author: JUSTICE O’CONNOR

text:
      In re APPLICATION OF EDWARD J. ROSEWELL, Cook County Treasurer and Ex Officio County Collector (The People ex rel. Edward J. Rosewell, Cook County Treasurer and Ex Officio County Collector, Relator-Appellee, v. 2626 Lakeview Limited Partnership et al., Objectors-Appellants).
    First District (3rd Division)
    No. 82—2835
    Opinion filed December 14, 1983.
    Kevin M. O’Keefe and Thomas G. Lyons, both of O’Keefe, Ashenden, Lyons & Ward, of Chicago, for appellants.
    Richard M. Daley, State’s Attorney, of Chicago (Jane Clark Casey and Thomas J. McNulty, Assistant State’s Attorneys, of counsel), for appellee.
   JUSTICE O’CONNOR

delivered the opinion of the court:

This appeal involves two consolidated specific objections to the Cook County collector’s application for judgment determining the correct amount of taxes paid under protest for the 1976 tax year. The objectors, appellants, herein, Harbor House Condominium Association and 2626 Lakeview Limited Partnership, question the Quadrennial Reassessment of two high-rise apartment buildings in Lake View Township in the city of Chicago. The objectors claim that the properties involved, which were converted to condominium usage during the 1976 tax year, were incorrectly classified and valued for tax purposes as high use residential buildings. The trial court overruled the objections and entered judgment for the collector. We affirm.

The record reveals the following facts with regard to the subject properties: On January 1, 1976, the Harbor House property was improved with a 278-unit rental residential apartment building. The owners of said property entered into a contract to sell the real estate to American Invsco (Invsco) on February 12, 1976, for a consideration of $9,298,570. Closing and conveyance of title occurred on February 29, 1976, and condominium declarations were filed and recorded on May 11, 1976. Initial unit sales began closing on March 11, 1976, and by June 30 of that year 64.4% of all the units had been sold. The total initial sales price of all units amounted to $13,174,720.

On January 1, 1976, the 2626 Lakeview property was improved with a 487-unit apartment building. Invsco contracted to purchase the property on June 17, 1976, for $13,500,000, and closing occurred on August 11, 1976. As with the Harbor House property, the conversion process began immediately, the condominium declarations being filed and recorded on October 13, 1976. By December 23, 1976, 26% of all units had been sold, the initial sales price of all units amounting to $22,570,694.

On November 30, 1976, after the filing of the condominium declaration and the closing of some unit sales, the Cook County assessor for 1976 issued a “Preliminary Notice of Assessed Valuation” against the Lakeview building, stating his intent to increase the assessment from $3,230,599 to $5,096,720. Similarly a notice relating to the Harbor House property was sent on February 8, 1977, stating the assessor’s intention to increase the assessments on that property from $2,412,124 to $3,359,606. Complaints were filed in the assessor’s office contesting the 1976 assessments of both properties, accompanied by the following evidence: income and expense statements for the properties, the sales price paid by Invsco for the properties, retail sales prices of the condominium units, the condominium declarations, and the rental residential values of the properties. The complaints sought an evaluation of the properties based on 33% of the sales price paid by Invsco.

Amended complaints were subsequently filed with the assessor’s office, requesting that the property either be classified as a residential condominium and assessed at 17% of the condominium retail sales price, or as rental residential containing seven or more units and assessed at 33% of the rental residential value. Hearings were conducted by the assessor’s office, after which both properties were classified as rental residential with an assessment ratio of 33% of the acquisition price paid by Invsco. The final assessments were $3,069,922 on Harbor House and $4,457,515 on 2626 Lakeview. Complaints for both buildings were filed with the Board of Appeals of Cook County, which ultimately sustained the assessments. The 1976 taxes were timely paid under protest, as required by statute. Specific objections to the 1976 assessments were filed, contesting both the classification of the property as rental residential and the use of the acquisition cost as the basis for the assessment.

The Cook County Classification Ordinance for 1976 (Ordinance), classifies properties for taxation purposes in terms of use. The Ordinance defines Class 2 properties to include real estate used for residential purposes when improved with an apartment building of not more than six living units, or residential condominiums, and provides that such properties will be assessed at 17% of market value. Class 3 properties are defined as all improved residential properties not included in Class 2, and are to be assessed at 33% of market value. (Cook County Ordinance 77 — 0—12 (1976).) The Ordinance makes no reference as to the time when such use is to be ascertained, however, nor does it provide any basis for changing the status of a property once determined as of the statutory lien date on January 1. The trial court was therefore faced with the question of how a property should be assessed with respect to its classification and its value when it has been converted from rental residential to condominium use after the lien date. The court heard the following testimony at trial with regard to the subject properties:

John Moody, a real estate appraiser and assessment analyst with the county assessor’s office until 1976, testified that in reviewing the assessment of a high-rise residential property, the policy of the assessor was to review the income and expense statements supplied by the taxpayer which were then compared with research data supplied by the assessor’s own research and standards department. If the taxpayer’s data fell within the established range, the net income derived from the statements would be capitalized. This was essentially the income approach to value, which Moody believed to be the best indication of a property’s value when that property is residential rental. Moody also testified that in addition to the income approach, the assessor would consider two other approaches to value, a cost approach and a market data approach, and that in so doing, sales of subject properties which had taken place after the assessment date would be considered, with the sale value relating back to the assessment date. Moody testified that many of the high-rise residential buildings in the area were converting to condominiums during 1974 through 1976. He also testified that a condominium developer would normally pay more for a building than its income stream value.

Patrick Doody, who was deputy assessor during the assessment period in question, also testified. Doody classified both of the subject properties as rental residential, and stated that he considered the sale of the properties to Invsco to represent their market value. When questioned as to whether it was the policy of the assessor’s office in arriving at the value of residential real estate to apply the income approach, Doody stated that it would vary from property to property, depending on the other information available to the assessor at that time, and that if the property in question had not been sold, its market value would have been arrived at through a combination of all three approaches to value. Doody testified that the subject property had three values during the year in question, relating to its use as either rental residential for the production of income, condominium conversion property, or condominium units. He stated that in determining value, the assessor would and did look to facts occurring after January 1 during a given year.

Lastly, the court heard testimony from Fred Demetros, an employee of Invsco who was involved in the acquisition of the subject properties. Demetros confirmed the fact that there is a different market value for rental residential properties which are purchased with the idea of conversion, and that Invsco had in fact purchased the subject properties for that purpose. Demetros stated that the acquisitions of both of the subject properties were free and voluntary market transactions.

Objectors first argue that the trial court erred in classifying the subject property as Class 3 residential where it was converted to condominium use after the lien date but prior to reassessment. Objectors also claim that where a property has different values depending upon its use, the assessor must use that value which relates to the property’s classification under the Ordinance, and that allowing the assessor selectively to rely on certain post-January 1 facts (the sale to In-vsco) while ignoring others (the filings of the condominium declarations) in determining value constituted error. Finally, they argue that the actions of the assessor violate the constitutional requirement of uniformity in assessments.

Relying on applicable provisions of the Revenue Act of 1939 (Ill. Rev. Stat. 1981, ch. 120, par. 482 et seq.), the trial court initially determined that, unless otherwise provided by law, a property’s status for purposes of taxation is to be determined as of January 1 of each year. We agree. Section 27a of the Revenue Act of 1939 applies to status, and provides that the owner of real property on January 1 shall be liable for the taxes of that year. (Ill. Rev. Stat. 1981, ch. 120, par. 508a.) The General Assembly has thus far provided to change applications of the January 1 date in only two circumstances, amending section 27a to permit partial exemption of taxation where a property becomes taxable or exempt after January 1, and providing for proportionate assessments in the case of new construction or uninhabitable property. (See section 27a of the Revenue Act of 1939 as amended by 1963 Ill. Laws 1591, sec. 1 and Public Act 78-376, sec. 5 (1973 Ill. Laws 1187) (Ill. Rev. Stat. 1981, ch. 120, par. 508a).) With these two exceptions, the Revenue Act does not provide for a change in the assessable status of property after the lien date (see Doran v. Cullerton (1972), 51 Ill. 2d 553, 283 N.E .2d 865; People ex rel. McCullough v. Deutsche Gemeinde (1911), 249 Ill. 132, 94 N.E. 162), and objectors have set forth no compelling reasons for this court to implement by judicial fiat that which is properly a function of the legislature.

The trial court then turned to the question of value. Illinois law requires that all real property shall be valued at its fair cash value, estimated at the price it would bring at a fair voluntary sale. The County Ordinance provides an identical definition for “market value.” (Real Property Assessment Classification Ordinance, sec. l(bX2).) Fair cash or market value has been further defined as the amount that the property would bring at a voluntary sale where the owner is ready, willing and able to sell but not compelled to do so and the buyer is likewise ready, willing and able to buy, but not forced to do so. (Springfield Marine Bank v. Property Tax Appeal Board (1970), 44 Ill. 2d 428, 430, 256 N.E.2d 334; People ex rel. McGaughey v. Wilson (1937), 367 Ill. 494, 496, 12 N.E.2d 5.) Thus the standard of valuation is theoretically an objective one, the value of any particular property being set by the forces of the marketplace at a given place and time. It is also well settled that in order to obtain relief on this issue, the objector must show by clear and convincing evidence that the assessor’s opinion of fair market value is constructively fraudulent (Clarendon Associates v. Korzen (1973), 56 Ill. 2d 101, 105, 306 N.E. 2d 299; People ex rel. Munson v. Morningside Heights, Inc. (1970), 45 Ill. 2d 338, 341, 259 N.E .2d 27). Fraud in law will be inferred only where the evidence shows the property to have been grossly overvalued, the assessed valuation being reached under circumstances showing either lack of knowledge of known values or a deliberate fixing of values contrary to the known value. Only where the evidence clearly establishes that an assessment was made in ignorance of the subject property’s value, on a judgment not based upon readily ascertainable facts, or on a designedly excessive basis will a finding of constructive fraud against the taxing authorities be entered. People ex rel. Munson v. Morningside Heights, Inc. (1970), 45 Ill. 2d 338, 341; People ex rel. Nordlund v. Lans (1964), 31 Ill. 2d 477, 479, 202 N.E.2d 543.

