text:
      In re APPLICATION OF DU PAGE COUNTY COLLECTOR—(The People ex rel. John Lotus Novak, Du Page County Collector, Applicant-Appellee, v. Arthur Rubloff & Company, Objector-Appellant; Township of Wayne, Appellee).
    Second District
    No. 82—739
    Opinion filed September 28, 1983.

      Ralph C. Putnam, Jr., and Paul A. Lewis, both of Alschuler, Putnam, MeWethy, Funkey & Grometer, P.C., of Aurora, for appellant.
    John X. Breslin, of State’s Attorneys Appellate Service Commission, of Ottawa, for appellee Du Page County Collector.
    James F. Campion, of Wheaton, for appellee Wayne Township.
   PRESIDING JUSTICE SEIDENFELD

delivered the opinion of the court:

Arthur Rubloff & Company (Objector) objected to taxes extended on its property in Wayne Township for the year 1978. It appeals from the judgment which overruled its objections and found in favor of the applicant, the County Collector of Du Page County (Collector).

The case was heard on a stipulation of facts which repeated the material allegations contained in the objections, and upon the testimony of the town supervisor Roy Paeth. The Objector paid the 1978 taxes in full under protest and filed timely written objections. The appeal concerns objections to taxes extended for Wayne Township “for town purposes” in the amount of $27.88; “special bridge tax” in the amount of $81.04; “equipment and building tax” in the amount of $56.73; and “special road tax” in the amount of $162.08.

Objection to Levy for Town Purposes

Wayne Township’s budget and appropriation ordinance was adopted July 24, 1978, and filed with the county clerk on July 28, 1978. Its tax levy was adopted August 14, 1978, and filed with the county clerk on August 15, 1978. The budget for town purposes is itemized and totals $256,657. The levy is also itemized and totals $282,823. The disparity between the levy and appropriation for the item “administrative” produced a corresponding excess in the levy which translated to a tax of $27.88.

The Collector contends that the appropriation ordinance no longer limits the amount of the levy; or, alternatively, that the appropriation ordinance in question is not related to the tax levy for 1978 since the levy will not produce revenue to be spent on the appropriation ordinance in 1978. The Collector argues, based on the testimony of the town supervisor, that the practical reason for the difference between the appropriation ordinance and the levy, although for the year 1978, is that no revenue would be produced until some time in June of 1979 when taxes are first collected on this levy; and that the July 24, 1978, appropriation was executed with tax monies collected in 1978 on the levy made in 1977.

The Collector’s argument that the appropriation ordinance no longer limits the amount of the levy relies on a change in the Illinois Municipal Code. The former statute (Ill. Rev. Stat. 1967, ch. 24, par. 8 — 3—1) contained the provision

“corporate authorities shall ascertain the total amount of the appropriations legally made for all corporate purposes to be provided for by the tax levy of that year. *** [T]he corporate authorities shall levy not to exceed the total amount so ascertained ***.” (Emphasis added.)

The underlined language was removed before the 1978 tax year. See Ill. Rev. Stat. 1977, ch. 24, par. 8 — 3—1.

However, as the Objector states, the cited section 8 — 3—1 as presently constituted is directed solely at municipalities and does not govern townships. Ill. Rev. Stat. 1981, ch. 24, par. 1 — 1—2(1).

The Objector further argues that under the Illinois Municipal Budget Law (Ill. Rev. Stat. 1981, ch. 85, pars. 801 et seq.), which does include townships, an evident purpose is shown to make taxing bodies levy within the constraints of a budget, thus that the budget ordinance limits the levy for the same period. The Collector concedes that the Illinois Municipal Budget Law does govern townships but argues that there is nothing in its language which states that the budget ordinance limits the levy for the same period. It argues that, in effect, the only limitation on the levy is the maximum rate which may be levied and the good faith of the municipality. We cannot agree.

It has long been the view that appropriation ordinances are for the purpose of circumscribing the items for which taxes may be raised and constitute a limitation on the amounts to be raised. People ex rel. Larson v. Thompson (1941), 377 Ill. 104, 118; People ex rel. Ruchty v. Chicago & North Western Ry. Co. (1953), 1 Ill. 2d 574, 578; cf. Diversified Computer Services, Inc. v. Town of York (1982), 104 Ill. App. 3d 852, 857 (section 3 of the Illinois Municipal Budget Law (Ill. Rev. Stat. 1981, ch. 85, par. 803) has as one of its purposes “to require governmental bodies to budget in advance the funds to be expended for each purpose and, once a budget and appropriation ordinance is adopted, that only expenditures for those purposes and in the sums therein set forth are permissible”).

The Collector’s argument that the cited cases are no longer applicable because of the removal of the limitation in the Illinois Municipal Code (Ill. Rev. Stat. 1981, ch. 24, par. 8 — 3—1) is not persuasive. Wayne Township at the time of its appropriation and levy was subject to the Illinois Municipal Budget Law (Ill. Rev. Stat. 1977, ch. 85, par. 801 et seq.). Ruchty involved a 1949 school levy when school districts were subject to the budget law (Ill. Rev. Stat. 1949, ch. 120, par. 365.2) and the fact that school districts are no longer subject to the budget law does not diminish the rationale of that case and its applicability here. Also, the applicant’s reliance on People ex rel. Prindable v. New York Central R.R. Co. (1947), 397 Ill. 50, is inapt because this involved a 1952 school levy after the legislature removed school districts from the Illinois Municipal Budget Law and added a provision to the school code to govern school budgeting so that the school code alone governed the 1952 levy. Here the Illinois Municipal Budget Law is being construed.

The real issue is whether the connection between the levy and the appropriation ordinance has been shown. It is true that if the ordinance had nothing to do with the levy but the expenditures were of dollars from past levies and other sources, the levy would be irrelevant and would not avoid the tax. (See People ex rel. Prindable v. Illinois Central R.R. Co. (1945), 389 Ill. 474, 477; People ex rel. Manifold v. Wabash R.R. Co. (1945), 389 Ill. 403, 409; People ex rel. Prindable v. New York Central R.R. Co. (1947), 397 Ill. 50, 55.) In Wabash, the court noted that there was no proof that the expenditure of any of the 1942 levy was to be made during the fiscal year commencing March 31, 1942, and ending March 29, 1943, for which the objected to appropriation had been made. The court noted that it followed that a budget and appropriation ordinance providing only for expending cash or cash items on hand of a previous year could not be considered as a budget of the revenue to be derived from a subsequent levy and that this did not invalidate the levy. (People ex rel. Manifold v. Wabash R.R. Co. (1945), 389 Ill. 403.) In Wabash, People ex rel. Larson v. Thompson (1941), 377 Ill. 104, was distinguished for the reason that in Thompson “the appropriation of money on hand was not involved.” 389 Ill. 403, 409.

Here, Paeth, testifying in July of 1981, said by way of illustration that they were currently in their operating budget for the years 1981-1982 and that in September they would file a levy for 1982-1983 for the revenues to be received from June 1, 1982, through May of 1983. He said that there would not be a direct relationship between the budget and appropriation ordinance for the period June 1, 1978, and ending May 31, 1979, and the levy that was filed on August 14,1978.

The record, however, does not indicate that the 1978 expenditures were to be made solely from monies on hand. Although it shows that net taxes of 1977 and prior levies to be received during this fiscal year and available for appropriation amount to $103,347 in the town fund, it also reveals that money to be borrowed in this fiscal year by sale of tax anticipation warrants based on the 1978 levy amounted to $111,000. As argued by the Objector the warrants were drawn under a statute which empowers townships to issue them “drawn against and in anticipation of any taxes already levied.” (Ill. Rev. Stat. 1977, ch. 1461/2, par. 2.) Thus the 1978 levy was required before the township could issue valid warrants against that levy and without it the township would have lost 43% of the estimated receipts needed to meet the expenditures budgeted for the fiscal year. In effect, then, the warrants enabled the townships to receive during the fiscal year money to be collected from the 1978 levy. Therefore, the warrants are the elements that relate the levy to the appropriation ordinance.

