was notified by Zeus that the agreement was terminated. Kelso thereafter filed its complaint to foreclose.

Zeus responded to the complaint with a motion for stay of proceedings and to compel arbitration in accordance with the contract. Prior to the trial court’s decision on that motion another defendant, J. P. Baron, Inc., the carpentry subcontractor of the project, was granted leave to intervene to seek adjudication of its lien claim arising out of the work it performed on the Briarwood Lakes project and was granted leave to file an amended counterclaim naming additional party defendants. Moser Lumber, Inc., Baron’s material supplier, filed its answer in the form of a general denial; the other defendants either failed to appear or failed to answer by the time this interlocutory appeal was commenced. The circuit court of Du Page County denied Zeus’ motion to certify the issue for appeal and ordered the defendants to answer or otherwise plead. Zeus timely filed its notice of interlocutory appeal.

The sole issue presented by this appeal is whether the trial court erred in denying Zeus’ motion to compel arbitration and to stay the lawsuit pending completion of arbitration.

Despite the trial court’s refusal to certify the question for appeal, this court nevertheless has jurisdiction to consider this interlocutory appeal pursuant to Supreme Court Rule 307(a) (73 Ill. 2d R. 307(a)), because the trial court’s order denying the requested relief is analogous to the denial of an injunction. School District No. 46 v. Del Bianco (1966), 68 Ill. App. 2d 145.

Sections 2(a) and (d) of “An Act relating to arbitration * * *” (hereafter “Arbitration Act”) (Ill. Rev. Stat. 1979, ch. 10, pars. 102(a) and 102(d)) provide that:

“(a) On application of a party showing an agreement described in Section 1, and the opposing party’s refusal to arbitrate, the court shall order the parties to proceed with arbitration, but if the opposing party denies the existence of the agreement to arbitrate, the court shall proceed summarily to the determination of the issue so raised and shall order arbitration if found for the moving party, otherwise, the application shall be denied.
(d) Any action or proceeding involving an issue subject to arbitration shall be stayed if an order for arbitration or an application therefor has been made under this Section or, if the issue is severable, the stay may be with respect thereto only. When the application is made in such action or proceeding, the order for arbitration shall include such stay.”

Section 1 of the Arbitration Act referred to above provides as follows:

“Validity of arbitration agreement. A written agreement to submit any existing controversy to arbitration or a provision in a written contract to submit to arbitration any controversy thereafter arising between the parties is valid, enforceable and irrevocable save upon such grounds as exist for the revocation of any contract * * Ill. Rev. Stat. 1979, ch. 10, par. 101.

Zeus first argues that the sole issue before a court ruling on a motion to compel arbitration and to stay proceedings is whether there is an agreement to arbitrate, citing School District No. 46 v. Del Bianco (1966), 68 Ill. App. 2d 145, Farris v. Hedgepeth (1978), 58 Ill. App. 3d 1040, and Bunge Corp. v. Williams (1977), 45 Ill. App. 3d 359. Zeus argues that because the contract between itself and Kelso clearly established they had an agreement to arbitrate, the statute dictates that the trial court “shall” order arbitration. Zeus asserts that once a valid arbitration agreement is established, a court does not have discretion in enforcing arbitration, citing Iser Electric Co. v. Fossier Builders, Ltd. (1980), 84 Ill. App. 3d 161. Further, Zeus asserts, the arbitration agreement must be enforced even though both parties may be parties to a multiparty lawsuit involving the same questions of liability on the same work. Galt v. Libbey-Owens-Ford Glass Co. (7th Cir. 1967), 376 F.2d 711.

Kelso counters that the ruling in J. F. Inc. v. Vicik (1981), 99 Ill. App. 3d 815, establishes that there are factual situations where enforcement of an arbitration agreement would only serve to violate and contravene the very policies under which arbitration is favored. Consequently, Kelso argues, the trial court is not mandated to order arbitration if there is a valid arbitration agreement, but may look to other factors and balance conflicting policies. Kelso contends that Iser Electric Co. v. Fossier Builders, Ltd. (1980), 84 Ill. App. 3d 161, impliedly recognized that the policy considerations favoring arbitration may have to yield to the policy considerations favoring joinder of claims and judicial economy where the claims of multiple parties are more intermingled and dependent than those involved in the Iser case. (84 Ill. App. 3d 161.) Kelso argues that a stay of proceedings pending arbitration between itself and Zeus would cause a substantial impairment of its mechanics’ lien rights since the trial court could not stay the proceedings pending arbitration as to the other lien claimants, or even as between Kelso and Zeus as an owner of the property, rather than as the general contractor. Kelso contends if arbitration were ordered, it would be compelled to proceed in two forums at the same time — in the arbitration forum with Zeus as the general contractor and in the judicial forum with Zeus as the owner of the property. Kelso posits that when an arbitration agreement involves some, but not all, of the parties to multiparty litigation, the policies favoring arbitration must be balanced against the policies favoring joinder of claims, citing J. F. Inc. v. Vicik (1981), 99 Ill. App. 3d 815, and two cases relied upon therein, County of Jefferson v. Barton-Doughs Contractors, Inc. (Iowa 1979), 282 N.W.2d 155, and Prestressed Concrete, Inc. v. Adolfson & Peterson, Inc. (1976), 308 Minn. 20, 240 N.W.2d 551. Kelso contends that when arbitration would increase rather than decrease delay, complexity and cost it should not receive favored treatment. Kelso argues further that its allegations of Zeus’ fraudulent inducement in obtaining waivers of lien in violation of section 21.01 of “An Act relating to contractors’ and material men’s liens, known as mechanics’ liens” (Ill. Rev. Stat. 1979, ch. 82, par. 1 et seq.) (hereinafter “Mechanics’ Liens Act”), and that its request for exemplary damages under the contract for that fraudulent conduct is not awardable in arbitration, citing generally Garrity v. Lyle Stuart, Inc. (1976), 40 N.Y.2d 354, 353 N.E.2d 793. Lastly, Kelso argues that Zeus should be estopped by its prior conduct from raising the arbitration provisions since it raised no question of claim or dispute during the period of time between the beginning of Kelso’s performance and the filing of its mechanics’ lien.

Zeus replies that Kelso will not be prejudiced in its mechanics’ lien by proceeding to arbitration first, since even if the arbitrators proceed to an award the making of the award does not destroy the lien nor prevent the plaintiff enforcing it for a larger amount than the amount of the award. (Sorg v. Crandall (1908), 233 Ill. 79, 99.) Zeus posits that when one party to an arbitration agreement raises that agreement as a bar to foreclosure proceedings, the court should stay proceedings but retain jurisdiction for the purpose of enforcing any award made by the arbitrators by foreclosure of the lien. This approach evidences an acknowledgement that the remedy provided by the Mechanics’ Liens Act is merely cumulative of the contractor’s common law remedies, which remedies may be pursued concurrently or successively until satisfaction of the claim is obtained through one of them. West v. Flemming (1857), 18 Ill. 248.

Zeus points out Kelso’s argument that the allegedly fraudulent inducement of Kelso to submit waivers of lien constitutes a cause of action in tort (and, therefore, a nonarbitrable issue) is incorrect. Section 21.01 of the Mechanics’ Liens Act makes that fraudulent act punishable as a Class A misdemeanor enforceable by the State’s Attorney. Zeus challenges Kelso’s assertion that the only question to be resolved is when it would be paid, rather than how much, pointing to letters in the record from Zeus to Kelso indicating Kelso either omitted or improperly completed electrical work in various units throughout the project. Further, Zeus counters its conduct in no way would support a finding that it should be estopped from seeking arbitration since it filed its motion to compel arbitration and to stay the proceedings immediately after Kelso filed suit to foreclose. Until that time Zeus had no reason to seek specific enforcement of the arbitration agreement. Zeus points out that its failure to seek arbitration as to its dispute arising out of the same project with J. P. Baron, Inc., has no bearing on the instant cause since Baron and Zeus mutually agreed to waive their right to arbitration when they proceeded to litigate in the judicial forum. Zeus further contraverts Kelso’s reliance on J. F. Inc. v. Vicik (1981), 99 Ill. App. 3d 815, charging that Kelso has created the appearance of a multiplicity problem when there is none. Zeus points out there is really only one other claim besides that of Kelso’s, that of J. P. Baron, Inc., the carpentry subcontractor and its material supplier, Moser Lumber, Inc. Further, the validity of Baron’s and Kelso’s claims is not dependent on the outcome of the other. In sum, Zeus’ steadfast position is that once a valid arbitration agreement is established the court has no discretion in the matter; it must enforce arbitration.

In our opinion, Zeus’ argument represents an accurate statement of the law. There are two basic considerations in this case. First, under section 2(a) of the Arbitration Act, when a party seeks to compel arbitration and shows there is an agreement between the parties to arbitrate the issue, the court “shall” order arbitration. If the existence of the agreement is denied by the party opposing arbitration, the court must summarily proceed to determine whether or not an agreement exists. If an agreement does exist, arbitration shall be ordered. Second, under section 2(d) of the Arbitration Act, any action or proceeding involving an issue subject to arbitration shall be stayed if the arbitration has been ordered or applied for, or, if the issue is severable, the stay may be with respect to that arbitrable issue only. As to the first consideration, the court has no discretion; as to the second, it does.