Objectors do not challenge the assessor’s valuation of the subject properties as being constructively fraudulent in the sense that the sale to Invsco was not at fair market value, but rather, they seek a determination of value consistent with the properties’ classification. They conclude that if classification is to be determined as of January 1 then events occurring after that date can have no relevance to the factual determination of value. Having examined the record, we find no factual support for such a conclusion, nor do we find case law to indicate the result urged here.

Objectors rely principally on Consolidation Coal Co. v. Property Tax Appeal Board (1975), 29 Ill. App. 3d 465, 331 N.E .2d 122, a case involving the evaluation of a coal preparation plant, in which the court stated generally that events subsequent to the lien date should have no effect on the value for assessment purposes for the year in question. That case did not involve a sale, however, and is, we believe, factually inapposite to the case now before us. In arriving at a valuation for the plant, both parties there had used a replacement-cost-less-depreciation method, but plaintiff’s appraisal included an obsolescence factor which considerably reduced the plant’s value for tax purposes. The question before the appellate court was whether the obsolescence factor had been properly applied. Plaintiff’s witness testified that while the plant itself was practically new and in good condition, recently obtained data showing that the mine could not supply nearly as much coal as previously expected made the obsolescence factor necessary to arrive at an actual cash value. This would reflect the fact that the plant would be operating at a far lower capacity than the level for which it was constructed. Defendant’s witness disputed the obsolescence factor, in part because there was no evidence of any coal shortage whatever on the lien date. While it recognized that the availability of coal was a relevant consideration in determining the plant’s value, the court reversed the trial court and upheld the Tax Board’s determination which rejected the obsolescence factor. Most significantly, the conflicting testimony before the Tax Board had indicated that it was not clear until sometime after the lien date that the coal supply in the mine was considerably less than expected. Other testimony was that the plaintiff’s loss in the mine during the year in question may have been caused by factors other than the coal supply. Based on the record before it, and because the trial court had given no reason for adopting plaintiff’s estimate which included the obsolescence factor, the appellate court could not say that the Tax Board’s decision had been against the manifest weight of the evidence. 29 Ill. App. 3d 465, 473.

Our supreme court has at least indicated that a sale of property during the tax year in question is a “relevant factor” in considering the validity of an assessment. (People ex rel. Munson v. Morningside Heights, Inc. (1970), 45 Ill. 2d 338, 342; People ex rel. Carr v. Stewart (1924), 315 Ill. 25, 145 N.E. 600.) Values which are future in character may not be taken into consideration, however, where they are so elusive and difficult of ascertainment that they have not affected the present market value of the property. (315 Ill. 25, 31.) With these considerations in mind, the trial court in the instant case held that the assessing officials were not barred, as a matter of law, from considering events which occurred after the lien date in assessing the subject properties. The court went on to state that what subsequent events assessing officials may consider in any individual case will depend on the nature of the event and the weight to be given the event will depend upon its reliability in tending to show value as of January 1. Based upon all of the evidence before it, the trial court determined that the subject properties were both available for use as condominiums and adaptable for that use as of the lien date. The court then upheld the assessments based upon 33% of Invsco’s acquisition costs, the evidence of which was properly before the assessor at the time of valuation. We cannot say that this determination was against the manifest weight of the evidence.

Lastly, we find no support for objectors’ argument that the subject assessments violate the constitutional requirement of uniformity. Both former employees of the assessor’s office testified that all three approaches to value (cost, income and market) were used by the assessor in valuing high-rise apartment buildings, depending in part upon the information which was available at the time of the assessment. The trial court correctly concluded that where, as here, the evidence indicated that the sales involved were free and voluntary market transactions, the market approach yielded a fair and proper method of valuation. Objectors have failed to set forth any evidence that similarly situated property was treated any differently.

Based on the foregoing, the judgment of the circuit court is affirmed.

Affirmed.

McNAMARA, P.J., and WHITE, J., concur.


source: Caselaw Access Project

author: JUSTICE JIGANTI JUSTICE JOHNSON,

license: Public Domain

text:
    THE PEOPLE OF THE STATE OF ILLINOIS, Plaintiff-Appellee, v. ALBERTA PEEBLES, Defendant-Appellant.
    First District (4th Division)
    No. 81—2981
    Opinion filed December 15, 1983.

      JOHNSON, J., dissenting.
    James J. Doherty, Public Defender, of Chicago (Kathleen M. McGinnis, Assistant Public Defender, of counsel), for appellant.
    Richard M. Daley, State’s Attorney, of Chicago (Harry H. Semrow, Jr., Assistant State’s Attorney, of counsel), for the People.
   JUSTICE JIGANTI

delivered the opinion of the court:

Defendant, Alberta Peebles, was indicted along with her husband, Eugene Peebles, on 111 counts of theft and one count of conspiracy to commit theft. The two codefendants’ cases were severed and after a jury trial, Alberta was convicted of conspiracy and acquitted of theft. She was sentenced to two years. On appeal from her conviction of conspiracy to commit theft, the defendant contends that her conviction was invalid on two grounds: (1) she was not proven guilty beyond a reasonable d.oubt and (2) the statute of limitations had run on the conspiracy count. She also contends that she was denied a fair trial because her husband’s testimony was stricken and because the State made improper and prejudicial remarks to the jury during closing argument. Finally the defendant contends that she received an excessive sentence.

The State contends that the defendant for a period of 10 years, starting in June 1967, conspired with her husband to defraud the State of Illinois out of approximately $130,000. The State presented extensive documentation as evidence of the existence of a conspiracy. This evidence revealed that in June 1967, the defendant filed an application for public aid due to the desertion of her husband. She indicated her address as 6425 South Parnell and her husband’s as 222 East 60th Street. She informed the State that Eugene had been working at Ward Baking Company and was earning approximately $120 per week. Other documentary evidence refutes the above information given to the Department of Public Aid. These documents indicate that on several occasions during 1967-1968, Ward reascertained Eugene’s address, and its personnel records listed his home address as 6425 South Parnell. In addition, Eugene’s income for 1967 from Ward was $11,116 and for 1968 was $10,346. These amounts totaled nearly twice the amount the defendant informed the State her husband was earning for those time periods. Further documentation reveals that Eugene opened a bank account at Michigan Avenue National Bank in March 1970, and the home address listed was the same as the defendant’s. Eugene was the sole signator.

This pattern of identical addresses for the defendant and Eugene, despite her claim of desertion, can be traced by the documentation for each of the following years of the alleged conspiracy. The defendant informed the State in November 1971, that she had moved to 10535 South Prairie Avenue. In January 1972, the defendant received a public aid warrant for $125. Subsequently, this instrument bore two endorsements, the defendant’s and Eugene’s, and was stamped with the account identification number of Eugene’s savings account at Michigan Avenue National Bank. Moreover, in 1971, a mortgage was executed on the 10535 South Prairie property bearing the names of both Alberta and Eugene Peebles. In 1972, Eugene filed a signature card at a currency exchange and listed his home address as 10535 South Prairie. In October 1973, the defendant filed a signature card at the same currency exchange and also listed her home address as 10535 South Prairie. In 1974, Eugene founded a corporation, and as its in-corporator, listed his address as 10535 South Prairie. He also opened a checking account for the corporation and had the statements mailed to the Prairie Avenue address.

In February 1975, the defendant informed the State that she had moved to 12110 South Emerald Avenue. In March 1975, she requested additional assistance listing the same Emerald Avenue address. In July 1975, an official from the State conducted a redetermination visit upon the defendant at 12110 South Emerald Avenue. The defendant was asked about any changes in her income and the whereabouts of her husband. She continued to represent that Eugene was not living with her and that he was earning $120 per week. Eugene worked at Ward Baking Company until November 1974, at which time he applied for unemployment compensation. The unemployment records list Eugene’s address in November 1974 as 10535 South Prairie; he also listed 12110 South Emerald as his address for 1975. Eugene Peebles earned well over $10,000 each year he was employed at Ward.

The defendant’s address for 1976 was listed with the Department of Public Aid as 9106 South Harvard. Also in 1976, Eugene’s signature card at the currency exchange was amended to reflect the new address at 9106 South Harvard and also to allow the defendant to negotiate checks that named Eugene as payee. Between May and June of 1976, seven unemployment warrants were sent to Eugene at 9106 South Harvard; five of those checks were deposited in a joint savings account Eugene held with the defendant at the Union National Bank. In 1976, an additional corporation was set up by Eugene, Gino’s Tax and Information Center. Eugene was listed as the owner, living at 9106 South Harvard. Gino’s also had an account at Union National Bank. During 1976, two particular deposits into Gino’s account were welfare warrants issued to the defendant. In addition to the defendant’s endorsement, these warrants bore second endorsements, providing, “Pay to the order of Union National Bank of Chicago for deposit only Gino’s Tax and Information Center.”

In April 1977, the defendant applied for food stamps and listed her address as 9106 South Harvard. She also indicated that her “Aid to Dependent Children” was her sole source of income. In August 1977, Ms. Joanne Cobb, a caseworker for the Department, went to 9106 South Harvard for a redetermination visit of the defendant. At trial, Cobb testified that when she arrived, a young boy directed her to the kitchen where she observed a man cooking. Cobb was then informed by the defendant that the man was Eugene and that they had reconciled. The defendant then instructed Cobb to cancel her aid since Eugene was presently employed on a full-time basis.

Robin Kunze, a document examiner for the Illinois Department of Law Enforcement, testified that the endorsements that appeared on public aid warrants issued to the defendant that were deposited in Eugene’s account and on unemployment warrants issued to Eugene were positively identifiable as the defendant’s signature.