People ex rel. Ruchty v. Chicago & North Western Ry. Co. (1953), 1 Ill. 2d 574, involved a budget and appropriation ordinance fixing a fiscal year commencing July 1, 1949, and which appropriated 1949 taxes by budgeting revenue of $30,000 from sale of anticipation warrants on 1949 taxes. Here Wayne Township’s budget and appropriation ordinance fixes the fiscal year commencing June 1, 1978, and appropriates 1978 taxes by budgeting revenue of $111,000 from the sale of anticipation warrants on 1978 taxes. The situations are similar and under Ruchty the relationship between the 1978 budget appropriation ordinance and the 1978 levy has been established. To the extent that the levy exceeded the appropriation the objection should have been sustained.

Objection to Levy for Special Bridge Tax Objector contends that the special bridge tax was void because the township, in absence of a maximum levy for the general road tax for the previous two years, was not authorized to levy the tax. Involved is the interpretation of the following statutory provisions:

“When it is necessary to construct or repair any bridge *** and the tax rate for road purposes in such road district was in each year for the 2 years last past not less than the maximum allowable rate provided for in Section 6 — 501 of this Code *** the highway commissioner *** may petition the county board for aid *** the county board shall appropriate from the ‘county bridge fund’ in the county treasury a sufficient sum to meet one-half the expense ***.” Ill. Rev. Stat. 1977, ch. 121, par. 5— 501.
“The highway commissioner in each road district in each county having adopted township organization shall in accordance with ‘The Illinois Municipal Budget Law’ *** prepare or cause to be prepared a tentative budget and appropriation ordinance and file the same with the clerk of such township ***.” Ill. Rev. Stat. 1977, ch. 121, par. 6 — 501(b).
“For the purpose of constructing or repairing bridges *** at the joint expense of a county and a road district *** there may be included in the annual tax levies *** a tax of not to exceed .05% of the value of all the taxable property in the road district * * *
*** The highway commissioner shall separately specify *** the amount necessary to be raised by taxation ***. [Upon approval by the county board] the county clerk shall extend the same against the taxable property of the road district ***.
*** [T]he road district may accumulate the proceeds of such tax for such number of years as may be necessary to acquire the funds necessary to pay the district’s share of the cost of such project. It shall not be a valid objection to any subsequent tax levy made under this Section that there remains unexpended money arising from a preceding levy of a prior year because of the accumulation ***.” Ill. Rev. Stat. 1977, ch. 121, par. 6 — 508.

The Objector argues that the provision of section 5 — 501 that the county board must appropriate one-half the cost on the condition that the township furnish the other one-half is for the purpose of providing the township’s share of the cost, and that section 6 — 508 limits the purpose of the tax to projects authorized under section 5 — 501. It argues that the history of section 6 — 508 confirms this in that the section originated in 1951 as section 58a of “An Act to revise the law in relation to roads and bridges” (Ill. Rev. Stat. 1951, ch. 121, par. 64a) which referenced then section 35, later enacted in almost identical language as section 5 — 501; and that the stated purpose of obtaining aid from the county as provided in section 5 — 501 (Ill. Rev. Stat. 1977, ch. 121, par. 5 — 501) further illustrates the purpose that the township must show its need and furnish its share of the cost to obtain the county share. The Objector further argues that section 6 — 508 authorizes a levy only after construction has been authorized under section 5 — 501, which section requires the condition of the prior two years maximum general road tax levy, which was not made. We agree.

The Collector argues that even if a precondition exists, the statute has been satisfied because, as the town supervisor testified, a levy at the maximum rate for the general road tax was intended. He stated that on the date the levies for 1976 and 1977 were required to be made an amount was levied which would have required a levy at or above the maximum rate permitted for the general road tax; however, that later multipliers were applied which increased the assessed valuation so that the amount levied no longer was at or in excess of the maximum rate permitted.

The trial court found that it was the intent of the township to levy at the maximum rate permitted by law for general road taxes; that the legislature intended that the maximum rate for the two preceding years be determined in the context of the facts existing at the time of the levy and not as the tax rate might be changed later because of an increase in the assessed valuation which was brought about by imposition of the State or county board of review multiplier.

The fact that valuation data was not available to enable the township to fix by computation a levy that would require extension of the maximum allowable rate does not excuse it from meeting the precondition. Under section 6 — 508 (Ill. Rev. Stat. 1977, ch. 121, par. 6— 508) it was the town board’s duty to determine and certify to the county clerk the amount necessary to be raised by taxation for road purposes. It is the county clerk’s duty, not the board’s to determine the rate at which the levy is extended. The township’s levy is always effective to the extent that it does not require more than the maximum rate. See People ex rel Toman v. Chicago & Northwestern Ry. Co. (1941), 377 Ill. 547, 550-51; People ex rel. Carter v. Touchette (1955), 5 Ill. 2d 303, 306.

The statute does not lend itself to the interpretation that an intent to levy the maximum based on a perception of what the rate may be satisfies the precondition to the levy of the special bridge tax. The purpose of the requirement that the township must have levied the maximum road tax for the prior two years is to show exhaustion of the township’s taxing power as a condition of entitlement to county aid. (See People ex rel. Thomas v. Wabash R.R. Co. (1914), 265 Ill. 530, 532-33.) The town board’s statutory authority and duty is to determine the maximum amount needed for road purposes for the year and it becomes the county clerk’s duty to make sure that no more than the maximum rate is figured. It was stipulated that the tax rate extended for the Wayne Township general road tax in 1976 and 1977 was less than the maximum allowable rate in each of these years. Therefore, the special bridge tax for 1978 amounted to an invalid levy.

Objection to Levy for Equipment and Building

The Objector contends that the equipment and building levy for 1978 was invalid because there was no proof that the tax was submitted to the electors by ballot when it was approved in April of 1964.

It is not disputed that the question of authorizing an equipment and building tax is to be submitted by ballot. (Ill. Rev. Stat. 1963, ch. 121, par. 6 — 508.1.) The Objector argues that the town clerk’s minutes furnish proof that the question was not submitted by ballot and that therefore the tax was not authorized. The minutes of the annual town meeting on April 7,1964, state:

“The town clerk then presented to the town electors a petition signed by 25 township landowners and legal voters that a vote be taken for or against an annual tax, not to exceed .035% on each $100 of the full, fair cash value as equalized or assessed by the Dept, of Revenue, to be known as the Equipment and Building Tax. Highway Commissioner John Schofield explained to the electors that the township needed a new truck. The petition is made as part of these minutes. Ray Huske moved that the requested Equipment and Building Tax be approved. Motion was seconded by Town Elector Mr. Van Patton and was unanimously approved by the Town electors.”

The town clerk is required to keep faithful minutes in the town record book of the proceedings at town meetings (Ill. Rev. Stat. 1963, ch. 139, par, 74), and every essential step in the course of a levy of taxes must appear in the official records of the bodies authorized to act on them. (People ex rel. Toman v. Chicago Heights Terminal Transfer R.R. Co. (1941), 375 Ill. 590, 597.) It is presumed that the officers levying the tax have properly discharged their duties (People ex rel. Thompson v. Clark (1975), 34 Ill. App. 3d 228, 234), until the contrary appears. The parol levy of taxes is not legally possible, but a record of the taxing body showing the levy or assessment of taxes must be kept. (People ex rel. Wangelin v. City of St. Louis (1937), 367 Ill. 57, 67; Compton v. School Directors (1955), 8 Ill. App. 2d 243, 249.) “A record which is the only source of evidence by which official action can be shown and which does not show any action shows that none was taken.” (People ex rel. Wangelin v. City of St. Louis (1937), 367 Ill. 57, 67.) The burden of establishing the invalidity of the tax rests upon the objector. Mid-Continental Realty Corp. v. Korzen (1976), 40 Ill. App. 3d 133, 140.

