author: JUSTICE REINHARD

text:
      In re ESTATE OF DENNIS C. DESKINS, Deceased (Diane Bevis, a/k/a Diane Freda, Plaintiff-Appellee, v. James Deskins, Defendant-Appellant).
    Second District
    No. 2—83—1021
    Opinion filed November 28, 1984.

      John P. Garrity, of Loftus, Riggs, Redmond & Duff, Ltd., of Addison, for appellant.
    William J. Scott, Jr., of Mirabella & Kincaid, of Wheaton, for appellee.
   JUSTICE REINHARD

delivered the opinion of the court:

Defendant, James Deskins, appeals from the admission of the will of his son, decedent Dennis C. Deskins, to probate and from the issuance of letters testamentary to plaintiff, Diane Bevis.

Defendant raises the following issues on appeal: (1) whether the trial court erred in admitting the torn will in light of the presumption of revocation; (2) whether, notwithstanding the presumption of revocation, the trial court’s decision to admit the will to probate was against the manifest weight of the evidence; (3) whether the trial court erred in admitting the will to probate when the attesting witnesses could not identify the alleged will; (4) whether the trial court erred in disallowing certain testimony as barred by the Dead Man’s Act; and (5) whether the trial court erred in disallowing evidence pertaining to decedent’s change of beneficiary in certain life insurance policies.

Following the death of decedent, Dennis C. Deskins, on May 4, 1981, decedent’s father, defendant James Deskins, filed a petition for letters of administration. Subsequently, plaintiff Diane Bevis (a/k/a Diane Freda), decedent’s ex-fiancee, filed a petition for probate of will and for letters testamentary. Both matters were consolidated at the beginning of trial.

At a bench trial, the following evidence was adduced. Testifying for plaintiff, Gary Kraus stated that he was the attorney who drafted the will in issue for decedent in February 1980 and that he kept a photocopy of that document. Kraus also stated that the -will was not executed in his presence. Comparing the photocopy with the original, he noticed a difference between them in that the signature lines on the attestation clause of the original will had been cut off. Kraus said he had a telephone conversation with decedent on May 7, 1980, during which decedent told Kraus that a breakup between decedent and plaintiff had occurred and asked Kraus to draft documents whereby decedent would deed his interest in the house to plaintiff in exchange for a release of a promissory note held by plaintiff’s father which was for part of the down payment on the house. Kraus reminded decedent that under his will everything would go to plaintiff and suggested that decedent might want to change his will. In September 1980, Kraus had. another conversation with decedent during which Kraus asked decedent whether he should draw up a new will, to which decedent replied that he wanted to keep the will that he had. Kraus told decedent if he changed his mind to tear the whole thing up or burn it up, completely destroying it. Kraus said he never told decedent the proper way to revoke the will was to excise the attesting witnesses’ signatures from the bottom of the will.

On cross-examination, Kraus testified that in the September 1980 conversation, decedent told him that plaintiff was still a very good friend, that she had taken care of him for several years while he was sick, and that he still wanted the will left as it was. Kraus had also drafted a reciprocal will for plaintiff which left most of her estate to decedent.

Dr. Calvin Kuehner, director of the Basic Science Division of the National College of Chiropractic, testified that he hired decedent as a biologist in the department in 1979. While he could not identify the first page of the will, he recognized the second page because the date of February 19, 1980, was in his handwriting. Kuehner said he saw decedent sign his name to the document and Mrs. Maniglia also witnessed decedent’s signature. Kuehner had signed his name below the date. Decedent stated the document was his will and asked Kuehner to witness his signature. Kuehner believed decedent to be of sound mind and memory.

Mary Ann Maniglia, an instructor at the National College of Chiropractic, did not recognize the will shown to her which had the signatures cut off. She did not remember the second page of the will without signatures. She said that sometime around February 1980, decedent asked her to witness his signature, that she did witness it and signed the will, and Dr. Kuehner also witnessed, dated and signed the document. She believed decedent to be of sound mind and memory and said decedent identified the document they signed as his last will and testament.