Arthur Turner, a friend of Eugene, testified for the defense stating that he had known Eugene since 1969 and as far as he knew, Eugene had never lived with his family. Bobbie Richards, the defendant’s daughter, testified that she had lived at home from 1967 to 1972 and that her father did not live with them during that time period.

Finally, after waiving his rights under the fifth amendment, Eugene testified for the defense. He testified that he moved out of 6425 South Parnell in 1967 and that he moved back with his wife in 1977 for a month or two. He stated that his wife did not sign a mortgage on the 10535 South Prairie property and that he never discussed the bank accounts at Michigan Avenue National Bank and Union National Bank with the defendant. On cross-examination, Eugene refused to answer any more questions on the grounds that to do so would tend to incriminate him, after the State attempted to impeach him regarding prior inconsistent statements about his residence. The trial court then struck all of Eugene’s testimony and instructed the jury to disregard it. The jury returned a verdict of guilty on the charge of conspiracy to commit theft.

Pursuant to section 8 — 2 of the Criminal Code of 1961, the requisite elements of conspiracy are (1) an agreement to commit an offense, (2) with an intent the offense actually be committed, and (3) the commission of an act in furtherance of the agreement by a co-conspirator. (Ill. Rev. Stat. 1977, ch. 38, par. 8 — 2.) However, because of the clandestine nature of the conspiracy agreement and the foreseeable difficulty of the prosecution’s burden of establishing the defendant’s conspiratorial intent and agreement by direct proof, the courts have permitted broad inferences to be drawn from the circumstances, acts and conduct of the parties. People v. Mordick (1981), 94 Ill. App. 3d 497, 418 N.E.2d 1057.

In the instant matter, the State presented extensive documentation tending to show that the defendant and Eugene were not separated as the defendant had represented to the Department of Public Aid, and that Eugene was earning more than the defendant had suggested. Furthermore, the State’s evidence tended to show that the defendant and Eugene were sharing their income, thus making the defendant’s receipts of public aid fraudulent.' We believe that the cumulative effect of the substantial circumstantial evidence is sufficient to justify a finding of guilty of conspiracy to commit theft. People v. Weaver (1982), 92 Ill. 2d 545, 442 N.E.2d 255.

A second issue raised on appeal by the defendant is that her conviction of conspiracy is invalid because the statute of limitations had run on the conspiracy count. In Illinois, the statute of limitations for conspiracy is three years after the commission of the offense. (Ill. Rev. Stat. 1977, ch. 38, par. 3 — 5(b).) Case law provides that every overt act in furtherance of a conspiratorial agreement is a renewal of the conspiracy, and the statute of limitations begins to run from the date of the commission of the last overt act. (People v. Isaacs (1967), 37 Ill. 2d 205, 226 N.E.2d 38.) Included as an act in furtherance of the conspiracy are subsequent efforts of concealment which are directed at enabling the conspirators to escape punishment. People v. Meagher (1979), 70 Ill. App. 3d 597, 388 N.E.2d 801.

The indictment in the present action, brought on June 23, 1979, charged the defendant with conspiracy to commit theft “on or about April 2, 1975, July 2, 1975 and August 23, 1977.” Without dispute, the first two dates alleging conspiratorial acts are clearly not within the applicable three years statute of limitations. The third date listed in the indictment, August 1977, does come within the three-year period. However, the defendant asserts that the August 1977 act, which was when the defendant told the State caseworker that she and her husband had reconciled and that she no longer needed public aid, was not an act in furtherance of the conspiracy. We disagree. The evidence presented at trial is clearly sufficient for a jury to draw the inference that the defendant and Eugene had consistently lied to the State regarding their living arrangements and their income level. It appears that the Peebles were living together continuously from 1967, despite the defendant’s representation to the contrary, so that, the time Cobb made an unannounced redetermination visit on the defendant, it became necessary for the defendant to conceal the long-term fraud she and Eugene had been perpetrating on the State by telling Cobb that Eugene had just moved back home. As previously stated, the law provides that subsequent efforts of concealment are acts in furtherance of the conspiracy, therefore, the defendant’s attempt to conceal from the State her 10-year-long fraud was an act in furtherance of the conspiracy. This act in August 1977, was well within the three-year statute of limitations period. Accordingly, the defendant’s conviction of conspiracy is not invalid.

The defendant next contends that she was denied a fair trial because Eugene’s testimony was completely stricken from the record. It is well established that a defendant who takes the stand in his own behalf, is not entitled to claim the privilege against self-incrimination on cross-examination on matters reasonably related to the subject matter of his direct examination. (Jenkins v. Anderson (1980), 447 U.S. 231, 65 L. Ed. 2d 86, 100 S. Ct. 2124.) The defendant must testify truthfully and accurately and in order to assure compliance, the prosecution is equipped with, and obligated to use, the traditional truth-testing devices of the adversary process. Harris v. New York (1971), 401 U.S. 222, 28 L. Ed. 2d 1, 91 S. Ct. 643.

In the instant matter, after voluntarily waiving his fifth amendment rights Eugene testified for the defense. However, during cross-examination, Eugene asserted his right against self-incrimination when asked questions regarding, matters in which he testified during direct. While Eugene is not the defendant, the legal principles stated above equally apply to a nonparty witness. Eugene’s testimony on direct was not subject to proper cross-examination due to the assertion of his fifth amendment right. This testimony was untested and clearly unreliable; thus, the trial court acted properly by striking Eugene’s testimony from the record.

The defendant further asserts that she was unfairly and substantially prejudiced by improper remarks made by the State during closing argument. However, the defendant has waived the issue of any impropriety in the State’s remarks by failing to object at trial. People v. Lucas (1981), 88 Ill. 2d 245, 430 N.E.2d 1091.

Finally, the defendant contends that she received an excessive sentence. The length of sentence to be imposed upon the convicted defendant, is a matter that lies within the sound discretion of the trial court, and absent an abuse of discretion, a sentence will not be disturbed on review. (People v. Perruquet (1977), 68 Ill. 2d 149, 368 N.E.2d 882.) A sentence for a conviction of conspiracy to commit theft is not less than one year and not more than three years. (Ill. Rev. Stat. 1977, ch. 38, par. 1005 — 8—1(b)(5).) The defendant was sentenced to two years. Accordingly, the trial court’s decision will not be disturbed.

The trial court’s decision to convict the defendant of conspiracy to commit theft is affirmed.

Affirmed.

ROMITI, P.J., concurs.

JUSTICE JOHNSON,

dissenting:

I dissent from the position taken by the majority; I would reverse. Because the majority’s statement is more conclusory than factual, I present this statement of facts.

In June 1979, defendant, Alberta Peebles, and her husband, Eugene Peebles, were jointly indicted on 111 counts of theft and 1 count of conspiracy to commit theft. The conspiracy count charged as follows:

“Eugene Peebles and Alberta Peebles committed the offense of conspiracy in that they knowingly with the intent that the offense of theft of property of the State of Illinois in excess of $150.00, be committed, agreed by and between themselves to the commission of said offense, and did, as an act in furtherance of said agreement, among others, the following: on or about April 2nd, 1975, July 2nd, 1975 and August 23, 1977, Alberta Peebles falsely denied to agents of the Illinois Department of Public Aid that her husband resided with her and supported her and their family, further Eugene Peebles concealed his support of his family and his presence in the home by various deceptions and that Eugene Peebles and Alberta Peebles jointly benefited from the receipt of Illinois warrants, food stamps and medical services on hundreds of occasions from December 29, 1967 through September 20th, 1978, ***.”

The cases of the codefendants were severed, and after a jury trial Alberta was acquitted of theft but convicted of conspiracy and sentenced to two years.

On June 22, 1967, Alberta applied for public assistance because her husband had deserted her. On an ADC absent parent form, dated June 16, 1967, Alberta reported that her husband made voluntary contributions of food and paid the rent. In January 1968, the Illinois Department of Public Aid determined that Alberta and her children were in need of “substantial medical treatment.”

Between 1968 and 1976, caseworkers filled out redetermination of eligibility forms during or after visits to Alberta’s home. On the forms Alberta reported to her caseworkers that Eugene was absent. Alberta applied for food stamps on March 25,1975, and on April 7,1977.

Alberta reported to the Department of Public Aid her various addresses as follows:

Address Date
6425 South Parnell February 1966
10535 South Perry November 1971
12110 South Emerald February 26,1975
10755 South Eggleston 9106 South Harvard ' 1976

Eugene Peebles’ addresses were listed on exhibits as follows: the Parnell address was listed on an employment record dated March 27, 1968, and on the signature card for an account opened by Eugene on March 19, 1970, at the Michigan Avenue National Bank; the Perry address was listed on a signature card dated May 19, 1972, for a currency exchange, on Eugene’s employment record dated October 23, 1973, and on an account card for an account opened April 3, 1974, at the Michigan Avenue National Bank for a business owned by Eugene; the Emerald address appeared on statements issued between March 31 and June 30, 1976, for a joint account of the Peebles at the Union National Bank of Chicago and on an application for unemployment compensation for Eugene; the Harvard address appeared on an application for unemployment compensation and on Eugene’s unemployment compensation checks dated May-July 1976, on a signature card for an account opened January 13, 1976, at the Union National Bank of Chicago for a business owned by Eugene, as a change of address on the signature card for the currency exchange, and on a joint income tax return dated May 25, 1978.