Although the use of the word “shall” in a statute is generally regarded as mandatory, it does not have a fixed, inflexible meaning and can, in fact, be construed as meaning “may” depending on legislative intent. (People ex rel. Larson v. Rosewell (1980), 88 Ill. App. 3d 272.) In this regard, the legislative intent is relatively clear. At common law, executory arbitration agreements generally were revocable at any time. (County of Jefferson v. Barton-Douglas Contractors, Inc. (Iowa 1979), 282 N.W.2d 155.) Section 1 of the Arbitration Act abrogates that common law rule by making written agreements to arbitrate existing or future controversies valid, enforceable and irrevocable except upon such grounds as exist for the revocation of any contract. By the same token, it is well established that parties are only bound to submit to arbitration those issues which by clear language they have agreed to arbitrate and that such agreements will not be extended by construction or implication. (Flood v. Country Mutual Insurance Co. (1968), 41 Ill. 2d 91.) The issue of whether a dispute is within the scope of an arbitration clause should be determined early and be controlled by judicial guidelines. Farris v. Hedgepeth (1978), 58 Ill. App. 3d 1040.

In resisting arbitration, one of Kelso’s arguments is that there was actually no arbitrable dispute regarding any of the terms and conditions of the contract for the work performed. Kelso states the only dispute was when it was to be paid, since Zeus failed to pay the full amount represented by the allegedly fraudulently obtained waivers of lien which were conditionally submitted by Kelso upon Zeus’ allegedly express promises to pay after it received payment from the project financers or purchasers. A review of the contract indicates, however, that the issue of when payment was to be made is arbitrable since it arises out of or relates to the contract. Paragraph 10 of the contract requires all requests for payment to be accompanied by waivers of lien, and paragraph 22 indicates these requests for payment were to be submitted “on or about the 27th day of each month for all work which has been properly performed by it as of the end of the preceding calendar month.” Lines left open in paragraph 22 for the purpose of filling in information relating to when Zeus would make payments requested were purposefully filled in with dashes and, had they been filled in, would have been subject to the condition that “in no event shall such payment be due until contractor has received payment for the same from owner, and all unsound, improper or rejected work has been made good by the sub-contractor.”

According to correspondence in the record, after Kelso recorded its lien, but prior to the filing of the foreclosure suit, Zeus requested completion and/or correction of the electrical work in various units. Another letter approximately 2½ months later notified Kelso it had 48 hours to cure the defects in its performance. A letter from Zeus two days later to Kelso terminated the contract.

Certainly, the matter of when Kelso was to be paid was a matter “arising out of or relating to the contract” since by the terms of the contract no payment was due Kelso until (1) the money had been received from the owner, and (2) all unsound, improper or rejected work had been corrected. Thus, the parties agreed to arbitrate the issue and the trial court erred by not specifically enforcing the agreement as contemplated and mandated by sections 1 and 2 of the Arbitration Act.

Once the issue has been determined to be arbitrable and arbitration duly ordered, the court’s discretion comes into play. As noted in Galt v. Libbey-Owens-Ford Glass Co. (7th Cir. 1967), 376 F.2d 711, section 2(d) of the Arbitration Act shows that the legislature contemplated multiplicity of actions. Consequently, that section of the Arbitration Act has provided the court with discretion to choose one of two options: it may stay the entire proceeding pending arbitration, or, if the arbitrable issue is sever-able, the stay may be with respect thereto only. These two options are also open to a court in the exercise of its discretion under section 2(d) where the arbitrable and nonarbitrable issues, although severable, are also interrelated in terms of a complete resolution of the cause between the parties. Farris v. Hedgepeth (1978), 58 Ill. App. 3d 1040.

The general rule, of course, is that absent an abuse of the court’s discretion, its decision will not be reversed. Section 2(d) of the Arbitration Act requires that “such stay” (as to either the entire proceedings or only the arbitrable issue) shall be included in the order for arbitration. In the instant cause, the court failed to decide the predicate question — whether there was an agreement to arbitrate the issue, thus mandating arbitration — and proceeded instead directly to a determination that ““ * * to compel arbitration and to stay these proceedings could very well result in a substantial impairment to the rights under the Mechanic [sic] Lien Act.” Setting aside for the moment the court’s initial error in failing to compel arbitration, we observe that the only question brought before a reviewing court in an interlocutory appeal is whether there was a sufficient showing to sustain the order of the trial court granting or denying the relief sought. (See S & F Corp. v. American Express Co. (1978), 60 Ill. App. 3d 824, 828; Ording v. Springer (1980), 88 Ill. App. 3d 243, 246.) Kelso strenuously argues there was a showing sufficient to sustain the court’s order denying Zeus’ motion to stay the foreclosure proceedings, and that J. F. Inc. v. Vicik (1981), 99 Ill. App. 3d 815, is precedential in that regard.

In that case, the Viciks employed J. F. Incorporated to construct a house for them. The contract contained a general arbitration clause. A dispute arose between the parties, and while the owners and the general contractor were negotiating, four firms (some subcontractors and some materialmen) demanded foreclosure of their mechanics’ liens, some of which demands had been made in original suits and others by way of counterclaim in pending suits. The general contractor demanded arbitration with the owners pursuant to their contract. The owners moved to consolidate the foreclosure suits and sought to enjoin arbitration. The owners’ motions were initially granted and they were later reversed and the matter certified for appeal. On appeal, the owners took the same position that Kelso has here — that the court may refuse to compel arbitration that involves some but not all of the parties to multiparty litigation. The general contractor advanced essentially the same argument that Zeus does here — that arbitration may be enjoined only upon a showing there is no agreement to arbitrate.

The Vicik court considered the general rule established in Iser Electric Co. v. Fossier Builders, Ltd. (1980), 84 Ill. App. 3d 161, that agreements to arbitrate will be enforced despite pending multiparty litigation. The Vicik court considered, however, that an exception to the Iser rule was impliedly recognized therein when the issues and relationships among the parties to the multiparty litigation are closely intermingled and dependent. In such instances, the Vicik court determined that the policy favoring arbitration must be weighed against the policy favoring joinder of claims, and that where arbitration would increase rather than decrease delays, complexity, and costs it should not receive favored treatment. The Vicik court recognized the necessity for a showing that the issues and relationships of the multi-parties are closely intermingled and took particular note of the fact that neither of the parties to the arbitration agreement had caused the multiplicity problem.

The instant case is distinguishable in these last two regards. Kelso instituted the foreclosure action which by its nature required joinder of all interested parties as defendants. (Ill. Rev. Stat. 1979, ch. 82, par. 9.) Kelso itself thereby created what appears to be a multiplicity problem. Further, the record does not show that the issues and relationships are so intermingled and dependent as to negative the policy favoring arbitration. As noted by Zeus, the only other claim involved in the instant foreclosure suit is that between Zeus and J. P. Baron, Inc., and its materialman, Moser Lumber, Inc., which same claim is also the subject of a prior-filed lawsuit. Baron’s claim against Zeus is not subsidiary to Kelso’s claim against Zeus. Additionally, the plaintiff’s claim for foreclosure may be obviated by the outcome of the arbitration, thus furthering the policy which favors the resolution of disputes outside the judicial forum.

Without considering whether J. F. Inc. v. Vicik (1981), 99 Ill. App. 3d 815, correctly decided that arbitration may be enjoined in the court’s discretion for reasons other than the absence of an agreement to arbitrate, the circumstances presented in that case are not present here, and we find there was not a sufficient showing below which would sustain the court’s order denying Zeus’ motion to stay the foreclosure pending arbitration. We conclude, therefore, that the cause must be reversed and remanded with directions that the parties proceed to arbitration, and that the foreclosure suit be stayed pending the outcome thereof.

The judgment of the circuit court of Du Page County is reversed and the cause is remanded with directions.

Reversed and remanded with directions.

LINDBERG and REINHARD, JJ., concur.


source: Caselaw Access Project

license: Public Domain

text:
    THE PEOPLE OF THE STATE OF ILLINOIS, Plaintiff-Appellee, v. GEORGE RODRIGUEZ, Defendant-Appellant.
    Second District
    No. 81-31
    Opinion filed May 18, 1982.
    Modified opinion filed on denial of rehearing, July 21,1982.

      Mary Robinson and Joel Tiebloom, both of State Appellate Defender’s Office, of Elgin, for appellant.
    J. Jordan Gallagher, State’s Attorney, of Sycamore (Phyllis J. Perko and Nancie S. Hudell, both of State’s Attorneys Appellate Service Commission, of counsel), for the People.
   JUSTICE UNVERZAGT

delivered the opinion of the court:

The defendant was charged by information with two counts of forgery (Ill. Rev. Stat. 1979, ch. 38, par. 17 — 3(a)(3)). The information specified the forged checks as being Nos. 1527 and 1528 purported to be made by Chicago South Sales Company and drawn on the Bank of Hickory Hills in the amounts of $277.33 and $259.03, respectively. The defendant was convicted by a jury and sentenced to three years’ imprisonment by the circuit court of De Kalb County.

Before the commencement of the trial, defense counsel made a motion in limine to exclude evidence of “other transactions by the defendant with respect to the depositing or negotiation of other checks or money orders, other than the ones specifically mentioned in the information herein.” The defense also moved to suppress a statement given to the police by the defendant. Both motions were denied by the trial judge. The defendant recorded a continuing objection to the use of such evidence of extra-indictment forgeries.

The State’s first witness, Janice Herrmann, bank teller at the Sycamore Road Drive-Up facility of the De Kalb Bank, testified that on June 17,1980, defendant presented two checks — Nos. 1527 and 1528 — made by Chicago South Sales Company and drawn on the Bank of Hickory Hills. He asked that $50 be deposited in his account and the rest of the proceeds given to him in cash. Upon checking his balance, the witness testified, she found it to be very low, about $10, and after conferring with her supervisor she declined to cash the checks, advising Rodriguez that the checks would have to be left for deposit until cleared. She testified that he asked to have the checks back and said he would go somewhere else to cash them. Herrmann, becoming suspicious, wrote down the names of the payees, and the numbers of the checks before returning them to the defendant. As the defendant drove away, she noticed the license number of his car and gave this information to the police. Herrmann testified she had seen the defendant previously at the bank as a customer and if his balance had been sufficient, she would have cashed the checks.

