author: Mr. JUSTICE LORENZ

text:
    The Taylor Wine Company, Inc., Plaintiff-Appellee, v. Foremost Sales Promotions, Inc. et al., Defendants-Appellants.
    (No. 57654;
    First District (5th Division)
    June 22, 1973.

      Allen H. Schultz, of Chicago, for appellants.
    Patrick W. O’Brien and David S. K. Platt, both of Mayer, Brown & Platt, of Chicago, for appellee.
   Mr. JUSTICE LORENZ

delivered the opinion of the court:

Plaintiff Taylor Wine Company, Inc., filed a verified amended complaint for “temporary” and permanent injunctions against Foremost Sales Promotions, Inc., and several independent liquor retailers doing business as Foremost Liquors alleging that defendants violated the Illinois Fair Trade Act. (Ill. Rev. Stat. 1969, ch. 121½, secs. 188-191.) Pursuant to proceedings detailed below, the trial court issued a permanent injunction restraining defendants from advertising, offering for sale or selling plaintiff’s products in violation of the Fair Trade Act.

On appeal defendants contend: (1) that plaintiff failed to prove its products were in fair and open competition, (2) that plaintiff failed to prove defendants willfully and knowingly advertised plaintiff’s products, (3) that plaintiff’s fair trade contracts are invalid against non-signers because they provide for minimum rather than stipulated prices, (4) that the Illinois and federal antitrust laws provide a valid defense in fair trade cases, (5) that fair trade contracts are inapplicable to Foremost Sales Promotions, Inc., and (6) that the injunction is invalid because it is not specific.

Plaintiff’s verified amended complaint alleged that plaintiff was injured when defendants engaged in unfair competition by willfully and knowingly advertising, offering for sale or selling several of plaintiff’s products, which defendants knew were in fair and open competition with similar products, below retail prices stipulated pursuant to the Fair Trade Act. Plaintiff attached to the complaint: (1) a copy of a fair trade agreement with a third party which referred to “minimum retail prices,” (2) a notice with “Minimum fair trade price to consumer per bottle” which was sent to retailers, (3) a copy of a consent judgment which had previously been entered with defendants, and (4) copies of defendants’ advertisements of plaintiff’s products which listed defendant Foremost liquor stores.

Defendants filed a verified answer to plaintiff’s amended complaint essentially alleging defendants’ lack of knowledge of plaintiff’s allegations except that it denied that plaintiff was a party to any valid fair trade agreements and asserting various affirmative defenses that: (1) the Fair Trade Act requires the use of “stipulated” prices while plaintiff referred to “minimum stipulated” prices, (2) plaintiff and others conspired to fix the retail or wholesale prices of plaintiff’s products in violation of the U.S. and Illinois Antitrust Acts, (3) plaintiff failed to commence or abandoned its enforcement of its fair trade contracts and thus violated the U.S. and Illinois Antitrust Acts, (4) plaintiff sold to other retailers at lower prices in violation of the Robinson-Patman Act and the Illinois Antitrust Act, and (5) defendant Foremost Sales Promotions, Inc., was the agent of a disclosed principal. Plaintiff filed a verified reply and motion to strike defendants’ affirmative defenses as insufficient at law. The court, observing that it had ruled on these defenses in other cases, granted plaintiff’s motion.

At the trial on the merits, Morris Shipman, plaintiff’s Northern Illinois manager, testified that plaintiff had adopted a fair trade program in Illinois and spent considerable money building and preserving its good will, that retailers were notified of plaintiff’s program and changes in stipulated prices through a trade journal and by direct mailings which included some directly to Foremost liquor stores (these and certain fair trade agreements were admitted into evidence), and that a shopping service policed the retailers to discover if they were abiding by the program. When asked if “other products provide competition for [plaintiff’s] products,” over defense objection that this was an ultimate issue in the case, Shipman was permitted to state: “Yes, there are other items that sell in our premium wine class such as Paul Masson, Great Western, Christian Brothers, Almadén.” Shipman also testified that defendants knew of plaintiffs program as he had discussed the matter with an officer of Foremost Sales Promotions, Inc. Nonetheless, defendants advertised plaintiff’s products at less than fair trade prices and Shipman identified several advertisements. Defendants did not cross-examine the witness. Plaintiff rested its case at the conclusion of this evidence and defendants moved for judgment in their favor arguing that not all the elements of the cause of action had been proved and that no injunction should be entered against Foremost Sales Promotions, Inc., since it was an agent for disclosed principals. The court denied defendants’ motion and defendants rested their case without presenting evidence.

The trial court, after observing that plaintiff was being irreparably injured, entered a permanent injunction in the following terms from which defendants appeal:

“[T]hat defendants * *' *, their agents, servants, employees and attorneys, and all persons in active concern or participation with them are hereby permanently enjoined and restrained from willfully and knowingly advertising, offering for sale or selling [certain of plaintiffs products at less than specific prices] or at less than such other prices as may be shown from time to time on price lists prepared pursuant to the terms of plaintiff’s Fair Trade contracts entered into under the protection of the Fair Trade Act of the State of Illinois, and made known to defendants in accordance with this order.”

Furthermore the court ordered:

“[T]hat plaintiff is given leave to change its Fair Trade price lists from time to time pursuant to the terms of its Fair Trade contracts. Said price changes shall become effective against defendants, as though incorporated herein, upon service on defendants, which service shall be personal or by certified or registered mail, return receipt requested.”

OPINION

Defendants first contend that plaintiff failed to prove that its products were in fair and open competition. “Fair and open competition with commodities of the same general class produced by others” is a condition regarding the validity of a fair trade contract. (Ill. Rev. Stat. 1969, ch. 121½, sec. 188.) This condition was imposed to prevent producers or distributors who have no effective competition from using the Fair Trade Act to increase their domination over the market. As a condition, the producer or distributor has the burden of proving fair and open competition. Proof that others produce commodities similar in quality and in price to plaintiff’s would seem to be sufficient evidence of fair and open competition.

In the instant case, defendants argue that the only evidence of fair and open competition was the opinion of a single witness regarding this ultimate issue, which was improperly admitted over defendants’ objection. In Kobrand Corp. v. Foremost Sales Promotions, Inc. (1972), 8 Ill.App.3d 418, 291 N.E.2d 61, the court held that the trial court did not err when it overruled a similar defense objection to such a question. While the form of tire question in Kobrand and in the instant case is less than ideal because it refers to “competition,” defendants here were not prejudiced by the form of the question. The normal complaint regarding questions which seek the witness’ opinion regarding an ultimate issue in the case is that the witness’ opinion tends to usurp the role of the trier of fact. In the instant case, the witness’ testimony that at least four other companies sold commodities similar to plaintiff’s is clearly proper evidence of fair and open competition. Moreover, since the witness was plaintiff’s Northern Illinois Manager, he doubtless had personal knowledge regarding those companies who produce such similar commodities. Although more detailed information regarding plaintiff’s competitors might sometimes be appropriate, the uncontroverted evidence in the record before us indicates that plaintiffs products were in fair and open competition.

Defendants secondly contend that plaintiff failed to prove defendants willfully and knowingly advertised plaintiffs products below their alleged stipulated prices. Only willful and knowing advertising, offering, for sale, or selling plaintiff’s fair trade products violates the Fair Trade Act. (Ill. Rev. Stat. 1969, ch. 121½, sec. 189.) Although defendants argue that they received no notice, the record is replete with - evidence of defendants’ knowledge of plaintiff’s faff trade program and defendants’ willful violation of that program. Plaintiff’s witness, without contradiction by defense witnesses, testified that retailers were notified of plaintiffs fair trade program through advertisements in the trade journal and through direct mailings. The retailers to which these mailings were directed included Foremost liquor stores. Although additional information was probably not needed, the witness also testified that he had discussed the matter with an officer of Foremost Sales Promotions, Inc. The record also shows that defendants advertised plaintiffs products below their fair trade prices after having consented to a judgment whereby they agreed to abide by plaintiff’s fair trade program. Clearly defendants willfully and knowingly advertised plaintiff’s products at lower than fair trade prices.

Defendants thirdly contend that plaintiff’s fair trade contracts are invalid against non-signers because they provide for minimum rather than stipulated prices. The Fair Trade Act validates fair trade contracts which provide that certain products will not be sold or resold “except at the price stipulated by” an appropriate party. If such products are willfully and knowingly advertised, offered for sale, or sold “at less than the price stipulated in any [such] contract,” the Act provides a remedy whether the person engaging in such conduct “is or is not a party to such contract.” Defendants cite Black & Decker Mfg. Co. v. Ann & Hope, Inc. of Danvers (1972), (Mass.), 277 N.E.2d 687, in support of their contention that reference to “minimum retail” prices rather than “stipulated” prices in plaintiffs fair trade contracts is fatal to its case. We also note that the notice to retailers attached to the complaint in the instant case refers to “minimum fair trade price to consumer per bottle.” Although the Supreme Judicial Court of Massachusetts in the case cited by defendants places great significance on the term “stipulated,” we do not agree that the term is so meaningful when it is considered that the remedy provided by the Act against non-signers applies where a party advertised, offered for sale, or sold fair trade products “at less than” stipulated prices. In view of these terms, the use of the term “minimum” becomes descriptive of the term “stipulated” for all practical purposes.

Defendants fourthly contend that anti-trust laws provide a valid defense in fair trade cases. The Illinois Fair Trade Act does not expressly provide for defenses where the requirements of the Act have been met. The McGuire Act (15 U.S.C.A. (1971), sec. 45(a)(3)) provides that nothing in any federal antitrust act “shall render unlawful the exercise or the enforcement of any right or right of action created by [a state fair trade act].” Section 10 of the Illinois Antitrust Act (Ill. Rev. Stat. 1971, ch. 38, sec. 60 — 10) provides that nothing in that Act “shall be deemed to amend, modify, or repeal in whole or in part the provisions of [the Illinois Fair Trade Act].” Although fair trade relates to vertical resale price maintenance, these statutory provisions admit of no exceptions. If antitrust laws were held to be a valid defense to fair trade, the enforcement of a fair trade program would be rendered unlawful and the Fair Trade Act would be subject to amendment and modification by the courts contrary to legislative intent. The case cited by defendants (Sunbeam Corp. v. Central Housekeeping Mart., Inc. (1954), 2 Ill.App.2d 543, 120 N.E.2d 362) does not establish the antitrust laws as a defense in fair trade cases. Rather, that case is based upon the trial court’s error in granting an injunction where the pleading showed defenses, denominated as being affirmative defenses, to which plaintiff did not reply. In the light of the above statutory provisions, we cannot construe as valid in a fair trade case any affirmative defense of illegality by reason of alleged violations of the antitrust laws.