The initial question is whether the recitation in the town minutes satisfies the burden of overcoming the presumption that the township officials performed their duty properly. The statement in the minutes that the question “was unanimously approved by the Town electors” in our view is less than conclusive proof that the question was not submitted to the town electors by a written ballot. People ex rel. Wangelin v. City of St. Louis (1937), 367 Ill. 57, 68, relied upon by the Objector, is distinguishable. In City of St. Louis there was no record made of the action of the board of review showing the assessment of the East St. Louis Union Station approach with no description of the property in the record. In several cases it has been held that where the record shows that an action has been carried by ballot but does not purport to set forth a form of the ballot, this failure does not invalidate the tax. (People ex rel. Manifold v. Chicago, Burlington & Quincy R.R. Co. (1944), 386 Ill. 56, 63-64; People ex rel. Prindable v. New York Central R.R. Co. (1948), 400 Ill. 507, 515.) The cited cases deal with a failure to include the form of a ballot in the certificate to the taxing authority. We believe, however, that the cases indicate that where, as here, the record shows that the issue was submitted to the town electors it will be presumed that the town officials did perform their duty properly, particularly where a long interval passes without the question being raised by anyone. See People ex rel. Prindable v. New York Central R.R. Co. (1948), 400 Ill. 507, 514; People ex rel. Manifold v. Chicago, Burlington & Quincy R.R. Co. (1944), 386 Ill. 56, 62-63.

In so deciding, we are not agreeing with several of the Collector’s arguments that the Objector has no standing because it was not a taxpayer in the district at the time of the authorization of the tax and thereby had no standing to object, or that laches or waiver barred the objection. The Objector was shown to be a recent purchaser of the property and could in no way be charged with sleeping on his rights or waiver on the basis that there was no evidence of objection to the lack of submission by a secret ballot if such was the case. In these circumstances the Collector has not sustained his burden of proving these defenses. Auer v. Wm. Meyer Co. (1944), 322 Ill. App. 244, 264; Kane v. American National Bank & Trust Co. (1974), 21 Ill. App. 3d 1046, 1052.

Objection to Levy for Special Road Tax

As to the special road tax which is required to be certified to the county clerk by the town board (Ill. Rev. Stat. 1977, ch. 121, pars. 6— 601, 6 — 602), the Objector claims that the certification was by the highway commissioner instead of the town board and therefore conferred no authority on the county clerk to extend the tax for 1978, making it void.

The record shows that a certificate of tax levy for special hard roads was issued on June 21, 1976. While the body of the certificate states that the certification is by the commissioner of highways and the township board of auditors, the certificate is signed only by the Wayne Township Highway Commissioner and the Town Clerk. The certificate recites the levy of a hard road tax at .1% upon property of the town for the year 1975 “and also for each succeeding year thereafter for the period of five years for the purposes above set forth” and follows with the recitation of the particular sum for the year 1976. At the hearing Town’s exhibit No. 1 was admitted into evidence. This was a certificate of tax levy filed August 12, 1976, and signed by the chairman of the board of auditors and certifies the amount necessary to be raised by taxation for the year 1977. A subsequent certificate was filed with the county clerk April 29, 1981, signed by the chairman and members of the town board verifying the tax for the year 1978.

The statute provides as pertinent:

“If a majority of all the ballots cast at such election on such proposition are in favor of such special tax, then the township board of auditors *** shall levy an annual tax in accordance with such vote and certify the same to the county clerk. That board of auditors *** shall also cause a copy of such certificate of levy to be filed in the office of the district clerk as provided in Section 6 — 502 of this Code.” Ill. Rev. Stat. 1977, ch. 121, par. 6 — 602.

A tax district must follow the statute, both in making the levy and in certifying the levy to the county clerk. (People ex rel. Chamberlain v. Chicago, Burlington & Quincy R.R. Co. (1943), 383 Ill. 212, 216.) Certification by the wrong authority confers no legal power on the county clerk to extend the tax. (People ex rel. Heaton v. Illinois Central R.R. Co. (1920), 295 Ill. 408, 413.) The certificate must be filed within the time prescribed or the levy will be void. (People ex rel. Chamberlain v. Chicago, Burlington & Quincy R.R. Co. (1943), 383 Ill. 212, 216-17; Gage v. Nichols (1890), 135 Ill. 128, 131-32.) The statute provides that no error or informality in the levy procedure shall vitiate a tax. (Ill. Rev. Stat. 1977, ch. 120, par. 716), but proper certification has been held to be mandatory, thus a matter of substance. (People ex rel. Chamberlain v. Chicago, Burlington & Quincy R.R. Co. (1943), 383 Ill. 212, 216-17; People ex rel. Preisel v. New York Central R.R. Co. (1941), 375 Ill. 574, 576; People ex rel. Heaton v. Illinois Central R.R. Co. (1920), 295 Ill. 408, 413.) Where a road tax is voted for a number of years, there is a duty by the certifying authority to levy the tax for the whole period and a duty on the county clerk to extend the tax each year by virtue of a single certificate; but the fact that a levy is not legally made for the first year does not destroy the right to tax for the remaining years. (Reynolds v. Town of Elkhorn Grove (1917), 280 Ill. 273, 277.) The validity of a tax is determined as of the time of the levy at the rate authorized when levied, not when extended. People ex rel. Orrison v. Wabash Ry. Co. (1931), 344 Ill. 606, 608.

The provision of the statute that the township board of auditors shall certify its levy to the county clerk appears to require that the township board and not the highway commissioner or town clerk sign the certificate.

The Collector maintains that the certificate of tax levy filed August 12, 1976, and signed by the chairman of the board of auditors (Town exhibit No. 1) is the necessary document to support the tax for 1978. The document discloses a levy of $85,000 “for the year 1977” as having been adopted August 11, 1976. A levy for 1976 or for 1977, could not authorize the county clerk’s extension of the 1978 tax. The Collector’s argument that only one certificate of levy is required for a multi-year tax is not an answer to the objection. The certification was not for a five-year period but for a one-year period in the amount of $85,000 to be “levied against all taxable property of said District for the year 1977.” (Apparently meant to be “1976”.) This could not amount to a levy for any other tax year and could not authorize a county clerk’s extension of a 1978 tax.

The April 29, 1981, certificate was too late to authorize the county clerk’s extension of the tax for the year 1978. People ex rel. Chamberlain v. Chicago, Burlington & Quincy R.R. Co. (1943), 383 Ill. 212, 216-17.

We also cannot agree with the Collector’s argument that even if the certificate filed July 21, 1976, was invalid because it lacked signature of one shown to be authorized by the town board, it could be amended at any time by adding the town board’s signature. The statute upon which the Collector relies provides in part:

“*** no error or informality in the proceedings of any of the officers connected with the assessment, levying or collection of the taxes, not affecting the substantial justice of the tax itself, shall vitiate or in any manner affect the tax or the assessment thereof; ***.” (Ill. Rev. Stat. 1977, ch. 120, par. 716.)

Proper certification, however, is mandatory and thus a matter of substance. People ex rel. Chamberlain v. Chicago, Burlington & Quincy R.R. Co. (1943), 383 Ill. 212, 216-17.

The judgment of the trial court of Du Page County overruling objections to taxes for town purposes in the amount of $27.88, to the special bridge tax in the amount of $81.04 and to the special road tax in the amount of $162.08 is reversed and the cause is remanded with directions to allow the objections. The judgment overruling the objections to the equipment and building tax in the amount of $56.73 is affirmed.

Reversed in part and remanded, affirmed in part.

NASH and VAN DEUSEN, JJ., concur.


source: Caselaw Access Project

author: PRESIDING JUSTICE ROMITI

license: Public Domain

text:
    GRACE EVANGELICAL LUTHERAN CHURCH OF RIVER FOREST, ILLINOIS, Plaintiff-Appellee and Cross-Appellant, v. THE LUTHERAN CHURCH—MISSOURI SYNOD et al., Defendants-Appellants and Cross-Appellees.
    First District (4th Division)
    No. 81—1851
    Opinion filed September 8, 1983.
    Rehearing denied October 17, 1983.

      Wesley S. Walton and Ward A. Meythaler, both of Chicago (Keck, Mahin & Cate, of counsel), for appellants.
    Edward T. Joyce and Richard S. Reizen, both of Chicago (Joyce and Kubasiak, P.C., of counsel), for intervenors-appellants Wilbur Werling, Carl Driessnack, Loren Saar, and Henry Eickelberg.
    James A. Serritella, James A. Klenk, and Donald A. Vogelsang, all of Chicago (Reuben & Proctor, of counsel), for appellee.
   PRESIDING JUSTICE ROMITI

delivered the opinion of the court:

This is an appeal by all parties from an order of the circuit court of Cook County declaring an option agreement to be valid and legally binding, but also declaring that a particular provision of that option agreement was unenforceable at law because such enforcement would necessitate an impermissible intrusion by the court into matters of religious doctrine and polity.