The next witness was Ray Christian, owner of Chicago South Sales Company. He testified that his business, located at 6958 Archer Avenue, in Chicago, had been burglarized on June 4,1980, and a fire had been set to cover the burglary. He found on inspection that several items were missing, including blank checks in the 1300 through 1500 series. He notified the bank to stop payment on these checks. Christian identified checks Nos. 1527 and 1528 as being among those stolen and that the maker’s signatures on the checks were unauthorized. Check No. 1527 was payable to Juanita Rodriguez, check No. 1528 was payable to Reyes Rodriguez, both unknown to Christian. A third check of Chicago South Sales Company, No. 1339, was also introduced into evidence. This check was payable to Ray Rodriguez and had been cashed by the De Kalb Bank. Check No. 1337 of Chicago South Sales Company, payable to Ramon Gaona, was also identified by a De Kalb Bank teller as having been cashed by that bank. Both checks were endorsed by the defendant. Both the payee and the person signing the checks were unknown to Christian.

The State’s next witness was De Kalb detective James Kayes. He testified he investigated the attempted cashing of checks Nos. 1527 and 1528 at the De Kalb Bank and in this connection questioned the defendant at his home on June 17. He said the defendant told him he had been asked by his sister-in-law, Juanita, to try to cash these checks for her; that he had attempted to do so in company with his brother, Felix, but had been told that he would have to leave the checks to be cleared, which he refused to do. Detective Kayes did not arrest the defendant on that occasion. He did inform the defendant that he was investigating the attempted cashing of the checks because he had learned that these checks were among a batch of checks which had been stolen in a burglary and payment had been stopped on them. The next day, in company with Detective Jack Garvey, he again questioned the defendant. He said the defendant told him that he and his brother had tried to cash the checks at the De Kalb Bank and after being turned down they tried to cash the checks at another drive-in facility but were again told that they would have to wait for the checks to clear. After that, they went to another bank in Sycamore and were again told that they would have to wait for the checks to clear. Detective Kayes testified that the defendant said that when his brother handed him the checks and asked him to cash them, that his brother had said the checks were the proceeds of an insurance settlement. Afterward, he said, when the defendant returned the checks to his brother, Juan, that Juan told him that he had gotten the checks in exchange for a vehicle he had sold in Chicago. Kayes testified that the defendant told him he had asked Juan whether the checks were stolen. A statement incorporating these facts and signed by the defendant was identified by Kayes as having been given by the defendant to him at the De Kalb police station.

Kayes went on to testify that on June 24 he had a further conversation with the defendant at the De Kalb police station. This was with reference to checks Nos. 1337 and 1339, also of Chicago South Sales Company. At that time, the defendant told him that he had been at his brother Felix’ house when a Mexican who was a stranger to him came to the house and asked for George (the defendant). Upon being told that he was George, the Mexican told him that he was having difficulty getting some checks cashed as he had no identification because he was an illegal alien. He asked the defendant to help him cash the checks and the defendant took the checks to the De Kalb Bank and cashed them and gave the Mexican the proceeds, receiving $5 from him.

The prosecutor then asked Detective Kayes if he had any further conversation with the defendant, to which Kayes replied that on June 30 he had talked to the defendant about another check, a cashier’s check drawn on the Continental Bank in Chicago made by Noma World Wide Company. This was another check which had been returned for debit to the defendant’s account since payment had been stopped. Kayes related that the defendant had told him that he had been in a tavern with a friend and there had met a Mexican who asked him if he would help to get a check cashed because he was an illegal alien and had no identification. The defendant, Kayes testified, said that he had agreed to do so. He took the check to the De Kalb drive-up facility and cashed it and returned the proceeds to the Mexican stranger, who gave him $10. The check, endorsed by the defendant, was admitted into evidence.

On cross-examination, defense counsel asked Kayes if he had any knowledge or any evidence in his possession indicating the defendant knew the checks he had negotiated were stolen. Kayes answered, “Yes, the fact that he was involved in the cashing of eight stolen checks in the month of June this year.” Upon further questioning, Kayes conceded he had no other knowledge indicating that the defendant had known the checks were stolen.

Francisco Moreno, a Chicago resident, also testified through an interpreter about the Noma World Wide check. He said that his apartment in Chicago had been burglarized during the first week in June and that a pay check of Noma World Wide payable to him which he had endorsed was stolen in the burglary. Other items taken in the burglary were described which the victim had never recovered. The assistant cashier of the De Kalb Bank also testified that the Noma World Wide check had been cashed by that bank and that since payment had been stopped by the maker bank, the De Kalb Bank was out the amount of the check.

Miguel Rivero, resident of Chicago, testified next. He said that an Illinois unemployment compensation check had been stolen when his mail box was rifled sometime in May and that he had reported this to the State unemployment office. The unemployment compensation check was introduced into evidence, and Rivero testified it was apparently the same check intended for him and that he had never received it. He said the endorsement thereon was a forgery. He was eventually reimbursed for the stolen check.

Ross Roland, owner of an establishment known as the “Pizza Wheel,” testified that he cashed the Miguel Rivero check after it had been endorsed by the defendant. Roland said the defendant came into the Pizza Wheel with a Mexican Roland did not know. Roland was acquainted with the defendant as a customer. The defendant asked him to cash the check and he said he would if the defendant would “co-sign” it, whereupon the defendant endorsed the check and he cashed it. The check was returned to Roland as a stolen or forged check, and he was out the amount of the check.

Detective Jack Garvey also testified in some detail as to his conversation with the defendant regarding the circumstances surrounding the check cashed at Pizza Wheel. He said the defendant told him he was helping a friend in De Kalb who was moving when a Mexican came up to him and asked if he knew where he could cash a check, that the defendant told him it could possibly be cashed at the Pizza Wheel and, because this Mexican did not have any identification, the defendant went with him to the Pizza Wheel where he was known. He “endorsed” the check at the owner’s request and the Mexican gave him $20 for helping him out.

Nancy Rodriguez, the defendant’s wife, testified for the defense that the defendant understood simple English, but could not write it. He read English with difficulty. She testified that defendant often helped out his relatives and friends who understood less English than he did. She was aware that he had often assisted Spanish-speaking people to cash checks.

During the jury’s deliberations, it sent a note to the trial judge reading:

“The jury would like to know if portions of the transcript of the trial can be viewed by the jury. Specifically, Detective Garvey’s testimony.”

There is no record of any consultation between the judge and counsel. The judge replied, “Transcripts not available. Jurors must rely on their collective memories.” The jury thereafter returned a verdict of guilty.

In this appeal, the defendant raises two issues: (1) that the defendant was denied a fair trial by the prosecutor’s introduction of detailed documentary and testimonial evidence regarding check forgeries that the defendant was not charged with in the information, and (2) the trial judge’s mistaken belief that he lacked discretion to allow the jury to review the testimony upon its request constituted reversible error.

The defendant contends that the evidence of other check forgeries introduced at the trial by the State was both quantitatively and qualitatively excessive and had a cumulative and prejudicial effect on the jury outweighing its probative value. The defendant had made a continuing objection to the admission of evidence of other crimes or offenses following the denial of his motion in limine to exclude such evidence.

The State replies that while evidence of extra-indictment offenses is generally inadmissible such evidence can be received where it goes to show notice, guilty knowledge, intent, identity, absence of mistake or modus operandi. (People v. McDonald (1975), 62 Ill. 2d 448.) However, even where factors are present which justify admitting evidence of other offenses, such evidence must be rejected where its prejudicial effect clearly outweighs its probative value. (People v. Olson (1981), 96 Ill. App. 3d 193; People v. Funches (1978), 59 Ill. App. 3d 71.) There can be no question that the forgeries of other checks of the Chicago South Sales Company — Nos. 1337 and 1339 — were properly brought into evidence here. These checks were part of the batch of checks stolen in the burglary in which checks Nos. 1527 and 1528 — the checks specified in the information — were stolen. Since all four checks were involved in the same burglary incident and the forgeries of checks Nos. 1337 and 1339 had probative value in connection with the forgeries of checks Nos. 1527 and 1528 as they related to the question of knowledge and intent, these checks come within the exception to the general rule.

Even conceding, however, that the two Chicago South Sales checks not mentioned in the complaint had sufficient connection with the checks described in the complaint, we think the testimony and exhibits with regard to the Noma World Wide check and the Illinois Unemployment check had prejudicial effect, beyond their probative value. Six witnesses, Moreno, Rivero, the assistant cashier of the De Kalb Bank, Ross Roland, owner of the Pizza Wheel, and the two detectives, Kayes and Garvey, testified about these checks and several exhibits were introduced regarding them. The checks were payable to persons with Spanish surnames. The possession of either of these checks by a Mexican alien, as defendant claimed these persons represented themselves to be, was not by any means so unlikely as to imply the defendant’s guilty knowledge as to the origin of the checks. The testimony given by Ross Roland as to the unemployment compensation check was, under the circumstances, not at all probative of the defendant’s guilty knowledge about the check he endorsed at Roland’s request. Combined with the testimony of Miguel Rivero, the testimony of the assistant cashier, and the evidence given by the two detectives, Kayes and Garvey, as well as the exhibits, the effect was more prejudicial than probative on the issue of the defendant’s knowledge about the checks he was charged with forging. The State in oral argument conceded that the circumstances of these extra-indictment checks were not such as to establish a modus operandi and, as noted above, justified the admission of such evidence as being necessary to establish the defendant’s knowledge and intent. We reject the argument that the evidence as to the other checks was necessary to refute the defendant’s defense that he had no knowledge that the checks were stolen at the time he endorsed them. The Noma World Wide check and the unemployment compensation check had no intrinsic probative value on the question of the defendant’s guilty knowledge as to the background of the checks described in the complaint and the testimony of six different witnesses about these checks tended to create a prejudicial inference by repetition.

