author: PRESIDING JUSTICE SULLIVAN

text:
    LOCAL 7-641, OIL, CHEMICAL & ATOMIC WORKERS INTERNATIONAL UNION, AFL-CIO, et al., Plaintiffs-Appellants, v. THE DEPARTMENT OF LABOR et al., Defendants-Appellees.
    First District (5th Division)
    No. 81-1057
    Opinion filed April 23,1982.

      Arnold S. Rosenberg and Barbara J. Hillman, both of Cornfield and Feldman, of Chicago, for appellants.
    Tyrone C. Fahner, Attorney General, of Chicago (Michael T. Prousis, Assistant Attorney General, of counsel), for appellee Department of Labor.
    Lawrence I. Kipperman and Paul F. McCarthy, both of Sidley & Austin, of Chicago, for appellee Velsicol Chemical Corporation.
   PRESIDING JUSTICE SULLIVAN

delivered the opinion of the court:

Plaintiffs appeal from an order on administrative review affirming a decision of the Director of Labor finding them ineligible for benefits under section 604 of the Illinois Unemployment Insurance Act (Act) (Ill. Rev. Stat. 1979, ch. 48, par. 434).

The facts are largely undisputed. Individual plaintiffs included laboratory, maintenance, and production employees of defendant Velsicol Chemical Corporation (Velsicol) who were members of plaintiff Locals 7-641 and 7-641A, Oil, Chemical & Atomic Workers International Union (Union) and were covered by collective bargaining agreements expiring on December 6,1977. Negotiations for a new contract began prior to that date and, while the parties reached an understanding as to certain terms, they were unable to complete the contract. The Union offered to continue work after December 6 under an interim arrangement to include the new terms already agreed upon and those terms of the old contract which were still in dispute. Velsicol rejected this proposal and, in making its own final offer, informed the Union that if the offer was not acceptable the employees could continue working after December 6 under interim terms concerning which the parties have different versions.

After the Union rejected Velsicol’s final offer and its interim terms for continued work, plaintiff employees failed to report for work from December 7, 1977, through April 8, 1978, and pickets were set up. This resulted in a work stoppage and, eventually, salaried personnel from other plants were brought in to restore production. During the work stoppage, 94 individual plaintiffs applied for unemployment benefits, and a claims adjudicator determined that under section 604 of the Act they were ineligible for benefits.

The individual plaintiffs appealed, and a mass appeal was also filed by the Union on behalf of the nonmanagement employees. After a hearing, a representative of the Director of Labor recommended that the employees be found ineligible for benefits, and the employees filed objections thereto asserting that there had been a “constructive lockout.” Eventually, the Director of Labor affirmed the determination of the claims adjudicator and held that plaintiffs were ineligible for benefits. On administrative review, the circuit court affirmed the decision of the Director of Labor, and this appeal followed.

Opinion

We are presented with the question of whether plaintiffs are entitled to unemployment benefits under section 604 of the Act, which provides in relevant part:

“An individual shall be ineligible for benefits for any week with respect to which it is found that his total or partial unemployment is due to a stoppage of work which exists because of a labor dispute at the factory, establishment, or other premises at which he is or was last employed. * * ° This Section shall not apply if it is shown that (A) the individual is not participating in or financing or directly interested in the labor dispute which caused the stoppage of work and (B) he does not belong to a grade or class of workers of which immediately before the commencement of the stoppage there were members employed at the premises at which the stoppage occurs, any of whom are participating in or financing or directly interested in the dispute; provided, that a lock-out by the employer or an individuals failure to cross a picket line at such factory, establishment, or other premises shall not, in itself, be deemed to be participation by him in the labor dispute. (Emphasis added.) Ill. Rev. Stat. 1979, ch. 48, par. 434.

Plaintiffs contend they are entitled to benefits because they were constructively locked out from their employment and thus came within the lockout exception amendment to section 604 of the Act (the portion italicized above is that amendment).

Initially, we note that while plaintiffs assert that the decision of the Director of Labor was against the manifest weight of the evidence, the relevant facts here which concern the question as to whether a lockout includes a “constructive lockout” are not disputed and, by reason thereof, their legal effect becomes a matter of law. Kensington Steel Corp. v. Industrial Com. (1944), 385 Ill. 504, 53 N.E.2d 395; Schoenbein v. Board of Trustees (1965), 65 Ill. App. 2d 379, 212 N.E.2d 380.

We note also that the term “labor dispute,” as used in section 604, includes a strike as well as a lockout and is defined as “any controversy concerning wages, hours, working conditions or terms of employment” (Buchholz v. Cummins (1955), 6 Ill. 2d 382,387,128 N.E.2d 900,903); that a “strike” has been defined as a cessation of work by employees in an effort to get for themselves more favorable terms (Bankston Creek Collieries v. Gordon (1948), 399 Ill. 291, 77 N.E.2d 670); and that the word “lockout” is characterized in Be-Mac Transport Co. v. Grabiec (1974), 20 Ill. App. 3d 345, 314 N.E.2d 242, as a suspension of operations by an employer resulting from a dispute with employees over wages, hours, or working conditions, or the ceasing to furnish work for employees in order to obtain more favorable terms for the employer.

It is the position of plaintiffs here that, in addition to its literal meaning of a plant closing by an employer, the term “lockout” as used in the amendment should be construed to include a “constructive lockout” — described as a situation where employees refuse to work following the termination of a work contract because the terms offered by the employer to continue working are substantially different from the status quo. Plaintiffs maintain also that the interim working terms offered by Velsicol were so materially different from those in their terminated work agreement that they were constructively locked out and, by reason thereof, should have been found eligible for benefits.

Plaintiffs concede that prior to the amendment claimants who were unemployed due to a lockout were not eligible for benefits unless there was a showing under section 604(A) and (B) that the claimants did not participate in, or finance, or have a direct interest in the labor dispute. (See Be-Mac Transport Co. v. Grabiec (1974), 20 Ill. App. 3d 345, 314 N.E.2d 242.) They maintain, however, that the amendment authorizes payment of benefits to locked out employees and, suggesting that the amendment was substantially adopted from statutes of other States which have judicially recognized the concept of constructive lockout, they argue a presumption that the Illinois legislature intended to adopt those interpretations and thus that we should hold the term “lockout” in the amendment includes a constructive lockout.

We are unpersuaded by this argument for several reasons. First, because it appears to be based upon a faulty major premise; namely, that the amendment authorizes payments to all claimants who are unemployed because of a lockout regardless of participation in a labor dispute. It is our belief that the legislature did not so intend. Second, because such a construction would be contrary to the policy behind the enactment of the Act, which was to provide economic security and relieve the hardship caused by involuntary unemployment. (Ill. Rev. Stat. 1979, ch. 48, par. 300; Fash v. Gordon (1947), 398 Ill. 210, 75 N.E.2d 294; or, as stated in Shell Oil Co. v. Cummins (1955), 7 Ill. 2d 329, 339,131 N.E.2d 64, 69, “to provide sustenance to those who are unemployed through no fault of their own and who are willing, anxious, and ready to work if given the opportunity.”) Third, the language of the amendment, rather than expressly excluding lockouts from the labor dispute disqualification provision, provides only that a lockout “shall not, in itself” be deemed to be participation by an employee in the labor dispute. We think that the phrase “in itself” is significant and, by its insertion, that the legislature intended that an employee is not disqualified by the mere fact of a lockout, as he would have been before the amendment, but that he would be entitled to benefits unless participation in the labor dispute is shown by additional evidence. Thus, while before the amendment a locked-out employee was ineligible for benefits unless he was able to show that he did not participate in, finance, or was not directly interested in the labor dispute, under the amendment a locked-out employee would be eligible unless it was shown that he was in fact a participant in the labor dispute.

We believe this reading of the amendment is consistent with the interpretation given it in Nestle Co. v. Johnson (1979), 68 Ill. App. 3d 17, 385 N.E.2d 793, There, in considering the provision in the amendment that “an individual’s failure to cross the picket line * * *, shall, not, in itself, be deemed to be participation by him in a labor dispute,” the court expressed doubt that the quoted language was intended to require that a conclusion of no participation must be made where claimants refused to cross a picket line, and it held that “the legislature’s use of the words ‘in itself indicates the intent to require that an employer show more than per se evidence of failure to cross a picket line before a conclusion of participation can be made, and that participation may be shown by other evidence in a case where the failure to cross a picket line is also in evidence.” 68 Ill. App. 3d 17, 20, 385 N.E.2d 793, 795-96.

Moreover, we find little merit in plaintiffs’ contention that the Illinois legislature is presumed to have recognized a constructive lockout because the amendment was modeled after statutes of other States which have adopted such a concept. The instant case is unlike those cited by plaintiffs. In two of them — People v. Beckers (1952), 413 Ill. 102, 108 N.E.2d 5, and Cook v. Dove (1965), 32 Ill. 2d 109, 203 N.E.2d 892 — the Illinois Inheritance Tax Act was clearly modeled after the New York act and, in the third — People v. Mills (1968), 40 Ill. 2d 4, 237 N.E.2d 6/97 — the interpretations given provisions of the Uniform Narcotics Drug Act by three other jurisdictions were considered persuasive where that Act had also been adopted by those other States.

We are unable to find in the legislative history any indication that the amendment was based on the lockout language of any other State statute, and plaintiffs have failed to cite any authorities to substantiate their contention. Furthermore, the lockout language within the statutes of each of five States; namely, Connecticut (Conn. Gen. Stat. Ann. sec. 31 — 236(3) (West 1972)), Ohio (Ohio Rev. Code Ann. sec. 4141.29 (D)(1)(A) (Anderson 1980)), Kentucky (Ky. Rev. Stat. Ann. sec. 341.360(1) (1977)), Pennsylvania (Pa. Stat. Ann. tit. 43, sec. 802(d) (Purdon 1964)) and West Virginia (W. Va. Code sec. 21A — 6—3(4) (1981)), where the concept of constructive lockout has been applied (see Annot., 62 A.L.R.Sd 437, 456-59 (1975)), differs from the lockout language in the Illinois statute. In Connecticut and West Virginia, the legislature has codified the constructive lockout principle and, unlike Illinois, in all five of those States lockouts are expressly excluded from the disqualification provision in the statute.