We affirm.

Appellant and cross-appellee, the Lutheran Church — Missouri Synod (the Synod), a Missouri not-for-profit corporation, is the second largest Lutheran church body in North America. Appellant and crossappellee, Concordia Teachers College, is an Illinois not-for-profit corporation located in River Forest. Concordia is owned and maintained by the Synod. (All further references to positions taken by the Synod in this appeal also apply to Concordia.) Appellee and cross-appellant, Grace Evangelical Lutheran Church of River Forest, Illinois (Grace), is an incorporated congregation with approximately 1700 members. Intervenors Wilbur Werling, Carl Driessnack, Loren Saar, and Henry Eickelberg, who are appellants and cross-appellees in this appeal, represent a group of Grace members who disagree with certain actions undertaken by Grace.

Grace was incorporated in 1902 and became a member of the Synod in 1903. In 1929, Grace purchased from the Synod the property which is the subject of this dispute, about one acre of land located on Concordia’s campus. On that land Grace’s present church structure was built. The property was conveyed pursuant to an agreement, signed by Grace, Concordia, and the Synod, granting the Synod and Concordia a 99-year option to repurchase the property upon the happening of any one of three events:

(A) Whenever Grace sought to sell the property and received a bona fide offer from a bona fide purchaser, the Synod had the right to purchase the property at that price. If the price was not agreeable to the Synod and they could not agree with Grace on a price within 20 days, then three “appraisers” would be selected (one by Grace, one by the Synod, and the third by the first two appraisers) to determine the price and terms. The results of this “arbitration” were to be accepted within 20 days. The Synod was also required to exercise its option under this clause within 40 days of receiving notice from Grace of the receipt of a purchase offer;
(B) Whenever Grace decided to affiliate, consolidate or merge with any other corporation, association or organization not affiliated with the Synod;
(C) “Whenever [Grace] shall fail or decide to not teach and preach the scriptures as set forth under Article II entitled ‘Confession’ of the Constitution of said Missouri Synod and in accordance with the rules, regulations and customs of [the Synod].” (The “Confession” states that the Synod and its members accept without reservation the Bible as the only rule and norm of faith and practice and certain other religious writing as the “true and unadulterated statement and exposition of the Word of God.”)

The agreement also provided that upon the happening of either of the latter two events the Synod or Concordia had the option of repurchasing the property with its improvements. If a price could not be agreed on within 30 days then the price was to be “arbitrated” within 60 days by three men selected in the same manner as was provided for under paragraph A. Their findings were to be accepted within 10 days. The agreement further stated that failure to exercise the option “within the time specified” would relieve Grace of all obligations under the agreement and render it null and void.

Grace purchased the property for $20,000. Five thousand dollars was paid in cash and the remaining amount was paid over a period of years, with some of that money allocated from money Grace had collected from its congregation for Synod purposes.

In the 1970’s certain controversies within the Synod caused Grace to re-evaluate its position in that body. One of these controversies concerned a resolution passed at the Synod’s 1973 convention, declaring that certain members of the faculty of Concordia Seminary in Saint Louis were teaching false doctrine. Grace had opposed this resolution. Most of the faculty and many of the students of the seminary left it to form a school called Seminary in Exile, or Seminex.

On June 13, 1976, Grace ordained as assistant pastor Aaron Sorrels, a graduate of Seminex who had not been certified by the Synod as required under Synod rules. The Synod and Concordia had opposed his ordination because of this lack of certification; however, there were continuing efforts by the parties to reconcile their differences on this issue before and after the ordination.

On August 24, 1977, Grace’s church council recommended to the congregation that Grace withdraw from the Synod. On September 20, 1977, the Voters’ Assembly of Grace voted to accept this recommendation effective October 1, 1977. On the latter date the Synod and Concordia notified Grace that they were exercising their option to repurchase the property.

On October 28, 1977, Grace filed a complaint for declaratory judgment, seeking a declaration that the option agreement was unenforceable under the first amendment and under principles of contract law. The Synod and Concordia filed an answer and counterclaim in which they sought a declaration that they were entitled to repurchase the property pursuant to paragraph C of the option agreement. Intervenors were permitted to file a complaint for injunction and other relief in which they raised certain procedural objections to the vote taken by Grace. (They have abandoned these contentions on appeal.)

After the filing of Grace’s complaint the Synod asked its commission of adjudication to resolve this dispute. Under Synod rules that body had jurisdiction in resolving disputes involving the Synod as a party. Grace did not participate in the ensuing proceedings, having advised the Synod that because of Grace’s withdrawal from the Synod it did not believe the Synod’s adjudicatory bodies had jurisdiction and that in any event such an adjudication would not even be binding on the Synod’s member congregations because of their autonomy. On June 12, 1978, the Synod commission of adjudication rendered a decision holding that Grace had violated the rules, regulations and customs of the Synod and therefore the Synod was entitled to exercise the option.

Intervenors sought an adjudication before a Synod district commission of adjudication, the body having jurisdiction over disputes among members of a particular district of the Synod. Grace also declined to participate in these proceedings. On August 7, 1978, that body determined that Grace had acted contrary to the scriptures in various respects and that as a consequence a schism was created in the congregation. In an addendum issued April 30, 1979, the district commission also found that members of Grace who had opposed Grace’s actions were entitled to the church property by virtue of article XV of the constitution and bylaws of Grace, which stated:

“If at any time a schism should take place in the congregation which God may graciously prevent, the property of the congregation and all benefit connected therewith shall remain with those members who shall adhere to the unalterable articles of this constitution ***.”

In various pleadings before the trial court the Synod and intervenors also contended that these findings were binding on the courts.

At the close of discovery Grace and the Synod each moved for summary judgment. Acting on these motions and on intervenors’ motion that the court adopt the findings of the district commission of adjudication, the trial court issued its order, holding that the option agreement was valid and legally binding on the parties but the provisions of paragraph C could not be enforced by a civil court because of first amendment restrictions.

Although the State has a legitimate interest in providing a forum for the peaceful resolution of church property disputes, the civil court’s role is severely circumscribed by the first amendment and accordingly the courts may not resolve such disputes on the basis of religious doctrine and practice. (Jones v. Wolf (1979), 443 U.S. 595, 61 L. Ed. 2d 775, 99 S. Ct. 3020; Presbyterian Church in the United States v. Mary Elizabeth Blue Hull Memorial Presbyterian Church (1969), 393 U.S. 440, 21 L. Ed. 2d 658, 89 S. Ct. 601.) When those matters are at issue in a property dispute involving a hierarchical church organization, the civil court must defer to any resolution of those issues reached by the highest authority within that church organization. (Jones v. Wolf (1979), 443 U.S. 595, 61 L. Ed. 2d 775, 99 S. Ct. 3020; Serbian Eastern Orthodox Diocese v. Milivojevich (1976), 426 U.S. 696, 49 L. Ed. 2d 151, 96 S. Ct. 2372.) However so long as no consideration of doctrine is involved the States are free to adopt any one of various approaches for settling church property disputes. (Jones v. Wolf (1979), 443 U.S. 595, 61 L. Ed. 2d 775, 99 S. Ct. 3020.) One such method, specifically approved by the court in Jones, is the neutral principles of law approach in which a court determines property ownership by applying general principles of property law and examining the terms of the local church charters, State statutes governing the holding of church property, and other pertinent documents such as provisions in the constitution of the general church pertaining to the ownership and control of church property. Again, however, if the church documents expressly incorporate religious concepts in the provisions relating to the ownership of property so that interpretation of those documents will require the court to resolve a religious controversy, then the court must defer to the resolution of those issues by the authoritative ecclesiastical body, assuming that the polity of the church is easily determined without intrusive scrutiny by the court. Jones v. Wolf (1979), 443 U.S. 595, 61 L. Ed. 2d 775, 99 S. Ct. 3020; Serbian Eastern Orthodox Diocese v. Milivojevich (1976), 426 U.S. 696, 49 L. Ed. 2d 151, 96 S. Ct. 2372; Maryland & Virginia Eldership of the Churches of God v. Church of God at Sharpsburg, Inc. (1970) , 396 U.S. 367, 24 L. Ed. 582, 90 S. Ct. 499, (Brennan, J., concurring).