The State invokes the cases of People v. Clark (1968), 104 Ill. App. 2d 12, People v. Toellen (1978), 66 Ill. App. 3d 967, and People v. Mertens (1979), 77 Ill. App. 3d 791. Both sides cite this court’s decisions in People v. Funches (1978), 59 Ill. App. 3d 71, and People v. Olson (1981), 96 Ill. App. 3d 193, noted above. In People v. Clark (1968), 104 Ill. App. 2d 12, the defendant and his companion stole about 30 checks from one source. The evidence showed that they then went to several places to procure fake identity evidence. Using this spurious identity information, the defendant endorsed another person’s name and attempted to cash a check. The check was not accepted and the defendant did not receive the proceeds. While the check was not one covered by the indictment, it was obviously a part and parcel of the same crime the defendant was being tried for and the evidence of the attempt to cash the check in question under an assumed name was part of the defendant’s modus operandi and justifiably admitted as evidence in the case. That case is not apropos to the one considered here. In this case, the defendant used his own identity, and neither the checks in question nor the circumstances of the negotiation had any connection with the charged offenses. People v. Toellen (1978), 66 Ill. App. 3d 967, is not in point. In that case, the evidence of other crimes was not admitted by the trial court and the State relies on dicta in the case to the effect that evidence of other crimes could properly have been admitted in the trial, since it tended to establish the defendant’s modus operandi. As we noted above, the State in the case at bar conceded that there was not sufficient similarity in the circumstances of the extra-indictment offenses to those surrounding the forgeries noted in the information to justify the challenged evidence on the ground of the modus operandi exception. Nor, in our opinion, is People v. Mertens (1979), 77 Ill. App. 3d 791, pertinent here. That case was an indictment for possession of stolen goods. The issue was whether the defendant knew the property was stolen. All the property in question was in one house in the possession and control of the defendants. The amount of such property was so great that it was found by the court to be probative as to the defendants’ knowledge and intent. The sheer volume of the stolen property in the defendants’ possession was a probative fact in that case. We do not regard Mertens as apposite to the case at hand.

In the instant case, the evidence uncovered by the police indicated that the Chicago South Sales checks had been stolen by a member of a Chicago gang in a burglary and passed to the defendant’s brother — who did not live with the defendant — in a transaction in Chicago which he said involved an automobile. The Noma World Wide check was apparently stolen by an individual burglar. It was payable to a Mexican payee and was passed off by a Mexican posing as an illegal alien whom the defendant met in a local bar. The Illinois unemployment check was stolen from an entirely different location in Chicago and was also payable to a person with a Mexican name and was likewise presented to the defendant by a person posing as a Mexican alien and was cashed at a pizza restaurant as a favor to the defendant who was a customer of the owner of the restaurant. These diverse circumstances can by no means be likened in their probative effect to the overwhelming inference created by the 400 stolen items found in the possession of the defendants in People v. Mertens (1979), 77 Ill. App. 3d 791.

As in People v. Funches (1978), 59 Ill. App. 3d 71, the issue here is not whether there was too much evidence, but whether there was too much nonprobative evidence, thus befogging the charges on which the defendant was actually being tried, with testimony having a cumulative effect which may have turned inference into evidence in the minds of the jurors.

We think the evidence of other conduct suggesting forgery exceeds the permissible bounds in this case. The State asserts that a question of defendant’s intent was raised by his statement to the police that he did not know the checks were stolen until they were rejected by the drawee banks. However, the defendant did not testify at the trial and no such evidence was necessary for impeachment purposes. The Noma World Wide and the Illinois unemployment checks in no way clarified or confirmed the defendant’s intent or guilty knowledge in regard to the Chicago South Sales checks. The detailed testimony of other witnesses, Moreno, Rivero and Roland, about these checks, merely served to raise an inference as to the defendant’s propensity to negotiate stolen checks — a purpose not permissible.

Because we think the issue of the defendant’s guilt as to the charged offenses was obscured by the evidence of other crimes, we reverse the defendant’s conviction and grant a new trial.

We do not find it necessary to reach the second issue posed by the defendant with regard to the trial court’s refusal to answer the jury’s note to it requesting a transcript of certain evidence. We do not anticipate that this same issue will arise again at a new trial.

The judgment of the circuit court of De Kalb County is reversed and the cause remanded for a new trial consistent with the views expressed herein.

Judgment reversed; remanded for new trial.

REINHARD and VAN DEUSEN, JJ., concur.


author: PRESIDING JUSTICE BARRY JUSTICE HEIPLE,

text:
    THE PEOPLE OF THE STATE OF ILLINOIS, Plaintiff-Appellee, v. ROBERT J. GORSAGE, Defendant-Appellant.
    Third District
    No. 81-467
    Opinion filed May 26, 1982.
    HEIPLE, J., specially concurring.

      Robert Agostinelli and Charles W. Hoffman, both of State Appellate Defender’s Office, of Ottawa, for appellant.
    Thomas J. Homer, State’s Attorney, of Lewistown (John X. Breslin and Rita Kennedy Mertel, both of State’s Attorneys Appellate Service Commission, of counsel), for the People.
   PRESIDING JUSTICE BARRY

delivered the opinion of the court:

The defendant was charged by information with the following offenses: robbery; deviate sexual assault; burglary (two counts); home invasion; and criminal damage to property. The State “nolle pressed” the criminal damage charge during trial, and the jury acquitted the defendant of all remaining charges except home invasion. Defendant appeals his conviction of home invasion.

On appeal the defendant advances a single issue in which he complains of remarks of the prosecutor in his closing rebuttal argument, including the following:

“I believe that this Defendant had every reason to believe that he could go in there and do whatever he wanted to Larry Longcor and that there would be no fuss about it.
And Longcor is as you saw him. He is a pathetic individual. He is a sad individual. He is not too bright. He is not too brave. He is not too virile. He is not too courageous. In fact, nature hasn’t been very kind to Larry Longcor at all.
It’s left him basically friendless, vulnerable, and alone. It’s treated him worse than it has a young child who has someone to look out for it or an old person in a nursing home.”

The remainder of the prosecutor’s argument could best be described as repetitious overkill to appeal to the jurors’ sympathies.

Defense counsel failed to register a timely objection during trial, and as a general rule, with respect to allegedly improper comments made during closing argument, such failure constitutes waiver. Nonetheless, as observed in People v. Smith (1977), 52 Ill. App. 3d 583, 588-89, 367 N.E.2d 756, 760, care must be exercised in the application of the waiver rule in these cases, and the allegedly improper comments should be examined in light of the whole record. With these principles in mind, our analysis of the issue presented in the instant case is as follows.

Initially, it should be noted that defense counsel’s written motion for a new trial included the issue of improper prosecutorial remarks during the prosecutor’s closing argument. Counsel on appeal suggests that the post-trial motion thereby preserved the issue for our consideration and trial counsel’s failure to object during the trial might be explained as a matter of tactics because of the likelihood that an objection, especially one advanced during the State’s rebuttal argument, could serve merely to more fully focus the jury’s attention on the improper remarks. While the defendant’s explanation is not without some merit, a close examination of the issue as presented to the trial court in connection with the defendant’s motion for a new trial demonstrates the frailty of the defendant’s substantive argument on appeal. In fact, the defendant’s issue as raised in his post-trial motion and argued to the trial court was framed in general, boilerplate language which did not apprise the trial court of any specific prejudicial remarks.

The defendant’s specific objections to the prosecutor’s rebuttal argument, advanced for the first time on appeal, are waived “unless [the allegedly improper comments] are plainly a material factor in [the defendant’s] conviction and substantially prejudiced [his] right to a fair trial. [Citations.]” People v. Smith (1977), 52 Ill. App. 3d 583, 588, 367 N.E.2d 756, 760.

We have reviewed the entire record in this case and find that the evidence of home invasion was overwhelming. In addition to the victim’s testimony concerning the defendant’s forcible entry into his apartment, physical evidence was introduced clearly demonstrating that the glass in the victim’s front door had been broken from the outside, scattering broken glass on the victim’s living room floor.

Based upon the totality of the evidence presented at trial, we do not find, with respect to the offense of home invasion, that the evidence was closely balanced. While we believe that the prosecutor’s rebuttal argument unnecessarily dwelt upon an appeal to the jurors’ sympathies for the victim, we cannot conclude that such argument, in this case, was either a material factor in the defendant’s conviction of home invasion or that it substantially prejudiced his right to a fair trial. Accordingly, we conclude that the error complained of in this case was waived and the judgment of the trial court is hereby affirmed.

Affirmed.

STOUDER, J., concurs.

JUSTICE HEIPLE,

specially concurring:

Following a jury trial, defendant was convicted of the offense of home invasion. He was sentenced to six years’ imprisonment in the Department of Corrections.

On appeal, defendant raises the single issue that certain remarks of the prosecutor in his rebuttal closing argument were improper.

In short, the defendant waived any alleged error in the prosecutor’s rebuttal comments by failing to object to them during the course of the trial. Moreover, an examination of the record demonstrates that the comments were based on reasonable inferences from the evidence and were, in fact, responsive to defense counsel’s closing argument. Thus, they were invited.

Accordingly, the conviction should be affirmed.


author: PRESIDING JUSTICE BARRY

text:
    NORTHERN TRUST COMPANY, Plaintiff-Appellant and Cross-Appellee, v. W. E. HANING,Defendant-Appellee and Cross-Appellant.
    Third District
    No. 81-433
    Opinion filed June 10, 1982.