The State introduced the following documents as evidence of a conspiracy between Alberta and Eugene:

1. Eight public aid checks issued to Alberta Peebles between 1969 and 1972 which were also endorsed by Eugene.
2. A mortgage dated October 12, 1971 between Eugene and Alberta Peebles and Mortgage Associates for $19,400 and signed by the Peebles for property located at 10535 South Prairie.
3. Signature card at a currency exchange. Eugene signed a signature card on May 19, 1972 and Alberta signed a card on October 22, 1973; she was authorized to cash checks for Eugene on June 14, 1976.
4. Alberta endorsed two public aid checks to one of Eugene’s business accounts in the Union National Bank on February 18-19, 1976.
5. Statements of account dated March 31-June 30, 1976 for a joint account in Alberta’s and Eugene’s name which was opened at the Union National Bank of Chicago. Five of Eugene’s unemployment checks were deposited in this account in 1976.
6. An unemployment compensation check cashed at the currency exchange was signed by Eugene and Alberta Peebles and addressed to E. Peebles at the Harvard Street residence.
7. A public aid check addressed to Alberta was endorsed by Eugene and Alberta and negotiated at the Michigan Avenue National Bank in an account maintained by Eugene.

JoAnn Cobb, a caseworker for the Illinois Department of Public Aid, testified for the State. Alberta Peebles was one of her clients. Cobb described a visit to Alberta’s house on August 11, 1977, as follows:

“I went into the home that morning and one of the children answered the door and I asked for the mother. They told me to come in. Mrs. Peebles came down the stairs. I was directed to the kitchen area which I believe would have been to my left and at that time I noticed there was a gentlemen there that was in the kitchen area preparing breakfast and Mrs. Peebles let me know that her husband had returned to the home and she was no longer in need of assistance and I should cancel her case.”

When asked to elaborate further, Cobb said:

“I came into the home. The gentleman was in the kitchen. At that time I did not know who he was but there was a striking resemblance to him and one of the children and Mrs. Peebles did advise me that she and her husband had reconciled and that he was back into the home fulltime employed. There was no need for supplement and I was to cancel the case.”

Robin Lee Kunze was qualified as a handwriting expert and testified that Alberta signed public aid checks issued to her between January 1975 and March 1976, a food stamp application dated March 25, 1975, and an affidavit, two public aid checks which she deposited in a business account of Eugene’s on February 18-19, 1976, and an unemployment compensation check issued to Eugene dated July 16,1976.

Henry Nembhard had been employed by Eugene in the latter’s accounting business in 1974 and 1975. He testified that Eugene introduced Alberta to him as his wife and that he saw her on two other occasions in 1974 when she visited Eugene’s place of business.

The State rested and Arthur Turner testified for the defense. Turner stated that he has known Eugene Peebles since 1969 but never knew him to live with Alberta.

Bobbie Richards, the Peebles’ daughter, testified that she lived ■with her mother until 1972, and her father did not live with her mother from 1967 to 1972.

In my opinion, this cause should be reversed because no act in furtherance of the conspiracy occurred within the limitations period.

In Illinois, the elements of conspiracy are defined as follows:

“A person commits conspiracy when, with the intent that an offense be committed, he agrees with another to the commission of that offense. No person may be convicted of conspiracy to commit an offense unless an act in furtherance of such agreement is alleged and proved to have been committed by him or by a co-conspirator.” (Ill. Rev. Stat. 1975, ch. 38, par. 8 — 2(a).)

The limitation period for conspiracy is three years. (Ill. Rev. Stat. 1975, ch. 38, par. 3 — 5(b).) The indictment charged that defendant committed acts in furtherance of the conspiracy on April 2, 1975, July 2, 1975, and August 23, 1977. Defendant was indicted in June 1979. To come within the three-year period, the State must have alleged and proved an act in furtherance of the conspiracy between June 1976 and June 1979.

According to the majority, defendant committed an act in furtherance of the conspiracy in August 1977 when she told her caseworker that she and her husband had reconciled and that she no longer needed public assistance. The majority found that defendant’s statement constituted an act in furtherance because it was an act to conceal the conspiracy by reducing or destroying the potential for detection. In People v. Meagher (1979), 70 Ill. App. 3d 597, 603, 388 N.E.2d 801, the court stated:

“*** [Conspiracy includes subsequent efforts at concealment, but only if those efforts are proximate in time to the commission of the principal crime. When acts or declarations directed towards concealment are distant from the commission of the offense, they are subject to such grave doubts as to their trustworthiness that they should not be admissible under the co-conspirator exception.”

I do not understand, nor does the majority satisfactorily explain, how defendant’s statement that she no longer wanted public assistance constituted an act in furtherance of a conspiracy to fraudulently procure public aid. If defendant had said that she wanted to continue receiving assistance, such a statement could be construed as an act in furtherance of the conspiracy. The inference to be drawn from the majority’s ruling is that any statement made by defendant could be construed as an act in furtherance of the conspiracy. The conclusion renders meaningless the concept of “an act in furtherance of a conspiracy” because the majority’s finding makes such an act out of any statement the defendant may have made. In my opinion, defendant’s statement that she no longer required public assistance was not an act in furtherance of the conspiracy to commit theft.

Further, the majority suggests that the jury concluded the defendant not only lied in stating that she and her husband had reconciled, but also that it concluded the couple resided together for the entire time defendant received public assistance. Such a suggestion is not warranted. The jury was aware that defendant received public assistance and yet concluded there was no theft. This verdict suggests to me that the jury in fact found that there was no continuous cohabitation. At best, the prosecution’s evidence suggests that at times Alberta and Eugene Peebles had the same mailing address. In my opinion, use of a mailing address over a period of years is not proof beyond a reasonable doubt that the addressee resides there. It merely creates an inference that the addressee may reside there.

For the foregoing reasons, I would reverse the decision of the trial court.


author: PRESIDING JUSTICE BUCKLEY

text:
    MFA MUTUAL INSURANCE COMPANY, Plaintiff-Appellant, v. CROWTHER, INC., et al., Defendants-Appellees.
    First District (1st Division)
    No. 82—2775
    Opinion filed December 12, 1983.

      Abramson & Fox, of Chicago (John E. Guy, of counsel), for appellant.
    French, Rogers, Kezelis & Kominiarek, of Chicago (Richard G. French and Michael J. Hennig, of counsel), for appellees.
   PRESIDING JUSTICE BUCKLEY

delivered the opinion of the court:

This appeal arises out of a third-party action brought by MFA Mutual Insurance Company (MFA) against Casualty Insurance Company (Casualty) and Casualty’s insured, Crowther, Inc., for allegedly wrongfully refusing to defend an underlying personal injury suit brought under the Structural Work Act (Ill. Rev. Stat. 1981, ch. 48, par. 60 et seq.). The complaint sought reimbursement of the expenses incurred by MFA in defending the personal injury action plus the judgment paid and interest. Additionally, the complaint included counts predicated upon theories of implied indemnity and contribution. Casualty and Crowther, Inc., filed a motion to dismiss the complaint, and the motion was granted by the trial court. MFA appeals from the order of dismissal. We affirm.

The record reveals as follows. MFA insured Lee Crowther on his home in Joliet, Illinois, under a homeowner’s insurance policy issued in 1973. Later that year, Lee Crowther contracted with Kofoid & Ti-lon, a general contractor, to build a family addition to his home. The roofing and gutter work was to be done by Crowther, Inc., of which Lee Crowther was part owner and vice-president. Crowther, Inc., hired Robert Bishop as a loaned employee to perform some of the roofing work. While performing the work, Bishop sustained serious injuries when he fell off a ladder as he carried a bundle of shingles on his shoulders.

Bishop filed a claim for worker’s compensation against his employer, Crowther, Inc. Casualty insured Crowther, Inc., and therefore defended the worker’s compensation claim. Eventually, through Casualty, Bishop received his worker’s compensation benefits and the claim was settled.

Bishop additionally filed a lawsuit predicated on the Structural Work Act against Lee Crowther individually and Kofoid & Tilon. No third-party action was ever filed against Crowther, Inc. MFA defended Lee Crowther in the Structural Work Act suit under a reservation of rights based on the business pursuits and worker’s compensation exclusions in the homeowner’s policy. The case was tried and the jury returned a verdict against Lee Crowther in the amount of $175,000. Kofoid & Tilon were found not liable. Lee Crowther appealed the judgment, contending, among other things, that he as a private homeowner could not be held liable as a party “in charge of” the work under the Structural Work Act. The appellate court expressly rejected this argument and affirmed the judgment against Lee Crowther. (Bishop v. Crowther (1980), 92 Ill. App. 3d 1, 415 N.E.2d 599.) Leave to appeal was denied by the supreme court. 85 Ill. 2d 555.

Robert Bishop thereafter filed a garnishment proceeding against MFA upon the homeowner’s insurance policy, and MFA filed a declaratory judgment proceeding for a declaration that it was not liable under the policy because of the business pursuits and worker’s compensation exclusions in the policy. The trial court held that the exclusions did not apply and it entered a garnishment judgment against MFA in the amount of the judgment recovered by Bishop, plus interest and costs.

MFA appealed, again asserting the argument that a private homeowner is not “in charge of” the work under the Structural Work Act. The appellate court disagreed and affirmed the trial court on the basis of the previous appellate court decision. (Bishop v. Crowther (1981), 101 Ill. App. 3d 933, 428 N.E.2d 1021.) The supreme court denied leave to appeal. 88 Ill. 2d 549.

MFA subsequently filed a third-party action against Crowther, Inc. and Casualty. MFA alleged that Casualty wrongfully refused to accept MFA’s tender of defense and indemnification in the Structural Work Act suit. The complaint additionally pleaded actions for implied indemnity and contribution. Casualty and Crowther, Inc. moved to dismiss the third-party, complaint pursuant to section 48 of the Civil Practice Act (now codified as section 2 — 619 of the Code of Civil Procedure (Ill. Rev. Stat. 1981, ch. 110, par. 2 — 619)). The two appellate court opinions in this matter were attached in support of the motion. The trial court granted the motion to dismiss the third-party complaint.

. I

We first address MFA’S contention that its complaint was improperly dismissed because Casualty had a duty to defend Lee Crowther in the underlying Structural Work Act suit. MFA argues that as a result of Casualty’s wrongful failure to defend Lee Crowther, MFA is entitled to recover from Casualty the sum of the judgment plus interest and costs it incurred in defending the action. We find this argument without merit.