In accordance with these principles of law we first consider the contentions of the parties which purportedly involve only the application of neutral principles of law to the resolution of this dispute.

A number of the Synod’s contentions on appeal depend upon the premise that it is entitled to exercise the option upon a finding that Grace violated the rules, regulations, and customs of the Synod. We need not examine these contentions in detail because we find that premise to be contrary to our construction of the pertinent option provision, paragraph C. The Synod apparently contends that this clause means that the option can be invoked if Grace violates the Synod’s secular rules and customs without the necessity of establishing any deviation from the Synod’s religious precepts. However we find that under a plain reading of the option provision it is subject to being exercised only if the teaching and preaching of the scriptures at Grace was not in accordance with the rules and regulations of the Synod. Thus a finding that Grace violated the rules and customs of the Synod without regard to the impact of those violations on Grace’s adherence to the Synod’s doctrinal positions would not suffice to permit exercise of the option. It is also clear, as the trial court found, that in deference to the first amendment the courts cannot resolve the question of whether the scriptures are being preached and taught in accordance with certain doctrinal positions. Jones v. Wolf (1979), 443 U.S. 595, 61 L. Ed. 2d 775, 99 S. Ct. 3020; Eddy ex rel. Pfeifer v. Christian Science Board of Directors (1978), 62 Ill. App. 3d 918, 379 N.E.2d 653.

The Synod contends that independent of the option contract between the parties, the trial court should have found that either a resulting trust or a constructive trust was established in favor of the Synod and Concordia. Generally a resulting trust arises when one person buys property with his own funds and title is taken in the name of another. (In re Estate of Wilson (1980), 81 Ill. 2d 349, 410 N.E.2d 23.) In this cause it is undisputed that Grace ultimately furnished the consideration for the property. Although the Synod initially loaned Grace a substantial portion of the cash used to purchase the property, that loan was repaid in full by Grace. A resulting trust does not arise where the funds furnished by a third party are in the form of a loan. Fields v. Fields (1953), 415 Ill. 324, 114 N.E.2d 402; Zack Co. v. Sims (1982), 108 Ill. App. 3d 16, 438 N.E.2d 663.

Nor do we find persuasive the Synod’s contention that a constructive trust should be imposed. A constructive trust may be imposed whenever it is established that one person holds property which in equity and good conscience should be possessed by another. (Zack Co. v. Sims (1982), 108 Ill. App. 3d 16, 438 N.E.2d 663; Steinmetz v. Kern (1941), 375 Ill. 616, 32 N.E.2d 151.) But in this cause for the trial court or this court to impose such a trust would require precisely the kind of searching inquiry into religious doctrine which the courts are forbidden to undertake. Fundamentally, the Synod’s equitable arguments in favor of imposing such a trust are grounded in the contention that Grace was not justified in withdrawing from the Synod. But such a determination would involve the searching evaluation of matters of doctrine and church practice that this court cannot make.

In its cross-appeal Grace had contended that as a matter of law the option agreement is unenforceable because it contains no definite price term and because its provisions relating to arbitration of the price are void and, in any event, uncertain. Grace also contends that the Synod and Concordia failed to seek to exercise the option within a reasonable time and therefore the option is void by its own terms. On these grounds Grace seeks reversal of the trial court’s order insofar as it declared the option to be valid and binding.

The Synod concedes that the option does not contain a specific price for the property. But they note that it does contain provisions for ascertaining that price. As we have set out earlier in this opinion, upon the exercise of the option, price disagreements were to be resolved by the appraisers in a process that was referred to in the option contract as arbitration. Grace relies on the fact that until the adoption of the Uniform Arbitration Act (Ill. Rev. Stat. 1981, ch. 10, par. 101 et seq.), in 1961, agreements to arbitrate future disputes were not valid in Illinois, in accord with the common law rule. (Cocalis v. Nazlides (1923), 308 Ill. 152, 139 N.E. 95; Godare v. Sterling Steel Casting Co. (1981), 96 Ill. App. 3d 601, 421 N.E.2d 925; Ill. Ann. Stat., ch. 10, par. 101, Introductory Notes, at 401 (Smith-Hurd 1975).) However this rule was not applicable to provisions concerning the valuation of property or other matters when that valuation was merely ancillary to a contract. (Cocalis v. Nazlides (1923), 308 Ill. 152, 139 N.E. 95; Norton v. Gale (1880), 95 Ill. 533.) The “arbitration” provision at issue here was not intended to resolve an ultimate legal issue such as the existence of grounds to permit exercise of the option, rather it was intended to establish the value of the property in the event the option was exercised. As such it was a valid provision despite common-law proscriptions concerning arbitration provisions pertaining to future disputes. Hamilton v. Home Insurance Co. (1890), 137 U.S. 370, 34 L. Ed. 708, 11 S. Ct. 133; 16 Williston on Contracts sec. 1918A (3rd ed. 1976).

Grace also contends that even if the use of arbitrators was valid, the option is invalid because it does not specify the standard to be used by them in arriving at a price. As we have noted the first clause, pertaining to a right of first refusal, specifically referred to the arbitrators as “appraisers.” Although in a subsequent clause pertaining to the option exercise at issue here the arbitrators are referred to only as “men,” it is clear that the use of appraisers was contemplated throughout. Numerous Illinois cases have approved similar terms as providing a sufficiently precise standard of determining price and accordingly we. find no merit to Grace’s objection on this ground. Norton v. Gale (1880), 95 Ill. 533; Stose v. Heissler (1887), 120 Ill. 433, 11 N.E. 161; Chicago Title & Trust Co. v. Northwestern University (1976), 36 Ill. App. 3d 165, 344 N.E.2d 52.

Grace next contends that in any event the Synod did not exercise its option within a reasonable time and for that reason the option is void. Grace concedes that as to the exercise of the option based on paragraph C no specific time limit is specified. However Grace contends that implicit in the contract is a requirement that such exercise take place within a reasonable time. (Yoder v. Rock Island Bank (1977), 47 Ill. App. 3d 486, 362 N.E.2d 68.) Grace notes that although the Synod has cited the ordination of Aaron Sorrels as one of the ways in which Grace violated the terms of paragraph C, the Synod did not seek to exercise its option until more than 15 months after that ordination. The record establishes however that the precipitating event for the Synod was Grace’s decision to withdraw from the Synod; the Synod notified Grace of its intentions on the very day Grace’s decision became effective. After the ordination of Sorrels the record establishes that there were numerous efforts by the parties to reach a resolution of their disputes. Only when Grace ultimately decided to withdraw from the Synod did the Synod exercise its option. Under these circumstances we do not find that the lapse of time between the ordination and the Synod’s ultimate decision was unreasonable. See Yale Development Co. v. Aurora Pizza Hut, Inc. (1981), 95 Ill. App. 3d 523, 420 N.E.2d 823.

Interveners contend that irrespective of its policy the Synod’s adjudications should have been enforced because under the law of voluntary associations courts must accept such associations’ interpretations of their own rules. But in this cause the dispute itself involves the question of the division of authority within the Synod; whether the congregation or the governing authorities of the Synod are the ultimate arbiters of doctrinal divisions. Thus we are squarely presented with the question of the polity of the Synod.

As we have noted earlier, one method the courts may use to resolve church property disputes without becoming impermissibly involved in questions of religious doctrine and practice is to determine the polity of the church organization and to then defer to the authoritative determination of the conflict by the highest authority within that organization. All the parties to this appeal contend that this dispute may be resolved in this manner. Of course the parties do not agree about which body holds that authority. Nor do they even agree as to the nature of the determination made by one of those bodies, the Synod.

We are primarily concerned here with the distinction between congregational and hierarchical polities. A church with a congregational polity has been defined by the United States Supreme Court as one in which:

“*** the property is held by a religious congregation which, by the nature of its organization, is strictly independent of other ecclesiastical associations, and so far as church governance is concerned, owes no fealty or obligation to any higher authority.” (Watson v. Jones (1872), 80 U.S. (13 Wall.) 679, 722, 20 L. Ed. 666, 674.