      Richard N. Molchan and Timothy L. Bertschy, both of Heyl, Royster, Voelker & Allen, of Peoria, for appellant.
    James Walker, Ltd., of Bloomington, for appellee.
   PRESIDING JUSTICE BARRY

delivered the opinion of the court:

Northern Trust Company appeals from an award of zero dollars damages returned on a verdict in Northern Trust’s favor in an action brought by Northern Trust to recover damages for the wrongful holdover of possession by W. E. Haning, tenant of a farm owned by the estate of John J. O’Neil.

Most of the facts of this case are not in dispute. Northern Trust was engaged by the owners of 320 acres in Tazewell County to manage the farm, and since 1970 or 1971, Northern Trust had leased the farm to W. E. Haning under a crop-share lease. The terms of the last lease provided for the owners and Haning, as the operator, to divide the crop expenses and to share the crop on a 50-50 basis for the year beginning March 1, 1979, and ending February 29, 1980. The lease also provided that it would continue from year-to-year unless either party served a written notice on the other party prior to the first day of September preceding the termination date.

During the summer of 1980, the owners of the O’Neil farm decided to put the farm up for sale, and accordingly Northern Trust gave Haning written notice in August of 1979 that the lease would terminate as of February 29, 1980. Both parties agree that the lease was thereby extinguished.

Northern Trust then negotiated with Haning for an interim operating agreement to insure that the necessary tillage and fertilizing would be performed by Haning in the fall and winter to prepare the ground for the next planting season, and also to insure that Haning would operate the farm during the coming year in the event it was not sold. This agreement contained the following provisions:

“1) Operator will perform fall 1979 tillage and will bear one-half of the cost of fertilizer applied in the fall of 1979;
2) Owner must notify Operator by March 1, 1980 of any pending sale of the farm; if Owner does not notify the Operator by March 1, 1980, Operator will be allowed to operate the property on a crop-share agreement for the 1980 crop year under the same terms as the 1979 lease (dated November 14, 1978 and now terminated);
3) If Owner advises Operator by March 1, 1980 that a farm sale is completed or pending, Operator must cease all operations and yield possession of the farm.
4) In the event the Operator must yield possession, Owner shall reimburse Operator for Operator’s share of fall 1979 fertilizer expenses; Owner shall also be obligated to pay Operator for all tilling operations performed following the fall 1979 harvest at custom rates as established by the Tazewell County Extension Office.”

In February of 1980 the O’Neils notified Northern Trust that a buyer had been obtained, and Max Evans, who was then manager in charge of the O’Neil farm, called Haning on February 11,1980, to tell him about the pending sale. According to Evans, he told Haning that the farm had been sold to a neighbor, that he should send his bills for tillage work and fertilizer to Northern Trust for payment before closing, and that Evans would find out about when Haning’s son would have to give up possession of a house which he occupied on the premises. According to Haning, Evans told him that a buyer might have been found and he would let him know for sure later. Haning also stated that he talked to Ward Freitag sometime after April 1, by which time he knew Freitag had purchased the farm. At that time Freitag asked Haning if he could put tile around the perimeter of the farm in order to improve drainage, and Haning gave his consent.

In the meantime, on March 10, 1980, Northern Trust sent defendant Haning a letter which began “This will confirm our conversation of some 3-4 weeks ago about the final settlement on the O’Neil Farm.” The letter requested bills from Haning for the cost of fertilizer applied in the previous fall and a statement listing the acres tilled and the custom rates for tillage practices from the Tazewell County Extension Office. The letter also informed Haning the house could continue to be leased from the purchasers.

Haning refused to surrender possession, claiming that he had leasehold rights to the farm for the coming crop year, and as a consequence, Freitag indicated that he would not complete the sale unless he was given possession. Northern Trust then agreed to lease the farm from Freitag and to bring legal action to eject Haning from the farm. In the event Haning was not ejected by April 26,1980, Northern Trust agreed to pay $60,000 in cash rent to Freitag for the period from April 26, 1980, to February 28, 1981. Freitag completed the purchase transaction, and Northern Trust brought a forcible entry and detainer action against Haning on April 8, 1980. The trial date was delayed by Haning’s jury demand, so Northern Trust paid the $60,000 cash rent to Freitag, and Haning remained in possession. After the crops were harvested, Haning tendered one-half of the crop to Northern Trust pursuant to the terms of the previous lease. Northern Trust did not refuse, and also paid the owner’s share of the expenses, thus realizing $36,526 in partial mitigation of damages.

Haning asserted as an affirmative defense that he was not notified of a sale during the term of the interim agreement because he did not receive a notice in writing before March 1, 1980.

Trial was set for May 18, 1981. On May 6, 1981, Northern Trust requested leave to file an amendment to its complaint consisting of two counts, one of which would assert that Haning’s holdover of possession was wilful and the other would assert that Northern Trust was damaged in the amount of $60,000 when it had to pay that amount as cash rent to prevent the sale from failing. Defendant Haning asked for 30 days to respond to the amended complaint, but Northern Trust would not agree to a continuance. The trial court refused leave to amend without a continuance, and the cause proceeded to trial before a jury. At the conclusion of trial the jury returned a verdict finding that Haning had wrongfully withheld possession and assessing zero dollars damages. Northern Trust has appealed from the damages award, and Haning has cross-appealed from the verdict and judgment finding that his possession was wrongful.

Northern Trust contends that the trial court erred in ruling that all evidence concerning “lost profits” must be excluded. According to the report of proceedings, Northern Trust’s first farm manager for this farm, Joseph Siggs, testified that a fair cash rental for this property would be $150 per acre for a total of $45,000. He also stated that, if Northern Trust had leased this farm from the owner for $45,000 cash rent, and had farmed it, he would expect to make a profit of $10,000 to $15,000 above the amount of the rent. The trial court ruled that this testimony concerning hypothetical profits would be stricken. Siggs then went on to testify that Haning gave to Northern Trust one-half of the crop at the end of the 1980 season and that Northern Trust sold the crop for $47,233. After deducting expenses of $10,707, Northern Trust realized a net income of $36,526. The fact that actual net income of $36,526 was less than the fair cash rental of $45,000 was due to the fact that crop yield was down in 1980. When Siggs went on to testify that in an average year, the crop share arrangement would have realized a greater return for the owner, the court sustained an objection to any speculation as to what an average year would be.

When Max Evans, another farm manager of Northern Trust, was called to testify, an offer of proof was made which indicated that, if Northern Trust had been permitted to rent the farm from the owner for $45,000 cash rent, a profit of $10,000 to $15,000 could have been made, over and above the rent paid. Evans would base his computation on actual production figures, actual expenses and customary rates for hiring the work done, and would testify that Northern Trust would have made a total profit of $57,000, from which the $45,000 rent would have to be deducted. Parenthetically, we note that the total net income or profit from Haning’s farming operation for the 1980 crop year was $73,052, of which Haning received one-half and Northern Trust received one-half. Thus a total net profit of $57,000 would not appear to be an unreasonable expectation were the owner to hire the work done.

The trial court excluded the Evans’ testimony as to lost profit on the ground that it was speculative. We believe the trial court erred. Lost profits from farm operations have been held to be a proper measure of damages recoverable by a farm tenant from whom possession of land was withheld wrongfully. (Rhodes v. Sigler (1976), 44 Ill. App. 3d 375, 357 N.E.2d 846.) We can see no reason for denying a farm landlord an opportunity to prove that he could have earned profits over and above a cash rent.

In Rhodes we stated:

“It has long been the law in Illinois that lost profits can be a measure of damages where a business is interrupted, but to properly prove a loss of profits, the business must have been established prior to the interruption so that lost profits were not speculative. * * * [E]vidence was placed before the trial court indicating the ability and experiences of plaintiff as a farmer, as well as his expenses and income for the previous year. Since absolute mathematical certainty is not required to fix the amount of damages [citation], sufficient facts were presented for the trial court to determine that the plaintiff [tenant] was no worse a farmer than the defendants [landlords] and therefore, to determine the profits which the plaintiff was likely to make during the period possession was withheld.” 44 Ill. App. 3d 375, 379-80, 357 N.E.2d 846, 850. See also Annot., 32 A.L.R.2d 582, 605 (1953).

Whether Northern Trust was established in the business of farming by hiring custom work done is a question for the trier of fact, along with the determination of what would be the fair rental value and the other elements involved in the determination of damages. By refusing to permit the jury to consider lost profits, the trial court in effect restricted Northern Trust to recovering a fair rental value, and nothing more, as damages for Haning’s wrongful withholding of possession. We believe that ruling was erroneous, and that the award of zero dollar damages must be vacated and the cause remanded for a new trial on the issue of damages.

Northern Trust also contends that the trial court wrongfully refused to give certain jury instructions defining lost profits as an element of damages in this case. The tendered instructions have not been identified or set out in Northern Trust’s brief, so we conclude that any such error was waived for purposes of this appeal. However, upon remand the trial court should give appropriate instructions based upon the evidence presented, including a definition of damages recoverable which would include the element of lost profits.

Northern Trust also claims that the verdict of zero damages was improper under the law and public policy since the effect is to permit a holdover tenant to forcibly make himself a partner of the wronged land owner. To permit the tenant to pay no more than the crop share specified in the expired lease would encourage tenants to hold over without fear of legal sanction. Having determined that a new trial on the issue of damages is required because of erroneous rulings of the trial court, we think it unnecessary to consider whether the verdict was contrary to the manifest weight of the evidence or to public policy. Northern Trust also cites certain improper comments made by defendant’s trial counsel. We agree that references to Northern Trust “buying” a law suit, made after an objection to such comment had been sustained, were improper. Upon remand, we assume that such improper statements will be avoided.