However, while the antitrust laws do not in themselves provide a defense in a fair trade case, anything which negates an element of a fair trade cause of action, for example the element of fair and open competition, may provide a defense. If that defense will surprise the opposing party it must be raised as an affirmative defense (Ill. Rev. Stat. 1969, ch. 110, sec. 43(4)) to which plaintiff must reply. (Ill. Rev. Stat. 1969, ch. 110, sec. 32.) Furthermore, this opinion should not be construed to unduly restrict other possibly valid defenses to a fair trade cause of action.

In the instant case, plaintiff filed a reply to and motion to strike defendants’ affirmative defenses as insufficient at law. The thrust of the defenses were plaintiff’s alleged violations of the antitrust laws. The only defense which related to an element of a fair trade cause of action was the defense that plaintiff conspired with “others” to fix the prices of its products. This defense was so general that a court could not possibly determine whether plaintiff allegedly conspired with other producers (horizontal) which arguably may relate to the element of fair and open competition or with the members of its chain of distribution (vertical) which in view of the Fair Trade Act is permissible. Therefore, we believe the trial court did not err when it granted plaintiff’s motion to strike defendants’ affirmative defenses.

Defendants fifthly contend that fair trade contracts are inapplicable to Foremost Sales Promotions, Inc. Defendants argue that section 2 of the Fair Trade Act (Ill. Rev. Stat. 1969, ch. 121V2, sec. 189) is inapplicable to those who do not offer for sale or sell fair trade products. Defendants state that Foremost Sales Promotions does not offer for sale or sell any fair trade products. Furthermore, defendants state that since the advertisements list various Foremost liquor stores, Foremost Sales Promotions is an agent for disclosed principals.

Section 2 of the Fair Trade Act clearly prohibits the willful and knowing advertisement of fair trade products below their stipulated prices. We find no indication that the legislature intended the remedy of unfair competition to be limited to those persons who offer for sale or sell fair trade products. Quite the contrary is true. Moreover, it makes little difference whether Foremost Sales Promotions is enjoined as a party to the action or as an agent of its alleged principals. An injunction may bind it in either case. (Ill. Rev. Stat. 1969, ch. 69, sec. 3 — 1.) However, as a party or as someone in active concert or participation with Foremost liquor stores, Foremost Sales Promotions would be entitled to actual notice of the injunction. Ill. Rev. Stat. 1969, ch. 69, sec. 3 — 1.

Defendants lastly contend that the injunction is invalid because it is not specific. As we held in Paddington Corp. v. Westville Beverage Mart (No. 57314, 1st Dist.), an injunction similar to the one entered by the trial court in Seagram-Distillers Corp. v. New Cut Rate Liquors (7th Cir. 1955), 221 F.2d 815, is specific enough to advise a defendant who is not a novice in the liquor business of its meaning. The instant injunction is much more detailed, and for that reason perhaps even preferable, to the injunction entered in either of the above cases.

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

Affirmed.

DRUCKER, P. J., and ENGLISH, J., concur.


source: Caselaw Access Project

author: PER CURIAM.

license: Public Domain

text:
    The People of the State of Illinois, Plaintiff-Appellee, v. William J. Snipe, Jr., Defendant-Appellant.
    (No. 57964;
    First District (5th Division) —
    June 22, 1973.
    James J. Doherty, Public Defender, of Chicago, (Lee T. Hettinger and Xavier Velasco, Assistant Public Defenders, of counsel,) for appellant.
    No appearance for the People.
   PER CURIAM.

DRUCKER, J., took no part.


author: Mr. PRESIDING JUSTICE STAMOS

text:
    Dewey Wimberley, Plaintiff-Appellee, v. Material Service Corporation, Defendant-Appellant.
    (No. 57737;
    First District (2nd Division) —
    June 19, 1973.

      Rehearing denied July 17, 1973.

      Lord, Bissell & Brook, of Chicago, (Richard E. Mueller, Richard C. Conklin, Cornelius P. Callahan, and George M. Elworth, of counsel,) for appellant.
    Horwitz, Anesi, Ozmon & Associates, Ltd., of Chicago, (Nat P. Ozmon and Timothy M. O’Brien, of counsel,) for appellee.
   Mr. PRESIDING JUSTICE STAMOS

delivered the opinion of the court:

Plaintiff filed, a complaint alleging negligence on the part of defendant. A jury trial was conducted. At the close of all the evidence the court allowed plaintiff to file an amended complaint adding a Count based on the doctrine of res ipsa loquitur. The trial court then granted plaintiff’s motion for a directed verdict on the issue of liability. The question of damages was submitted to the jury and they awarded plaintiff the sum of $60,000.00. On appeal defendant contends:

(1) It was improper to direct a verdict for plaintiff on the issue of liability because the evidence presented a question of fact for the jury to decide and plaintiff was not free from contributory negligence as a matter of law;
(2) The trial court erred by excluding evidence of a subsequent injury suffered by plaintiff; and
(3) Plaintiff’s closing argument was improper and resulted in prejudicial error.

On June 21, 1965, at approximately 5:30 P.M. a concrete mixer truck owned by defendant and operated by its employee was proceeding in a northeasterly direction on the Stevenson Expressway at an approximate speed of 50 miles per hour. Plaintiff was operating his motorcycle behind the truck at a constant distance of approximately 100 to 150 feet Both vehicles were in the curbside lane of traffic. An automobile was travelling alongside plaintiff in the next lane to his left at a speed of about 50 miles per hour. There were a total of three lanes carrying traffic in a northeasterly direction. The weather conditions were good, the road surface was dry, and traffic was light. Plaintiff observed an object “bouncing, spinning” in front of him. He applied his brakes and directed his motorcycle slightly to the left. The object struck plaintiff’s motorcycle and right foot. The object was subsequently identified as a metal cement chute, three to four feet in length, which is normaHy stowed on the right rear fender of defendant’s truck. Plaintiff retained control of his motorcycle and brought it to a stop. After a cursory examination of his cycle, which revealed that it was operable, plaintiff pursued the truck and subsequently communicated the details of the mishap to the truck driver. At the driver’s suggestion, plaintiff followed the truck and driver to defendant’s office. Plaintiff was transported from the office to a medical center where he received treatment for his injuries.

The truck driver testified that he was unaware that anything had fallen from the truck until he was so informed by an unidentified motorist on the expressway. After receipt of this information he inspected the truck and discovered that the cement chute and stowage receptacle therefor were missing. The receptacle was normaHy mounted on to the right rear fender of the truck by two bolts which were also missing. The driver further testified that he had inspected the truck in the morning and again before commencing the return trip from a construction site to defendant’s yard. The chute receptacle was tested for security by wiggling it. The receptacle was securely mounted when tested by the driver. The mounting bolts which secured the receptacle to the truck were not inspected because they were covered with mud and were not easffy observable.

Medical testimony at trial revealed that plaintiff had suffered a compound fracture of the distal phalanx of the right great toe, soft tissue swelling in the right hip area, and a ruptured intervertebral disc in the lumbar area. Surgery had been recommended for correction of the ruptured disc, but plaintiff declined undergoing the operation because of his fear of the procedures involved.

Defendant initially contends that it was error to direct a verdict for plaintiff on the issue of liability because the evidence presented a question of fact for the jury to decide and plaintiff was not free from contributory negligence as a matter of law.

To establish a prima facie res ipsa loquitur case a plaintiff must establish that the instrumentafity which caused the injury complained of was within the control or management of defendant, that the result would not have occurred in the ordinary course of things without negfigence on the part of defendant and that plaintiff is free from contributory negligence. (Drewick v. Interstate Terminals, Inc., 42 Ill.2d 345; Metz v. Central Ill. Electric & Gas Co., 32 Ill.2d 446; Jirik v. General Mills, Inc., 112 Ill.App.2d 111.) Application of the doctrine raises an inference of negligence, the strength of which is dependent upon the facts and circumstances of the case, which must be weighed with all other evidence in the case. (Drewick, supra; Metz, supra; Collgood, Inc. v. Sands Drug Co., 5 Ill.App.3d 910.) The inference of negligence may be so strong as to require a directed verdict for plaintiff. Collgood, Inc., supra; see also Moore v. Atchison, Topeka & S.F.R. Co., 28 Ill.App.2d 340; Erckman v. Northern Illinois Gas Co., 61 Ill.App.2d 137.) A verdict ought to be directed when all of the evidence, viewed in its aspect most favorable to the opponent; so overwhelmingly favors the movant that no contrary verdict based upon that evidence could ever stand. Pedrick v. Peoria & Eastern R.R. Co., 37 Ill.2d 494.

It is undisputed that the injury-causing instrumentality in the case at bar was within the control of defendant and the result was such as would not ordinarily occur in the absence of negligence on the part of defendant. Defendant presented no evidence which would suggest that the result could have occurred without negligence on its part. The testimony of the truck driver tending to show due care on the part of defendant does not negate the inference of negligence raised by the evidence, but must be considered along with all other evidence in the case. All of the evidence in the instant case, when viewed in its aspect most favorable to defendant, so overwhelmingly favors plaintiff that no contrary verdict based thereon could ever stand. Therefore, if plaintiff was free from contributory negligence his motion for a directed verdict on the issue of liability was properly granted.

The sole evidence regarding plaintifFs conduct was presented through his own testimony, which was unimpeached and uncontradicted as it related to the occurrence. Contrary to the insistence of defendant, we do not think that it can reasonably be inferred from the evidence that plaintiff: (1) was following the truck too closely; (2) was travelling at an excessive rate of speed; (3) failed to keep a proper lookout; (4) had ample time to avoid hitting the chute; or, (5) did not attempt to avoid colliding with the chute. The evidence established that plaintiff was not guilty of contributory negligence. Therefore, the trial court correctly granted plaintiff’s motion for a directed verdict on the issue of liability.