One article on the subject has defined a congregational polity as one in which “each local congregation is self-governing [and] *** in which the autonomy of the local congregation is the central principle.” (Note, Judicial Intervention in Disputes Over the Use of Church Property, 75 Harv. L. Rev. 1142, 1143-44 (1962).) A hierarchical church polity was defined in Watson as one:

“*** where the religious congregation or ecclesiastical body holding the property is but a subordinate member of some general church organization in which there are superior ecclesiastical tribunals with a general and ultimate power of control more or less complete, in some supreme judicatory over the whole membership of that general organization.” (Watson v. Jones (1872), 80 U.S. (13 Wall.) 679, 722-23,) (20 L. Ed. 666, 674.)

These are theoretical categories, however, and it has been recognized that it is possible for a church to constitute a combination of hierarchical and congregational aspect. (Kelley v. Riverside Boulevard Independent Church of God (1976), 44 Ill. App. 3d 673, 358 N.E.2d 696.) Thus in this cause the parties all agree that with respect to the ownership of property the Synod is congregational. Its rules provide that membership of a congregation in the Synod gives the Synod no equity in the congregation’s property. However this aspect of the polity of the Synod is not dispositive in this property dispute because we are concerned with the alleged violation of a requirement of doctrinal purity and the question of who has the power to decide such issues within the church.

The Synod and interveners contend that with respect to doctrine the polity of the Synod is hierarchical. On this ground the Synod contends that the trial court should have deferred to the determination of the Synod’s commission of adjudication that Grace had deviated from the scriptures in its teaching and preaching. The Synod contends that based on this allegedly authoritative determination it was entitled to exercise the option. Interveners also cite the determination of this commission but they rely on that part of the determination which found that because of these violations a schism had been created and the minority members of Grace were entitled to the property of the congregation. Thus intervenors seek to have themselves and those they represent awarded the property. Presumably this would vitiate any need for the Synod to seek to exercise its option. However in oral argument the Synod has indicated that it seeks the right to exercise its option in derogation of the intervenors’ claim.

It is Grace’s contention that the Synod has a congregational polity and thus the courts should defer to Grace’s determination that it continues to properly teach and preach the scriptures in conformity with the Synod’s doctrine, rules, and practices.

Included in the record on appeal are the constitution and bylaws of the Synod and of Grace, histories of the Synod, minutes of Synod meetings, reference books on religious organizations in America and numerous other documents relating to this issue. Upon a review of all of this material we conclude that the polity of the Synod is not a readily ascertainable fact. We find that the trial court correctly concluded that an attempt to determine this fact would in this case necessarily involve the courts in “*** a searching and therefore impermissible inquiry into church polity.” Serbian Eastern Orthodox Diocese v. Milivojevich (1976), 426 U.S. 696, 723, 49 L. Ed. 2d 151, 170, 96 S. Ct. 2372, 2387.

Our inability to readily (and thus constitutionally) determine the polity of the Synod is illustrated by the following examples from the evidence presented to the trial court and to us on appeal. The Synod presented the affidavit of Dr. Herbert Mueller, secretary of the Synod and also a member of the Synod’s commission on constitutional matters, a body charged under Synod rules with interpreting the Synod’s constitution and bylaws. Dr. Mueller avers that:

“*** the Synod regards its member congregations as having voluntarily relinquished a portion of their autonomy by associating with other member congregations within the Synod, especially in doctrinal matters, in procedures involving the adjudication and appeal of doctrinal issues, and in its own rules, regulations, custom, and polity. In this respect the Synod regards itself as having hierarchical character, as that has been articulated by some civil courts.”

However Dr. Mueller also concedes in the affidavit that he was not presenting the official position of the commission on constitutional matters. Grace presented the affidavit of Martin E. Marty, Fairfax M. Cone Distinguished Service Professor at the University of Chicago Divinity School, with a doctorate in American religious and intellectual history. Marty is a past president of the American Society of Church Historians and is an ordained Lutheran minister. Marty averred that upon a review of the Synod’s constitution, bylaws, and history he had concluded that:

“*** ^6 Lutheran Church - Missouri Synod is a religious denomination of congregational polity, that is to say that the majority of the voting members of a [Synod] congregation is the final arbiter of whether determinations of the Synod ‘are in accordance with the Word of God or expedient as far as the condition of a congregation is concerned.’ ”

All the parties cite to various provisions of the bylaws and constitution of the Synod. Grace notes that article VII of the Synod’s constitution provides:

“In its relation to its members the Synod is not an ecclesiastical government exercising legislative or coercive powers, and with respect to the individual congregation’s right of self-government it is but an advisory body. Accordingly, no resolution of the Synod imposing anything upon the individual congregation is of binding force if it is not in accordance with the Word of God or if it appears to be inexpedient as far as the condition of a congregation is concerned.”

On the other hand the Synod and interveners cite bylaws provisions permitting the Synod to suspend and expel members who act contrary to certain doctrinal statements (Synod Constitution, art. XIII) and establishing an elaborate procedural structure for adjudication and appeal of disputes within the Synod (By-Laws of the Synod, sec. V).

Grace cites the conclusion of Dr. Carl S. Mundinger, a Synod historian, that the Synod’s constitution “made the congregation the possessor of all church power and the highest tribunal ***.” (C. S. Mundinger, Government in the Missouri Synod 196 (1947).) But the Synod in turn notes that Mundinger stated that because of the Synod’s supervisory powers over pastors and teachers it:

“*** coui¿ exercise, and did exercise, control over the lives of all the pastors and teachers and over all the doctrine taught in the member churches. It is no exaggeration to say that this provision made it possible for an energetic President of Synod to determine what should be taught, how it should be taught, and who should do the teaching. Given the other provision of the constitution that all matters of doctrine and faith are to be decided by the Word of God and not by majority vote, the President of Synod could exercise influence over doctrine and life of both pastor and congregation altogether out of keeping with the commonly accepted concept of a strictly independent local congregation.” Mundinger, at 187-88.

Upon review of such conflicting evidence and of the voluminous documents contained in the record, we have found that we cannot constitutionally make the extensive inquiry and evaluation necessary to determine the polity of the Synod with respect to doctrinal disputes. The other neutral methods of resolving this dispute advanced by the parties have also not sufficed. Thus, although we have found no merit to Grace’s contentions with respect to the legal invalidity of the option contract at issue, we have also determined that on the record before us we cannot constitutionally determine whether that option can be exercised.

Accordingly, the judgment of the trial court is affirmed.

Affirmed.

JIGANTI and LINN, JJ., concur.


author: PRESIDING JUSTICE SEIDENFELD

text:
    BRIARCLIFFE WEST TOWNHOUSE OWNERS ASSOCIATION, Plaintiff-Appellant, v. WISEMAN CONSTRUCTION COMPANY, Defendant-Appellee.
    Second District
    No. 82—771
    Opinion filed September 19, 1983.

      John B. Kincaid, of Mirabella & Kincaid, of Wheaton, for appellant.

      Gary L. Taylor, of Rathje, Woodward, Dyer & Burt, of Wheaton, for appellee.
   PRESIDING JUSTICE SEIDENFELD

delivered the opinion of the court:

The principal issue is whether a homeowner’s association which holds title to common land in a planned unit development may maintain an action for breach of an implied warranty of fitness of the common land, in which the homeowners possess easements. The plaintiff, Briarcliffe West Townhouse Owners Association, a not-for-profit corporation (Association), appeals from the order granting the motion of Wiseman Construction Company (Developer) for a directed verdict as to count I of the third amended complaint on the basis that the Association lacked standing.

The Developer cross-appeals from the trial court’s judgment in favor of the Association as to count II of the third amended complaint.

I

The Developer purchased land adjoining the city of Wheaton, entered into annexation and subdivision agreements with the city, subdivided the land, and sold townhouses to various purchasers with accompanying easements, party wall rights and covenants, as set forth in the Declaration. The Declaration provided in essence that the Developer would convey described common land to the Association to be managed for the benefit of the homeowners, that each homeowner would have an easement to use the common land and would be a member of the Association, and that the Association could assess members to pay for the maintenance, capital improvements, and unforeseen expenses of the common land. In October 1976, the Developer conveyed the common land to the Association by quitclaim deed.