In Illinois, an insurer’s duty to defend an action against its insured is determined by the allegations of the complaint against him. (Conway v. Country Casualty Insurance Co. (1982), 92 Ill. 2d 388, 393, 442 N.E.2d 245; Maryland Casualty Co. v. Peppers (1976), 64 Ill. 2d 187, 193, 355 N.E.2d 24.) An insurer may not justifiably refuse to defend an action against its insured unless it is clear from the face of the complaint that the allegations fail to state facts which bring the case within, or potentially within, the policy’s coverage. (Conway v. Country Casualty Insurance Co. (1982), 92 Ill. 2d 388, 393, 442 N.E.2d 245.) When the allegations of the complaint show that the claim is beyond the policy coverage, the insurer can safely and justifiably refuse to defend. (Reis v. Aetna Casualty & Surety Co. (1978), 69 Ill. App. 3d 777, 784, 387 N.E.2d 700.) Hence, it is apparent from these controlling principles that the following two requirements must be met before an insurer has a duty to defend an action: (1) the action must be brought against an insured; and (2) the allegations of the complaint must reveal the potential of policy coverage.

In the case at bar, neither of the foregoing requirements are met. First, no entity insured by Casualty was named as a defendant in the complaint filed by Robert Bishop; Lee Crowther was sued individually, and Crowther, Inc., was never named as a defendant. No third-party action was filed against Crowther, Inc., at that time. Second, all of the allegations in the complaint were directed against Lee Crowther as owner of the home involved in the incident. There were no allegations that Lee Crowther was acting as an agent of Crowther, Inc. or that Lee Crowther was in any way connected with or acting on behalf of Crowther, Inc. If Bishop’s complaint had contained such allegations, his claim would have been barred because he would have been suing a co-employee. (Brooks v. Carter (1981), 102 Ill. App. 3d 635, 430 N.E.2d 566.) The allegations against Lee Crowther were carefully drafted to avoid the exclusive remedy provision contained in the Workers’ Compensation Act. Ill. Rev. stat. 1981, ch. 48, par. 138.5.

Hence, since the allegations of Bishop’s complaint reveal that the action was not brought against Casualty’s insured and that there was no potential for coverage under the Casualty policy, Casualty had no duty to defend the underlying action.

MFA cites several cases for the proposition that an insurance company that wrongfully fails to defend its insured will be estopped from any subsequent collateral attack against the underlying proceeding. (Solo Cup Co. v. Federal Insurance Co. (7th Cir. 1980), 619 F.2d 1178, 1184; Reis v. Aetna Casualty & Surety Co. (1978), 69 Ill. App. 3d 777, 783, 387 N.E.2d 700; Aetna Casualty & Surety Co. v. Coronet Insurance Co. (1976), 44 Ill. App. 3d 744, 748, 358 N.E.2d 914; McFa-dyen v. North River Insurance Co. (1965), 62 Ill. App. 2d 164, 172, 209 N.E.2d 833.) These cases, however, fail to support MFA’s position; each case involves a situation wherein a named insured was sued and the insurance company argued it had no duty to defend the action based upon an exclusion contained in the insurance policy. In the present case, no entity insured by Casualty was ever made a party to the underlying suit and there is no exclusion being asserted by Casualty. The authorities cited by MFA in this regard therefore are inapplicable.

II

MFA further argues on appeal that it is entitled to indemnification directly from Crowther, Inc., and derivatively from Casualty on an implied indemnity theory predicated upon active-passive fault. Although Lee Crowther was held to be “in charge of” the work under the Structural Work Act, MFA’s complaint sets forth facts alleging that Lee Crowther could only have been guilty of passively violating the Act, and that he should be indemnified by Crowther, Inc., an active wrongdoer under the Act. We find the dismissal of the implied indemnity count to be proper.

Liability under the Structural Work Act attaches to those parties “having charge of” the work. (Ill. Rev. Stat. 1981, ch. 48, par. 69.) In order to further the Act’s purpose of promoting safety in the construction industry, courts have broadly construed the phrase “having charge of” to effectively include two classes of potential defendants: (1) those having the right to supervise or control the actual work from which the injury arises; and (2) those with overall responsibility for the work being performed on the job site. (Norton v. Wilbur Waggoner Equipment Rental & Excavating Co. (1979), 76 Ill. 2d 481, 488-89, 394 N.E.2d 403; Larson v. Commonwealth Edison Co. (1965), 33 Ill. 2d 316, 321-22, 211 N.E.2d 247.) Since more than one party-can be “in charge of” the work, several parties may ultimately be liable to the injured party. (Emberton v. State Farm Mutual Automobile Insurance Co. (1978), 71 Ill. 2d 111, 117, 373 N.E.2d 1348.) However, it is established that there can be degrees of fault among those who are liable under the Act, and the passively delinquent party, if held accountable, may transfer its statutory liability to the actively delinquent party. (McInerney v. Hasbrook Construction Co. (1975), 62 Ill. 2d 93, 104, 338 N.E.2d 868.) In such a case, implied indemnity is proper where there is a “qualitative distinction” between the culpability of two tortfeasors. Zizzo v. Ben Pekin Corp. (1979), 79 Ill. App. 3d 386, 398, 398 N.E.2d 382.

In the instant case, the jury found that Lee Crowther, in his capacity as a private homeowner, was “in charge of” the work under the Structural Work Act. This finding, and the judgment against him were affirmed by the appellate court in two separate decisions. The appellate court determined there was sufficient evidence to support a finding that “[Lee] Crowther’s liability was not derivative but direct, stemming from his own conduct and actions and not those of Crowther, Inc.” Bishop v. Crowther (1980), 92 Ill. App. 3d 1, 12, 415 N.E.2d 599.

We recognize that the fact that Lee Crowther was found in charge of the work does not in itself lead to the conclusion that he was an active wrongdoer under the Act. (Miller v. DeWitt (1967), 37 Ill. 2d 273, 291, 226 N.E.2d 630.) We are further aware that the issue of whether a party was actively or passively at fault under the Act is generally a question for the jury. (Prater v. Luhr Brothers, Inc. (1977), 51 Ill. App. 3d 685, 693, 366 N.E.2d 399.) However, this court previously has determined that active fault can be found from the pleadings, as well as the evidence in the original action. (Gimmeson v. Illinois Power Co. (1974), 18 Ill. App. 3d 736, 738, 310 N.E.2d 397.) Gimmeson indicates that if the pleadings and evidence in the underlying action disclose that a party’s conduct could only be characterized as active wrongdoing under the Act, it is not necessary for a trial to be held on the implied indemnity issue. See also Lindner v. Kelso Burnett Electric Co. (1971), 133 Ill. App. 2d 305, 273 N.E.2d 196 (third-party plaintiff’s conduct, as ascertained from the pleadings, could only be characterized as active wrongdoing under the Act and the dismissal of the third-party complaint for implied indemnity therefore was proper).

In the case at bar, it is clear from the pleadings and evidence in the underlying action that the conduct of Lee Crowther could only be characterized as active fault and was of such a nature so as to preclude any finding of merely passive wrongdoing on his part. No “qualitative distinction” can be found to exist between the conduct of Lee Crowther and Crowther, Inc. so as to warrant recovery on an implied indemnity theory. As the appellate court noted (Bishop v. Crowther (1980), 92 Ill. App. 3d 1, 4, 10, 415 N.E.2d 599), Lee Crowther testified to the following: he was present on the job site when different tradesmen were there for the construction work; he was familiar with construction practices; he coordinated the work between Crowther, Inc., and Kofoid & Tilon; he had the authority to stop the work of Crowther, Inc., if it was being performed in an unsafe manner; he had the right to schedule the work of the various contractors; and, finally, he was present on the job site as owner of the home and not as an employee of Crowther, Inc.

Additionally, Carl Kofoid, partner of Kofoid & Tilon, testified that Lee Crowther was functioning as a general contractor and walked around the job site with him discussing the work that was completed and the work to be done. Kofoid stated it was assumed that Lee Crowther would handle his areas of specialization, which included the roofing work. (92 Ill. App. 3d 1, 5.) Bishop also testified that Lee Crowther was running the roofing portion of the job and in fact gave him specific instructions about the shingling. (92 Ill. App. 3d 1, 9.) Bishop’s injury occurred while he was engaged in the roofing work. Therefore, the evidence shows that Lee Crowther directly supervised and was in charge of the very activity from which the injury and violation of the Act arose.

Moreover, the evidence further reveals that Bishop’s injury resulted when he was required to place his ladder on muddy, uneven ground, permitting the ladder to slide while he was upon it. Lee Crowther acknowledged that the perimeter area of the addition had experienced settling of backfill, forming a trench, and that the backfill had to be redone so the ground was not so uneven. (Bishop v. Crowther (1980), 92 Ill. App. 3d 1, 4, 415 N.E.2d 599.) With regard to the backfill, the appellate court stated:

“Crowther performed the duties of *** general contractor, he was responsible for job safety. It was his decision whether or not Kofoid should redo the backfill to even it off.” (92 Ill. App. 3d 1, 10, 415 N.E.2d 599.)

We note that in Svenson v. Miller Builders, Inc. (1979), 74 Ill. App. 3d 75, 392 N.E.2d 628, the plaintiff was injured when his scaffold sank into a backfill which, as the evidence revealed, was “rough and sloppy” and inadequate to support the scaffold. The court in Svenson held that the contractor who had responsibility for compaction of the backfill could only be an active, rather than passive, wrongdoer under the Act for failing to provide backfill adequate to support the scaffold and, therefore, was not entitled to indemnity.

In the present case, given the evidence and applying the law above, we find no error by the trial court in dismissing the count for implied indemnity.