Finally, Northern Trust also insists that the trial court erred in refusing to permit leave to file an amended complaint which would have added two additional counts. The rule in Illinois has long been that the time for allowing an amendment to a pleading rests within the sound discretion of the trial court whether application for leave to amend is sought after issue has been joined, during trial, or any other time prior to entry of judgment. (Simmons v. Columbus Venetian Stevens Buildings (1958), 20 Ill. App. 2d 1, 155 N.E.2d 372.) In the case before us, it is clear that the trial court would have allowed Northern Trust to amend its complaint shortly before trial if Northern Trust would agree to a continuance to permit defendant to respond. Northern Trust refused to agree to an allowance of time for responsive pleadings, and the trial court denied leave to amend. Under such circumstances, we cannot say that the trial court abused its discretion. In fact, the rules of fair play would hardly permit any other ruling at that stage of the proceeding. We see nothing in the record to indicate that the amendments were offered again at the close of the evidence in order to conform the pleadings to the proof. Hence, we assume that the proposed new counts would have introduced new issues that required time for a response.

Defendant Haning has also filed a cross-appeal from the verdict which found him to have retained possession wrongfully. Defendant contends that he was entitled to a written notice of termination under the contract, which he characterizes as a renewal of the previous year-to-year lease, pursuant to section 5.1 of “An Act to revise the law in relation to landlord and tenant” (Ill. Rev. Stat. 1979, ch. 80, par. 5.1). The statute requires a notice to quit in writing not less than four months prior to the end of the year of letting in order to terminate a year-to-year tenancy of farmland. The statute prohibits a verbal waiver of the notice requirement, but does not prevent a written waiver of the requirement.

Clearly the year-to-year tenancy which bound the parties for the year ending February 29,1979, was terminated by timely notice from Northern Trust to Haning. Thereafter the parties entered into an interim operating agreement which by its terms indicates an intent to be something other than a year-to-year tenancy, and which expressly permits Northern Trust to terminate Haning’s possession of the farm at any time prior to March 1, 1980. In order to protect the owners’ interest in having the farm ready for planting if the sale did not occur, Northern Trust and Haning executed a contract which waived the farm tenant’s statutory right to four months written notice in return for a promise that he would be reimbursed for his labor for tillage and for the cost of fertilizer applied. Since the contract did not specify written notice, Haning must be considered to have waived his right to written notice as well.

The evidence at trial presented a question of fact as to whether Haning was given adequate notice that the land had been sold when he talked to Max Evans on the telephone on February 11, 1980. Although Haning denied that Evans told him that a sale had been arranged, Evans’ testimony was clear and unequivocal and was corroborated by a written memorandum made at the time of the call which convinced the trier of fact. Furthermore, the purchaser Freitag testified that Haning talked to him on February 20,1980, about letting his son stay in the farm house until an expected baby had been born. The evidence supported the jury’s verdict in favor of Northern Trust and that verdict is, accordingly, affirmed.

Judgment vacated and remanded, with directions.

STOUDER and HEIPLE, JJ., concur.


author: JUSTICE SCOTT JUSTICE HEIPLE,

text:
    WICK BUILDING SYSTEMS, INC., AGRI-BUILDINGS DIVISION, Plaintiff-Appellant, v. WILLIAM H. BUNNING, JR., Defendant-Appellee.—(MEL-O-DEE BUILDERS, INC., Defendant.)
    Third District
    No. 81-470
    Opinion filed June 14, 1982.
    HEIPLE, J., dissenting.
    John W. Howard, of Bartley, Fraser, Parkhurst, Hession & Renner, of Peoria, for appellant.
    Dean B. Rhoads, of Sutkowski & Washkuhn Associates, of Peoria, for appellee.
   JUSTICE SCOTT

delivered the opinion of the court:

Wick Building Systems, Inc. (Wick), a manufacturer of agricultural buildings, on March 28,1978, entered into an agreement with William H. Bunning, Jr. (Bunning), whereby Bunning would be a dealer for the sale of such buildings. On August 21, 1978, Bunning assigned his dealership agreement to Mel-O-Dee Builders, Inc. (Mel-O-Dee), a business owned by Bunning. The assignment agreement contained language, the effect of which was to make Bunning a guarantor to an extent later to be determined of certain obligations. The assignment of the dealer agreement was approved of and consented to by Wick.

On June 4, 1979, Mel-O-Dee ordered from Wick a hog confinement building to be delivered to a customer. Prior to various change orders the contract price for the building was $14,926. Mel-O-Dee also had delivered to Wick its promissory note in the sum of $12,493.82. On March 31,1980, the plaintiff Wick filed suit against Mel-O-Dee and Running for payment of the promissory note and for final payment of $12,607.50 under the June 4, 1979, contract for construction of the hog confinement building. On June 16,1980, the circuit court of Peoria County dismissed counts I and II of Wick’s complaint for lack of jurisdiction. No'appeal from the dismissal of the counts was taken. On September 25, 1980, counts III and IV alleging that money was due to the plaintiff Wick from Running as guarantor of the corporate defendant Mel-O-Dee were dismissed for failure to state a cause of action; however, the court granted Wick 21 days to file an amended complaint. Wick took no further action in the case until April 7, 1981, when it filed a motion for a final judgment order. Over Running’s objection the court on July 29, 1981, entered a final order of dismissal whereby Wick’s complaint was dismissed without leave to amend. This appeal ensued.

As the issues in this appeal are addressed, the pleadings, court orders and contractual agreements will be set forth as they become pertinent.

The defendant Running first contends that Wick failed to file a timely appeal from the trial court’s order of September 25, 1980, and that this court does not have jurisdiction to review the circuit court’s dismissal of the complaint.

This jurisdictional issue is raised by the defendant Running in his appellee’s brief and is predicated upon the argument that even though Wick was granted the right to amend its pleadings, the trial court’s order of dismissal of the complaint was not grounded on technical defects, but was based on a determination that the factual allegations in the complaint were insufficient to state a cause of action as a matter of law. Running further argues that the dismissal order was final because Wick did not in fact amend or attempt to amend its complaint, which is indicative of a conclusion that the plaintiff Wick acknowledged that the complaint could not be cured so as to state a cause of action and hence it was a final appealable order from which Wick did not file a notice of appeal within 30 days. Running’s argument is appealing, since it is obvious that the court’s order of September 25, 1980, was directed at the substantive allegations of the complaint; however, to adopt such argument would require a determination in many instances as to the basis for a trial court’s order of dismissal, and it is conceivable that in many instances the picture could be a cloudy one. The better and correct rule to apply is that an order of dismissal followed by an election to stand on the complaint is not a final appealable order until a subsequent order dismissing the suit is entered. This is true even if the time granting leave to amend the complaint has run. (See Martin v. Marks (1980), 80 Ill. App. 3d 915, 400 N.E.2d 711.) We reject Bunning’s argument and hold that this court does have jurisdiction of this appeal.

Wick further asserts that the trial court incorrectly dismissed counts III and IV of its complaint on the grounds that they failed to state a cause of action.

Counts III and IV of the complaint, which sought liability from Burning, were predicated upon language contained in paragraph 8 of the dealer agreement and paragraph 3 of the assignment agreement from Bunning to Mel-O-Dee.

Paragraph 8 of the dealer agreement provides as follows:

“Erection and Payment. Dealer shall coordinate erection details between manufacturer and customer, and between any other tradesmen hired by customer, to assure the orderly and prompt completion of Wick Agri-Buildings. Dealer understands that unless otherwise specifically and expressly agreed, the purchase price shall be paid as set forth in the customer’s purchase order as accepted by Manufacturer.
Dealer shall be responsible for collection of the purchase price of the Wick Agri-Building product from customer within the times provided therefore, and shall promptly forward any and all payments upon receipt. All checks and drafts shall be made directly payable to Wick Agri-Buildings Division of Wick Building Systems, Inc.
It shall be the responsibility of Dealer to secure customers for Manufacturer which are financially solvent, and to aid and assist customers as necessary in obtaining of necessary mortgage loan financing. (It is not anticipated nor intended by this provision that Dealer should become an ‘arranger of financing’ or ‘arranger of credit’ as those or similar terms are defined by applicable Trust-In-Lending laws.)
Accordingly, in the event customer shall fail, or be unable to pay the full purchase price to Manufacturer, through no fault or neglect on the part of the Manufacturer, and if Manufacturer shall have diligently pursued available lien remedies, then Dealer shall, and hereby does agree to, indemnify, and save harmless Manufacturer, and shall thereupon pay to Manufacturer the balance of the purchase price of said Wick Agri-Buildings product, less Dealer’s Commission. Upon receipt of said payment, Manufacturer shall assign to Dealer, Manufacturer’s claim, and all causes of action thereunder, against customer with respect to said Wick Agri-Buildings product.”

Paragraph 3 of the assignment agreement provides as follows:

“Assignor is and agrees to remain personally liable and responsible to Manufacturer for the full and complete performance of all the duties, responsibilities, and obligations of Dealer under said Agreement, notwithstanding this Assignment, and agrees to and hereby does indemnify, defend, and save Manufacturer harmless with respect to all of the indemnities on the part of Dealer therein contained.”

The defendant Bunning argued before the trial court that an interpretation of the above provisions imposes upon him liability as a guarantor to plaintiff Wick of the obligations of third party customers of Wick. Stated conversely, Bunning argued that any obligation which was the result of a direct purchase by Mel-O-Dee (“Dealer,” by virtue of the assignment agreement) from Wick (“Manufacturer”) is not an obligation under the assignment agreement for which he (Bunning) is personally liable. The trial court agreed with Bunning’s interpretation and granted Bunning’s motion to dismiss.