Because we believe that the legislature did not intend to automatically qualify locked-out employees for benefits under the amendment regardless of their participation in the labor dispute, we see no basis for a holding that a constructive lockout would do so, even were we to recognize the concept. In view thereof, we find it unnecessary to consider the other issue raised — whether under the facts here plaintiffs were constructively locked out.

For the reasons stated, we find that the decision of the Director of Labor that plaintiffs were ineligible for benefits under section 604 as amended was proper, and accordingly we affirm the judgment of the circuit court.

Affirmed.

MEJDA and WILSON, JJ., concur.


source: Caselaw Access Project

author: JUSTICE GOLDBERG

license: Public Domain

text:
    BARRY ZISKIN, Plaintiff-Appellant, v. THRALL CAR MANUFACTURING COMPANY et al., Defendants-Appellees.
    First District (1st Division)
    No. 81-0345
    Opinion filed April 28,1982.

      Much, Shelist, Freed, Denenberg, Ament & Eiger, of Chicago (Wolf, Popper, Ross, Wolf & Jones, Stephen D. Oestrech, and Ellen Chapnick,. all of New York, New York, of counsel), for appellant.
    Kurt L. Schultz and Jerome W. Pope, both of Winston & Strawn, of Chicago, for appellee Chamberlain Manufacturing Corporation.
    John M. Hartigan and John M. Hillery, both of Carroll, Hartigan & Hillery, Ltd., of Chicago (Lewis A. Kaplan, Jay L. Himes, Harriet L. Goldberg, and Paul, Weiss, Rifkind, Wharton & Garrison, all of New York, New York, of counsel), for other appellees.
   JUSTICE GOLDBERG

delivered the opinion of the court:

Barry Ziskin (plaintiff) brought this class action against Thrall Car Manufacturing Company (Thrall), Chamberlain Manufacturing Corporation (Chamberlain), and five individual directors of Chamberlain. Plaintiff sought an injunction against a proposed merger between the defendant corporations, which has since been consummated under Iowa law, and damages. Plaintiff’s complaint was dismissed for failure to state a cause of action (see Ill. Rev. Stat. 1979, ch. 110, par. 45), and his motion for leave to file an amended complaint was denied. Plaintiff appeals.

In passing upon a motion to dismiss a complaint, all well-pleaded facts are accepted as true. (Steinberg v. Chicago Medical School (1977), 69 Ill. 2d 320,329,371 N.E.2d 634.) In addition, the tender offer and other pertinent exhibits were placed in the record as part of memoranda submitted to the trial court by defendants. Counsel for all parties have referred to these documents.

Plaintiff owns 150 shares in Chamberlain. When this litigation was commenced, Chamberlain was an Iowa corporation based in Elmhurst, Illinois. Chamberlain is engaged primarily in the manufacture of electronic items, forged metal, and home improvement products. Chamberlain also produces a component used in the assembly of missile warheads. Thrall is a closely held Delaware corporation based in Chicago Heights, Illinois. Thrall is engaged primarily in the manufacture, repair, and leasing of railroad freight cars.

Commencing in January of 1977 and continuing through April of 1979, Thrall made a series of purchases of Chamberlain stock. By June 30, 1979, Thrall owned 854,360 shares, or approximately 54% of the outstanding shares of Chamberlain. By July 28,1979, Thrall was able to elect five of the 12 directors of Chamberlain.

In response to an approved plan to reincorporate Chamberlain in Delaware, on August 27, 1979, Thrall announced a tender offer for all outstanding shares of Chamberlain at $30 per share. The tender offer indicated that this price represented a premium of approximately a third over the then current market value, and approximately $4 over the estimated book value, of the Chamberlain stock.

In the statement submitted with its tender offer, Thrall indicated its intention to acquire all Chamberlain stock and the possibility that under a proposed follow-up merger, Chamberlain stock might no longer be traded on the open market, seriously limiting the liquidity and probable value of the stock owned by those shareholders not tendering their shares to Thrall. Thrall also disclosed a joint venture between Chamberlain and Mason & Hange-Silas Mason & Company for the construction of a munitions plant facility. In evaluating the potential profit of this venture, Thrall indicated:

“In the event of operation at full mobilization base capacity (which operation is unlikely unless there is a war or other major international conflict in which the United States is a participant), the Facility could generate sales in the range of $50,000,000 to $60,000,000 per month. It is estimated that production at the Facility will yield profits to the operator which on average will be at least 4% of sales. It is impossible to predict at what percentage of mobilization base capacity the Facility will operate and hence impossible to predict the profits which will be generated when the Facility becomes operative.” 1

By this tender offer Thrall acquired 94% of all Chamberlain stock it did not previously own. Therefore, by October 19, 1979, Thrall owned 91% of all Chamberlain stock. On February 20,1980, a Chamberlain shareholders’ meeting approved Thrall’s proposed follow-up merger whereby remaining Chamberlain shareholders would either tender their stock at the rate of $30 per share or invoke appraisal rights under Iowa corporation law.

In his complaint, plaintiff alleges Thrall and the five directors/defendants engaged in a “plan and scheme” to acquire Chamberlain stock at a deflated price. Plaintiff alleges the defendants purposely obscured the above mentioned joint venture, and limited dividends in order to keep the market value of Chamberlain artificially low, enabling Thrall to tender a low price for the stock. Plaintiff alleges fraud in the limitation of dividends and the nondisclosure of the “potential profitability” of the joint venture. Plaintiff further alleges the tender price was so low as to constitute fraud independently; defendants breached a fiduciary duty to the minority shareholders of Chamberlain; and the tender offer was coercive.

The basis of our evaluation of the instant complaint is found in Knox College v. Celotex Corp. (1981), 88 Ill. 2d 407,421,430 N.E.2d 976, where the supreme court held:

“Although pleadings are to be liberally construed, and a defendant’s motion to dismiss admits all facts well pleaded, nonetheless, in considering a motion to dismiss, the pleadings are to be construed strictly against the pleader.”

In addition the court further pointed out (88 Ill. 2d 407, 426-27):

“ ‘the motion admits facts well pleaded, and conclusions may be proper if based on facts set forth, but the motion does not admit conclusions or inferences by the pleader, such as conclusions of law or of fact unsupported by allegations of specific facts on which the conclusions must rest.’ [Citation.]
Notice pleading, as known in some jurisdictions, is not sufficient under our practice act.”

In response to plaintiff’s attack on the merger and prayer for injunction, defendants reply that section 496A.70 of the pertinent Iowa statute (28 Iowa Code Ann. sec. 496A.70 (West Cum. Supp. 1981-82)), disposes of the common law requirement of unanimous shareholder approval of corporate mergers. Furthermore defendants urge that by specifying only appraisal rights to dissenting shareholders, section 496A.78 (28 Iowa Code Ann. sec. 496A.78 (West 1962)) has established appraisal as plaintiff’s exclusive remedy.

We agree that the Iowa act establishes appraisal as the exclusive remedy against a proper corporate merger. Not only is the absence of other specific remedies in the body of the statute significant, we also find Rath v. Rath Packing Co. (1965), 257 Iowa 1277, 136 N.W.2d 410, informative. In Rath, plaintiffs sought an injunction against a de facto merger. While the Iowa Supreme Court reversed the dismissal of plaintiffs’ cause of action, the court did not address the general right to injunction but rather concentrated on the right of appraisal. Initially, the court discussed the general rights of appraisal (257 Iowa 1277, 1287, 136 N.W.2d 410, 415):

“At common law no merger could take place without unanimous consent of the stockholders. However, statutes in all jurisdictions now authorize mergers upon a vote of less than all stockholders. A shareholder who dissents to a merger may obtain the value of his stock if the right thereto is provided by statute, if procedure is established therefor and is followed by him. 0 * *. Sections 496A.77, 496A.78 confer such right and provide such procedure.”

Finally, in its mandate to the trial court, the Iowa court again stressed the appraisal rights of dissenting shareholders in event of a merger (257 Iowa 1277, 1292, 136 N.W.2d 410, 418):

“We hold entry of judgment of dismissal on the pleadings was error, that defendants should be enjoined from carrying out the [de facto merger] until such time, if ever, as it is approved by the holders of at least two-thirds of the outstanding shares of Rath and in the event of such approval plaintiffs, if they dissent to such plan and follow the procedure provided by Code section 496A.78, I.C.A., shall be entitled to be paid the fair value of their shares in Rath.”

In the case at bar, it is clear that the proposed merger was approved by more than the requisite percentage of shareholders. Therefore, we do not believe plaintiff has a remedy other than appraisal in response to the effectuated merger itself. We find unpersuasive plaintiff’s contention that the tender offer which effectuated the merger was coercive. While Thrall did disclose its intention of acquiring 100% of all Chamberlain stock so that trading of the stock might be discontinued, such information would certainly be material to the shareholders, and most probably required by both State and Federal law. See 28 Iowa Code Ann. sec. 502.213(2) (j) (West Cum. Supp. 1981-82); 17 C.F.R. secs. 240.13d-101, item 4(h), 240.14d-100, item 5 (1981).