Ill

MFA’s third-party complaint includes a count for contribution. The Contribution Act applies only to those actions arising on or after March 1, 1978. (Ill. Rev. Stat. 1981, ch. 70, par. 301.) The “action” which must arise on or after March 1, 1978, is the plaintiff’s cause of action in the underlying lawsuit. (Balmes v. Hiab-Foco (1982), 105 Ill. App. 3d 572, 575-76, 434 N.E.2d 482; Verson Allsteel Press Co. v. Major Spring & Manufacturing Co. (1982), 105 Ill. App. 3d 419, 421-22, 434 N.E.2d 456.) Here, the plaintiff’s cause of action in the underlying lawsuit arose in 1973 when Bishop was injured, which was prior to the effective date of the Contribution Act. MFA therefore has no cause of action for contribution.

Finally, we briefly note that MFA pleaded a count seeking equitable relief. In view of the pleadings, litigation and two prior appellate opinions in this matter — all spanning over the past decade — we conclude that equity compels us to affirm the dismissal of MFA’s third-party complaint.

For the foregoing reasons, the judgment of the circuit court of Cook County is affirmed.

Affirmed.

McGLOON and CAMPBELL, JJ., concur.


author: PRESIDING JUSTICE BUCKLEY JUSTICE McGLOON,

text:
    CONTINENTAL CASUALTY COMPANY et al., Plaintiffs-Appellants, v. POLK BROTHERS, INC., Defendant-Appellee.
    First District (1st Division)
    No. 82—2203
    Opinion filed November 21, 1983.
    Rehearingdenied January 17, 1984.

      McGLOON, J., dissenting.
    Clausen, Miller, Gorman, Caffrey & Witous, P.C., of Chicago (James T. Ferrini, Richard W. Strawbridge, and Lisa D. Marco, of counsel), for appellants.
    Glen H. Kanwit and Karen P. Flynn, both of Hopkins & Sutter, of Chicago, for appellee.
   PRESIDING JUSTICE BUCKLEY

delivered the opinion of the court:

The present appeal arises out of an action brought by plaintiff insurance companies as subrogees of their insured, Rand Realty & Development Company (Rand). Plaintiffs’ complaint alleged that the negligent conduct of defendant Polk Brothers, Inc. (Polk), caused a fire which ultimately resulted in the destruction of a building Rand had leased to Polk. The various insurers were thereby required to pay claims on fire insurance policies held by Rand, which they then sought to recover from Polk as damages. Plaintiffs appeal from an order granting Polk’s motion for summary judgment.

On appeal, the insurance companies contend that under the lease agreement executed by Polk and Rand for the premises subsequently destroyed by fire, Rand clearly has a cause of action against the lessee Polk for damages to the building occasioned by Polk’s negligence. Plaintiffs argue that as subrogees of Rand they should be permitted to pursue Rand’s claim against Polk. Polk argues here, as it did below, that the lease agreement, the relationship between Polk and Rand as parent corporation and wholly owned subsidiary and the insurance policies procured by Polk and Rand all reveal an intent by the parties to the lease to look only to the insurance proceeds for indemnity against fire loss. Consequently, defendant contends that the insurance companies have no subrogation claim against Polk and the trial court properly granted its motion for summary judgment. After reviewing these competing contentions and the record below, we find the trial court properly granted Polk’s motion for summary judgment, and affirm.

It is axiomatic that for a right of subrogation to exist, the subro-gor must possess a right which he could enforce against a third party and that the subrogee must seek to enforce the subrogor’s right. (American National Bank & Trust Co. v. Weyerhaeuser Co. (7th Cir. 1982), 692 F.2d 455.) The subrogee can have no greater rights than the subrogor and can enforce only such rights as the subrogor could enforce against the third party. (William Aupperle & Sons, Inc. v. American Indemnity Co. (1979), 75 Ill. App. 3d 722, 394 N.E.2d 725.) Thus, it is commonly stated that the subrogee (here the insurers) must step into the shoes of or be substituted for the subrogor (here Rand). (London & Lancashire Indemnity Co. of America v. Tindall (1941), 377 Ill. 308, 36 N.E.2d 334.) From the foregoing, it is clear that if the lease agreement executed by Rand and Polk exculpates the lessee Polk from liability for fire loss due to its own negligence, then the subrogee insurance companies will have no right of action against Polk.

Plaintiffs rely primarily on the yield-back, waiver of claims, and untenantability provisions contained in the lease to support their contention that a right of subrogation exists against Polk. The yield-back provision provides in relevant part:

“9. *** At the termination of this lease by lapse of time or otherwise, Lessee shall return the premises and all equipment and fixtures therein in as good condition as when Lessee took possession, ordinary wear and tear excepted, failing which Lessor may restore the premises, equipment and fixtures to such condition and Lessee shall pay the cost thereof upon request.”

The waiver of claims provision requires the lessee, Polk, to waive all claims against the lessor for damages to person or property sustained by lessee or any other occupant of the building. The paragraph further provides:

“6. *** If any such damage, whether to the demised premises or to the building or any part thereof, or whether to Lessor or to other tenants in the building, result from any act or neglect of Lessee, Lessor may, at Lessor’s option, repair such damage and Lessee shall upon demand by Lessor, reimburse Lessor forthwith for the total cost of such repairs. Lessee shall not be liable for any damage caused by its act or neglect if Lessor or a tenant has recovered the full amount of the damage from insurance and the insurance company has waived in writing its right of subrogation against Lessee.”

Paragraph 13 of the lease agreement is the only provision in the lease dealing specifically with damage by fire and provides in relevant part:

“UNTENANTABILITY. If the premises or the Building are made wholly untenantable by fire or other casualty, Lessor may elect (a) to terminate this lease as of the date of the fire or casualty by notice to Lessee within thirty days after that date, or (b) to repair, restore or rehabilitate the Building or the premises at Lessor’s expense. *** If the demised premises shall be partially damaged by fire or other casualty without the fault or neglect of Lessee, Lessee’s servants, employees, agents, visitors or licensees, the premises shall be repaired, restored or rehabilitated by and at the expense of Lessor, ***.” (Emphasis added.)

In construing these lease provisions our primary objective is to ascertain and give effect to the intent of the parties (Hartwig Transit, Inc. v. Menolascino (1983), 113 Ill. App. 3d 165, 446 N.E.2d 1193) through a consideration of the instrument as a whole (One Hundred South Wacker Drive, Inc. v. Szabo Food Service, Inc. (1975), 60 Ill. 2d 312, 326 N.E.2d 400). That intent must be ascertained, if possible, from the language of the lease and the words should be given their common and generally accepted meaning. (Hartwig Transit, Inc. v. Menolascino (1983), 113 Ill. App. 3d 165, 168.) However, where the language is ambiguous, evidence such as the position of the parties, the surrounding circumstances existing at the time of execution and the parties’ subsequent conduct may be considered in order to explain language susceptible to more than one meaning. Hartwig Transit, Inc. v. Menolascino (1983), 113 Ill. App. 3d 165, 168; American National Bank & Trust Co. v. Lembessis (1969), 116 Ill. App. 2d 5, 11, 253 N.E.2d 126.

Applying the above cited rules of construction, we must reject plaintiffs’ contention that the terms of the lease unambiguously manifest the intent of Rand and Polk to hold Polk liable for the negligent destruction by fire of the demised premises. Both the yield-back provision contained in paragraph 9 and the waiver of claims provision of paragraph 6 give the Lessor, Rand, the right to be reimbursed for repairs it makes to the leased premises under certain circumstances, particularly where the repairs have been necessitated by the lessee’s negligence. As such, these provisions cut in plaintiffs’ favor inasmuch as they demonstrate an intent to hold Polk liable for some types of damage to the building. However, the language of paragraph 6 is of a general character referring to “any damage” caused by lessee’s negligence. Similarly, the yieldrback clause would appear to impose a general duty to return the premises in good condition excepting only ordinary wear and tear. Neither paragraph makes reference to reimbursement for damages caused by fire, whereas paragraph 13 specifically refers to this eventuality and should be determinative on the issue of the parties’ intent. This approach is in accord with the well-settled rule of construction that where a document contains both general and specific provisions relating to the same subject, the specific provision is controlling. Gordon v. Dolin (1982), 105 Ill. App. 3d 319, 434 N.E.2d 341.

Paragraph 13 clearly differentiates between fire damage rendering the building wholly untenantable (as occurred here) and partial damage by fire. In the former case, the lessor has the option of terminating the lease or repairing, restoring or rehabilitating the premises at the lessor’s expense. In the latter case, the lessor’s obligation to repair the premises only arises where the fire occurs “without the fault or neglect of the lessee.” The partial damage provision is clearly inapplicable to the case at bar and plaintiffs’ reliance thereon is misplaced — here, the building was totally destroyed by fire. Under these circumstances, the language of the lease does not condition lessor’s duty to repair at its own expense on the lessee being free from negligence as in the case of partial damage to the premises. Furthermore, there is no provision for the lessor to recoup the cost of such repairs as appears in other sections of the lease. Rather, paragraph 13 unequivocally requires the lessor to bear the entire cost of such repairs where the premises have been rendered wholly untenantable by fire.

Since Rand agreed to repair the building at its own expense if the building was totally destroyed by fire, it is clear that the parties contemplated Rand would obtain insurance to protect against this eventuality. This construction is bolstered by provisions contained in paragraph 11 of the lease wherein Polk covenanted not to make any use of the premises which would invalidate or increase the premium cost of insurance and to pay Rand for any such increases occasioned by Polk’s use of the premises. Obviously, any obligation to pay the lessor for premium increases would pertain only to insurance which the lessor would maintain. Our supreme court has construed a similar lease provision requiring the lessee to pay increases in insurance premiums caused by lessee in Stein v. Yarnall-Todd Chevrolet, Inc. (1968), 41 Ill. 2d 32, 37, 241 N.E.2d 439. There, the court stated:

“ ‘Clearly under this section of the lease it was contemplated that the lessor would carry insurance on the property and look to the insurance for compensation for any loss by fire. If the parties had intended otherwise, there would have been no reason for such provision.’ United States Fire Ins. Co. v. Phil-Mar Corporation (1956), 166 Ohio St. 85, 89,139 N.E.2d 330, 333.”