Defendant next contends that the trial court erred by excluding evidence of an injury suffered by plaintiff subsequent to the occurrence in question. The basis of this contention is that the trial court would not allow defendant to cross-examine plaintiff’s witnesses concerning an injury incurred by plaintiff on January 2, 1968. The trial court stated that its decision was based upon Gordon v. Checker Taxi Co., 334 Ill.App. 313, wherein it was announced that it is improper to raise innuendoes on cross-examination of a witness, under the guise of laying a foundation for impeachment, if there will be no proof of the matter insinuated. Thus, the trial court indicated that, unless defendant could show that the subsequent injury was in some way related to the injuries for which plaintiff was seeking to recover, evidence of the subsequent injury would not be admitted.

In an apparent attempt to relate the subsequent injury to the injuries for which recovery was sought, defendant produced the doctor who had treated the subsequent injury. The court conducted a hearing outside the presence of the jury to determine whether or not the doctor’s testimony would be admissible. After examination of the doctor by court and counsel, the trial court ruled that the doctor would not be permitted to testify as to the January 2, 1968, injury. Defendant’s motion to treat the testimony at the hearing as an offer of proof was allowed.

The doctor’s testimony was that he examined plaintiff on January 3, 1968, in connection with plaintiff’s complaint of lower back pain. Plaintiff first noticed the pain on January 2, 1968, following a rapid motion associated with raising his left leg. The doctor diagnosed the condition as an acute lumbo sacral sprain. He testified that acute signified “shortness of duration of the manifestations” as opposed to chronic which means over a long period of time. He prescribed “a few days bed rest and the use of local heat” for treatment of the problem. He had not seen plaintiff since the time of that diagnosis.

On cross-examination by plaintiff’s counsel, the doctor testified that he had no knowledge of injuries sustained by plaintiff other than the one which he had diagnosed. He also testified that he could not relate the problem that he diagnosed to the 1965 occurrence or any condition that plaintiff might have had with his right leg at the time of trial.

Evidence is relevant if it tends to prove a fact in controversy or renders a matter in issue more or less probable. (Marut v. Costello, 53 Ill.App.2d 340, aff'd 34 Ill.2d 125.) Defendant sought to introduce evidence of the subsequent injury to prove that all of the injuries alleged by plaintiff at the time of trial were not the result of the 1965 occurrence. However, defendant was unable to show that the subsequent injury was related to the injuries for which plaintiff sought to recover. The offer of proof merely indicated that plaintiff had suffered a relatively minor back injury of short duration. It could not be reasonably inferred from the doctor’s testimony that the 1968 injury was related to the injuries for which plaintiff sought to recover. Therefore, the offer of proof was irrelevant and it was proper for the trial court to exclude evidence of the subsequent injury to prevent the jury from speculating that the injury was in some way related to the injuries for which recovery was sought.

Defendant’s final contention is that plaintiff’s closing argument was improper and resulted in prejudicial error. We are initially referred to the following statement made by plaintiff’s counsel at the outset of his rebuttal of defendant’s closing argument:

“Mr. Tourek says that the claim of Mr. Wimberley is grossly exaggerated. Well now, it is [sic] grossly exaggerated. As I can only find that is his opinion. I ask Mr. Tourek for Material Service Corporation then why didn’t they bring in some evidence to show that it was grossly exaggerated? Then why didn’t some doctor get on the stand on behalf of Material Service and testify that this is not the situation? Then why didn’t they bring in some evidence, any evidence at aH instead of just standing before you at this stage and say it’s grossly exaggerated?”

Defendant urges that this argument was improper and prejudicial because it had sought to introduce evidence of the exaggeration of the extent of plaintiff’s injuries through the testimony of the doctor who had treated plaintiff for the 1968 injury, but such testimony was excluded by the ruling of the trial court. We disagree. The offer of proof consisting of the testimony of defendant’s medical witness did not tend to show that plaintiff’s allegations of the seriousness of his injuries were exaggerated, but merely tended to show that plaintiff had suffered an injury subsequent to the injury complained of in the case at bar. It was not improper for plaintiff’s counsel to comment on the lack of evidence in support of defendant’s contention that plaintiff’s injuries were exaggerated.

Defendant next refers us to the foHowing argument advanced by plaintiff’s counsel during his rebuttal argument:

“He says, Why doesn’t he have the operation?’ I talked to you quite a bit about that. He says, ‘Seventy-five percent get good or exceHent results.’ I accept his terminology. That sounds good when you say 75 percent. If I know what 75 percent is, that means if you four folks had to have that surgery one of you would be in bad trouble, and if you four folks had that surgery one of you would be in bad trouble, if you four folks had that surgery one of you would be in bad trouble. To me those are big odds. If everybody who had pneumonia, one out of four died, this population would be—
MR. TOUREK: I object, Judge.
THE COURT: Overruled. You opened the door.
MR. OZMON: This population would be way, way down. Those are big mortality odds, and although 75 percent sounds nice when you say it, 75 percent, if you put four human beings out there and say one of you are not going to come off that table in very good shape and you three may come off with a good result, and maybe one of you might come out with an excellent result, now I don’t know about Counsel, but those statistics scare me and I don’t blame Mr. Wimberley for being scared.”

Defendant urges that the above argument was designated to arouse the prejudice of the jury and appeal to its passions by inferring that plaintiff might die if he underwent the proposed corrective surgery. Defendant asserts that there was no evidence presented from which the jury could infer that the surgery could prove fatal.

Plaintiff’s argument did not state that there was a possibility of death from tire surgery. Rather, it was a response to an argument advanced by defendant that there was a 75 percent probability of correcting plaintiff's back disorder through corrective surgery. Plaintiff’s counsel contended by means of analogy that plaintiff could come within the 25 percent of cases where surgery did not produce the desired result. It is our opinion that the argument was not improper. See Perfect v. Kaley, 130 Ill.App.2d 61.

The judgment is, therefore, affirmed.

Affirmed.

LEIGHTON and HAYES, JJ., concur.


author: Mr. JUSTICE DIERINGER

text:
    The People ex rel. James Baylor, Director of the Department of Insurance, Petitioner-Appellant, Cross-Appellee, v. Multi-State Inter-Insurance Exchange, Respondent-Appellee, Cross-Appellant.
    (No. 56745;
    First District (4th Division) —
    June 13, 1973.

      Rehearing denied July 18, 1973.

      William J. Scott, Attorney General, of Chicago, (Warren K. Smoot and Donald S. Carnow, Assistant Attorneys General, of counsel,) for appellant.
    Samuel H. Young Professional Corporation, of Chicago, (Samuel H. Young, John D. Cummins, and Nathaniel J. Forgan, of counsel,) for appellee.
   Mr. JUSTICE DIERINGER

delivered the opinion of the court:

This is an appeal from a judgment of the Circuit Court of Cook County by the Director of Insurance as Liquidator of Multi-State Inter-Insurance Exchange, and a cross-appeal by Leonard Croupe, the collector of assessments from the policyholders of Multi-State Inter-Insurance Exchange.

The issues on appeal are whether the chancellor erred in awarding an additional $200,194 in quantum meruit fees to Croupe, a lawyer, because the repeal of section 207 of the Insurance Code on August 7, 1969, rendered further performance impossible under the July 19, 1967, employment agreement, and whether the additional award was improper because Croupe had been discharged under a new contract of August 19, 1969, which had been substituted for the July 19, 1967, agreement; whether the chancellor erred in finding that Croupe was discharged “for reasons that would not deny him the right to compensation”; whether the chancellor erred in awarding fees which were not fixed by the Liquidator; whether the chancellor erred by failing to weigh all of the evidence adduced; whether the chancellor abused his discretion by not reducing the amount of fees already paid by $50,000; and whether the chancellor erred by awarding fees in quantum meruit of $41,545 on 1187 cases in which judgments were' obtained before August 7, 1969, without crediting the estate with $34,018.27 previously paid, and in awarding fees in quantum meruit of $44,205 on 1263 cases where settlement contracts were obtained without crediting the estate with $35,759.72 previously paid on those same cases pursuant to the contingent fee contract.

On cross-appeal the issues are whether the chancellors award of $12,509.97 to the Director of Insurance was contrary to the manifest weight of the evidence and inconsistent with the findings contained in the degree, and whether the court erred by failing to enter an order assessing reasonable expenses and attorney’s fees against the Liquidator for making statements which he knew to be untrue pursuant to section 41 of the Civil Practice Act.

On September 11, 1964, the Circuit Court of Cook County entered an order dissolving Multi-State Inter-Insurance Exchange and instructing the Director of Insurance to take possession of all its property and business affairs for the purpose of liquidating it for the benefit of the creditors and the policyholders in accordance with article XIII of the Illinois Insurance Code. (Ill. Rev. Stat., ch. 73, § 799 et seq.) MultiState Inter-Insurance Exchange was an insurance reciprocal, which meant its policies provided that policyholders could be assessed an amount equal to their original premium; and prior to August 7, 1969, section 207 of the Illinois Insurance Code authorized the Liquidator to levy such assessments.

In 1967, Leonard Groupe, a licensed Illinois attorney, was employed by the Director of Insurance on a contingent fee basis to collect assessments from the policyholders of Multi-State pursuant to a letter of agreement dated July 19, 1967. This agreement provided that Groupe receive 25% of the amount collected without a suit, 33%% of the amount collected by a suit, and 50% of the amount collected' where the policyholder did not reside at the address shown on the company’s records. In addition, he was to pay all expenses other than court costs incurred for filing and processing the claims. There were approximately 35,000 claims for collection. From September 5, 1967, until his termination in January of 1970, Groupe testified he collected a total amount of $1,062,927.45 and was paid $379,908.30 as fees pursuant to the letter of agreement.

On August 7, 1969, section 207 of the Insurance Code (Ill. Rev. Stat., ch. 73 § 819) was repealed by the Illinois General Assembly, and on August 19, 1969, Albert Verb, Special Deputy in charge of the Bureau of Liquidation, advised Groupe the Liquidator’s instructions were to cease collections of assessments on insurance policies in view of the repeal of section 207. He specifically instructed Groupe he was to make no more collections against Multi-State policyholders unless there was a valid judgment entered before August 7, 1969. Groupe protested these instructions, but in a letter to Verb, dated August 21, 1969, he agreed to comply with the directives.