Apparently, plaintiff is at least partially basing his claim on section 502.402 of the Iowa Corporation Act (28 Iowa Code Ann. sec. 502.402 (West Cum. Supp. 1981-82)):

“It is unlawful for any person who is or was an officer, director or affiliate of an issuer or any other person whose relationship to the issuer or to any of the foregoing persons gives or gave such person access, directly or indirectly, to material information which is of decisive importance about the issuer or the security not generally available to the public, to purchase or sell any security of the issuer in this state at a time when he knows such information about the issuer or the security gained from such relationship, which information
1. Would significantly affect the market price of that security;
2. Is not generally available to the public; and
3. Such person knows is not intended to be so available, unless that person has reason to believe that the other party to such transaction is also in possession of such information.”

Regarding application of the above quoted statute and plaintiff’s contentions of fraud and breach of fiduciary duty, we believe these arguments are simply different ways of articulating the same basic charge, and would be established by the same evidence. We can assume that at least the directors/defendants have a fiduciary duty to the plaintiff shareholder (see Holi-Rest, Inc. v. Treloar (Iowa 1974), 217 N.W.2d 517, 525), and although the issue has apparently not been addressed in Iowa, it is possible that Thrall, as majority shareholder of Chamberlain at the time of the tender offer, owed a fiduciary duty to the minority shareholders as well. (See Panter v. Marshall Field & Co. (N.D. Ill. 1980), 486 F. Supp. 1168,1193, affd (7th Cir. 1981), 646 F.2d 271, cert, denied (1981),_U.S. -, 70 L. Ed. 2d 631, 102 S. Ct. 658.) Obviously the determination of existence of a fiduciary duty does not establish liability but it does require the fiduciary to act with utmost good faith and to “make full and truthful disclosure of all material facts” regarding the transaction. Wheeler v. Waller (Iowa 1972), 197 N.W.2d 585, 588.

Similarly the Iowa statute makes unlawful insider trading based on “material information which is of decisive importance about the issues or the security not generally available to the public.” 28 Iowa Code Ann. sec. 502.402 (West Cum. Supp. 1981-82).

Therefore, it appears to us that whether plaintiff’s theory is based upon common law fraud or violation of statute, his complaint will be sufficient only if he has alleged facts which would establish the misrepresentation or nondisclosure of material facts which in turn would be decisive with reference to the value of the Chamberlain stock. The mere conclusionary assertion that defendants entered into a “plan and scheme” to defraud is not sufficient. (Candlewick Lake Utilities Co. v. Quinones (1980), 82 Ill. App. 3d 98, 101, 402 N.E.2d 369; see also In re Estate of Lorimor (Iowa 1974), 216 N.W.2d 349, 353.) In addition, to sustain an action for fraud, the alleged misrepresentation must be of a present or preexisting fact rather than an opinion regarding a future occurrence. Peterson Industries, Inc. v. Lake View Trust & Savings Bank (7th Cir. 1978), 584 F.2d 166,169; Metropolitan Bank & Trust Co. v. Oliver (1972), 4 Ill. App. 3d 975, 978, 283 N.E.2d 62; International Milling Co. v. Gisch (1965), 258 Iowa 63, 137 N.W.2d 625.

In the case at bar, plaintiff alleges defendants misrepresented the future profitability of the joint venture previously mentioned. However, we do not find any misrepresentation or nondisclosure of a present material fact. The existence of the venture was mentioned in Chamberlain’s annual prospectus, though no mention of expected profits was included, and the venture was again fully disclosed and described in Thrall’s tender offer. Thrall’s representation of the future profitability of the venture can only be categorized as an opinion of a future occurrence which, without more, is not actionable.

Just as Thrall’s statement regarding the future profitability of the joint venture cannot be the basis of a cause of action for fraud, neither can it be the basis of a cause of action for stock manipulation or insider trading in connection with the tender offer. “Full factual disclosure need not be embellished with speculative, financial predictions.” (Rodman v. Grant Foundation (2d Cir. 1979), 608 F.2d 64, 72.) In fact, in tender offers “ ‘presentations of future earnings, appraised asset evaluations and other hypothetical data ° ° ” are “to be discouraged.” Alaska Interstate Co. v. McMillian (D. Del. 1975), 402 F. Supp. 532, 567, quoting from Kohn v. American Metal Climax, Inc. (3d Cir. 1972), 458 F.2d 255, 265, cert, denied (1971), 409 U.S. 874, 34 L. Ed. 2d 126, 93 S. Ct. 120.

Nor do we find persuasive plaintiff’s contention that defendants conspired to depress the price of Chamberlain stock through the limitation of dividends. First, during the majority ownership of Thrall, the dividend rate of Chamberlain stock actually increased. Chamberlain declared that it intended to maintain its rate of dividends shortly before Thrall initiated its tender offer. Second, only five of the Chamberlain directors were elected by Thrall, and only those five are defendants. Because Chamberlain had a directorate of 12, it follows Thrall could not control a majority of the board of directors and needed acquiescence by independent directors. This fact tends to negate any inference of a conspiracy against the interests of the minority shareholders of Chamberlain.

In effect the charges made by plaintiff concerning fraud, breach of fiduciary duty and stock manipulation constitute the full theory of plaintiff’s case. However, aside from the legal problems created by these contentions, it is manifest that plaintiff’s complaint fails to set out factual allegations as to the existence of any of these charges. The complaint is replete with allegations of pure conclusions such as that Thrall dominated and controlled the business affairs and actions of Chamberlain; defendants have engaged in a scheme and plan to eliminate plaintiff and other minority shareholders; the tendered price for minority stock was grossly unfair and was grossly and fraudulently inadequate; defendants failed to declare appropriate dividends in order to artificially depress the market price of Chamberlain stock so as to acquire the stock at a price far below its true value, and the tender offer is intended to coerce the minority shareholders.

We find significant that all of plaintiff’s allegations revolve around his basic assertion that the tender offer was simply too low. Aside from the general principle that the adequacy of a tender offer should be decided in the market place (Seaboard World Airlines, Inc. v. Tiger International, Inc. (2d Cir. 1979), 600 F.2d 355, 361-62), plaintiff has a completely adequate remedy under the Iowa appraisal statute. All the factors which plaintiff alleges make the inherent value of the Chamberlain stock higher than either the tender price or the market price, such as a low dividend rate and the future profitability of the joint venture, can be brought to the attention of the Iowa trial court if it is called upon to make an independent judicial determination of the value of the stock.

Finally we hold the trial court was correct in denying plaintiff’s motion for leave to file an amended complaint. From our perusal of the proposed amended complaint, we find the deficiencies outlined above would not be cured thereby. (See Kittay v. Allstate Insurance Co. (1979), 78 Ill. App. 3d 335, 339, 397 N.E.2d 200.) “This ruling by the able trial judge was well within the bounds of reasonable discretion particularly in view of the fact that the proposed * * * amended complaint was not tendered until after final judgment.” Himmelstein v. Valenti Development Corp. (1982), 103 Ill. App. 3d 911, 916,431 N.E.2d 1299, citing In re Estate of Ariola (1979), 69 Ill. App. 3d 158, 171-72, 386 N.E.2d 862.

For the reasons stated above the judgment appealed from is affirmed.

Judgment affirmed.

CAMPBELL, P. J., and McGLOON, J., concur.


author: JUSTICE LINN

text:
    THE PEOPLE OF THE STATE OF ILLINOIS, Plaintiff-Appellee, v. FRANK NAYDER, Defendant-Appellant.
    First District (4th Division)
    No. 80-2611
    Opinion filed May 13,1982.

      James J. Doherty, Public Defender, of Chicago (Michael Woloshin and Judith A. Stewart, Assistant Public Defenders, of counsel), for appellant.
    Richard M. Daley, State’s Attorney, of Chicago (Michael E. Shabat, Casimir J. Bartnik, and Thomas Wood Flynn, Assistant State’s Attorneys, of counsel), for the People.
   JUSTICE LINN

delivered the opinion of the court:

On August 7, 1980, a representative of the Department of Mental Health filed a petition in the circuit court of Cook County requesting the involuntary hospitalization of respondent, Frank Nayder. The petition alleged that respondent was a person who was mentally ill and who, because of his illness, was reasonably expected, in the near future, to harm himself or another; further, respondent was unable to provide for his basic physical needs so as to protect himself from serious harm. (Ill. Rev. Stat. 1979, ch. 91M, par. 1 — 119.) That same day a certificate was filed by Dr. Carlos Segovia, a qualified psychiatrist who is a member of the staff of Madden Mental Health Center where respondent was hospitalized, stating that in his opinion respondent was mentally ill and unable to care for himself. Shortly thereafter, a second certificate stating the same opinion was filed by Dr. Gilbert Parent, another psychiatrist on the staff of Madden Mental Health Center. The second certificate additionally stated that respondent was a danger to others.

Following a hearing on September 3, 1980, at the Illinois State Psychiatric Institute, the trial court found respondent to be a person subject to involuntary admission and ordered that he “be hospitalized in the Department of Mental Health and Developmental Disabilities.”

Respondent appeals the order, claiming that it was error for the trial court to permit the State to call him to testify as an adverse party pursuant to section 60 of the Civil Practice Act (Ill. Rev. Stat. 1979, ch. 110, par. 60) because he was thereby deprived of the effective assistance of counsel. Respondent argues that he was denied counsel’s advice in determining whether to testify and, if he did so, what the timing and content of his testimony should be. He also claims that he was deprived of the right to effective assistance of counsel under the provisions of the Mental Health Code (Ill. Rev. Stat. 1979, ch. 9Bz, par. 6 — 100). He further argues that calling him to testify under section 60 deprived him of due process of the law because of the imbalance in the proceedings resulting from the unavailability of section 60 to him as respondent. Respondent additionally claims that his “threats” against a police commander were protected speech under the first amendment because they did not amount to “fighting words” and therefore were improperly used as a basis for finding him to be subject to involuntary commitment. Finally, respondent asserts that the State failed to prove, by clear and convincing evidence, that he was unable to care for himself.