Faced with a situation in which the lessor implicitly agrees to provide fire insurance, the court in Stein further recognized the basic absurdity of also placing a duty on the tenant, who in effect paid for the landlord’s insurance through rental payments, to seek a separate policy to protect against its own negligence. More specifically, the court stated:

“It would be a tortured construction, indeed, to say that under the lease here it was proposed that the lessor would procure fire insurance to cover fire risks save those which might be attributable to the negligence of the lessee or its employees. Under such a construction the lessee, to protect itself, then would seek an unusual, if not unique, policy to cover the risk of its own negligence, but nothing more. The only reasonable conclusion we can draw is that the parties intended, judging by their entire expression in the lease, that the lessors were to procure fire insurance and were to look to it to protect them from loss by fire, including fires which might be caused by the lessee’s negligence.” 41 Ill. 2d 32, 38.

Plaintiffs argue that an express exculpatory provision in the lease is required if the lessee is to be exonerated for its negligently caused fires. Our case law is to the contrary. In Cerny-Pickas & Co. v. C.R. Jahn Co. (1955), 7 Ill. 2d 393, 396, 131 N.E.2d 100, our supreme court held:

“The argument most strongly urged against exoneration of the lessee is that the lease does not in so many words provide that the lessee be free from liability for fires resulting from its own negligence. Of course, if the lease contained such an express provision, that would be the end of the matter. But because the contingency was not covered by express language, it does not follow that the instrument may not, when all of its provisions are considered, show that the parties themselves intended that the lessee should not be liable. That determination is to be made upon a consideration of the instrument as a whole. [Citations.]”

Accord, One Hundred South Wacker Drive, Inc. v. Szabo Food Service, Inc. (1975), 60 Ill. 2d 312, 314; Stein v. Yarnall-Todd Chevrolet, Inc. (1968), 41 Ill. 2d 32, 35.

Plaintiffs further, argue that in every case in which a lease has . been construed to exculpate a lessee for fires caused by lessee’s negligence, fire damage was specifically exempted in the yield-back clause requiring lessee to return the premises in as good condition as when lessee took possession. (One Hundred South Wacker Drive, Inc. v. Szabo Food Service, Inc. (1975), 60 Ill. 2d 312, 314 (“ordinary wear and loss or damage by fire or other casualty *** excepted”); Stein v. Yarnall-Todd Chevrolet, Inc. (1968), 41 Ill. 2d 32, 34 (“ordinary wear and tear or damage by fire or other casualty beyond lessee’s control excepted”); Cerny-Pickas & Co. v. C.R. Jahn Co. (1955), 7 Ill. 2d 393, 395 (“loss by fire and ordinary wear excepted”).) Plaintiffs contend that since the present yield-back provision does not specifically except loss by fire from the obligation of Polk to return the premises in good condition, the above cited cases are not controlling. We find plaintiffs’ contention to be without merit. While the yield-back clause of a lease is an important indication of the parties’ intent, failure to except fire damage therein merely raises ambiguity with respect to that intent. The proper construction to be given a lease is to be determined from the instrument as a whole. (One Hundred South Wacker Drive, Inc. v. Szabo Food Service, Inc. (1975), 60 Ill. 2d 312, 314; Stein v. Yarnall-Todd Chevrolet, Inc. (1968), 41 Ill. 2d 32, 39; Cerny-Pickas & Co. v. C.R. Jahn Co. (1955), 7 Ill. 2d 393, 396.) The yield-back provision in the Stein case is particularly instructive on this point since there only damage by fire “beyond lessee’s control” was excepted, strongly indicating that fires due to lessee’s negligence were not to be exonerated. The Stein court rejected this construction and construed the yield-back clause in relation to another lease provision requiring lessee to pay for increases in insurance premiums caused by lessee as evincing an intent to exculpate the lessee from liability and look only to the insurance proceeds for indemnification. Furthermore, plaintiffs’ argument ignores a recent appellate court decision where the court found that the lease terms exculpated lessee from liability even though the yield-back provision was virtually identical to the one in the case at bar in that the clause did not specifically exempt damage by fire. Windsor at Seven Oaks v. Kelly (1983), 113 Ill. App. 3d 978, 979, 448 N.E.2d 251 (“Lessee will immediately yield up the Apartment to the Lessor in as good condition as when same was entered upon by Lessee, ordinary wear and tear excepted”).

Our review of the above-cited cases dealing with the issue of lessee liability for fire damage reveals that the key factor in determining whether the parties intended to exculpate lessee negligence is the allocation of insurance burdens as evidenced by the terms of the lease. Where the lease terms either expressly or impliedly indicate that the lessor is to obtain fire insurance, the lessee will normally not be held liable for fire damage caused by its own negligence unless the parties’ intent is clearly to the contrary. This construction will give effect to the probable intent of the parties that the lessor is to look to the insurance he has agreed to procure for indemnification from fire loss. To hold otherwise would require both lessor and lessee to obtain fire insurance — lessee for fires caused by his own negligence and lessor for all other fires. As we have previously noted, such a peculiar insurance arrangement is not in accord with normal underwriting practices existent in the insurance industry today where fire insurance policies are routinely written to cover all fire damage, even if caused by the insured’s reckless or negligent conduct. Nor are we convinced that the right of the lessor to underinsure the premises or the position of the insurers as subrogees requires a contrary result. As the court noted in Stein:

“ ‘If the lessor *** chose to carry insurance for less than the full value of the property, any detriment so resulting to it is due to its own fault. We need have no compunction here about the position of the insurers as subrogees. Fire insurers expect to pay fire losses for negligent fires and their rates are calculated upon that basis; indeed, we may well assume that a great majority of fires are caused by someone’s negligence in a greater or lesser degree.’ ” Stein v. Yarnall-Todd Chevrolet, Inc. (1968), 41 Ill. 2d 32, 37-38.

The accuracy of the court’s observation in Stein with regard to the position of the insurers as subrogees is borne out by testimony elicited in the case at bar from the vice-president of the insurance agency which calculated the insurance premiums and wrote the policies in question. His unrefuted testimony indicated that the coverage insured against all direct loss caused by fire, including fire caused by the negligent or reckless conduct of the insured and further that the insurance premiums would have been the same whether Polk had been named as a co-insured on the policy or not. This being the case, we are forced to conclude that the premiums were set without reference to a possible subrogation claim against the lessee as no additional cost would have been incurred by including Polk as a named insured thereby barring any possible subrogation claim against the lessee. Refusing a subrogation claim based on the terms of the lease will work no hardship on the insurers as no additional risk is being saddled upon them.

After reviewing the terms of the lease in light of the applicable ease law we come to the following conclusions based only upon the language contained therein. We find the lease terms strongly indicate that the parties thereto never intended to hold Polk liable for fires caused by Polk’s negligence. Clearly, under paragraphs 13 and 11, the parties contemplated that Rand would obtain insurance to protect itself against the total destruction of the building by fire and that Rand would look only to the insurance proceeds for indemnification. Consequently, Rand has given up all right of recovery against the lessee, Polk, and the derivative rights of plaintiffs as subrogees are nonexistent. To the extent paragraphs 6 and 9 evince a contrary intent, ambiguity on this issue may be said to exist. However, a review of the extrinsic evidence properly considered by the court below unequivocally indicates that any ambiguity was correctly resolved in defendant’s favor.

The corporate structure of Polk and Rand and the relationship of the two corporations is highly probative on the issue of their intent. Polk is a close corporation solely owned by three brothers, Sol, Sam and Morris Polk and their sister Goldie Luftig. Sol is the president of Polk, Morris the vice-president and Sam the treasurer. The brothers have held these positions since the incorporation of Polk in 1935. Rand is a wholly owned subsidiary of Polk in the business of owning, developing and leasing properties primarily to Polk or one of Polk’s other wholly owned subsidiaries. Since Rand was incorporated, the officers of Rand have been the same as the officers of Polk. The lease was prepared by an attorney that serves in that capacity for all the Polk companies and was a form lease containing certain minor revisions. Morris Polk signed the lease on behalf of Rand, and Sol Polk signed the lease on behalf of Polk. There were no negotiations over the terms of the lease nor any discussion that Rand, the lessor, had retained the right to recover against the lessee, Polk. Given the close relationship of the parties, this possibility was apparently not contemplated. Rand obtained fire and casualty insurance on the building with Polk obtaining similar insurance on the contents.

Viewing this extrinsic evidence together with the applicable lease provisions, we find the construction urged by defendant inescapable. As paragraphs 13 and 11 indicate, Rand was to carry fire insurance on the leased premises and did in fact do so. More importantly, the closely held nature of the two corporations and their intimate parent-subsidiary relationship conclusively demonstrates that Rand never intended to hold Polk liable for fire damage due to Polk’s negligence. A contrary construction would render the insurance obtained by Rand nugatory since the same business entity (Polk and its wholly owned subsidiaries) would end up bearing the loss that the insurance was initially obtained to cover. Such unreasonable consequences cannot represent the intent of Polk and Rand when they executed the lease.

Although a summary judgment is a drastic remedy to be used with caution, its use is to be encouraged in the proper case. (Tatelman v. Tatelman (1975), 25 Ill. App. 3d 678, 323 N.E.2d 821, appeal denied (1975), 58 Ill. 2d 599.) We find the trial court properly granted Polk’s motion for summary judgment where the lease terms and the undisputed extrinsic evidence clearly demonstrated that no triable issue of fact existed with respect to whether Polk and Rand intended to exculpate the lessee, Polk, from liability.

For the foregoing reasons, the judgment of the trial court is affirmed.

CAMPBELL, J., concurs.

JUSTICE McGLOON,

dissenting:

I respectfully dissent from the decision of my esteemed colleagues because I believe that it is, in essence, a revision of the contract between the parties. Rather, I find that the parties agreed to hold Polk liable for damage to the premises caused by its negligence.