Groupe testified at the time of receiving the directive there were approximately 151 files in the office of the Chief Justice of the municipal division of the Circuit Court of Cook County awaiting entry of judgment. He said he went to the offices of the Chief Justice, informed him of the instructions, and presented some law with regárd to whether the estate was entitled to have these judgments entered nunc pro tunc as of the date of default. The Chief Justice concluded it was proper to enter the judgments. After Verb advised Groupe the Liquidator considered these collections to be in violation of his instructions, Groupe refunded the collections and his fees.

Mr. Verb testified around December 18, 1969, he contacted Groupe and told him a Tribune reporter had been in to see him with a long list of Multi-State assessments where the people had paid money to Groupe without judgments entered against them. Verb said he retained the auditing firm of Peat, Marwick, Mitchell & Co., Certified Public Accountants, to perform an audit. Groupe reviewed his records and furnished to the Bureau a list of approximately 682 collections on which fictitious judgment dates were shown and on which there were no judgments entered prior to August 7, 1969. On the basis of these reports the Bureau made refunds to policyholders of $45,278.70 and found that $16,400.72 was due the Bureau for Groupe’s fees of which Groupe repaid all but $6,037.97.

When asked how these matters occurred, Groupe stated one of his employees, Daniel Locke, was responsible. Locke testifid he was told by Edward Kennedy, Groupe’s office manager, if a return date was prior to August 7, 1969, he should assume this was a judgment date and record it as such. He testified further he had gone to the Chicago Tribune because he believed the collections to be improper and was afraid because he had a criminal record, he would be blamed for it: “I wanted the opinion of an unbiased party, namely, the Chicago Tribune.”

Groupe testified he had never instructed Locke to submit false judgment dates to the Bureau of Liquidations and did not discover what Locke had been doing until after he had resigned in December of 1969. Kennedy testified Locke told him he was afraid he would lose his job if collections were only made on judgments entered before August 7, 1969. Groupe and Kennedy testified Locke was asked to come back to work for a period of time in December to help straighten out the matter.

Verb stated that in December when the story first broke about the improper collections, the Bureau of Liquidations was swamped with calls, and Verb sent Groupe a bill of $2,000 for office expenses and a bill for $4,472 charged by the auditors. On January 26, 1970, Verb wrote a letter to Groupe terminating his employment “In view of the experience of the past thirty days.”

The Director of Insurance sought a judgment against Leonard Groupe for the following items: the sum of $6,037.87 for fees retained by Groupe for the collection of assessments from 682 policyholders which were refunded when it was ascertained that fictitious judgment dates had been entered; the sum of $4,472 charged by Peat, Marwick, Mitchell & Co. in auditing the records of Groupe for the Liquidator to determine the number of assessments which were collected by Groupe in violation of his instruction; and the sum of $2,000 as office expenses incurred in making the refunds to 682 policyholders. The Liquidator later amended his petition seeking an order requiring Groupe to refund $50,000 or such other sum as the court might determine of the total compensation of $379,908.30 paid to Groupe on a contingent fee basis from July 19, 1967, to January 26, 1970.

Groupe counterclaimed for an accounting and the fixing of fees in accordance with his contingent fee contract dated July 19, 1967, or, in the alternative, in quantum meruit, for 15,166 lawsuits which had been prepared and filed by Groupe, which were in the following status at the time he was relieved of his duties: 1187 suits which had been reduced to final judgment, 1263 suits not reduced to judgment in which Groupe had entered into settlement agreements with policyholders, and 12,716 suits in various stages of litigation.

After hearings, the chancellor awarded the Liquidator of Multi-State a total award of $12,509.97 to cover office expenses, auditors fees, and fees which Groupe had not repaid in connection with the 682 fictitious judgments. The chancellor held that the payment of fees of $379,837 to Groupe was proper and in accordance with the terms of the contract and denied the claim of the Liquidator for the repayment of $50,000. He further awarded Groupe a judgment for the additional amount of $200,194 on a quantum meruit basis computed as follows: the amount of $45,545 for the 1187 cases which had been reduced to judgment prior to August 7, 1969, at the rate of $35 per case; the amount of $44,205 for the 1263 cases where settlement agreements were obtained prior to August 7, 1969, at the rate of $35 per case; and the amount of $144,444 for the 12,716 cases in various stages of litigation at the time Groupe was instructed to cease collections at the rate of $9 per case.

The Liquidator is appealing, the award of quantum meruit compensation to Groupe in the amount of $200,194 and the denial of the claim of the Liquidator for a repayment of $50,000 of claimed excess fees but of the $379,800.37 in fees previously paid under the letter of agreement of July 19, 1967.

Groupe cross-appeals from the judgment of $12,509.97 in favor of the Liquidator and the denial of his petition for attorney’s fees under section 41 of the Civil Practice Act.

The Director first contends the chancellor erred in awarding fees in quantum meruit because the repeal of section 207 of the Insurance Code (Ill. Rev. Stat, ch. 73, § 819) rendered further performance impossible and for the reason that Groupe’s services were terminated under, a new agreement of August 19, 1969, which had been substituted for the original agreement and would not entitle him to additional fees. These arguments are made for the first time on appeal and were not litigated in the court below, where the issue was whether the collector, Leonard Groupe, had been discharged for good cause. Therefore, we shall not consider them further.

Second, the Director contends the court erred in finding that Groupe had been discharged “for reasons that would not deny him the right to compensation."

In Illinois it is well settled that an attorney who has been employed under a contingent fee contract is entitled to compensation if discharged by his client without valid cause (Warner v. Basten (1970), 118 Ill.2d 419), and in Miller v. Solomon (1964), 49 Ill.App.2d 156, the court stated:

“The cases seem to hold that whether or not an attorney who has been justifiably discharged can recover in quantum meruit for the value of his services depends upon the degree of wrongfulness of his conduct.”

The Director specifically alleges Groupe was guilty of wrongful conduct in that he collected on 151 nunc pro tunc judgments and collected on 682 cases in which it was shown that fictitious judgment dates had been entered and $6,037.87 was still owed by Groupe. The only evidence with respect to the 151 judgments entered nunc pro tunc shows they were entered by a judge who had full knowledge of the circumstances, and Groupe stated he believed the estate was entitled to the collections.

There is a conflict in testimony with regard to the enry of the 682 fictitious judgments. Locke testified he entered the fictitious judgment dates with full knowledge and under the direction of Groupe’s office manager, and he enlisted the aid of the Chicago Tribune because he became convinced what he was doing was illegal and feared he would take the blame because he had a criminal record. On the other hand, Kennedy testified Locke told him he had entered the fictitious judgment dates because he was afraid he would lose his j'ob if collections were made only on judgments entered prior to August 7, 1969. The record also shows Groupe cooperated fully in returning the collections. Groupe stated he withheld the $6,037.97 on the advice of counsel because it approximated the amount he believe was owed him on collections he had received on settled cases between August 7, 1969, and August 19, 1969, when he was notified to cease further collections.

When there is conflicting testimony it is well settled that the credibility of the witnesses is for the trier of fact and will not be disturbed unless the findings are manifestly against the weight of the evidence. (Schulenburg v. Signatrol, Inc. (1967), 37 Ill.2d 352.) After reviewing the record, we conclude the chancellors determination was not against the manifest weight of the evidence.

Third, the Director contends the chancellor exceeded his statutory power, as a matter of law, in awarding Groupe fees out of the funds of Multi-State not first approved by the Liquidator. Section 202 of the Insurance Code (Ill. Rev. Stat., ch. 73, § 814) provides in part:

“The compensation of every such special deputy, agent, clerk, assistant, attorney or solicitor shall be fixed, and all expenses of taking possession of the property of the company and the administration thereof shall be- approved, by the Director, all subject to the approval of the Court, and should be paid out of the funds or assets of the company * *

The Director maintains the award in quantum meruit was contrary to the express terms of the statute which provides that compensation is to be “fixed” by the Liquidator. He relies primarily on the case of People ex rel. Knight v. O’Brien (1968), 40 Ill.2d 354, where the court held that a court had no authority to play any role in the selection of the attorney for a receiver under the statute involved. The issue of whether the court could pass on the reasonableness of an attorney’s fee or the payment out of the assets of the estate was not an issue.

In the case of People v. Marquette Fire Insurance Co. (1933), 351 Ill. 516, the court approved the rationale of the decision in In re Casualty Co. of America (1927), 244 N.Y. 443, 155 N.E. 735, 736, decided under a similar statute, wherein Mr. Justice Cardozo stated:

“He (the Liquidator) may fix the rate of compensation as a trustee or an assignee or creditors, or a receiver may be said to fix it, but subject at all times to the approval of the court. The meaning is, that even when he acts the court shall have a veto.”

The Liquidator has the power to fix compensation in the first instance, but his determination is always subject to the supervisory power of the court. Any other construction would give the Liquidator immunity against any claim for attorney’s fees which he refused to pay.

Next, the Director contends the court erred by failing to weigh all of the evidence adduced at trial in that the court found “that the grounds for Groupe’s discharge as alleged in the Director’s petition and amendments are wild, spurious, unsubstantiated and otherwise not proven by any of the evidence adduced in this case which in any event would justify this court in denying Groupe the right of compensation.” Specifically, he complains the court disregarded the testimony of Daniel Locke, which implicated Groupe in the wrongdoing with regard to the entry of the false judgment dates. Because the testimony was in conflict, it was the duty of the court in a chancery proceeding to evaluate the credibility of the witnesses, and the court plainly resolved the conflict in favor of Groupe. In Rose v. St. Louis Union Trust Co. (1968), 99 Ill.App.2d 81, the court said:

“Where a determination of the case depends largely upon the facts found in the record the findings and judgment of the trial court, in chancery and nonjury cases, will not be disturbed by the reviewing court if there is any evidence in the record to support such findings, and where the testimony is contradictory, a reviewing court will not substitute its judgment as to the credibility of witnesses for that of the trial court which saw and heard the witnesses, unless the findings are manifestly against the weight of the evidence, the chancellor’s conclusions in nonjury cases being entitled to the same weight as a jury verdict.”