We disagree with respondent and affirm the trial court’s judgment that respondent is in need of continuing mental treatment and should remain hospitalized.

Background

Respondent had been committed by the circuit court of Cook County to hospitalization in the Madden Mental Health Center, and had been at Madden continuously from May 28, 1980, until the September 3, 1980, hearing appealed from here. The September 3 hearing resulted from the decision of Madden staff psychiatrists that at the time the original commitment period was over, respondent was not yet ready to be discharged as able to care for himself.

At his hearing, respondent’s counsel moved to withdraw because respondent claimed counsel was not representing him adequately. The trial court asked respondent whether he in fact did not want attorney Joslyn or the public defender’s office to represent him. Respondent answered that he had tried to talk to Ms. Joslyn, his counsel of record, about a “weighty thing” which involved considering Doctors Segovia and Parent (Madden staff psychiatrists) to be “malpractitioners” and drug addicts who were “running a concentration camp.” Respondent, who has a Ph.D. degree in biochemistry, further stated that he had written a “drug paper” and sent copies to Jimmy Carter, Tip O’Neill, Kurt Waldheim, the Pope, and others, that “[t]hey have railroaded me into Madden,” and that his counsel was also “on drugs.” The trial court denied counsel’s petition to withdraw.

The State then called respondent as a witness under section 60. Respondent’s counsel objected that this procedure would frustrate respondent’s right to counsel because respondent’s counsel “should be the one to choose what evidence to put on, and not the State.” Counsel also argued that forcing respondent to testify would conflict with his “right to refuse to talk to somebody [and] * * * various other constitutional-type rights 0 * Acknowledging the validity of counsel’s argument “in that it is a civil proceeding, and yet it is coupled with deep consideration for the civil liberties of the person asserted to be mentally ill,” the trial court ruled that section 60 nevertheless should apply because the proceedings were civil in nature, and counsel would have to work within the framework of the laws applicable to such proceedings.

Respondent was then called as a witness under section 60. He testified that he lived in a house owned by himself and six others and that there had been 400 violations to his property, including illegal entry, vandalism, theft, and sabotage, about which he had called the police 90 times with no response. He went to the State’s Attorney’s office and complained, naming as drug users certain neighbors who he said had threatened him with castration and murder. Respondent testified that he went to see the youth officer five or 10 times, and was insulted and “strong armed” out of the station by police officers. He stated that the police have “the character of lice.”

Respondent testified that he had tried to talk to police commander Mildice, who was never available. The State asked respondent whether he had threatened to harm Mr. Mildice. Respondent’s counsel’s objection to • the question was sustained and she advised him not to answer, but he went on to describe the alleged vandalism of his property and his calls to the police. Finally respondent said of Commander Mildice, “You ought to be lynched or something. Someone is going to blow your brains out if you can’t do a commander’s job and you let every window of the stores be robbed.”

The State next called Dr. Carlos Segovia, a psychiatrist at Madden Mental Health Center. Dr. Segovia testified that respondent is basically alert, oriented, coherent, and relevant, but that he has problems with loose associations, tangential thoughts and flight of ideas, and is delusional. One of respondent’s false beliefs is that almost everyone is against him — a delusion of persecution. Dr. Segovia further testified that respondent could follow a conversation and was interested in literature and music, but when discussing his hospitalization or his life and the length of his illness he became loud, abusive, threatening, and used foul language. Respondent has a good sense of humor, but cannot recognize that he has a mental problem and is not functioning as he should.

Dr. Segovia also testified that respondent told him he had established a “Foundation” and was doing research on the use of feces to make food, that he collected stools and had not used the toilet for several years. Respondent was not violent, but refused to take his prescribed tranquilizing medications, even though they helped him function better. Respondent claimed the medications were causing him to develop diverticulitis of the bowel and to become Mongoloid — his eyes were slanting and he was becoming “Chinese-like.”

Dr. Segovia then testified about the condition of respondent’s home based on a visit made IJ2 months earlier by Dr. Gilbert Parent. Dr. Parent indicated that the house was a “near shambles” and in a very unhygienic condition, with garbage and newspapers accumulated everywhere and rabbit droppings on the floor. Respondent also told Dr. Segovia he had not taken a bath for a year before going to Madden, and slept “dressed up” in a sleeping bag.

Dr. Segovia’s opinion was that respondent was suffering from a paranoid illness of major psychotic proportions. Further, respondent would be unable to care for himself if he were released from the hospital. While he did not believe respondent was homicidal or suicidal, he did believe respondent’s condition would deteriorate if his needs went unattended, and “he might indeed, in desperation, injure himself or others” in the near future.

On cross-examination by respondent’s counsel, Dr. Segovia stated that respondent had not been dangerous or violent in the hospital, and that he bathed and ate. Dr. Segovia’s opinion was that respondent’s paranoia is a permanent condition, although it might be minimized with medication.

After hearing and considering the evidence, the trial court found respondent to be subject to involuntary hospitalization because he is mentally ill and, because of his illness, could reasonably be expected to harm himself. Further, respondent would be unable to provide for his basic physical needs or guard himself against harm. Respondent appeals.

Opinion

I

Respondent Nayder’s first argument on appeal is that the State’s calling him to testify as an adverse party under section 60 denied him his constitituonal right to effective assistance of counsel in that it interfered with counsel’s judgment regarding whether he should testify and, if so, what the timing and content of his testimony should be. Respondent also claims that his compelled testimony under section 60 was a violation of the Mental Health Code (Ill. Rev. Stat. 1979, ch. 91*2, par. 6 — 100), which provides for effective assistance of counsel, as well as a violation of due process of the law because section 60 could not be used by him as it was by the State. He argues that “[a] mental health respondent * * 0 in civil commitment proceedings where his fundamental right to liberty is in issue, no less than the criminal defendant, requires the effective assistance of counsel in the proceedings against him.” We agree that respondent is entitled to effective assistance of counsel, but disagree with his claim that he failed to receive it at the hearing appealed from.

Respondent’s arguments regarding his constitutional rights to effective assistance of counsel and due process (U.S. Const., amends. VI and XIV; Ill. Const. 1970, art. I, secs. 2 and 8) are predicated on the deprivation of liberty that results from an involuntary commitment. On this basis respondent attempts to equate a commitment proceeding to a criminal trial, citing In re Stephenson (1977), 67 Ill. 2d 544, 367 N.E.2d 1273. The Illinois Supreme Court in Stephenson did indeed observe that certain analogies may be drawn between civil commitment proceedings and criminal prosecutions; however, it concluded, “the application of labels or use of simplistic analogies is of little real assistance. More to the point ° ° ° is an appraisal of the interests of the allegedly mentally ill individual and the society of which he is a part. Those interests are, in part, competing.” 67 Ill. 2d 544, 554, 367 N.E.2d 1273, 1276.

The issue in Stephenson was what standard of proof should be required in a civil involuntary commitment case. The supreme court rejected the argument that proof beyond a reasonable doubt was required, and held that the proper standard of proof was clear and convincing evidence. In reaching its conclusion, the court examined the question whether the confinement that results from a civil commitment renders the proceeding sufficiently similar to a criminal trial to require all the protections afforded a criminal defendant — protections which respondent attempts to invoke here. The court found that the interests of our free society in protecting itself from harmful conduct and in protecting those of its members who are unable to care for themselves must be balanced against the liberty interest of the person facing commitment. The attempt to equate the two types of proceedings was thus rejected by the Stephenson court, which clearly stated that “we deem undesirable any additional steps which might erode the differences between mental health commitment proceedings and traditional criminal trials.” 67 Ill. 2d 544, 556, 367 N.E.2d 1273,1277.

Furthermore, we note that civil commitment differs fundamentally from criminal imprisonment in that its purpose is to protect and cure, not to punish. A civil commitment is not punitive, and therefore “can in no sense be equated to a criminal prosecution.” (Addington v. Texas (1979), 441 U.S. 418,428, 60 L. Ed. 2d 323,332, 99 S. Ct. 1804,1810.) Finally, this court has held that the State’s calling a respondent as a witness under section 60 violates neither his constitutional rights nor the Mental Health Code. (In re Powell (1980), 85 Ill. App. 3d 877, 407 N.E.2d 658; In re Nolan (1978), 66 Ill. App. 3d 744, 384 N.E.2d 134.) Accordingly, we find that respondent’s constitutional rights were adequately protected at his hearing, which was conducted in conformity with the standards appropriate to a civil commitment proceeding.

II

Respondent also argues that his “threats” against police commander Mil dice were protected speech under the first amendment and therefore should not have been admitted as evidence that he was in need of involuntary commitment “on the grounds of dangerousness to himself.” We find this argument to be lacking in merit for two reasons. First, respondent’s right to freedom of speech has in no way been abridged. A civil commitment is not punitive in nature. (Addington v. Texas (1979), 441 U.S. 418, 60 L. Ed. 2d 323, 99 S. Ct. 1804.) Respondent himself chose to repeat at his hearing the “threats” he had made, thereby putting the statement into evidence on the issue of his need for mental treatment. And second, even assuming arguendo that the statement was not probative on the issue of respondent’s dangerousness to himself, we note that respondent was also asserted to be potentially dangerous to others and unable to care for himself. We find no error in considering the statement as evidence on these latter two issues.