The only statement in the majority opinion with which I can agree is that all provisions of the lease must be considered as a whole to determine the intent of the parties. (One Hundred South Wacker Drive, Inc. v. Szabo Food Service, Inc. (1975), 60 Ill. 2d 312, 326 N.E.2d 400; Stein v. Yarnall-Todd Chevrolet, Inc. (1968), 41 Ill. 2d 32, 241 N.E.2d 439; Cerny-Pickas & Co. v. C.R. Jahn Co. (1955), 7 Ill. 2d 393, 131 N.E.2d 100.) I would add, however, that the terms of the lease should be construed against defendant Polk because Polk’s attorney prepared the lease. Windsor at Seven Oaks v. Kelly (1983), 113 Ill. App. 3d 978, 448 N.E.2d 251.

Paragraph 9, the yield-back clause of the lease, is particularly relevant. This paragraph provides in part:

“*** At the termination of this lease by lapse of time or otherwise, Lessee shall return the premises and all equipment and fixtures therein in as good condition as when Lessee took possession, ordinary wear and tear excepted, failing which the Lessor may restore the premises, equipment and fixtures to such condition and Lessee shall pay the cost thereof upon request.”

Conspicuously absent from this clause is an exclusion for loss by fire caused either by the lessee’s negligence or otherwise. Under common law, a lessee was liable for damage to leased premises caused by his own negligence. (Ford v. Jennings (1979), 70 Ill. App. 3d 219, 387 N.E.2d 1125.) Unless the yield-back clause exempts the lessee from such liability, it does no more than restate the lessee’s common law obligation. Cerny-Pickas & Co. v. C.R. Jahn Co. (1955), 7 Ill. 2d 393, 397, 131 N.E.2d 100, 103.

Thus, I disagree with my colleagues’ statement that the failure to exempt fire damage in the yield-back clause merely raises an ambiguity with respect to intent to hold the lessee liable for its negligence. Rather, the absence of exculpatory language raises the inference that the parties intended to hold the lessee liable where the lessee caused the loss to occur. Indeed a similar inference was drawn in Englehardt v. Triple X Chemical Laboratories, Inc. (1977), 53 Ill. App. 3d 926, 369 N.E.2d 67, appeal denied (1978), 67 Ill. 2d 591, wherein the yield-back clause excepted only loss by fire or other casualty not caused by the lessee.

The cases relied on by the majority interpreted leases in which the yield-back clauses excluded loss by fire. In Cerny-Pickas and One Hundred South Wacker Drive, loss by fire was excepted. Again in Stein, loss by fire or other casualty beyond the lessee’s control was excepted. Here, the yield-back clause did not state such exclusion. Admittedly, the lease contains some provisions similar to those examined in Stein to determine the parties’ intent. Here, Rand was obligated to procure insurance on the building and Polk was required to insure the contents. Also Polk covenanted not to use the premises in any manner which would invalidate the insurance or increase the premiums. But other provisions of the lease between Polk and Rand distinguish this case from Stein and when read together with all the lease provisions, indicate that the parties intended to hold the lessee liable for its negligence.

As stated by the majority, paragraph 6 requires Polk to waive claims against the lessor for damage sustained by the lessee or any occupant of the building. However, it further provides:

“This Section 6 shall apply especially, but not exclusively, to the flooding of basements or other sub-surface areas, and to damage caused by refrigerators, sprinkling devices, air-conditioning apparatus, water, snow, frost, steam, excessive heat or cold, falling plaster, broken glass, sewage, gas, odors or noise, or the bursting or leaking of pipes or plumbing fixtures, and shall apply *** whether such damage be caused or result from any thing or circumstance above mentioned or referred to, or any other thing or circumstance whether of a like nature or of a wholly different nature. If any such damage, whether to the demised premises or to the Building or any part thereof, or whether to Lessor or to other tenants in the Building, result from any act of neglect of Lessee, Lessor may, at Lessor’s option, repair such damage and Lessee shall, upon demand by Lessor, reimburse Lessor forthwith for the total cost of such repairs. Lessee shall not be liable for any damage caused by its act or neglect if Lessor or a tenant has recovered the full amount of the damage from insurance and the insurance company has waived in writing its right of subrogation against Lessee.” (Emphasis added.)

Clearly, this paragraph contemplates holding the lessee liable for damage to or destruction of the premises by perils specified therein and caused by the tenant’s neglect. Even in One Hundred South Waclcer Drive, the court held that a clause virtually identical to paragraph 6 caused the tenant to assume such liability. Here, Polk also agreed to be held liable for damage by perils of a wholly different nature resulting from its neglect. The possibilities of holding the lessee liable for its negligent destruction of the premises and of incurring such liability by way of a subrogation action are recognized and agreed to herein.

Contrary to the opinion of my colleagues, I would also find that paragraph 13 evidences an intent to hold the lessee liable for fire damage caused by its neglect. This paragraph provides in part:

“If the premises or the Building are made wholly untenantable by fire or other casualty, Lessor may elect (a) to terminate this lease as of the date of the fire or casualty by notice to Lessee within thirty days after that date, or (b) to repair, restore or rehabilitate the Building or the premises at Lessor’s expense ***. If the demised premises shall be partially damaged by fire or other casualty without the fault or neglect of Lessee, Lessee’s servants, employees, agents, visitors or licensees, the premises shall be repaired, restored or rehabilitated by and at the expense of Lessor. ***”

Beginning with the partial damage provision, it is clear that the lessor is obligated to repair only if the damage was not caused by the lessee. Granted, this clause is not the specific one applicable to this case since the premises were totally destroyed by fire. However, it is probative of the parties’ intent and refutes the majority’s conclusion that Rand intended to look solely to insurance for reimbursement.

Regarding the total destruction provision, I disagree with the majority’s holding that this clause unequivocally requires Rand to bear the entire cost of repairs where the building has been rendered unten-antable by fire. A reading of all the language in this clause indicates that Rand could either terminate the lease or repair the premises at its own expense. The majority ignored the former option in reaching its conclusion and thus the clause is not as determinative of the parties’ intent as the majority so holds. If in fact Rand elected to terminate the lease, the lessee would be required, under the yield-back clause, to return the premises in good condition. The yield-back clause expressly requires the lessee to do so upon “termination of the lease by lapse of time or otherwise.” (Emphasis added.) As noted above, the yield-back clause does not exclude loss by fire and thereby evidences the parties’ intent to hold the lessee liable for negligent destruction of the premises. In my opinion the failure to consider all the language of the total destruction provision has substantially altered the agreement of the parties as expressed in the lease.

In summary, I find that the lease evidences the parties’ intent to hold the lessee liable for its negligent destruction of or damage to the premises. This conclusion is inescapable considering the absence of exculpatory language in the yield-back clause and the language in paragraphs 6 and 13 which indicates that the lessee’s negligence could be the basis for liability.

Other matters discussed by my colleagues and others apparent in the record also warrant discussion here. First, the majority noted the corporate relationship between Rand and Polk and concluded that if Polk were held liable, the same business entity would bear the loss . which the insurance was obtained to recover. However, this conclusion is refuted by the well-established principle that affiliated corporations are separate and distinct entities. (Main Bank v. Baker (1981), 86 Ill.

2d 188, 427 N.E.2d 94.) The record shows that Rand has its own corporate charter, corporate minute books, books of accounts, and bank account. It purchases property with its own funds, holds title in its name, and takes tax deductions as owners of the realty. The same business entity would therefore not bear the loss and the inference opposite that drawn by the majority is equally sound. In fact, the close corporate relationship supports the equally plausible inference that the parties intended to retain the option of assigning the loss to the entity which would incur the more beneficial tax consequence.

An important lease provision not addressed by the majority is that concerning the procedure for releasing the lessee from liability. Paragraph 6, which specifically contemplates the insurance companys’ right of subrogation, provides:

<¡*** Lessee shan not be liable for any damage caused by its act or neglect if Lessor or a tenant has recovered the full amount of the damage from insurance and the insurance company has waived in writing its right of subrogation against Lessee.”

Polk stipulated that Rand was not fully reimbursed for the damage and the record contains no written waivers by plaintiffs. Rather, Samuel Polk, as president of Rand, signed subrogation receipts which expressly subrogated the insurance companies to all claims which Rand may have had against any person or corporation liable for the loss.

Defendant argues in its brief that clause D of the insurance policy eliminated the need for a written waiver. Clause “D” provides:

“It is hereby stipulated that this insurance shall not be invalidated should the insured waive in writing prior to loss any and all rights or recovery against any party for loss occurring to the property described herein.”

While this clause may eliminate the need for a written waiver from the insurance company as required by the lease, it is not a substitute for a written waiver which, under the terms of clause “D”, was to be executed prior to loss. The interpretation urged by Polk would only encourage collusion between insureds and tortfeasors. Furthermore, Polk’s waiver argument cannot stand in view of the subrogation receipts which specifically warranted that Rand had not settled or released any party who may have been liable for the loss and would not do so without the consent of the insured.

Finally, I disagree with the majority’s application of Windsor at Seven Oaks v. Kelly (1983), 113 Ill. App. 3d 978, 448 N.E.2d 251, wherein the court found the lessee was exempted from liability even though the yield-back clause was almost identical to that in the case at bar. Windsor involved the interpretation of a residential lease which, as a general rule, is interpreted in favor of the tenant. The lease in the case at bar is a commercial lease which was prepared by Polk and thus is subject to stricter construction against Polk. Furthermore, the lessee in Windsor had no contractual duty to repair the premises in case of fire. Under paragraphs 6, 9, and 13 of the lease in this case, Polk was not exempted from liability for fire damage caused by its neglect. Thus, Windsor is not controlling on this issue.

For the foregoing reasons, I would find that plaintiffs can properly state a cause of action against Polk because the lease indicates an intent to hold Polk liable for its negligence. I would reverse the judgment of the trial court and remand the cause for a trial on the merits.