Diane Bevis, the former Diane Freda, testified that she had been decedent’s fiancee and that they had entered into reciprocal wills in February 1980. She replaced her will with a different will in September 1980, by which time the engagement had been broken, and told decedent she was getting a new will. After the engagement was broken on May 3, 1980, she called decedent about five times a week and visited him at his apartment and in the hospital about once a month. Decedent was in the hospital from November 1980 until after Christmas, and plaintiff visited him there. She visited him at his apartment in February 1981 and then, after decedent was hospitalized again in March 1981, she periodically visited him in the hospital. Decedent died in the hospital on May 4, 1981. At decedent's funeral on May 8, 1981, defendant showed her decedent’s will and she saw the second page was cut. Prior to May 8, 1981, the last time she saw decedent’s will was May 1980, at which time it contained signatures and was complete.

Defendant, testifying as an adverse witness, stated that decedent, his son, passed away at the age of 28 on May 4, 1981, from Hodgkin’s disease. Prior to his death, decedent had been in the hospital for one month, during which time defendant would drive down from his home in Troy, Michigan, and visit decedent in the hospital. When visiting, defendant and his wife, when she came along, would stay at decedent’s apartment. Defendant would pick up the key at the hospital and return it when he left. To his knowledge, no one other than he and his wife stayed at decedent’s apartment during the last month. Defendant stated that a friend of decedent’s had access to the apartment to water the plants and bring in the mail. Defendant showed the will to plaintiff at the decedent’s funeral.

Dr. Faye O’Brien Usala testified that she taught with decedent beginning in April 1980 and knew him until his death. In November 1980, she had a conversation with decedent regarding his will in which he told her he had a life insurance policy with plaintiff named as the beneficiary. Plaintiff objected to testimony about the change of insurance beneficiary on the basis of relevancy. The trial court permitted the witness to answer, reserving ruling on its relevancy to see if defendant could later tie up intent to change the insurance beneficiary with intent to revoke the will. Usala said decedent told her that plaintiff was named as receiver of decedent’s estate under the will and that Dr. Kuehner and Mrs. Maniglia were the witnesses. Decedent told her that he wanted the beneficiary on the will changed because he felt his parents should get any money that was left after he died because they helped him with his financial responsibilities and with their emotional support. She testified that decedent said he wanted to change the will and the insurance so that any money left after his medical bills were paid went to his parents. During that November 1980 conversation, decedent was depressed, lonesome, and hurt because his relationship with plaintiff had ended, and he felt since plaintiff wanted the relationship ended, he should not leave her as beneficlary under his insurance or his will.

In February or March 1981, Usala had another conversation with decedent at his apartment during which decedent said he wanted to change the will so that his parents would get the money after all the medical bills were paid. Usala said she never saw the will until after decedent died, when defendant showed it to her while he and his wife were cleaning decedent’s apartment. She noted that the will was in the same condition then as it was on the day of trial in that it was ripped on the bottom part. On cross-examination, Usala admitted that she had had a key to decedent’s apartment.

Edmundo Wong, accountant and office manager at the National College of Chiropractic, testified that he handled the insurance at the time decedent was a faculty member at the college, and that decedent executed a change of beneficiary request on a life insurance policy on September 28, 1980, which changed the beneficiary from Diane Freda to the estate of Dennis Deskins. The change-of-beneficiary card itself was not admitted into evidence, based on the trial court’s ruling that it was irrelevant in that only decedent’s intent as to the will itself was at issue.

Defendant testified that in November 1980, decedent became ill and was hospitalized until January 1981, and defendant was there almost every weekend. There were periods when defendant would stay a week or 10 days at a time. Decedent was hospitalized for one- or two-day periods off and on and then hospitalized for the last long term beginning on April 4, 1981. Defendant said he first saw the will between January 10, 1981, and February 11, 1981, while staying with decedent, and that the will looked then as it did at trial, with the second page being only a portion of a page.

Counsel asked defendant if he had any conversation with decedent regarding the will. An objection to the question was sustained on the basis of the Dead Man’s Act.

Defendant further testified that he subsequently saw the will several times during the February-March time frame of 1981 lying on top of decedent’s desk, while decedent’s other papers were in a metal cabinet. From April 4 to May 4, 1981, defendant visited decedent during weekends, whenever he could, and had access to decedent’s apartment. Defendant found the will, still lying on top of decedent’s desk, the day after decedent died, and removed it along with decedent’s personal effects, bankbook, cash, insurance policies, and change-of-beneficiary notice dated May 1980.