III

Respondent’s final claim is that the State failed to prove, by clear and convincing evidence, that he was unable to care for himself. We disagree. To subject a person to involuntary commitment for mental treatment the State must show by clear and convincing evidence (Ill. Rev. Stat. 1979, ch. 9Bá, par. 3 — 808; In re Stephenson (1977), 67 Ill. 2d 544,367 N.E.2d 1273) that because of the illness the person “is reasonably expected to inflict serious physical harm upon himself or another in the near future; or * * * is unable to provide for his basic physical needs so as to guard himself from serious harm.” (Ill. Rev. Stat. 1979, ch. 91M, par. 1 — 119.) In applying these principles, Illinois courts have recognized that the science of predicting future dangerous conduct is inexact, and have upheld commitments based on the opinion of a qualified psychiatrist that the respondent was reasonably expected to engage in dangerous conduct. (In re Powell (1980), 85 Ill. App. 3d 877, 407 N.E.2d 658; People v. Sansone (1974), 18 Ill. App. 3d 315, 309 N.E.2d 733.) Involuntary commitment need not be delayed until someone is harmed. In re Powell; In re Graham (1976), 40 Ill. App. 3d 452, 352 N.E.2d 287.

The facts adduced at trial regarding respondent’s mental state have been outlined above. Respondent and Dr. Segovia both testified about respondent’s bizarre beliefs and actions. Dr. Segovia’s opinion was that respondent suffers from a paranoid illness of major psychotic proportions, that he would be unable to care for himself outside the hospital, and that he might well injure himself or another in the near future. The trial court found the evidence of respondent’s need for continued hospitalization to be clear and convincing, and after reviewing the record, we agree.

The judgment of the circuit court is accordingly affirmed.

Affirmed.

JOHNSON, P. J., and JIGANTI, J., concur.


author: PRESIDING JUSTICE WHITE

text:
    MARGARET JOHNSON, Adm’r of the Estate of Lincoln W. Mills, Deceased, Plaintiff-Appellee, v. R & D ENTERPRISES, Defendant.—(CAROLINA CASUALTY INSURANCE CO., Garnishee-Appellant.)
    First District (3rd Division)
    No. 80-2600
    Opinion filed April 28,1982.

      Jacobs, Williams & Montgomery, Ltd., of Chicago (John D. Daniels and Barry L. Kroll, of counsel), for appellant.
    Robert G. Peterson & Associates, of Chicago (Robert G. Peterson and Michael R. Alberts, of counsel), for appellee.
   PRESIDING JUSTICE WHITE

delivered the opinion of the court:

Appellee, Margaret Johnson, administrator of the estate of Lincoln W. Mills, deceased, obtained a default judgment against R&D Enterprises, a Georgia corporation (R&D). Appellee then brought a garnishment action against Carolina Casualty (Carolina), the insurer of R&D. The trial court held Carolina liable under the policy despite the fact that R&D had breached certain policy conditions.

Carolina appeals from that judgment raising the following issues for our review: (1) whether an insurer is liable under a policy to a judgment creditor where the insured, the judgment debtor, breached the conditions of the insurance policy; (2) whether Illinois law or public policy bars insurer from asserting insured’s breach of policy conditions as a defense in the garnishment proceedings instituted by judgment creditor; (3) whether a garnishment action was the proper method of recovery under the facts of this case. We will address these issues in the order presented.

Lincoln Mills was killed as a result of an accident that occurred on the Dan Ryan Expressway in Chicago on July 20, 1973, and involved a car driven by Mills and a truck owned by R&D. On August 5,1974, appellee, as administrator of the estate of Lincoln W. Mills, filed a personal injury lawsuit seeking damages arising out of the accident. R&D was served by substituted service on the Illinois Secretary of State (Ill. Rev. Stat. 1973, ch. 95/á, par. 10 — 301) and a copy of the complaint and summons was mailed to R&D by certified mail. On September 9, 1975, a default judgment in the sum of $12,500 was entered in favor of appellee and against R&D.

Appellee then instituted garnishment proceedings against appellant Carolina. The receipt of garnishment papers was the first notice that Carolina had of this entire matter. Carolina answered, denying having in its possession any funds or assets of R&D due to R&D’s breach of certain policy conditions which required R&D to (a) give written notice to Carolina when an accident occurs, (b) notify Carolina if a claim is made or suit brought, and (c) cooperate with Carolina in the conduct of suits. Additionally, the policy provided that “no action shall lie against the company unless as a condition precedent thereto, the insured shall have fully complied with all the terms of this policy.”

In the garnishment proceeding the trial court found that: (1) the commercial insurance policy issued by Carolina to R&D was in force and effect at the time of the occurrence; (2) the policy was issued by a company licensed to do business in Illinois, but it was not certified to the State; and (3) R&D failed to cooperate in the defense of the suit and failed to give the insurance company notice of the occurrence to the prejudice of the company.

Carolina first contends that as an insurer it is not obliged to provide indemnification to an insured nor pay a judgment rendered against an insured where there has been a prejudicial noncompliance with the conditions of the insurance policy. (M.F.A. Mutual Insurance Co. v. Cheek (1977), 66 Ill. 2d 492,363 N.E.2d 809.) In such circumstances, it is argued, those defenses which the insurer has against the insured are also available against an injured third party seeking recovery under the policy. (Gallaway v. Schied (1966), 73 Ill. App. 2d 116,219 N.E.2d 718.) This is the law in Illinois absent some provision of the law which bars the insurer from raising those defenses.

Here it is uncontested that R&D did breach the conditions of the policy in question, and the trial court found that this was to the prejudice of Carolina. However, in finding for the appellee the trial court ruled that the policy defenses available to Carolina are enforceable only against R&D, the insured, and not against an injured third party as a matter of public policy. Appellant contends this was error and that neither law nor public policy of Illinois bars the insurer from asserting its defenses against the insured’s judgment creditors.

The Illinois Motor Carrier of Property Law (Ill. Rev. Stat. 1973, ch. 95>2, par. 18 — 701), entitled, “Security for the protection of the public,” provides:

Essentially, this statute makes it compulsory for all common carriers of property to file a bond or a certificate of insurance with the Illinois Commerce Commission. The purpose behind this requirement is indicated by the heading of the paragraph “Security for the protection of the public.” In Illinois Casualty Co. v. Krol (1944), 324 Ill. App. 478, 58 N.E.2d 473, a case decided under the Illinois Truck Act which preceded the Illinois Motor Carrier of Property Law, the court reasoned that the purpose of a compulsory insurance requirement for common carriers was to provide for the protection of the general public. To implement that policy, Krol held that while an insurer could raise policy defenses against its insured, such defenses were unavailable in an action brought by an injured third party. The court stated:

“No motor carrier of property shall operate any motor vehicle for which a certificate or permit is required by this Chapter unless it has on file with the Commission and in effect good and sufficient indemnity bonds or insurance policies * * * executed by a surety, indemnity or insurance company authorized under the laws of this State to transact such business within this State.”
“We think it is a fair construction of the statute to hold that one of the compelling reasons for enacting the Illinois Truck Act was the necessity of more stringent regulations for the protection of the general public in the use of highways; that one of the methods of effecting this purpose, as adopted by the legislature, is to require the operator of trucks to carry a policy of insurance indemnifying him from his liability, * * * such insurance is for the protection of the public, and therefore policy defenses which may be good as against the insured, do not relieve the insurance carrier of its liability to parties injured in their persons or property by reason of the insured’s unlawful operation of its trucks.” (324 Ill. App. 478, 482.)

The Motor Carrier of Property Law includes substantially the same subject matter as the Truck Act; we find, therefore, the holding in Krol relevant to the issue before us.

The policy behind the Motor Carrier of Property Law (Ill. Rev. Stat. 1973, ch. 95M, par. 18 — 701) makes paramount the protection of the public in the use of the highways. To relieve California of liability in this case and, thereby, deprive an innocent third party of recovery would thwart the purpose behind the requirement of compulsory insurance.

Other portions of section 18 — 701 of the Rlinois Motor Carrier of Property Law read:

“Every motor carrier of property, except as hereinafter provided, shall file with the Commission and have in effect an indemnity bond or insurance policy (or certificates of bonds or insurance in lieu thereof) which shall indemnify or insure the carrier for its liability, in the case of each motor vehicle operated or to be operated by the carrier in the amount of not less than * °

Appellant argues that because the. policy was not so filed, Illinois statutory law is not applicable to the policy in question. The trial court held that the policy need not be filed with the State for coverage to be effective within the State. We agree. R&D’s failure to comply with Illinois law should not relieve Carolina of its liability to third parties who seek to recover under the policy.

In a case similar to the one at bar, Cotner v. Grissley (Ky. 1969), 447 S.W.2d 603, 605, the court held that where “an insurer has issued a policy of the kind required of a licensed carrier it cannot avoid liability in a direct action by the claimant on the grounds that the insured was not licensed to operate in the state at the time of the accident.” The court gave this rationale for its holding:

“We believe this rule to be sound. To hold otherwise would be to subject one who had complied with the law to liability and to exonerate the illegal operator.” (447 S.W.2d 603, 605.)

The Cotner court further stated that since the trucking company was authorized under the policy to operate with an unlimited trip radius, “the company was on notice that the truck might be operated in [another State] and under the law is presumed to have knowledge of state laws relating to registration and licensing.”

We find Cotner instructive in deciding the instant case. Here, appellant issued a commercial policy to R&D with an unlimited trip radius in the United States and Canada. By the very terms of the policy, appellant was on notice that R&D might operate its trucks in Illinois and, as in Cotner, would be presumed to have knowledge of the laws of Illinois. Accordingly, we apply Illinois law as set forth in Krol and hold appellant, Carolina, liable to appellee, regardless of R&D’s breach of policy conditions.

Carolina also contends that it was error for the trial court to allow appellee to recover in a garnishment action. “The general rule in garnishment is that a claim asserted by a judgment creditor against a garnishee must be one which the judgment debtor himself could have maintained.” (Hunter Manufacturing Inc. v. Hines (1979), 76 Ill. App. 3d 664, 395 N.E.2d 186.) Therefore, where an insured has breached policy conditions, a garnishment action generally will not lie. (Patton v. Washington Insurance Exchange and Suburban Auto Insurance Co. (1937), 288 Ill. App. 594, 6 N.E.2d 472.) Relying on this general rule Carolina maintains that since it has no obligation to R&D, because of R&D’s breach of policy conditions, appellee should be precluded from bringing a garnishment action against Carolina.