This court now has the duty of determining whether the trial court was correct in construing the dealer agreement and assignment agreement. In approaching that task we note that neither Wick nor Bunning claim that the agreements are ambiguous; however, they are poles apart as to what they believe to be the proper construction of the agreements. In construing the documents involved, we first direct our attention to paragraph 3 of the assignment agreement. An examination of this paragraph discloses that by the language therein Bunning assumed personal liability to Wick for complete performance of all duties, responsibilities and obligations of Mel-O-Dee under the dealer agreement. By the assignment agreement Mel-O-Dee took Bunning’s place as a dealer of Wick; however, by the language of paragraph 3 of the assignment, he remained obligated to continue to fulfill certain duties placed upon him when he was granted a dealership by Wick. To determine the scope of the obligations imposed upon Bunning by the assignment, an examination must be made of the dealer agreement.

In ascertaining the meaning of certain provisions in a written contract, the meaning must be determined by construing the contract in its entirety. (White v. White (1978), 62 Ill. App. 3d 375, 378 N.E.2d 1255.) With this rule in mind we first direct our attention to paragraph 8 of the dealer agreement. This paragraph establishes an arrangement whereby the dealer (Mel-O-Dee by assignment) is to act in the capacity of a sales representative for Wick. As such representative the dealer is to procure financially solvent customers for Wick and if necessary assist those customers in obtaining financing for the purchase of the manufacturer’s (Wick’s) merchandise. A prospective customer must submit an offer to purchase which must be approved by Wick before a contract is created. Upon approval or acceptance of an offer to purchase, then a contractual relationship exists between the ultimate purchaser and Wick.

This construction of the dealer agreement is bolstered by the language in paragraph 9 of the agreement, which provides that the dealer is to be compensated by commissions from sales. The paragraph also refers to Wick as the “Manufacturer” and Bunning as “Dealer.” By virtue of the assignment, Mel-O-Dee replaced Bunning as the “Dealer.” The documents in question specifically designated who is the manufacturer and who is the dealer, but there is no express definition as to who is a “customer.” By this omission it can only be concluded that the customer was to be the prospective purchaser solicited by the dealer and accepted by the manufacturer. In the instant case the indebtedness to Wick was not incurred by an accepted customer but by the dealer, Mel-O-Dee. Harking back to paragraph 8 of the dealer assignment, it is specifically provided that in the event a customer shall fail to pay through no fault of the manufacturer and if manufacturer shall have diligently pursued available lien remedies, then the dealer shall indemnify and save harmless the manufacturer by paying the balance of the customer’s purchase price less dealer’s commission. We conclude that the trial court properly construed the documents in question by determining that Bunning was guarantor for only the indebtedness of third party customers and none is in esse in the situation presented in this appeal.

Wick advances the argument that Mel-O-Dee is both a dealer and a customer of Wick. We do not find it incompatible for one to be both a dealer and a customer, for a customer is a purchaser, buyer or patron. Mel-O-Dee may well be both a customer and a dealer, but even if such a conclusion is reached, it affords no relief to Wick in the instant case since the dealer agreement and assignment agreement clearly contemplated a three-tiered structure, to-wit, manufacturer, dealer and customer, before Bunning became a guarantor for the payment of the balance of any purchase price. The third segment of the structure, namely the ultimate purchaser, is missing in this case and hence Bunning is not liable.

At first blush the result reached appears inequitable and harsh, but upon reflection that feeling is dissipated. All documents involved in this case were drafted and supplied by Wick. In construing such documents they must be construed liberally in favor of the nondrafting party. (Wetland Tool & Manufacturing Co. v. Whitney (1969), 44 Ill. 2d 105, 251 N.E.2d 242.) The brief of Wick calls attention to the fact that Bunning is the sole shareholder of Mel-O-Dee Corporation. This fact gave rise to an initial impression that some chicanery was being practiced by Bunning; however, this impression was dispelled by the record, which shows that Wick was not only aware of the extent of Running’s interest in Mel-O-Dee, but the assignment agreement consented to by Wick provided Bunning would remain the sole or majority shareholder in Mel-O-Dee during the entire term of the assignment.

Bunning is not escaping liability as the result of legal technicalities, but is found to be free from liability for the indebtedness of Mel-O-Dee as the result of the only reasonable construction possible of the contract in question.

For the reasons set forth the judgment of the circuit court of Peoria County is affirmed.

Affirmed.

STOUDER, J., concurs.

JUSTICE HEIPLE,

dissenting:

Wick manufactures prefabricated farm buildings. William Bunning wanted to sell them. Accordingly, he and Wick entered into a contract authorizing Running to do so. Later, Mr. Running assigned such contract to Mel-O-Dee Builders, Inc. The latter Iowa corporation was wholly owned by Mr. Bunning. In June 1979, Mel-O-Dee ordered a building from Wick. The building cost $14,926 and was delivered and erected. Mel-ODée did not pay for it. In March 1980, Wick filed a four-count complaint in Peoria County against Mel-O-Dee and Mr. Bunning. The complaint’s first two counts, pertaining to Mel-O-Dee, were dismissed for lack of in personam jurisdiction. No appeal was lodged. The remainder of the complaint, seeking to impose personal liability on Mr. Bunning, was dismissed for failure to state a cause of action. Wick appeals.

The issue in this cause is whether Mel-O-Dee’s obligation to pay is one arising under the dealer agreement which discharges Bunning from his personal guarantee to pay Mel-O-Dee’s debt. If it is, Wick loses: if not, plaintiff wins. Mr. Bunning acknowledges he is personally liable as a guarantor to Wick for unfulfilled obligations of third-party customers of Wick. Bunning says Mel-O-Dee’s failure to pay is not a personal obligation he assumed under the assignment agreement. My colleagues have concluded that Mel-O-Dee assumed Running's obligations by virtue of the assignment. Thus, Wick should look to Mel-O-Dee for payment. Both these theories are highly technical, strained, and unpersuasive.

Under the dealer agreement Mr. Bunning personally assured Wick that:

“* * *in the event the customer shall fail, or be unable to pay the full purchase price to Manufacturer ° * * then Dealer shall, and hereby does agree to, indemnify, and save harmless Manufacturer * * * and pay to Manufacturer, the balance of the purchase price at at * * *."

And, when Mr. Running assigned the dealer agreement to Mel-O-Dee he did not necessarily release himself from personal liability under the dealer agreement. As assignor, Mr. Running,

“* * * agree (d) to remain personally liable and responsible to Manufacturer for the full and complete performance of all the duties, responsibilities, and obligations of Dealer under said agreement, notwithstanding this Assignment * * *." (Emphasis added.)

Since Mel-O-Dee acceded to the status of “dealer” under the dealer agreement, the majority says, Running was released from personal liability on his original obligation to pay third-party debts. As assignee, Mel-O-Dee acquired all title and interest in the Dealer Agreement. Thus, Mel-O-Dee became the dealer and therein personally liable for defaulting third parties in purchase contracts with Wick. In other words, my colleagues conclude, a novation, or substituted contract, occurred which discharged Running from his obligations under the dealer agreement.

Arguably, the dealer agreement and the assignment agreement contain elements of a novation. These include: a valid prior obligation; a subsequent agreement of all parties to a new agreement; discharge of a previous contractual duty; and the validity of a new contract. (Kiefer v. Reis (1928), 331 Ill. 38, 43; and see generally J. Calamari and J. Perillo, Contracts sec. 345, at 526-27 (1970).) Novation, however, is an affirmative defense that must be pleaded and proven. Defendant did not follow that procedure. Rather, defendant filed a motion to dismiss the complaint for failure to state a claim. The trial court granted the motion to dismiss. The dismissal order was not only premature, it was improper. The complaint did and does state a cause of action that turns on the claim of plaintiff against defendant based on defendant’s personal guarantee. That claim was properly pleaded. The motion to dismiss should have been denied and the defendant ordered to plead over. Had that been done, defendant could have pleaded novation as an affirmative defense, the issues could have been joined and the matter could have proceeded to trial.

Whether the assignment clause discharged Mr. Running’s personal liability might be resolved either way. Rut neither resolution could properly be decided as a matter of law on the motion to dismiss. The assignment agreement is without terms which state that upon execution Mr. Running’s personal liability somehow evaporates or is transferred. In fact, it is unreasonable to assume such assent was contemplated since the language "* * * notwithstanding the assignment * * *" lends itself to the conclusion that Mr. Running remained liable regardless of what obligations or duties Mel-O-Dee was assuming. Moreover, it cannot be ignored that, in reality, Mr. Sunning and Mel-O-Dee are one and the same.

The trial judge was wrong in deciding this case against plaintiff on the defendant’s motion to dismiss. The matter should be remanded to the trial court so that the issues can be joined and the merits tried. Accordingly, I dissent.


text:
    STANLEY J. BUTT et al., Plaintiffs-Appellants, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY et al., Defendants-Appellees.
    Third District
    No. 81-540
    Opinion filed June 14, 1982.

      William H. Knuppel, of Lemmer, Boggs, Knuppel & Krebaum, P. C., of Havana, for appellants.
    George D. Browning and Jeffrey W. Jackson, both of Westervelt, Johnson, Nicoll & Keller, of Peoria, and Richard B. Opsahl, of Rantoul, for appellees.
   PRESIDING JUSTICE BARRY

delivered the opinion of the court:

Plaintiffs Stanley and Mildred Butt appeal, from a declaratory judgment entered by the circuit court of Fulton County. The court ruled that the defendant, State Farm Mutual Insurance Company (State Farm), has no liabilities under an insurance policy issued by it to plaintiffs for the period from December 7, 1977, until December 25, 1977, during which time Stanley Butt was involved in a collision with a vehicle operated by defendant Teresa Kelly. On appeal, plaintiffs contend (1) that State Farm’s acceptance of plaintiffs’ policy renewal check constitutes a waiver of State Farm’s right to declare a lapse and requires the company to insure them retroactively, including the date of the accident, and (2) that traditional contract principles apply so as to require State Farm to provide such retroactive coverage.