Commenting on the relevancy of the evidence concerning change of insurance beneficiary, the trial court at the close of trial made no definite ruling on the admission of this evidence except to state that “[tjhere is no jury here, so it doesn’t make that much difference really.” The court asked the parties to submit post-trial memoranda on the evidence, which also apparently included the relevancy question as it was addressed briefly in the memoranda filed by the parties. Subsequently, the trial court issued a memorandum to the parties in which it found that the facts of Stefany v. Synek (1965), 55 Ill. App. 2d 464, 205 N.E.2d 265, were nearly identical to those of the instant case; that defendant discovered the will in its mutilated condition months before decedent’s death but never informed anyone of the discovery until after decedent died; that decedent had been instructed as to how to revoke the will, and the mere tearing of the attestation clause was contrary to those instructions; that decedent was expressly asked if he wished to change his will, but he stated he did not want to change it; that, based on these observations, it appeared that possession of the will was in defendant at the time of death; that the conditions for revocation of a will were not present; and admitted the will to probate. The court did not comment or rule on the relevancy of the change of life insurance beneficiary.

Defendant first contends that the will was improperly admitted to probate because plaintiff failed to present evidence to overcome the presumption of revocation which, he claims, was established by the cutting of the second page and by decedent’s exclusive possession of the will. Generally, where a will remains in the testator’s possession until his death and is then found among his papers with erasures, alterations, cancellations or tearings, the presumption is that such act, manifest upon the will, was done by the testator with the intention of revoking it. (In re Will of Barrie (1946), 393 Ill. 111, 119, 65 N.E.2d 433; Burton v. Wylde (1913), 261 Ill. 397, 399-400, 103 N.E. 976.) No act of tearing or cutting is effective, however, unless there is an intent to revoke the will. (In re Estate of Bakhaus (1951), 410 Ill. 578, 583, 102 N.E.2d 818; Fleming v. Fleming (1937), 367 Ill. 97, 101, 10 N.E.2d 641.) The intent may be inferred from the nature of the act, the condition of the instrument, or by extrinsic evidence, but it must, in some competent way, be made to appear. Fleming v. Fleming (1937), 367 Ill. 97, 101,10 N.E.2d 641.

The Probate Act outlines the methods of revocation of wills.

“A will may be revoked only (1) by burning, cancelling, tearing or obliterating it by the testator himself or by some person in his presence and by his direction and consent, (2) by the execution of a later will declaring the revocation, (3) by a later will to the extent that it is inconsistent with the prior will or (4) by the execution of an instrument declaring the revocation and signed and attested in the manner prescribed by this Article for the signing and attestation of a will.” (Ill. Rev. Stat. 1981, ch. 110½, par. 4 — 7(a).)

“Tearing,” as used in this provision, includes cutting, and need not be a cutting of the entire will. (Fleming v. Fleming (1937), 367 Ill. 97, 100, 10 N.E.2d 641; Burton v. Wylde (1913), 261 Ill. 397, 402, 103 N.E. 976.) The excision of the names of the attesting witnesses constitutes a tearing within the meaning of the statute (see Stefany v. Synek (1965), 55 Ill. App. 2d 464, 472, 205 N.E.2d 265), and thus the first requirement for the establishment of the presumption has been met.

The trial court held that the second requirement, that decedent have possession and control of the will at the time of his death, had not been met, finding that defendant had possession at the time of decedent’s death. “[W]ith respect to revocation by mutilation, the possession in the testator at the time of death should be such as to carry assurance that the testator’s intention will not be thwarted by the ease with which a will can be mutilated or destroyed; that is to say, that the testator had such possession as does not normally admit of access or opportunity by others to mutilate or destroy.” Stefany v. Synek (1965), 55 Ill. App. 2d 464, 471-72, 205 N.E.2d 2(35.

What is necessary to show possession turns on the facts of each case. In In re Estate of Bakhaus (1951), 410 Ill. 578, 102 N.E.2d 818, where the will had been kept in a drawer in testator’s harness shop with other business papers, while his other valuable papers were in a safe in his bedroom closet, it was held that the will was in the exclusive possession of the testator. Likewise, in In re Estate of Riner (1965), 59 Ill. App. 2d 434, 207 N.E.2d 487, on which defendant principally relies, where the will, along with business papers, had been kept in a drawer in a house testator shared with his niece and had been found there in a torn condition by the niece and an acquaintance following testator’s death, the court found the presumption of revocation was raised. In contrast, in Stefany v. Synek (1965), 55 Ill. App. 2d 464, 205 N.E.2d 265, the facts of which the trial court found nearly identical to those of the instant case, decedent was hospitalized and her nephew and his wife found a will, which had the names of the attesting witnesses torn off, while cleaning decedent’s home. They took it home, read it, took it to a lawyer, and returned it to where it had been found without telling decedent. Decedent died in a convalescent home, never returning to her home. The appellate court found that under these circumstances, the nephew, rather than decedent, had possession of the will. 55 Ill. App. 2d 464, 472, 205 N.E.2d 265.