Fifth, the Director contends the chancellor abused his. discretion in not approving the Liquidator’s recommendation to reduce the amount of fees already paid to Groupe by the amount of $50,000. He ignores the fact the amount awarded was under a contract entered into by his predecessor in office, and Albert Verb had been filing current reports with tiie court recommending for approval the payment of fees to Groupe. We think it is inappropriate for the Liquidator to originally seek the court’s approval for the payment of fees, and then later contend the amount of fees granted under a contract should be reduced. Furthermore, the evidence in the record is not sufficient to establish the fees awarded were excessive.

Finally, the Director urges the chancellor erred, in awarding Groupe in quantum meruit $41,545 on 1187 cases in which judgments were obtained before August 7, 1969, without crediting the estate with $34,018.27 previously paid under the contract, and $44,205 on 1263 cases where settlement contracts were obtained without crediting the estate with $35,759.72 previously paid under the contract. The chancellor awarded Groupe those amounts in quantum meruit at $35 per case in payment for the work done on cases pending at the time Section 207 was repealed. At a hearing on July 8, 1971, it was determined that Groupe had received money for those cases as a part of the original $379,908.30 under the contingent fee contract. Because Groupe had already recovered on the cases in question, we hold he would be paid twice if allowed to recover in quantum meruit on those same cases. The additional judgment of $200,194 should be reduced by $85,750, the sum total of $41,545 and $44,205.

On cross-appeal Groupe contends the award of $12,509.97 was improper in that it was inconsistent with the facts elicited during the trial and contrary to the findings contained in the decree and to the applicable law. He disputes the $6,037.97 portion of the award because it approximates an amount owed to him on cases he coHected between August 7 and August 19, 1969. Nevertheless, it is clear that he agreed to return the fees obtained from the 682 cases where fictitious judgment dates were entered and returned a total of only $10,362.75, leaving $6,037.97 unpaid.

He disputes the award of $2,000 for office expenses and $4,472 for auditing expenses because there was not sufficient evidence to justify the reasonableness of these amounts. However, the record shows that the testimony of Albert Verb with respect to the office expense is undisputed, and the auditors bill had already been approved by another chancellor, making a total of $6,472 unpaid.^ Adding the two unpaid amounts totals the $12,509.97 awarded the Director, and we hold the court was correct in so doing.

Secondly, Leonard Groupe contends the court erred by denying his motion for fees and reasonable expenses against the Director for making statements which he knew to be untrue pursuant to section 41 of the Civil Practice Act. Ill. Rev. Stat., ch. 110, § 41.

The allowance of attorneys’ fees under section 41 is within the discretion of the trial court (Horween v. Dubner (1965), 68 Ill.App.2d 309), and that discretion can be exercised only when the record discloses the evidence of bad faith on the part of the pleader. After reviewing the record, we conclude the chancellor did not abuse his discretion in denying the motion.

For these reasons the judgment of the Circuit Court of Cook County is reversed in part and affirmed in part, and the cause is remanded with directions to modify the judgment as indicated.

Reversed in part; affirmed in part; and the cause remanded with directions.

BURMAN, P. J., and ADESKO, J„ concur.


author: Mr. PRESIDING JUSTICE DEMPSEY

text:
    The People of the State of Illinois, Plaintiff-Appellant, v. Gordon Poteat, Defendant-Appellee.
    (No. 55955;
    First District (3rd Division) —
    June 21, 1973.

      Rehearing denied July 26, 1973.

    Edward V. Hanrahan, State’s Attorney, of Chicago, (Elmer C. Kissane and James S. Veldman, Assistant State’s Attorneys, of counsel,) for the People.
    David Lincoln Ader, of Chicago, for appellee.
   Mr. PRESIDING JUSTICE DEMPSEY

delivered the opinion of the court:

This is an appeal by the State from an order of the circuit court discharging the defendant, Gordon Poteat, because he was not tried within 120 days of his arrest. The State contends that the defendant’s motion for discharge was erroneously granted since he was responsible for a delay which tolled the running of the statute. Ill. Rev. Stat. 1969, ch. 38, par. 103 — 5(a).

Poteat, charged with aggravated battery and attempt murder, was taken into custody on September 6, 1970, and appeared in court on September 8th. The victim of his' alleged attack was in a hospital and a continuance was requested by the State. The defendant’s bond was set and he was informed that the case would be continued to September 30th. The court told him that on September 30th he could have the services of the public defender if he was unable to afford his own lawyer.

On September 30th he was not represented by counsel and the hearing was postponed on motion of the defendant until October 15th. Poteat was subsequently indicted. He did not obtain his release on bail and on January 29, 1971, he filed a motion for discharge which alleged that he had been incarcerated for more than 120 days and, without fault on his part, had not been brought to trial. The motion was granted.

At issue is whether the continuance of September 30, 1970, was properly attributed to the defendant. The complaining witness was in court on that date and the State, ostensibly, was ready to proceed with the preliminary hearing. The following colloquy took place:

“The Clerk: Gordon Poteat.
The Court: Are you Gordon Poteat?
The Defendant: Yes sir.
The Court: You are charged with attempted murder, using a butcher knife at one said Bernice Stevens — Is Bernice Stevens here?
The Complainant: Yes.
The Court: Are you ready for trial?
The Defendant: No.
The Court: When do you suppose you will be ready for trial?
The Defendant: I don’t know.
The Court: You were arrested September 7th and you still want a continuance?
The Defendant: Yes.
The Court: Why?
The Defendant: To get a lawyer.
The Court: Motion defendant. October 15th.”

Poteat testified in support of his motion for discharge’that on September 30th he was confused by the court’s question, “Are you ready for trial?” He said he recently had come to Illinois from Georgia and had no prior involvement in criminal proceedings; he did not know if by the word “trial” the judge meant that a determination of his guilt or innocence would be made; if the judge had explained the nature of a preliminary hearing and that the-public defender was available to him, he would have known what was going on, would have accepted legal assistance and would not have- asked for a continuance.

The defendant was 20 years old, was a high school graduate and had attended a vocational school. He had been told on September 8th that if he had no lawyer of his own on September 30th he could have the services of the public defender. Moreover, it was brought out at the hearing on the motion to discharge that between his first court appearance on September 8th and his second on September 30th, he wrote his mother and she telephoned a cousin of his in Chicago. The cousin visited him in jail and at one of these visits, which occurred three days before September 30th, told him they were going to get him a lawyer. Poteat was asked what the cousin said and he replied:

“A. He said they would go about trying to get some help for me; first, try and find out what they is going to do. So when I went to court and the judge asked if I was ready for trial I asked for a continuance.”

His family did engage an attorney and this attorney appeared for him at the preliminary hearing which was held at the next court date, October 15th. The same attorney filed the motion for discharge, represented him at that hearing and represents him in this appeal.

Ill. Rev. Stat. 1969, ch. 38, par. 103 — 5(a) provides:

“(a) Every person in custody in this State for an alleged offense shall be tried by the court having jurisdiction within 120 days from the date he was taken into custody unless delay is occasioned by the defendant, * e *”
“(d) Every person not tried in accordance with subsections (a), * # * of this Section shall be discharged from custody * *

In resolving the issue of whether the delay was occasioned by the defendant the criterion in each case is whether the defendant’s acts caused or contributed to the delay. People v. Fosdick (1967), 36 Ill.2d 524, 224 N.E.2d 242; People v. Walker (1968), 100 Ill.App.2d 282, 241 N.E.2d 594.

To sustain the order of the trial court Poteat principally relies on the cases of People v. House (1957), 10 Ill.2d 556, 141 N.E.2d 12, and People v. Wyatt (1962), 24 Ill.2d 151, 180 N.E.2d 478. In House, the court proposed a continuance in order to notify the attorney representing the defendant who did not appear when the defendant was brought into court for arraignment. The defendant did not move for the continuance and it was held that the delay could not be ascribed to him. In Wyatt, the court, at the defendant’s arraignment, ordered a continuance charged to him upon the representation of a bystander that private counsel was to be secured. It was held that the defendant was not responsible for the delay although he acquiesced in the continuance; since the court proposed the delay the defendant’s agreement could not convert the offer of the court into a request on his part.

In this case there was no outside interference, and Poteat did more than acquiesce in the continuance as in House and Wyatt — he asked for it. He told the court that he was not ready for trial and did not know when he would be ready, and that he wanted a continuance to get a lawyer. Even where no delay is requested, if the delay is caused by the actions of the defendant, the 120-day statute wUl be tolled. (People v. Barnes (1969), 118 Ill.App.2d 128, 255 N.E.2d 18; People v. Stuckey (1967), 83 Ill.App.2d 137, 227 N.E.2d 135.) The record reveals that when Poteat said he wanted time to get a lawyer he knew that his famffy was attempting to secure one for him. The delay from September 30th to October 15th was not only caused by him but was granted at his specific request.

In ordering the defendant discharged, the trial court found that he had not been advised of his right to counsel, that he was confused by the designation of the preliminary hearing as a trial, that the continuance to October 15th was forced upon him and should not have been attributed to him. We reach the opposite conclusion. The period of incarceration without a trial which was not chargeable to him commenced on October 15, 1970 — not on September 8th. The statutory limit of 120 days had not expired by January 29, 1971, and the defendant should not have been discharged.

Reversed and remanded.

McNAMARA and McGLOON, JJ., concur.


author:
Mr. JUSTICE CREBS
      Mr. JUSTICE GEORGE J. MORAN dissenting:

text:
    The Department of Transportation, Petitioner-Appellant, v. Alfred A. Galley et al., Defendants-Appellees.
    (No. 71-316;
    Fifth District —
    June 29, 1973.

      Rehearing denied August 6, 1973.

      G. MORAN, J., dissenting.
    William J. Scott, Attorney General, of Springfield, (William P. Ryan, Assistant Attorney General, and Ronald G. Mottaz, Special Assistant Attorney General, of counsel,) for appellant.
    Wiseman, Shaikewitz & McGivern, of Alton, for appellees.
   Mr. JUSTICE CREBS

delivered the opinion of the court:

This is an appeal by the Illinois Department of Transportation from a judgment rendered upon a jury verdict in the Circuit Court of Madison County in an eminent domain proceeding. The judgment awarded defendants-appellees $4,000.00 for land taken, $100.00 for a temporary construction easement, and $50,000.00 for damages to land not taken. It is contended that reversible error was committed in the admission of certain testimony, in the refusal of the court to give one of petitioner’s instructions, and the alleged prejudicial final argument of counsel for defendants.