The Association proceeded to trial on its third amended complaint. That complaint alleged in count I that the Developer designed and fashioned the topography of the development, and impliedly warranted to the Association and individual members of the Association that the townhouses and drainage systems were habitable and fit for their intended use; that serious and continuous storm drainage problems occurred and were brought to the Developer’s attention but that corrective action had not been taken; and that the common'areas have retained and held surface storm water, resulting in substantial damage.

At the close of the Association’s case, the court granted the Developer’s motion for a directed finding on count I, finding that the Association did not have standing to bring an action under the implied warranty of habitability theory.

A

It is now clear that an implied warranty of habitability may extend to a subsequent purchaser who discovers a latent defect within a reasonable time after the purchase of a home even though the party is not in privity with the original developer/builder. (Redarowicz v. Ohlendorf (1982), 92 Ill. 2d 171, 183.) Defendant initially argues that there can be no implied warranty of habitability to vacant common land. We cannot agree. There may be circumstances in which a latent defect in the common land can affect the habitability of the living quarters. This has been recognized in Tassan v. United Development Co. (1980), 88 Ill. App. 3d 581, 584 (in which one of the defects claimed was “[t]here was inadequate drainage of the surface waters in front of the building”); Kramp v. Showcase Builders (1981), 97 Ill. App. 3d 17, 21 (defects in the septic system). See also Park v. Sohn (1980), 90 Ill. App. 3d 794, 798, aff'd (1982), 89 Ill. 2d 453, as here material (faulty septic system and drain tiles).

Under the terms of the purchase agreement, the Declaration was to be delivered to the purchaser of a townhouse together with the deed. The townhouse purchaser under his contract agreed to subscribe to membership in the Association and to comply with the Declaration, and agreed to be bound by the covenants and restrictions contained in the Declaration. The Declaration stated the purpose to create a community consisting of the townhouses and the common facilities and to promote and enhance the value of the amenities in the community. We perceive no real distinction between the buildings and the common land in the application of the public policy protecting a purchaser of a new or reasonably new home from latent defects in the building or the required amenities since the purchaser in a substantial degree must rely in either case on the expertise of the building-vendor creating the defect. See Redarowicz v. Ohlendorf (1982), 92 Ill. 2d 171, 183.

B

The basic issue then becomes whether the Association has standing to enforce an implied warranty of habitability either in its own right as owner of the common land, as third-party beneficiary of the contract between the Developer and the homeowners, or as a representative of the homeowners.

The doctrine of “standing” requires the party bringing suit to allege an injury to a legally protected interest, so that the court may decide only specific controversies. (See, e.g., Hill v. Butler (1982), 107 Ill. App. 3d 721, 725; Lynch v. Devine (1977), 45 Ill. App. 3d 743, 747-48.) What amounts to a legally protected interest has been given an increasingly broad interpretation. See Maiter v. Chicago Board of Education (1980), 82 Ill. 2d 373, 381 (community organization had “enforceable and recognizable right” to participate as local nominating committee for selection of school principals and had standing to intervene in suit brought by school principals against the Board); De Witt County Taxpayers’ Association v. County Board (1983), 112 Ill. App. 3d 332, 335 (taxpayers association could maintain action on behalf of taxpayers of the county who are members of the association).

In determining whether the Association has the necessary legally protected interest in the litigation, we must consider the purport of the homeowners purchase agreements, the effect of the quitclaim deed of the common lands to the Association, and the declaration of covenants, conditions and restrictions for Briarcliffe West which were made a part of the purchase agreements and to which their individual deeds were subject. The entire scheme of marketing the townhouses included not only the sale of the buildings but the assurance in the sales contract that the common areas would be deeded to the not-for-profit corporate association of which the townhouse owners would be members, thus insuring them the beneficial enjoyment of the common areas in connection with their homes.

The Developer argues that the plaintiff Association is neither a vendee nor subsequent vendee and is thus not afforded the protection of the implied warrant of habitability and that the declaration does not confer standing to maintain a suit for the breach of the owners’ contract rights, nor give the Association a right to claim as a direct beneficiary of the individual contracts between the Developer/builder and the homeowners. The Developer’s theory, adopted by the trial court, would create what, to our mind, is an untenable dilemma to the purchasers of the townhouses and their real interests. The Developer suggests in its brief that the townhouse owners may “arguably, perhaps” maintain a suit for breach of implied warranty of habitability but that they are not before the court. We note parenthetically that they are not before the court in their own right because an earlier motion judge found standing in the Association and when, at the trial and upon the close of the Association’s case, the trial court found lack of standing, it refused to permit the filing of a complaint on behalf of the townhouse owners as a class. Moreover, there is some question, which the Developer also suggests, but which is not directly before us, whether the townhouse unit owners can claim an implied warranty of habitability with reference to the common areas based on their ownership of mere easements in them. Similarly, the Association, as recipients of title by a quitclaim deed may also be thwarted in charging damage to their direct interests in the common land.

In effect, the Developers are arguing that because of the way in which the development was documented there is no one who can effectively claim the benefit of an implied warrant of habitability as to the common land. We are not persuaded that the method of separating the ownership of building and common lands should be allowed to undercut the public policy stated in Redarowicz v. Ohlendorf (1982), 92 Ill. 2d 171, 183, which was evolved to protect purchasers of new houses upon discovery of latent defects, by requiring that such defects be cured by the builder or developer who had created them.

We conclude under the particular circumstances of this case that the Association has standing to sue as a representative of the individual townhouse owners. Count I of the third amended complaint contains the allegation that the Association holds title for the common use and enjoyment of its members who are owners of the townhouses, that the Developer/builder impliedly warranted to the Association and to its individual members that the townhouses and the storm sewer drainage system were habitable and fit for the intended use of the same, that the development was free from latent defects but that serious and continuous storm drainage problems were brought to the attention of the Developer, which refused to correct or reconstruct them, resulting in the retention of surface storm water in the common areas and necessitating the construction of subsurface storm water drainage, with damages in the sum of $36,704.45. The Association has thereby stated under general common law principles representational standing to assert the rights of its individual members since it has alleged an immediate, direct and substantial injury to any one of them. (1000 Grandview Association v. Mt. Washington Associates (1981), 290 Pa. Super. 365, 368, 434 A.2d 796, 797-98.) In Grandview, as here, the Association was a nonprofit corporation comprised of all unit owners of a residential condominium property. The court found that the Association had standing, despite a lack of statutory authorization, to sue for breach of express and implied warranty. While agreeing that the Association had not alleged injury to its status as the decision-making body representing the individual unit owners, the court concluded that the Association had alleged a direct injury to the interests of its members by stating that the Developer had failed to comply with its implied and express warranties for the common areas resulting in, among other things, cracked masonry, water leakage, a defective sewage pump and the like. (See also Greentree Condominium Association v. RSP Corp. (1980), 36 Conn. Supp. 160, 163, 415 A.2d 248, 250.) In Greentree, the court noted that the Association was formed by the unit owners in accordance with a declaration of condominium and in accordance with its bylaws which charged the Association with the management, operation, care and upkeep of the common areas. The court noted that the Developer

“ ‘gave an implied warranty to unit owners and to Greentree Condominium Association, Inc., itself and/or as a third party beneficiary that the condominium units, common areas and facilities- and improvements purchased by said unit owners from RSP Corporation and built by the defendants would be constructed and erected in a competent and workmanlike manner *** 1
From those admitted facts the conclusion is inescapable that the association has standing, either directly or in a representative capacity, to maintain this action for the protection of the interests of the unit owners in pursuance of its obligations under the by-laws.” 36 Conn. Supp. 160, 163, 415 A.2d 248, 250.

While we recognize that both of these cases involve condominiums whereas the record in this case does not show compliance with Illinois condominium law, in both cases there was no statutory authority for the condominium association to sue on behalf of the owners, unlike the Illinois statute. (See Ill. Rev. Stat. 1981, ch. 30, par. 309.1. See also Doyle v. A & P Realty Corp. (1980), 36 Conn. Supp. 126, 128, 414 A.2d 204, 205.) In Doyle, the allegations that the Association had a contractual duty to maintain the project, and that there were damages in the form of increased maintenance costs because of alleged construction and design deficiencies were held to show a direct and substantial interest to the Association, providing standing to proceed.