This general rule, however, does not apply to the case at bar. Roberts v. Central Mutual Insurance Co. (1936), 285 Illl. App. 408, 2 N.E.2d 132, is instructive. Roberts involved the bringing of a creditor’s bill, a proceeding analogous to garnishment because as a general rule, each is brought for the purpose of reaching, in the hands of a third party, money due and owing from judgment debtor to judgment creditor. (Fidelity Coal Co. v. Alfred Diamond and Mutual Life Insurance Co. (1944), 322 Ill. App. 229, 54 N.E.2d 240.) An action in the nature of a creditor’s bill is also similar to garnishment because in both actions the judgment creditor has no greater rights to the property in issue than the judgment debtor. (Schaeffer v. Zaltsman (1975), 29 Ill. App. 3d 1011, 1014, 331 N.E.2d 212.) In Roberts the insured taxi cab company had filed a bond pursuant to a compulsory insurance statute. Although the insured had breached certain policy conditions, a judgment creditor of the insured was allowed to bring a creditor’s bill against the insurer. There, the court reasoned that because the bond was intended for the protection of the public, an injured third party holding a judgment against the insurer could “file a creditor’s bill against the insurer and in those cases, it is held that the judgment is conclusive against the insurer.” 285 Ill. App. 408, 411.

Similarly, in the case at bar, Carolina’s liability to appellee is predicated upon the public policy of Illinois to protect the public in its use of the highways. Here, as in Roberts, in order to uphold public policy the trial court properly allowed appellee recovery in garnishment despite the insured’s breach of certain policy conditions.

Moreover, other courts have allowed a judgment creditor to garnish an insurer even though the insured had breached policy conditions. (See Pawlik v. Nichols (E.D. Ill. 1961), 195 F. Supp. 735, aff’d (7th Cir. 1962), 302 F.2d 255; Sandoval v. Chenoweth (1967), 102 Ariz. 241, 428 P.2d 98.) In Pawlik the insurance policy contained an endorsement creating liability under the Illinois Truck Act and specifically provided that violations of the policy by the insured would not relieve the insurer of liability to judgment creditors. There, the court concluded that the insured’s breach of the provisions of the policy did not affect the right of the judgment creditor to recover under the endorsement and, therefore, a garnishment action was proper. Pawlik is relevant to the case at bar because in both instances the insurer, precluded from asserting the insured’s breach as a defense, was liable under the policy. As a result, the assets of that policy would be available to a judgment creditor who garnished the insurer. In Sandoval the insurer had issued an insurance policy pursuant to the financial responsibility laws of Arizona and in order to promote the public policy behind those laws, the court precluded the insurer from asserting the insured’s breach of policy conditions as a defense to their liability. Once the court found the insurer liable under the policy it went on to state: “[i]t seems to be settled that after recovering a judgment against an insured under a liability policy, the injured third person may collect such judgment by instituting garnishment proceedings against the liability insurer.” (See also 22A Appleman, Insurance Law & Practice §14565 (rev. ed. 1979).) Similarly, in Dairyland Mutual Insurance Co. v. Andersen (1967), 102 Ariz. 515, 433 P.2d 963, in order to uphold public policy behind the State’s financial responsibility laws, once the insurer was found liable under a policy, the court allowed a judgment creditor to sue in garnishment despite the fact that the insurer was not indebted to the insured who had breached “illegal” policy conditions.

We hold that Carolina is liable to appellee under the policy it issued to R&D. To allow Carolina now to assert its nonliability to the insured as a defense to appellee’s recovery in garnishment would be to promote form over substance and thereby thwart the public policy behind the Illinois Motor Carrier of Property Law. Therefore, we also hold that the trial court properly allowed appellee to recover in garnishment.

For the aforementioned reasons the judgment of the circuit court is affirmed.

Affirmed.

McGILLICUDDY and RIZZI, JJ., concur.

       It should be noted that appellant is not left without a remedy. Under a policy of insurance issued pursuant to a compulsory insurance statute, the insurer, although not relieved of liability to a third party claimant, may seek reimbursement from the insured for its breach of policy conditions. (324 Ill. App. 478,486; Great American Insurance Co. v. Brad Movers, Inc. (1978), 65 Ill. App. 3d 357,362,382 N.E.2d 623.) Therefore, although appellant remains liable under the policy to appellee, it may enforce its rights under the policy and seek reimbursement from R&D.


author: PRESIDING JUSTICE STAMOS

text:
      In re MARRIAGE OF SHIRLEY JOHNSON, Petitioner-Appellee and Cross-Appellant, and EUGENE G. JOHNSON, Respondent-Appellant and Cross-Appellee.
    First District (2nd Division)
    Nos. 80-1334, 81-1893 cons.
    Opinion filed April 27,1982.
    Rehearing denied June 1,1982.

      Arnold B. Kalnitz, of Chicago, for appellant.
    Roy W. Sears and Harry C. Lee, III, both of Eckhart, McSwain, Hassell & Silliman, of Chicago, for appellee.
   PRESIDING JUSTICE STAMOS

delivered the opinion of the court:

We herein consolidate two appeals. Shirley Johnson petitioned for dissolution of her marriage to Eugene G. Johnson. Final judgment for dissolution was entered on April 21,1980. Respondent Eugene G. Johnson appeals from the maintenance awarded petitioner and the terms of the property settlement, and alleges errors by the trial court in considering affidavits in lieu of evidence. Petitioner cross-appeals the maintenance awarded her and the terms of the property settlement. Subsequent to the filing of the appeal and cross-appeal, petitioner brought a post-decree proceeding seeking a money judgment for arrearage in temporary support which accrued prior to the entry of the judgment of dissolution of marriage. On July 1, 1981, judgment was entered in favor of petitioner in the amount of $10,489.54 ($1,489.54 due as temporary support for the period through August 13, 1979, pursuant to a judgment entered October 31,1979, and $9,000 due as temporary support for the period from August 13, 1979, to April 21, 1980, the date of the judgment of dissolution). Respondent appeals that judgment and the trial court’s denial of respondent’s motion to strike petitioner’s reply in the post-decree proceeding.

Eugene and Shirley Johnson were married in 1951 and lived together until their separation in July 1977. During the marriage the parties enjoyed a middle to upper-middle class life style. They have two adult children. Both parties were 53 years old and in relatively good health at the time of the trial. Petitioner has a bachelor’s degree in psychology from the University of Illinois. She was unemployed through most of the marriage, until approximately eight years prior to trial when she began conducting preliminary interviews in the personnel field. She was employed at this job one day per week and earned $2,109 in 1978. There was conflicting testimony as to her employment potential. One of respondent’s witnesses was a director of employee relations at a local hospital who testified that there were numerous opportunities in the personnel field for someone with petitioner’s qualifications. Salaries for these positions ranged from $13,000 to $18,000 per year. Petitioner testified that although she did not think she could work full-time because she had not done so in 28 years, she might be able to work two or three days a week. She also testified that there were very few job openings which were appropriate for her and for which she was qualified. Petitioner’s original affidavit indicated that she had net yearly expenses of $25,354. Her amended affidavit, filed after completion of the trial, listed those expenses as $21,711. The trial court ruled that her life style called for expenses of more than $2,000 per month.

Respondent is employed by Johnson and Genrich, Inc. (J&G), an executive recruiting firm, and Metropolitan Business Reports, Inc. (Metro), a credit reporting firm. Both corporations were organized and operated by respondent. He owns 100% of the J&G stock and 24% of the Metro stock. The remaining 76% of the Metro stock is owned by J&G. Respondent, therefore, effectively owns both firms in their entirety. His Federal income tax returns show his gross income in 1978 as $37,000. Between 1974 and 1978, his income varied from a low of $30,000 in 1977 to a high of $50,000 in 1975. Much of the confusion at trial regarding his income can be attributed to his tax returns having been prepared on a calendar year basis while his wholly owned corporations operated on a fiscal year ending March 31.

After awarding each party household furnishings, an automobile and cash-on-hand, the trial court valued and divided the remaining property as follows:

Nonmarital property to petitioner:
Savings accounts Stock
Credit for forgiveness of debt due petitioner’s father
Marital property to petitioner: Marital residence Savings accounts Securities
$21,714.77
851.50
6,503.16
$29,069.43
$87,000.00
41,347.77
36,149.08
$164,496.85
Marital property to respondent:
J&G corporate stock $145,000.00
Metro corporate stock 45,834.00
Respondent’s interest in
profit-sharing plan 34,166.00
$225,000.00

The court also ordered respondent to execute a promissory note to petitioner for $36,754. This amount consists of a $30,251 “equalizing note” designed to give the parties equal property settlements, and a $6,503 credit for the amount of petitioner’s nonmarital contribution to settlements, and a $6,503 credit for the amount of petitioner’s nonmarital contribution to the marital residence. The note provides for an annual interest rate of 12% and is payable in 144 monthly payments. The court also determined that petitioner lacked sufficient property, including marital and nonmarital property apportioned to her, to provide for her reasonable needs and was unable to support herself through appropriate employment and was otherwise without sufficient income. The court therefore ordered respondent to pay petitioner permanent maintenance of $900 per month.