At the request of defendants a prehearing conference was held in this court under Supreme Court Rule 310, (Ill. Rev. Stat, ch. 110A, sec. 310.) At this hearing the facts were stipulated substantially as follows. Defendants owned and operated a building materials and lumber supply business, consisting of an aggregation of buildings utilized as a single unit with a frontage of 450 feet abutting Route 140 in Madison County. The depth of the property was 270 feet. It was proposed that Route 140 be widened from two lanes to four lanes, necessitating the taking of six feet of defendants’ property along its entire length for right of way purposes. The taking reduced the parking area in front of defendants’ buildings from a previous width of 35 feet to 29 feet. The petition did not seek elimination of access as such, but construction plans provided for the installation of a curb and gutter along the new right of way line and four entrance driveways, 35 feet in width. In effect, this eliminated the former use of the State right of way for parking, and altered the formerly broad entrance to defendants’ property by restricting it to the four 35 foot driveways.

For convenience purposes at the trial the property was described with tract numbers, and these numbers were used in the jury verdict, the post trial motions, the judgment, and again here on appeal. The verdict and judgments were $4,000.00 for land taken, Tract 4I5A; $100 for the temporary easement, Tract 415R; and $50,000.00 for damages to land not taken, Tract 415.

At the prehearing conference it was agreed and stipulated between the parties that the issues on appeal would be limited solely to that part of the judgment relating to the award of $50,000.00 for land not taken, and that defendants could withdraw or receive payment in the amount of $4,000.00 for land taken and $100.00 for the temporary construction easement. It was further specifically stated that the notice of appeal filed by petitioners would be considered as amended to reflect this agreement.

At the conclusion of the prehearing conference on April 13, 1972, a proposed order was drawn stating that the stipulations and agreements of the parties were adopted and approved by the court and made a part of the record on appeal; that abstracts of the record need be prepared only insofar as germane to the issue agreed upon; that a statement of facts and issues on appeal should be omitted from the briefs; and that times for filing briefs and abstracts should be computed from the date of the prehearing order.

On April 17, 1972 defendants filed a motion to strike said order and to dismiss petitioner’s appeal. It was contended that petitioner’s original notice of appeal was fatally defective in that it specified an appeal only from the judgments entered with respect to Tracts Nos. 415A and 415B, and that it failed to mention Tract No. 415. It was argued further that at the prehearing conference petitioner had abandoned its appeal relative to Tracts 415A and 415B, and, because Tract 415 was not included in the notice of appeal, the appellate court was without jurisdiction to entertain the appeal. It was also argued that the attempted amendment of the notice at the prehearing conference limiting the issue to Tract 415 was ineffective in that it was not made within 90 days after judgment. We denied this motion on April 26, 1972, stating that defendants cannot avail themselves of changes in position created by prehearing conference procedures taken for clarification and simplification of issues on appeal, and that, in our opinion, the notice of appeal was sufficiently addressed to the form of judgment entered in the trial court so as to place squarely in issue the amount of damages to land not taken, i.e. Tract No. 415.

In their briefs defendants have now reiterated their argument relative to the alleged deficiency of petitioner’s notice of appeal and we shall first address ourselves to this matter.

Stated broadly, the purpose of a notice of appeal is to inform the party in whose favor a judgment or decree has been rendered that the unsuccessful party desires a review of the case by a higher tribunal. Admittedly, the notice is jurisdictional, but it has been generally held that where the deficiency in the notice is one of form only, and not of substance, the appellate court is not necessarily deprived of jurisdiction. (Bank of Republic v. Kaspar State Bank, 369 Ill. 34.) Also the notice should be considered as a whole and where the notice fairly and adequately sets out the judgment complained of and the relief sought so that the successful party is advised of the nature of the proceedings, then the absence of strict technical compliance with the form of notice is not fatal. (People v. N.Y.C.R.R. Co., 391 Ill. 377.) More specifically, a notice which clearly states that an appeal is from a judgment issued on a certain date, is sufficient as an appeal from the entire judgment and not just a portion thereof even though the notice did not quote the entire judgment order. Woods v. Village of LaGrange, 298 Ill.App. 595.

Here, it is clear that the notice of appeal specifically refers to the trial court judgment of August 5, 1971, in which defendant was awarded $4,000.00 for land taken, $100.00 for a temporary construction easement, and $50,000.00 for damages to land not taken. Also the notice prays that said “Order be reversed and the judgment entered in the above named cause be set aside”. This is conceded by defendants. However, it is contended that further language in the notice limits the appeal solely to those portions of the judgment involving Tracts 415A and 415B because only those tracts are specifically mentioned; and that the omission of any specific mention of Tract 415 constitutes a failure to perfect an appeal as to that tract involving the $50,000.00 damage to land not taken. We cannot accept this argument.

The order itself mis-described the tract numbers, but there was no doubt in the minds of defendants or anyone else that the order entered judgment in accordance with the findings of the jury as to each respective tract. In fact, not until almost one year after the trial, only after the pre-hearing conference, did defendants file a motion to dismiss the appeal based on the same grounds advanced here. We denied the motion for the reasons above stated. We have been given no reason now to change our position. Based on the rules above cited the deficiency, if any, in the notice is one of form only, and not of substance. Considered as a whole it fairly and adequately sets out the judgment complained of and the relief sought. The defendants were fully apprised of the nature of the appeal, and they were fully aware that a review was sought of the entire judgment relating to defendant’s property and not just the two lesser portions thereof. Nor have defendants been prejudiced in any way. To the contrary, it is they who seek an unfair advantage on purely technical grounds. We find the notice of appeal was sufficient in itself, and no amendment thereof was contemplated or made at the prehearing conference as suggested by defendants. At such hearing the petitioner’s abandonment of the appeal as to the two lesser portions of the judgment constituted the only "amendment” of the notice; and the appeal of that portion of the judgment referring to damages to land not taken remained intact.

We shall now proceed to a consideration of the case on its merits.

For petitioner, William Blacklock testified that the fair cash market value of the entire property was $250,000.00, that the taking would affect the remainder and cause damages in the amount of $180.00 to relocate a concrete base sand box. He stated there would be no effect on the truck loading and unloading and that customer parking would be affected only to the extent that parking would have to be angular and not perpendicular. Robert Warford testified that fair cash market value in his opinion was $150,000; that there was no damage to land not taken, and that the four 35 foot entrances would not adversely affect parking, or ingress and egress for trucks.

Alvah Breitweiser, a licensed architect was the first witness for defendants. He stated that he was requested by defendants to give, his opinion as to reproduction costs to “facilitate” customer parking and to enable trucks to reach the rear of defendants’ property. He stated he was not an appraiser, that he had no opinion as to the value of the property, either before or after the taking, and that he had no idea whether the proposed costs would bring the property back to its present condition or whether it would increase the value. Over objection, he was permitted to testify that to facilitate customer parking 13Vz feet of the front of the building for its entire length should be removed at a cost of $7,500.00 and rebuilt at a cost of $33,000.00; that the grocery store on the west end should be removed at a cost of $2,000.00, a house removed for $1,500.00, and a garage removed for $500.00. He also suggested a canopy on the building for $990.00 and asphalt paving for the newly created parking area at a cost of $1.50 to $2.00 per square foot. Exclusive of the paving and a raising of the warehouse trusses to permit trucks to reach the rear of the premises, these figures total $45,490.00.

Defendant, Allen Kutter, testified that the fair cash market value for the whole property was $350,000.00 and that damage to land not taken should be $125,000. He based this latter figure on his opinion that the only way he could get customer parking would be to demolish the front of his building, and the only way that he could get merchandise delivered would be to remove a house and garage, and part of a grocery store, and by raising certain warehouse trusses to permit trucks to enter the rear of his premises. Such demolition and replacement costs were included in his opinion of damage to land not taken. Appraiser William Thebus testified that the fair cash market value of the entire property was $294,204.30, and that the damage to land not taken was $153,597.80. He stated that he based this latter figure on the “awful” trouble trucks would have getting into the 35 foot driveways to deliver merchandise, and the loss of customer parking. In his opinion customer parking would be reduced from approximately 40 cars to 13 cars, but he admitted that prior to the taking, 27 or 30 of the 40 cars would have been resting on the state’s right of way. John S. Payne testified that the fair cash market value of the property was $350,000.00 and that damage to the remainder was $115,000.00 based on the need to demolish part of the main building, a house and garage, and the need to raise certain warehouse trusses to arrange for parking and truck deliveries.

Petitioner contends first that the trial court committed reversible error in admitting the testimony of the architect, Breitweiser. It is argued that damages for land not taken can only be determined by the difference in the fair cash market value of the land before and after the improvement, and that actual costs of individual items are not admissible. Defendants claim that Breitweiser’s testimony was offered, and admitted, not for the purpose of making an appraisal but to lay a foundation to see if such reproduction costs would affect the market value in the opinion of the appraisers.

It has been uniformly held in Illinois that the measure of recovery for damages to land not taken is the . reduction of its value resulting from the improvement, and that expenditures made and costs incurred in adopting, the land to use after the improvement are relevant, if reasonable and economical, as evidence of the depreciation in value, but not as recoverable items in themselves. (Dept. of Public Works v. Bloomer, 28 Ill.2d 267; Dept. of Public Works v. Caldwell, 301 Ill. 242.) Stated another way we consider the rule to be that in determining diminution of the market value of land not taken it is proper to consider the expenses made necessary by reason of the improvement in adjusting the property to the changed conditions brought about by the taking. However, such costs are not the measure of damages and cannot be recovered specifically. They are merely factors of evaluation to be considered in determining a reduction in the market value of the whole. Counsel for defendant showed a clear understanding of this rule when he cautioned his appraiser, John Payne, “Not to give the figures” but just to tell how he arrived at his opinion and what he had considered. In effect, what counsel is proposing is that the rule can be circumvented by having a witness, other than an appraiser, testify to such individual costs without relating said costs to a diminution in fair cash market value. The evil resulting is readily apparent. The demolition of a large part of the building, together with the house and the garage undoubtedly would provide a large parking area, but without such demolition there is little or no evidence that the available parking space would be any less than it was before the taking. Also, the parking area prior to the taking was not blacktopped. Nor is there any evidence that the taking of the six foot strip necessitated the raising of the main trusses in the warehouse, for the rear of the premises had not been used for deliveries prior to the taking. Apparently, the state’s right of way had been used for both parking and deliveries, and defendants’ main complaint is that the state would now be making full use of its right of way.