In Maiter v. Chicago Board of Education (1980), 82 Ill. 2d 373, 382, the Illinois Supreme Court noted that “an organization has standing to assert the concerns of its constituents.” In De Witt County Taxpayers’ Association v. County Board (1983), 112 Ill. App. 3d 332, 334-35, the court found that a taxpayers’ association, although not itself a taxpayer, was entitled to assert the rights of its constituent members who were taxpayers. Under the facts before us, the Association should have been allowed to represent the interests of its constituent members, the homeowners. This is true particularly because the homeowners, although directly interested, may not have had a complete remedy in their own right, and, in any event, were denied participation.

The Developer cites American Federation of Technical Engineers v. La Jeunesse (1976), 63 Ill. 2d 263, 265-66, for the proposition that an unincorporated association cannot sue in a representative capacity in an action at law absent legislative authority. La Jeunesse proceeded on the premise that at common law “an unincorporated association has no separate legal existence independent of the members who compose it.” Here the Association is incorporated and its members are the clearly ascertainable homeowners.

The Developer places substantial reliance on Tassan v. United Development Co. (1980), 88 Ill. App. 3d 581, to support its argument that there is no contract between the Developer and the Association which could create the implied warranties claimed. In Tassan, the suit commenced as a class action by condominium unit owners, who owned both the homes and the common areas, for breach of an implied warranty of habitability of the individual homes and common areas; and the Developer defended on the grounds that the Association rather than the condominium owners was the proper party to assert the breach of a warrant of habitability. The court concluded that it was the unit owners’ contract rights which were being asserted, with no showing of a contract between the Developer and the Condominium Association which could create the warranty. Defendant relies principally on the statement in dicta:

“If anything, it is the association who would have no standing in this action but for the fact that the amendment to section 9.1 of the Condominium Property Act apparently gives the association standing to assert the unit owners’ rights in the common elements.” (Tassan v. United Development Co. (1980), 88 Ill. App. 3d 581, 596.)

We do not accept the quoted dicta in Tassan as applicable to the allegations in count I of the complaint before us for the reasons we have previously stated.

The trial court dismissed count I of the third amended complaint solely on the issue of standing without reaching the merits of the proof offered by the Association. In our finding that the Association has standing we, of course, express no opinion as to whether it has proved a breach of the implied warranty of habitability and is entitled to the claimed damages. In the view we have taken, we do not reach the Association’s additional claims that the trial court erred in denying its request to file further amended complaints which also would have added the townhouse owners as additional parties.

C

We also find no merit in the Developer’s argument that the action is barred by the statute of limitations. Defendant’s motion to dismiss was on the basis that the common area was conveyed to the Association by quitclaim deed on October 5, 1976, and the original complaint was not filed until May 9, 1980, contrary to the two year limitation period contained in section 21.3 of the Limitations Act (Ill. Rev. Stat. 1981, ch. 83, par. 22.3). As the Association notes, the statute was not effective until November 29, 1979, and has no retroactive application to the Developer’s planning and design of the project which took place between the years 1974 through 1976. (See Ill. Rev. Stat. 1981, ch. 110, par. 13 — 214(e).) The five-year statute of limitations applicable to an implied warranty of habitability begins to run when the structure or development is completed. (Altevogt v. Brinkoetter (1981), 85 Ill. 2d 44, 50.) As to the common area it was deeded to the Association on October 5, 1976. Thus, the suit filed on May 9,1980, was within the five-year statute of limitations.

D

The Developer further argues that the implied warranty of habitability has been waived as a matter of law by express warranty and waiver provisions in paragraph 5 of the purchase agreement. In substance, it provides that all construction work is to be done in a workmanlike manner in accordance with plans and specifications, and that seller warrants the workmanship and material for a period of one year after tender of possession of the premises with the further language:

“*** WARRANTIES ARE GIVEN IN LIEU OF ANY OTHER WARRANTIES, EXPRESSED OR IMPLIED, AND ALL SUCH WARRANTIES INCLUDING WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE ARE HEREBY EXCLUDED.”

This claim was not interposed as a defense in the trial court and cannot be raised for the first time on appeal. See, e.g., Snow v. Dixon (1977), 66 Ill. 2d 443, 453.

II The Cross-Appeal

Count II of the third amended complaint alleged that in March 1978, the Developer was in control of the water distribution system, that a water main under its control broke, that pursuant to the declaration, annexation agreement and subdivision improvement agreement, the Developer obligated itself to maintain the water distribution system until it was accepted by the city. The acceptance had not occurred until May 15, 1980, and as a result the Association had to pay for its repair. The Association also alleged that it was a third-party beneficiary of the Developer’s declaration and of the Developer’s agreement with the city of Wheaton concerning the subdivision, specifically the annexation agreement and the subdivision improvement agreement. After the Developer rested without presenting any evidence, the court found in favor of the Association. The trial court agreed that the Association was a third-party beneficiary and awarded it damages for the break of a water main which was part of the water distribution system for the townhouses. In its cross-appeal, the Developer argues that the Association was not a third-party beneficiary to any of the documents so as to permit it to bring this cause of action.

We first reject the Association’s claim that the issue is moot because of the Developer’s payment of the judgment. The payment of a judgment does not preclude that party from appealing from the judgment. Pinkstaff v. Pennsylvania R.R. Co. (1964), 31 Ill. 2d 518, 523; First National Bank v. Road District No. 8 (1945), 389 Ill. 156, 161-62; Richter v. Collinsville Township (1981), 97 Ill. App. 3d 801, 804.

We also agree with the Developer that the declaration does not give the Association any rights as a third-party beneficiary. It merely provides that the Developer retains legal title to the common area and facilities until the Association is able to maintain them. We also agree with the Developer that the annexation agreement between the city of Wheaton, the Developer and owners of certain land to be purchased by the Developer also does not give the Association rights as third-party beneficiary because by its terms the agreement expired on February 3,1971, prior to the deed to the Association.

We do conclude, however, that the subdivision improvement agreement dated January 23, 1972, between the city and the Developer to insure the completion of public improvements gives the Association third-party beneficiary status. In that agreement the Developer guaranteed the workmanship and material of its public improvements for one year after final acceptance by the city. The agreement required defendant to make any necessary repairs and placed the responsibility for the maintenance of the improvements on the Developer until final acceptance by the city. These improvements included the water distribution system. Since the city did not accept the system until after the break had occurred, the duty was upon the Developer to repair the broken main.

The Developer claims that the Association failed to show that the Agreement relates to the area encompassing the broken main but we find the record to the contrary. Also, the Developer claims that the Association does not have third-party beneficiary status because it had not been incorporated at the time the agreements were made and thus was not intended to benefit. The fact that the Association had not been incorporated at the time the agreements were entered into does not require the conclusion that the Association was not an intended beneficiary. A third-party beneficiary need not be identified by name but may be described as a member of a class. (Altevogt v. Brinkoetter (1981), 85 Ill. 2d 44, 55-56.) The Association, being charged with the duty of repairing and maintaining facilities, is a third-party beneficiary of the contract which allocated that duty to the Developer until the system was accepted by the city.

This court’s opinion in Kravitz v. County of Lake (1978), 62 Ill. App. 3d 101, supports a finding that the Association had third-party beneficiary standing. In Kravitz, the county purchased from the developer the water works which served the developer’s land by a contract in which the county agreed not to charge a connection fee to lots of the developer. The plaintiffs purchased lots from the developer and were told that they would not have a water connection fee. The county, however, charged them a fee and they brought suit against the county. This court held that they had standing as third-party beneficiaries because they would derive a direct benefit from the county’s promise not to charge a fee. (62 Ill. App. 3d 101, 105.) Similarly, in the instant case, the allocation of the duty to maintain the water mains found in the Agreement gives a direct benefit to the Association.

The judgment as to count I of the third amended complaint is reversed and the cause is remanded for proceedings consistent with this opinion. The judgment based on count II is affirmed.

Reversed in part and remanded, affirmed in part.

NASH and VAN DEUSEN, JJ., concur.