Petitioner’s post-decree proceeding was based on a September 19, 1977, court order directing respondent to pay petitioner temporary support of $250 per week. In May 1979, petitioner filed a motion seeking relief for arrearage in the payment of that support. On August 13, 1979, respondent filed a petition seeking modification of the temporary support order based on his lack of funds. On October 31,1979, the trial court (per Judge Burks) entered judgment against respondent for $1,850 for arrearage in temporary support payments through August 13,1979. No specific action was taken concerning respondent’s petition seeking modification of the temporary support order. Respondent’s motion to vacate or stay enforcement of the October 31 judgment was denied.

Final judgment for dissolution of marriage was entered by Judge Burks on April 21,1980. No reference was made to the $1,850 judgment or other unpaid temporary support in this final judgment. However, after allocating marital and nonmarital property between the parties and providing for permanent maintenance, the judgment of dissolution ended by stating:

“Y. That, except as hereinabove otherwise provided, any and all right, claim, demand or interest of either party against the other, arising out of their marital relationship or otherwise, and any and all right, title, claim or interest of either party in and to the property of the other party, of whatever kind, nature and description, and whether real, personal or mixed, which either party now owns, controls or hereafter acquires from any source whatsoever, including dower, homestead, jointure or otherwise, shall be and the same are hereby forever barred, terminated and ended; provided, however, that nothing in this paragraph shall be construed to release, limit or abridge the obligations of either party fully to execute, perform and carry out the provisions of this Judgment of Dissolution.”

On September 17, 1980, petitioner filed a post-decree petition seeking $9,000 and alleging that respondent failed to pay temporary support from August 13, 1979, through the entry of the judgment of dissolution on April 21, 1980. Respondent admits he paid no support during this period. Respondent filed a motion to strike petitioner’s post-decree petition on the grounds that the issue was res judicata and also that it was barred by paragraph Y of the judgment of dissolution. Respondent’s motion to strike was denied and he filed an answer to the petition. Petitioner filed a reply to the answer. Respondent then filed a motion to strike the reply on the ground that it was not a plain and concise pleading as required by section 33 of the Civil Practice Act. His motion was denied.

The trial court entered an order on petitioner’s post-decree petition on July 1,1981. The court (per Judge Burks) held that paragraph Y of the judgment of dissolution did not abolish petitioner’s rights in the unpaid support established by the September 19, 1977, court order. The court ruled that respondent owed petitioner $1,489.54 from the judgment entered on October 31, 1978 ($1,850 minus $360.46 received), and an additional $9,000 as unpaid temporary support for the period from August 13,1979, to April 21,1980.

Appeal No. 80-1334

Respondent’s first contention on appeal from the original dissolution action is that the maintenance awarded by the trial court is unwarranted in view of section 504(a) of the Illinois Marriage and Dissolution of Marriage Act (the Act) (Ill. Rev. Stat. 1979, ch. 40, par. 504(a)). Section 504(a) states that maintenance can be awarded only where the court finds that the party seeking maintenance lacks sufficient property, including marital property apportioned to her, to provide for her reasonable needs and is unable to support herself through appropriate employment, or is otherwise without sufficient income. (Ill. Rev. Stat. 1979, ch. 40, par. 504(a).) The trial court in the instant case specifically found that petitioner met the requirements of section 504(a).

The awarding of maintenance is a matter within the sound discretion of the trial court and will not be disturbed on appeal unless it amounts to an abuse of discretion or is against the manifest weight of the evidence. (Schuppe v. Schuppe (1979), 69 Ill. App. 3d 200,203, 387 N.E.2d 346; see also Hoffmann v. Hoffmann (1968), 40 Ill. 2d 344, 349, 239 N.E.2d 792.) Absent an abuse of discretion, a reviewing court should not substitute its discretion for that of the trial court. (In re Marriage of Lee (1979), 78 Ill. App. 3d 1123, 1127, 398 N.E.2d 126.) Such an abuse of discretion occurs only where no reasonable man would take the view adopted by the trial court. (78 Ill. App. 3d 1123,1127.) Nothing in the record convinces us that no reasonable man would agree that petitioner’s potential employment and the property apportioned her would be insufficient to provide for her reasonable needs. The parties had enjoyed a fairly comfortable life style during their marriage and there was evidence that petitioner would experience some difficulty in finding employment capable of keeping her in that life style. Since there is no evidence that the trial court abused its discretion in awarding maintenance to petitioner, that portion of the court’s judgment for dissolution is affirmed.

Respondent’s next contention is that $900 per month maintenance is excessive in view of petitioner’s needs, the property settlement and respondent’s ability to pay. Petitioner counterappeals that $900 per month is insufficient, citing her needs, respondent’s ability to pay, the 28-year duration of the marriage and the standard of living established during the marriage. As with the decision whether to award maintenance, the amount of maintenance awarded lies within the discretion of the trial court, and its decision will not be set aside unless it is contrary to the manifest weight of the evidence or amounts to an abuse of discretion. In re Marriage of Lovejoy (1980), 84 Ill. App. 3d 53, 59, 404 N.E.2d 1092.

The trial court appears to have considered the factors set out in section 504(b) for determining the proper amount of maintenance. (See Ill. Rev. Stat. 1979, ch. 40, par. 504(b).) The court stated that it considered the duration of the marriage, the comfortable standard of living established by the parties, the fact that most of the property apportioned respondent as part of the property settlement was income-producing while much of that given petitioner was not, the needs and other resources of the parties as well as other factors. We therefore find the trial court did not abuse its discretion and the final judgment was not against the manifest weight of the evidence. See Gauger v. Gauger (1979), 70 Ill. App. 3d 378, 383, 388 N.E.2d 123; Lewanski v. Lewanski (1978), 59 Ill. App. 3d 805, 810, 375 N.E.2d 961.

Respondent’s next contention is that the value assigned to J&G and Metro was excessive, resulting in a disproportionate property settlement. Petitioner counters that the corporations were undervalued. We note that the parties agreed that shareholder’s equity was the proper measure of the corporations’ value and that at the time of trial there were no plans to sell the corporations.

At the outset, respondent argues that the valuation of the corporations was overstated because the trial court failed to consider the income tax ramifications of a theoretical sale of the two businesses. In support of his position, respondent cites In re Marriage of Emken (1980), 89 Ill. App. 3d 667, 411 N.E.2d 599, affd in part and revd in part (1981), 86 Ill. 2d 164, 167,427 N.E.2d 125. The majority in Emken held that the present market value of certain investments should be reduced by the expenses and liabilities incurred by a sale of the investments. (89 Ill. App. 3d 667, 671.) Justice Stouder dissented from that portion of the opinion, arguing that such expenses and liabilities were speculative because there were no plans to dispose of the investments. Had there existed a definite plan to sell the assets and therefore incur specific expenses and liabilities, Justice Stouder would have permitted a deduction from the gross amount of the marital property. (89 Ill. App. 3d 667, 673.) We believe the reasoning used by Justice Stouder in his dissent is the better approach. For a court to speculate as to the existence and amount of future tax liabilities from a sale, particularly when no sale is imminent, would amount to a mere guessing game. The proper approach was to ignore any speculative tax implications from a hypothetical sale of J&G and Metro. The Illinois Supreme Court has recently ruled in favor of the position taken by Justice Stouder in his dissent. In re Marriage of Emken (1981), 86 Ill. 2d 164,167, 427 N.E.2d 125.

Respondent also asserts that the valuation placed on the corporations was excessive because the court failed to take into account that he owned only 2A% of Metro’s stock. This contention is partially meritorious. The court set the value of the two corporations at $190,834. If shareholder’s equity is used as the measure of value, as agreed by the parties, the total valuation should have been $192,867.97. The following chart, based on the financial statements of the two corporations, illustrates how $192,867.97 is reached.

Gross shareholder’s equity of J&G $152,844.26 Less book value of 76% of Metro held by J&G as listed on J&G books 7,600.00
Shareholder’s equity of J&G (Less (J&G’s interest in Metro)
Shareholder’s equity of Metro
Total shareholder’s equity of two corporations

As the chart illustrates, the book value of Metro stock listed on J&G’s books ($7,600) is subtracted from J&G shareholder’s equity. If shareholder’s equity is to be used to value the corporations, it must be used throughout the computations. Since respondent effectively owns both corporations in their entirety and the values are based on shareholder’s equity, we believe that the fairest way to determine the total value is to add the net shareholder’s equity of each business.

$145,244.26 $ 47,623.71

While $192,867.97 is the shareholder’s equity of the two corporations, respondent correctly asserts that this amount should be reduced by his debt of $19,282.97 to J&G. Petitioner admits in her brief that the valuation of J&G should be reduced by the amount of respondent’s indebtedness. The proper net valuation of the two corporations should have been $173,585. The trial court, therefore, overstated the value of the two corporations by $17,249. One-half of this amount ($8624.50) should be subtracted from the equalization note which the court used to balance the amount of property apportioned the parties in the property settlement.