Appraiser Payne and owner Kutter testified that they took into consideration the architect’s estimate of costs, but neither of them, nor did the appraiser, Thebus, ever testify what the market value of the land would be after the taking without the major renovations suggested by the architect. In effect, they did not use the renovation costs as factors of evaluation of reduced value, but rather as a measure of damages to be recovered specifically. As a result the jury was denied the opportunity to compare the difference, if any, between the fair cash market value of the property as a whole before and after the taking which is the only proper measure of damages. Though we cannot know to what extent the jury was thereby influenced, it is interesting to note that their verdict was very close to the architect’s itemized costs estimate of his suggested renovations. Such renovations may be considered desirable by the owner and his architect but they do not in themselves necessarily reflect a diminution in market value caused by the taking. Accordingly, we conclude that the trial court committed reversible error in admitting the testimony of Breitweiser, and the cause is remanded for a new trial on the issue of damages to land not taken.

In view of our remandment we shall discuss only one other contention of petitioner. It is apparent that the parties are in complete disagreement on the question as to whether “access rights” is a relevant issue under the facts of this case. Petitioner contends that access rights may be acquired only when the condemnation suit is brought under the Freeway Act, (Ill. Rev. Stat, ch. 121, sec. 8 — 101, et seq.) It is argued that the case was not brought under this Act, the petition did not seek access rights, and, therefore, any reference thereto was improper. Instructions to this effect were given to the jury, but petitioner objects to the admission of certain evidence on behalf of defendants relative to loss of access rights, and also to argument of counsel on the subject. It appears to us that the dispute is one of semantics. The Freeway Act contemplates a complete denial of any access. The position of defendant is that their access, or more aptly their rights of ingress and egress, to the highway is impaired because the driveways provided are inadequate to permit the entry and departure of trailer trucks delivering merchandise. It is argued that though the state has the authority to regulate the means of ingress and egress, nonetheless such authority is limited to that which is reasonable. (Ill. Rev. Stat., ch. 121, sec. 4 — 210.) And, if damages are occasioned by the unreasonable impairment of one’s ingress and egress to his property they are compensable. Dept. of Public Works v. Morse, 3 Ill.App.3d 721. See also, Pure Oil Co. v. City of Northlake, 10 Ill.2d 241.

It thus appears that the question does not involve a denial of access rights but rather whether defendant’s rights of reasonable ingress and egress to the highway have been impaired. If more precise terminology is used by both parties in the next trial it would be possible to state the issue on this question without the present confusion.

The judgment of the Circuit Court of Madison County on damages to land not taken is reversed and the cause remanded for a new trial on that issue.

Reversed and remanded.

EBERSPACHER, J., concurs.

Mr. JUSTICE GEORGE J. MORAN dissenting:

The majority opinion properly acknowledges that expenditures made and costs incurred in adopting the land to use after the improvement are relevant as evidence of the depreciation and not as recoverable items in themselves. However, the majority reverses because this evidence was not related to the diminution of the fair cash market value. This objection was not made in the trial court and this contention has not been made in this court. The only objection made is that the estimated costs were not admissible in evidence. There are other reasons for reversal stated in the majority opinion which were not made in the trial court or in this court.


author: Mr. JUSTICE ADESKO

text:
    H. G. Prizant and Company, Plaintiff-Appellant, v. Gust K. Newberg Construction Co. et al., Defendants-Appellees.
    (No. 57043;
    First District (4th Division) —
    June 13, 1973.

      Schwartz, Cooper, Kolb & Gaynor, Chartered, of Chicago, (Malcolm M. Gaynor, Narcisse A. Brown, and Gary M. Stern, of counsel,) for appellant.
    Carey, Filter & White, and Nachman, Munitz & Sewig, both of Chicago, (Edward M. White and Norman H. Nachman, of counsel,) for appellees.
   Mr. JUSTICE ADESKO

delivered the opinion of the court:

This action was brought by plaintiff, H. G. Prizant and Company, debtor in possession under chapter XI of the Bankruptcy Act (11 U.S.C. secs. 701 — 799 (1964)), to recover from defendant, Gust K. New-berg Construction Co., additional expenses incurred in the installation of the ventilation system of the Chicago Civic Center. Various surety companies were also joined as defendants. There was a stipulation of fact including an arbitrator’s award to plaintiff of $550,000 for extra expenses incurred. The trial court determined, however, that defendant’s payments to plaintiff exceeded the contract price even as increased by the $550,000, which the arbitrator awarded. The court thereupon entered judgment for defendants. Plaintiff appeals from that judgment and raises the following issues for review:

1. Whether a defendant sued by a debtor in possession may setoff against the debtor in possession’s claim amounts paid the debtor in possession and its predecessor; and
2. Whether the burden of proof as to what extent payments were made to the debtor in possession and to the debtor lies ■ upon the plaintiff or upon the defendant.

The facts are as follows:

In September, 1963, Gust K. Newberg Construction Co., the general contractor for the building of the Chicago Civic Center, entered into a contract with H. G. Prizant and Company for subcontract work for the ventilation system of the building. On September 9, 1965, long after performance by Prizant had begun and during such performance, Prizant filed a petition for an arrangement with creditors pursuant to chapter XI of the Bankruptcy Act. Newberg, after learning that Prizant had been named as debtor in possession by the district court with authority to continue to operate its business, notified Prizant as debtor in possession that they were:

“* * * to continue to perform the work to be performed by H. G. Prizant and Company under the terms of its contract with us dated September 5, 1963 (subcontract #482-27) and any amendments or additions thereto. To assist you in the performance of said work, we shall advance and pay to you, as required by you, such sums as are necessary for the payment of labor utilized by you in the performance of the aforesaid work; such payments shall include sums required as and for withholding and unemployment taxes as well as F.I.C.A. In addition, we shall advance and pay to you, as required by you, such sums as are necessary to pay for materials delivered to you for use in said job.
Sums advanced by us shall be utilized by you only as and for payment for labor and material, as aforesaid, supplied in connection with the work upon the Chicago Civic Center and shall not be used by you to pay debts incurred in connection with any other job.”

Prizant, as debtor in possession, petitioned for authority and was authorized by the Bankruptcy Court to agree to this proposal and in pursuance thereof the work under the subcontract was completed on June 30, 1966. Shortly thereafter this suit was filed by Prizant, debtor in possession, wherein Prizant alleged the existence of the contract and Prizant’s performance under it. Prizant, while conceding that Newberg had paid the contract price provided for in its original contract, alleged that in the course of its performance it was required to furnish labor and material in excess of that reasonably indicated on the contract drawings, and that it was entitled to be paid the fair value of such extra work, which it contended was $2,327,782.76.

It became apparent to the court and to the parties that the matters involved in Prizant s complaint required the application of expertise and specialized knowledge in the field of building construction, and with the consent of all the parties, the issues in Prizant’s claim referred to McKee-Berger-Monsueto, Inc., construction consultants and engineers, for a determination of the amounts, if any, to which Prizant was entitled with respect to its claims for additional labor and material. McKee-Berger-Monsueto subsequently reported to the court its finding that Prizant was entitled to $550,000 on its claim for additional work and materials, but the report made no apportionment as to work performed prior to the proceeding under the Bankruptcy Act or subsequent thereto and specifically, neither considered nor made any finding with respect to claims by Newberg for setoff or recoupment for payments made to Prizant in excess of the contract price.

A stipulation was subsequently entered into by the parties by which it was agreed that payments to H. G. Prizant and Company, including payments to Prizant as debtor in possession, exceeded the contract price, even when increased by $550,000, which McKee determined should be added to the contract price. The court thereupon entered judgment for defendants, finding that defendants had in fact paid more than the contract price, even as increased. Plaintiff appeals from that judgment.

Plaintiff’s initial contention on appeal is that the trial court erred in allowing defendant, Newberg to offset against amounts due to Prizant as the debtor in possession monies paid to Prizant as debtor. Plaintiff maintains that it, as debtor in possession under section 342 of the Bankruptcy Act (11 U.S.C. § 742 (1964)), is a separate legal entity from H. G. Prizant and Company, the debtor, and is in the capacity of a trastee. Plaintiff concludes that payments made to the debtor prior to bankruptcy thus cannot be offset against amounts which become due and owing to the debtor in possession after bankruptcy, as the debtor, and the debtor in possession although both are named H. G. Prizant and Company, are in fact two distinct entities under the law, and the obligations of one would not be the obligations of the other. Plaintiff cites several cases in support of his contention.

In Howard v. Magazine & Book Co., 147 App.Div. 335, 131 N.Y.Supp. 916, upon which plaintiff primarily relies, the Appellate Division of the New York Supreme Court held that one who incurred a debt to a bankrupt and to the trustees of the bankrupt’s estate for material and services provided by the bankrupt and by the trustees could not set off amounts owing from the bankrupt itself for advertising space provided to the bankrupt. This 1911 New York case, in which two of the five justices dissented, is distinguishable, however, from the case at bar. The court in Howard held that the trustees are not obliged to continue to perform the contracts of the bankrupt and that damages growing out of such failures are properly claimed against the bankrupt and not against the trustees. The court went on to state the rule that:

“A debt to or from the trustee in bankruptcy and arising after the bankruptcy in the management of the estate cannot be set off against a debt due from or to the bankrupt before the bankruptcy."

In Howard, the court thus states formalistically that no debts incurred by a bankrupt can be utilized to offset amounts owed to the trustee after bankrupty. In Howard, however, unlike the instant case, there is no indication that the trustees ever expressly assumed the original contract of the bankrupt, thus equitably taking the liabilities of that contract along with its benefits. In the case at bar, there is evidence that the debtor in possession expressly assumed the original contract of the debtor and would be in equity liable for the liabilities of that contract as well as its benefits. Further, in Howard, there is indication that the disputed amounts arose out of separate transactions as the claim by the trustees was for material and services and the claim by Magazine was for the value of advertising provided. The instant case concerns a single transaction.