Turning to the facts of the instant case, we note first that the will was located on top of decedent’s desk after his death, while his other important papers were kept in a metal cabinet. Decedent’s father, who stood to gain if the will was revoked, had access to decedent’s apartment during the month-long hospitalization immediately before decedent’s death. Dr. Usala, a friend and co-worker, also had a key to the apartment. Defendant admitted staying periodically in decedent’s apartment while decedent was in the hospital during that time frame, and decedent never again returned to his apartment. Defendant was the only person to testify to seeing, prior to decedent’s death, the second page of the will in its mutilated condition. Defendant further testified that he saw the will lying on top of the desk on several occasions during the February-March 1981 period while he was at decedent’s apartment.

Under these particular circumstances, we do not believe possession of control of the will was in the decedent-testator until his death to the exclusion of someone who may have an interest in the revocation of the will. Defendant, who stood to gain by mutilation of the will, and who periodically stayed in decedent’s apartment during the month-long time decedent was in the hospital immediately prior to his death, had such access or opportunity to mutilate the will while it was lying in plain view on the desk top that possession of the will was not in the decedent to order to invoke the presumption of revocation of the will. Based on this evidence, we do not believe the trial court’s conclusion that the will was not in decedent’s possession was erroneous.

Defendant next argues that even if the presumption of revocation is inapplicable, the trial court’s ruling that the will was not revoked was against the manifest weight of the evidence. A review of the evidence discloses that although the attorney who drafted the will told decedent that the proper way to revoke the will was to burn or tear it completely, the will was found, contrary to those instructions, with the names of the attesting witnesses cut off. The attorney had on two occasions reminded decedent that the will left almost everything to plaintiff and asked decedent if, because the engagement had been broken, he wanted the attorney to draw up a new will, but decedent replied that he wanted to keep the will that he had because plaintiff was still a very good friend and had taken care of him for several years while he was sick. Plaintiff remained in close contact with decedent until his death, calling him five times a week and visiting him once a month. Evidence which shows the testator maintained an attitude of friendship toward proponents of the will up to the time of his death has been held to reflect the attitude of a testator which makes it unlikely that he would have revoked a will benefiting those with whom he continued to have good relations. (See In re Estate of Moos (1953), 414 Ill. 54, 60-61, 110 N.E.2d 194; In re Estate of Babcock (1983), 119 Ill. App. 3d 482, 489-90, 456 N.E.2d 671, appeal allowed (1984), 96 Ill. 2d 567 (cases which deal with the presumption of revocation where the will cannot be found).) While it is evident that decedent expressed thoughts about changing his will and its presence on top of his desk indicates such, it is also shown that decedent told his attorney that he wanted to keep the present will and remained a good friend of plaintiff.

Some of the testimony was conflicting, in that while defendant testified that he saw the will with the second page cut between January 10, 1981, and February 11, 1981, Dr. Usala stated that in a February or March 1981 conversation, decedent told her he wanted to change the will, implying that he had not as yet done so. Defendant stated that he found the will the day after decedent’s death, in the presence of his other son, David, and, because he believed things should not be left in an unattended apartment, took it, along with other important papers, back to Michigan. Dr. Usala testified that she saw the will in decedent’s apartment a week or two after his death when decedent’s parents were cleaning his apartment, so that there is a conflict in testimony as to when the will was actually discovered and removed. We recognize that, especially where the testimony is contradictory, the trial judge as trier of fact is in a position superior to a court of review to observe the conduct of the witnesses while testifying, to determine their credibility, and to weigh the evidence, and where, as here, we believe the trial court’s finding is not against the manifest weight of the evidence, we will not disturb it. Nibco, Inc. v. Johnson (1983), 98 Ill. 2d 166, 173-74, 456 N.E.2d 120.