Respondent’s next contention is that the trial court erroneously gave petitioner a $6,503 credit as nonmarital property. Petitioner and her sister were the sole beneficiaries of their father’s estate when he died in 1969. At that time, their father held a $10,158 mortgage on the parties’ marital residence and $2,848.70 mortgage on petitioner’s sister’s residence. The sisters agreed that petitioner and respondent would pay the sister half the difference between the two mortgages ($3,654.85) and their father’s estate would release both mortgages. Petitioner claimed that the difference between the mortgage balances was a nonmarital asset because it was an inheritance. (See Ill. Rev. Stat. 1979, ch. 40, par. 503(a).) The trial court apparently agreed with petitioner and ruled that she was entitled to a $6,503 credit as non-marital property. ($10,158 mortgage debt, reduced by $3,654.85 paid to sister, leaves $6,503.15, rounded to $6,503.) This amount was added to the equalization note which was made payable to petitioner. Respondent argues that the arrangement between the parties and petitioner’s sister was merely an extinguishment of the parties’ joint obligation. The act of increasing their joint equity in the marital residence is claimed to evince an intention to treat the inheritance as marital property. Petitioner asserts that no such intention existed and the arrangement was made solely to ease the administration of her father’s estate,

The facts of this case favor respondent’s position. As was stated in Klingberg v. Klingberg (1979), 68 Ill. App. 3d 513, 386 N.E.2d 517, the failure to properly segregate nonmarital property by commingling it with marital property evinces an intent to treat the former as part of the marital estate. (68 Ill. App. 3d 513,516-17.) In the instant case, marital funds were used in 1970, to extinguish a mortgage debt in the marital residence. The intent to increase the parties’ joint equity seems clear. By commingling the nonmarital inheritance with the marital residence seven years before the parties separated and ten years before their marriage was dissolved, petitioner showed an intent to benefit both her and respondent by converting the nonmarital property into marital property. (See Klingberg v. Klingberg (1979), 68 Ill. App. 3d 513, 517; see also In re Marriage of Smith (1981), 86 Ill. 2d 518, 529, 427 N.E.2d 1239.) It was therefore error for the trial court to award petitioner a $6,503 credit as nonmarital property. This amount should be subtracted from the note payable to petitioner. See generally In re Marriage of Scott (1980), 85 Ill. App. 3d 773, 780,407 N.E.2d 1045.

Respondent’s next contention is that the equalization note is unnecessary because of the income tax considerations upon a potential sale of his two businesses. In the alternative, respondent asserts that the 12% interest rate applied to the equalization note is usurious. We have already discussed the speculative nature of potential income tax ramifications. The remaining issue is whether the trial court could require that respondent’s promissory note to petitioner (which amount should be reduced by $15,127.50 pursuant to the above analysis) bear interest at 12% annually.

Respondent cites the Illinois statute setting interest on judgments recovered before any court at 9%. (Ill. Rev. Stat. 1979, ch. 74, par. 3.) Petitioner’s response is that the trial court properly set the interest rate at 12% to help achieve an even distribution of property. Petitioner argues that the marital residence, constituting almost half of the marital property apportioned her was not income-producing. This fact, however, does not justify setting an interest rate in excess of that permitted by statute. Petitioner’s appellate brief acknowledges that respondent could prepay the promissory note and thereby avoid the 12% interest payments. In view of the plain wording of the court’s judgment and petitioner’s acknowledgment that the 12% could be avoided by prepayment, petitioner’s assertion that the 12% was part of the judgment itself and not interest on the judgment is untenable.

Respondent’s final contention on appeal from the dissolution proceeding is that the trial court improperly used petitioner’s affidavit and amended affidavit in lieu of testimonial evidence concerning her monthly expenses. The use of affidavits to aid a court in determining property settlements and maintenance awards is not improper. (See generally In re Marriage of Simmons (1980), 87 Ill. App. 3d 651, 658, 409 N.E.2d 321 (written budget admitted and considered by court); In re Marriage of Stegbauer (1980), 84 Ill. App. 3d 83, 404 N.E.2d 1140.) A review of the record reveals that the affidavits in this case were used by the court as an aid in understanding the extensive testimony regarding the needs of the parties. There is nothing to indicate that the judgment was based on these affidavits in lieu of testimonial evidence.

The award of $900 per month maintenance is affirmed. The promissory note payable to petitioner is modified in that the equalizing portion is reduced by $8,624.50 (taking into account the revaluation of the shareholder’s equity and respondent’s debt to J&G) and the $6,503 credit as nonmarital property awarded petitioner is stricken. The amended promissory note is hereby modified to provide for a principal sum of $21,626.50. In addition, the interest rate on the balance due is lowered to 9%. The remainder of the judgment of dissolution is affirmed.

Appeal No. 81-1893

Respondent’s first contention on appeal from the post-decree order is that any claim for arrearage in temporary support was explicitly barred by the judgment of dissolution of marriage, specifically, paragraph Y. He therefore asserts that the post-decree judgment was improper. Petitioner responds that a trial court has no authority to modify past-due installments of temporary support. Therefore, even if the trial court had intended to bar any claims for the past-due installments of support, which petitioner argues was not the court’s intention, the trial court was powerless to do so. • 8 Past-due installments of support are a vested right and the court has no power to modify them. (Collins v. Collins (1977), 47 Ill. App. 3d 258, 263-64, 361 N.E.2d 787.) In addition,

“[W]hen a court decrees that an amount of temporary support is to be paid, the court cannot reduce it retroactively. As each installment becomes due, the right to that installment is vested. The party entitled to receive this payment has a right to expect, plan, and look forward to its receipt, while on the other hand the duty to continue payment cannot be reduced or eliminated.” (47 Ill. App. 3d 258, 264; see also Hoos v. Hoos (1980), 86 Ill. App. 3d 817, 821, 408 N.E.2d 752 (past-due installments of child support are vested rights and are not subject to reduction either as to amount or time of payment).)

In the instant case, the trial court in the original dissolution proceeding did not have the power to bar claims relating to past-due temporary support payments.

We note, however, that even without the use of the vested rights approach, petitioner would prevail on this issue. Both parties have cited Winter v. Winter (1978), 69 Ill. App. 3d 359, 363, 387 N.E.2d 695, for the proposition that paragraph Y of the judgment of dissolution should be construed reasonably and as a whole, giving effect to the apparent intention of the trial court. We believe the intention of the trial court was that paragraph Y did not bar any claims for past-due temporary support payments. This intention is illustrated by the fact that the same judge (Judge Burks) entered both the original judgment of dissolution, including paragraph Y, and the post-decree judgment ordering respondent to pay petitioner $10,489.54. Clearly the judge who entered the judgment of dissolution would know the meaning he intended by the order. In addition, there is nothing in the record of the dissolution proceeding stating that claims pursuant to the October 31, 1979, judgment (for arrearage in temporary support) or any other past-due support payments were barred by the judgment of dissolution. Whether we consider the intentions of the trial court or the restrictions on that court’s power, the result is the same. The action for past-due temporary support payments owed petitioner was not barred by paragraph Y of the judgment of dissolution.

Respondent’s assertion that petitioner’s failure to appeal paragraph Y estops her from contesting the section on appeal is likewise without merit. Since we hold that paragraph Y does not bar actions for past-due payments, petitioner had no reason to appeal paragraph Y. Any action she sought to bring for those payments (such as the present post-decree action) was proper regardless of paragraph Y.

Respondent’s next contention is that petitioner’s claim for past-due temporary support payments is res judicata. He asserts that petitioner raised her claim for arrearages prior to entry of the judgment of dissolution and that the issue was fully litigated at that time. Respondent argues that since the issue was presented to the trial court, it must be deemed to have been fully adjudicated upon entry of the judgment of dissolution. Petitioner responds that to allow the judgment of dissolution to be res judicata with respect to requests for past-due installments of temporary support would allow the trial court to do indirectly what it could not do directly: modify petitioner’s vested rights in the past-due installments. She argues that the question of arrearages in temporary support payments was never litigated in the original dissolution proceeding and, therefore, the judgment of dissolution did not resolve that question.

We believe that petitioner has correctly analyzed the issue. Since the trial court did not have the power to directly modify petitioner’s vested interests in the past-due installments (see Collins v. Collins (1977), 47 Ill. App. 3d 258,264), that court should not be able to indirectly modify those interests, even if it wished to do so. In addition, the record reveals that the question of arrearages in temporary support was not litigated in the dissolution proceeding. Direct evidence relating to the past-due amounts was never presented or requested. It is therefore understandable that the comprehensive, 19-page judgment of dissolution makes no reference to the arrearage. We find, therefore, that the judgment of dissolution is not res judicata to the question of arrearages in temporary support.

Respondent’s next contention is that paragraph Y bars petitioner’s right to enforce the interlocutory judgment for arrearage of $1,850 (which currently has a balance of $1,489.54). This issue has already been discussed in relation to the claim for the arrearage accumulating from August 13,1979, to April 21,1980 (respondent’s first contention), and the same reasoning applies. Petitioner’s vested right in the judgment could not be modified and the trial court’s finding in relation to the judgment for $1,850 is affirmed.

Respondent’s final contention is that the trial court erred in refusing to strike petitioner’s reply to respondent’s answer in the post-decree proceeding before the trial court. Respondent argues that petitioner’s reply violated the requirements of section 33 of the Civil Practice Act that the pleading “contain a plain and concise statement of the pleader’s cause of action, counterclaim, defense, or reply.” (Ill. Rev. Stat. 1979, ch. 110, par. 33(1).) Respondent points to the inclusion, in the reply, of a synopsis of the significant events in the proceeding and petitioner’s financial affidavit. Petitioner argues that the synopsis was included solely to inform the judge handling the post-decree proceeding of the relevant facts of the case. She argues that the financial affidavit was included in support of her claim for attorney fees.

A review of the record fails to convince us that the inclusion of the synopsis and financial affidavit resulted in any prejudice to respondent. In Matchett v. Rose (1976), 36 Ill. App. 3d 638,344 N.E.2d 770, the appellate court held that allegations constituting mere surplusage in a complaint should be disregarded if the plaintiff has alleged facts sufficient to constitute a cause of action. (36 Ill. App. 3d 638, 652.) The same logic should apply to a reply. The synopsis and affidavit, even if improper, are mere surplusage that absent a showing of prejudice can be disregarded. This logic, together with the rule that pleadings should be liberally construed (Ill. Rev. Stat. 1979, ch. 110, par. 33(3)), leads us to donclude that the trial court’s failure to strike petitioner’s reply to respondent’s answer did not constitute reversible error.

The judgment of the trial court in the post-decree proceedings is affirmed.

Appeal No. 80-1334 is affirmed as modified.

Appeal No. 81-1893 is affirmed.

PERLIN and HARTMAN, JJ., concur.