The other cases relied upon by plaintiff similarly involve the attempt to formalistically distinguish between pre and post-bankruptcy debts without analyzing the equities of the individual situation and the manifest intent of the parties, and involve situations which are distinguishable from the instant case in that there has generally been no evidence of assumption of a pre-bankruptcy contract by the post-bankruptcy trustee in those cases. We do not feel constrained in the instant case to arbitrarily find that pre-petition claims of a creditor cannot be offset against post-petition claims of the debtor without careful analysis of the particular facts involved.

The case at bar represents a situation where a sub-contractor became insolvent during the course of performing the work contracted for. Under Bankruptcy Law such a debtor has the right to reject contracts entered into prior to the filing of a petition for an arrangement with creditors under chapter XI of the Bankruptcy Act (11 U.S.C. § 713(1), (1964)), but any party injured by such rejection can claim as a creditor (11 U.S.C. §753 (1964)). In the instant case, when Newberg learned of the insolvency of its sub-contract, Prizant, and of Prizant’s continuing its business as debtor in possession, Newberg was determined to have Prizant finish the work it had begun, rather than terminate the contract and proceed to completion with another sub-contractor. Newberg further offered to make all payments necessary for completion of the work without regard to contractual limitations otherwise affecting payment. When Prizant, as debtor in possession, and with the approval of the bankruptcy court, made the judgment not to reject the contract with New-berg, but rather to assume it and continue performance under it, Prizant had obviously determined that it would be in a better position if it completed its contract and put itself in a position to assert its claims for extra labor and material rather than to reject and thereby breach its contract which would have enabled Newberg to claim for any damages ensuing.

Prizant now seeks to obtain from Newberg the value of its services above the original contract price as determined by the arbitrator, but without regard to the total payments Newberg has already made, which the trial court found exceeded the original contract price. It is well settled that in actions under the Bankruptcy Act, the debtor or the trustee is not free to retain the favorable terms of an executory contract and reject only the unfavorable ones. The rule is stated in Collier on Bankruptcy, 14th Ed. (1971) vol. 8, par. 3.15(7), 228:

“An executory contract cannot be rejected in part, and assumed in part. The debtor, or the trustee, is not free to retain the favorable features of the contract, and reject only the unfavorable ones. Assumption carries with it all of the burdens as well as the benefits of the contract.”

The United States Supreme Court in Thompson v. Texas Mexican R.R. Co., 328 U.S. 134, 141, 90 L.Ed. 1132, 1137, 66 S.Ct. 937, 942, stated that “* * * the bankruptcy rule is that he [the trustee] takes the contracts of the debtor subject to their terms and conditions. Contracts adopted by him are assumed cum onere.” The Supreme Court in Thompson cited Grief Bros. Cooperage Co. v. Mullinix, 264 F. 391 in support of that statement.

In Grief Bros., advances were made by Grief to a debtor under an agreement whereby the debtor was to obtain lumber for the manufacture of barrel staves for Grief. When the debtor became insolvent, the contract was assumed by the trustee. Thereafter additional payments were made by Grief and deliveries of staves were made by the Trustee, but at the conclusion of the contract, the Trustee contended that Grief had no right to apply advances made before the adjudication of bankruptcy to deliveries by the trustee after bankruptcy. The court held at 396, 397:

“When the adjudication in bankruptcy was made, the Grief Company and the bankrupt were in the midst of tire performance of the executory contract of December 27, 1916. The referee in bankruptcy and the trustee, with his consent, were vested with the power and charged with the duty to accept, adopt and perform that contract, or to renounce it, and thereby to require the Grief Company to continue to perform it or to release it from further performance. The referee and the trustee elected to require performance. * * * [T]he referee and tire court below required the Grief Company to continue and complete the performance of the contract, and subjected the trustee and the estate to the liability on their part to perform the bankrupt’s part of the contract according to its terms.
In March, 1918, after the contract had been performed, it was too late and too inequitable for the court of bankruptcy to repudiate or rescind * # * any of the terms of that contract * * *. [T]he action of the trustee * * * induced the Grief Company to continue its advances and complete its performance, so that when the contract expired by its terms on December 31, 1917, its advances were $21,618.33. The trustee and the court below accepted the benefits of the Grief Company’s performance and advances, and by their action they were estopped from denying the liability of the trustee and the bankrupt estate to bear the burdens of that contract and of its performance. When the trustee in bankruptcy, by order of the referee or of the court, elects to ratify, confirm and adopt the executory contract of the bankrupt, he thereby assumes the liability of the bankrupt thereunder, and takes the contract in the same plight in which the bankrupt held it. [Citations.]”

The United States Court of Appeals for the Third Circuit also considered an issue similar to that of the case at bar In re Italian Cook Oil Corp (3rd Cir. 1951), 190 F.2d 994. In that case a debtor contracted for delivery of products to the government, and assigned the proceeds to be received from the government as collateral for a bank loan. The debtor then filed a petition for re-organization under the Bankruptcy Act. The trustee in bankruptcy assumed the contract with the government and commenced performance. The trustee took the position that since the bank made its advance prior to bankruptcy and the goods were delivered by the trustee subsequent to bankruptcy, the trustee was entitled to the entire sum due from the government without setoff for the money already received from the bank. The trustee contended that the bank only had a claim against the bankrupt’s estate for the monies it advanced. The court held that as the trustee had assumed the contract, it stood in the same position as the debtor and it must honor the assignment for collateral of any advance by the bank. The court held:

“* 9 * the trustee is given the right to adopt or reject any executory contract. He must do one or the other. * * * The trustee, however, may not blow hot and cold. If he accepts the contract he accepts it cum onere. If he receives the benefits he must adopt the burdens. He cannot accept one and reject the other.”

A recent case expressly recognizing a right to setoff in circumstances similar to the case at bar is DiLauro v. Electronic Wholesalers, Inc., 239 A.2d 162 (D.C.Mun.Ct.App. 1968). In DiLauro, a purchaser had a credit with a seller for returned merchandise. At the time of the seller’s bankruptcy, there were several orders outstanding from the purchaser which were still unfilled. The trustee proceeded to fill those orders and later contended that he was entitled to the full purchase price of the goods delivered to the purchaser without setoff for the credit the purchaser had accrued before the seller’s bankruptcy. In upholding the right of setoff, the court held:

“In conclusion, we hold that the trustee did not reject Electronics [the purchaser] orders but instead adopted and took their burdens as well as their benefits.”
# # #
“It is also generally accepted that the court in a reorganization proceeding * * * may apply equitable principles, including the equity rule of set-off if warranted by the circumstances. [Citation] Here all the equities favor Electronic and the trial court properly allowed set-off.”

We must conclude, therefore, that where a debtor in possession assumes an executory contract of the debtor’s and accepts the benefits of such contracts, equity requires that the debtor in possession also accept the burdens of such contracts. Thus, amounts owing from a bankruptcy debtor on an executory contract could be properly set off against amounts owing to a post-bankruptcy debtor in possession where that debtor assumed the contract and equity would be served by allowing such set-off.

Plaintiff, in the instant case, however, argues that even if setoff would be appropriate where a trustee or a debtor in possession has assumed an executory contract of the debtor’s, the court erred in allowing setoff in the instant case, because the debtor in possession had not in fact assumed the contract of the debtor.

Plaintiff contends that in the case at bar, the debtor in possession could not have assumed the contract of the debtor with Newberg as Newberg terminated that contract. Plaintiff attempts to support his contention by citing two sentences from a letter from Newberg to Prizant which was stipulated into evidence. Plaintiff maintains that the language, “You are to continue to perform the work to be performed by H. G. Prizant and Company under the terms of its contract with us dated September 5, 1963 (subcontract #482-27) and any amendments or additions thereto”, and “All the foregoing advances shall apply toward payment for sums due to you as debtor in possession for services rendered, as aforesaid, commencing September 10, 1965”, is compelling evidence that Newberg entered into a new contract with the debtor in possession and that the debtor in possession could not therefore assume the “old” contract. We are not so persuaded. Our examination of the record in the instant case reveals that the parties operated as if the debtor in possession had assumed the executory contract of the debtor. Indeed, the complaint filed by the debtor in possession seeks recovery under a single contract for labor and materials furnished between the commencement of the contract in 1963 and the completion of that contract in mid 1966. Evidence introduced during the litigation does not demonstrate any intent by the parties to create a new contract whose inception would be the date of the bankruptcy.

We find that as evidenced by the manifest intent of the parties, there was in the case at bar, an assumption by the debtor in possession of the debtor’s executory contract with Newberg. We conclude that the equities of the instant case compel the allowance of the setoff of pre-bankruptcy and post-bankruptcy claims, and that the trial court did not err in so ruling.

Plaintiffs other contention on appeal is that the court below erred by not placing the burden.of proving Newberg’s payment to Prizant and the apportionment of that payment as to pre-bankruptcy or post-bankruptcy, upon Newberg, and that the court erred by not finding that New-, berg had failed to meet that burden. We cannot agree with plaintiffs contention. The evidence in this case which was offered by stipulation of all the parties provided that the contract price for the work provided by Prizant was $2,797,091.36, that an additional $550,000.00 was owed Prizant for additional work as determined by the arbitrator, and that payments by Newberg to Prizant totaled $3,353,991.27, plus an additional payment of $29,730.41. The court thereafter held that plaintiff had received full payment for all work provided under the contract and for additional work as determined by the arbitrator.

As we have already determined that the executory contract between the debtor and Newberg had been assumed by the debtor in possession and that the trial court properly allowed the setoff of pre-bankruptcy and post-bankruptcy claims, under the contract, we find that the evidence admitted clearly provided payment to Prizant in excess of the contract price owed even when increased by the arbitrator’s award for additional work and that the trial court did not err in so determining.

For the foregoing reasons, the judgment of the Circuit Court of Cook County is hereby affirmed.

Judgment affirmed.

BURMAN, P. J., and DIERINGER, J., concur.