The facts relevant to the issues on appeal may be briefly stated. The plaintiffs have been automobile insurance customers of State Farm since 1957. The policy on the automobile here in dispute provided an initial coverage period from August 19, 1976, to December 7, 1976. It was thereafter renewed on two occasions for continuous coverage from December 7, 1976, to June 7, 1977, and again from June 7, 1977, to December 7, 1977. A little over a month prior to the next renewal date, State Farm sent the insureds notice that their six-month premium of $119.80 was due on December 7, 1977. Although the notice was admittedly received by the Butts prior to the due date, their check for the premium amount was not written until December 15, 1977. Family matters intervened and occupied their attention immediately after the check was written, and, as a result, the check lay forgotten in a basket at their home until December 24, 1977, when it was finally mailed to State Farm.

Meanwhile, on December 22, 1977, while driving the automobile insured under this policy, Stanley Butt was involved in an accident which resulted in damage to the Butt vehicle and personal injuries and property damage to Teresa Kelly. Mr. Butt reported the accident to his local State Farm agent, Gene Zook, in a letter dated December 23, 1977. Upon discovering that the policy renewal check had not been mailed promptly, Mr. Butt visited Zook personally on December 26, 1977, explained the situation, and asked if the policy was still in force despite the lateness in mailing the check. Zook checked his microfiche file and ascertained that no indication of a lapse in coverage appeared thereon.

State Farm received plaintiffs’ check on December 27,1977. Because the payment was made more than 10 days after the due date and less than 40 days thereafter, company policy was to reinstate insurance coverage effective with the date after the postmark on the remittance envelope and to refund the excess premiums paid for the period of noncoverage. In this case, plaintiffs’ policy was renewed for the period December 25,1977, to June 7, 1978, and plaintiffs were sent a refund check for $12.52.

Teresa Kelly filed suit against Stanley Butt, claiming damages in the amount of $185,000. State Farm denied liability since the accident occurred during the period of lapsed coverage. Plaintiffs thereafter instituted the instant suit seeking a declaratory judgment to determine State Farm’s liabilities under the policy and to obligate State Farm to defend them in the suit filed by Kelly. A bench trial ensued. After hearing the evidence and arguments of the parties, the trial court entered its order against plaintiffs, finding that the insurance policy in question was not in effect on December 22,1977, the date of the accident. It is from this order that plaintiffs appeal. We affirm.

Plaintiffs initially contend that their own good-faith efforts to get the premium check in the mail promptly upon their discovery that it had not been so mailed when originally written, plus their prompt report of the December 22 accident and their specific inquiry of agent Zook about coverage, combine to create in plaintiffs an expectation of continuous coverage. Add to this scenario the fact that State Farm cashed plaintiffs’ late check, the argument continues, and the conclusion is that State Farm waived its right to declare a lapse in coverage. We disagree.

The insurance policy in question contained conditions and terms specifically referring to plaintiffs’ duty to pay premiums when due. Page 3 of the policy contains a section entitled “When and Where Coverage Applies.” It provides in pertinent part:

“The policy period is * * * for successive periods of six months each for which you pay the renewal premiums. Payments must be made on or before the end of the current policy period.”

On page 13, the following condition is recited:

“Renewal * * * we agree: * * * to renew the policy for the next policy period * * * unless we mail to you written notice of our intention not to renew * * *. These agreements to continue and to renew are void if: you fail to pay the premium when due * * *."

In addition to these unequivocal provisions giving notice to plaintiffs of their duty to pay premiums on a timely basis for continuous coverage and plaintiffs’ acknowledged receipt of the renewal notice prior to December 7, 1977, testimony at trial established that State Farm ordered an expiration notice sent to plaintiffs on December 11, 1977, which read as follows:

“DID YOU FORGET TO RENEW YOUR AUTOMOBILE INSURANCE?
Payment within 10 days after Expiration Date will provide coverage for 6 months from the Expiration Date.
If paid after 10 days from the Expiration Date you will be informed if we accept your payment and if so, the exact date and time coverage is again effective. There is no coverage for accidents occurring between the date and time of expiration and the date and time your coverage is again effective.”

While plaintiffs denied having read this notice, they could not state for certain that it had not been received by them. Even had they not received it, State Farm contends, plaintiffs had adequate notice of the company’s renewal policies from their prior experience with late premium payments. At trial, State Farm produced evidence that in 1973 plaintiffs had failed to pay their premium within 10 days after the due date. On that occasion the insurance was renewed under the reinstatement-after-lapse policy outlined in the second paragraph of the above-quoted expiration notice. Company records disclosed that plaintiffs had been sent a renewal billing on June 26, 1973, showing that the six-month premium of $57.60 was due on July 28, 1973. Plaintiffs failed to respond to this notice, and a subsequent expiration notice was sent on August 1, 1973. On August 15, 1973, Stanley Butt wrote a check to State Farm for $57.60. Upon receipt of this check, State Farm reinstated plaintiffs’ policy as of August 17, 1973, and issued a check to plaintiffs for $6.90, representing a refund for the period of lapsed coverage between July 28, 1973, and August 17, 1973. The latter check was negotiated by Butt, apparently without further inquiry about the lapse in insurance coverage.

Plaintiffs’ attempt to show waiver on the part of State Farm by demonstrating that their failure to make a timely premium in 1975, on which occasion a coverage lapse did not result, is significantly undermined by the fact that the 1975 check representing premium payment due on July 28, 1975, was written on August 3, 1975, and deposited by State Farm on August 5,1975, well within the 10-day grace period allowed by policy per the first paragraph of the above-quoted expiration notice.

On these facts, plaintiffs will not be heard to deny that they had knowledge of the company’s policies respecting reinstatement of coverage upon receipt of late premium payments. Such policies were not undisclosed, secret internal policies enforced or not at the whim of State Farm, as plaintiffs would have this court believe. State Farm did not, therefore, impliedly waive their right to declare a lapse in coverage in 1977 because of their application of company policies to the plaintiffs’ late premium remittances in 1973 and 1975.

Finally, evidence of record clearly demonstrates that State Farm did not expressly waive its right to deny any obligation to defend plaintiffs in the suit arising out of the December 22 accident. The record contains a document entitled “Request for Claim Service and Non-Waiver of Rights.” It is dated December 28,1977, and is signed by Stanley Rutt. The form states that “Company records indicate that the policy period expired for non-payment of renewal premium,” and goes on to explicitly deny that any action taken on the part of either State Farm or Rutt concerning the December 22,1977, accident shall not waive the rights of either party. Whereas this document, standing alone, might be insufficient to overcome an “implied waiver” argument on another set of facts, such is not, as our previous findings indicate, the case herein.

Plaintiffs’ second contention, based on traditional contract law principles, that State Farm’s unconditional acceptance of the plaintiffs’ premium renewal check requires the company to retroactively renew the policy, is meritless. Plaintiffs will not be permitted to foist upon State Farm a change in the terms of their written insurance policy merely by tendering a check for an amount that represents what would have been due had plaintiffs not breached their duty to pay renewal premiums on a timely basis. Plaintiffs’ argument here is precisely the same as that advanced and rejected by the court on review in Gurley v. State Farm Mutual Automobile Insurance Co. (1981), 101 Ill. App. 3d 619, 428 N.E.2d 916.

In Gurley as in the present case, plaintiff attempted to analogize the facts of Van Hulle v. State Farm Mutual Automobile Insurance Co. (1969), 44 Ill. 2d 227, 254 N.E.2d 457, and Cullotta v. Kemper Corp. (1979), 78 Ill. 2d 25, 397 N.E.2d 1372, to the case before the court. The Gurley court distinguished Cullotta on the basis that the issue upon which the Cullotta case turned was whether, once a check is accepted within a specified time, its later dishonor by the bank results in a cancellation of the insurance contract. The Cullotta court determined that it does not, unless it is shown that the original acceptance of the check was conditioned upon the bank’s honoring of it.

Similarly, Van Hulle is distinguishable from the present case, as it was in Gurley, because the insured therein expressly told the agent that his late payment of the premium was conditional upon the insurer’s grant of coverage retroactively so as to include the date of Van Hulle’s accident, and if such coverage could not be afforded, the check was to be returned to the insured. The court held that the insurer had waived its right to refuse coverage under the policy because the insurer had some history of retroactively reinstating lapsed policies and, in Van Hulle’s case, the insurer had cashed the premium payment check with knowledge of the accident which had demolished the automobile in question as well as the insured’s express condition that the check be returned if retroactive coverage was to be refused. Because neither Cullotta nor Van Hulle are sufficiently on point, they provide no basis upon which this court could afford plaintiffs’ relief in the present case.

As defendant State Farm correctly points out, Shiaras v. Chupp (1975), 61 Ill. 2d 164, 334 N.E.2d 129, and Gurley are factually analogous to the present case. In both cases, as here, the insureds, after having been sent notices reminding them of the 10-day grace period, failed nonetheless to remit their premiums timely. In those cases, as here, neither implied nor express waiver could be found to prevent the insurer from declaring a coverage lapse. General contract law principles are unavailing to plaintiffs to alter the result herein from that obtained in Shiaras and Gurley.

In sum, we agree with the trial court that plaintiffs’ policy had lapsed and that State Farm is therefore relieved of liability thereunder and is under no duty to defend plaintiffs with respect to the accident occurring during the period of lapse.

Affirmed.

STOUDER and HEIPLE, JJ., concur.