Defendant claims that because the attestation signatures had been cut off, plaintiff attempted to prove the will by testimony, pursuant to section 6 — 4 of the Probate Act of 1975 (Ill. Rev. Stat. 1981, ch. 110½, par. 6 — 4), but that the testimony failed because the attesting witnesses were unable to identify specifically the will. Defendant has not cited to us any cases in support of his argument. The statute states:

“When each of 2 attesting witnesses to a will states that (1) he was present and saw the testator or some person in his presence and by his direction sign the will in the presence of the witness or the testator acknowledged it to the witness as his act, (2) the will was attested by the witness in the presence of the testator and (3) he believed the testator to be of sound mind and memory at the time of signing or acknowledging the will, the execution of the will is sufficiently proved to admit it to probate, unless there is proof of fraud, forgery, compulsion or other improper conduct which in the opinion of the court is deemed sufficient to invalidate or destroy the will.” (Ill. Rev. Stat. 1981, ch. 110½, par. 6 — 4(a).)

Both witnesses to the will sought to be admitted attested to decedent’s sound mind and memory and stated that they saw decedent sign the will and that they signed the will, thus fulfilling the statutory requirements. Dr. Kuehner recognized that the date on the will was in his handwriting, and he and Mrs. Maniglia each testified that they saw the other sign it. Dr. Usala testified that decedent told her that Kuehner and Maniglia were witnesses to the will and plaintiff was the beneficiary. Attorney Gary Kraus identified the will as the one he drafted for decedent, except that the signature lines on the attestation clause had been cut off. Thus, the requirements of the statute regarding execution of the will were met, and the proofs were sufficient to show that the will sought to be admitted was the will attested to by the witnesses. Under these circumstances, we conclude that the trial court properly admitted the will to probate even though the witnesses to it could not definitely identify it as the will decedent signed.

Defendant’s next contention is that the trial court, relying on the Dead Man’s Act, improperly prohibited defendant, as a party in interest, from testifying as to a conversation he had with decedent regarding the will. Defendant maintains that the Act was inapplicable because the testimony would have been such that decedent could not refute it and because plaintiff had “opened the door” by calling defendant as an adverse witness.

The Dead Man’s Act (Ill. Rev. Stat. 1981, ch. 110, par. 8 — 201) renders incompetent the testimony from an interested person concerning conversations and events taking place in the presence of the deceased person. (Manning v. Mock (1983), 119 Ill. App. 3d 788, 800, 457 N.E.2d 447.) Defendant argues that decedent evidenced an intent to revoke, based on the change of beneficiary on his life insurance policies, which decedent, if alive, could not refute. However, decedent, if alive, obviously could refute that he had intended to revoke the will, a question separate from the change of beneficiary on his life insurance policies.

Although defendant had been called by plaintiff as an adverse witness, the conversation about which defendant wished to testify was not a subject opened up by plaintiff during her section 2 — 1102 examination. Defendant claims all of his testimony was “part of the same transaction,” so as to fall within an exception to the Dead Man’s Act which provides:

“If any person testifies on behalf of the representative to any conversation with the deceased or person under legal disability or to any event which took place in the presence of the deceased or person under legal disability, any adverse party or interested person, if otherwise competent, may testify concerning the same conversation or event.” (Ill. Rev. Stat. 1981, ch. 110, par. 8 — 201(a).)

The words “same conversation or event,” when given their plain and ordinary meaning (see Schutzenhofer v. Granite City Steel Co. (1982), 93 Ill. 2d 208, 211-12, 443 N.E.2d 563), are not as encompassing as defendant contends, for, under his interpretation, any fact regarding the will would be subject to the exception to the Act. (See Manning v. Mock (1983), 119 Ill. App. 3d 788, 799, 457 N.E.2d 447.) Defendant was examined pursuant to section 2 — 1102 only generally as to the dates of decedent’s hospitalization, the defendant’s access to decedent’s apartment, and defendant’s showing of the will to plaintiff at the funeral. Although a party who is incompetent to testify for himself as to a transaction, if called as an adverse witness and questioned concerning the same, is competent to testify on his own behalf as to the whole of the transaction, the incompetency is not removed on other matters about which he was not interrogated by the adverse party. (Perkins v. Brown (1948), 400 Ill. 490, 497, 81 N.E.2d 207.) Here, the disputed conversation sought to be introduced clearly does not fall within the exception to the Dead Man’s Act and was properly excluded.

Defendant next contends that the trial court erred in disallowing relevant evidence pertaining to the decedent’s change of beneficiary in certain life insurance policies, which comprised most of his estate, from plaintiff to his estate. From our examination of the court’s comments on this point, it is not entirely clear whether the court excluded all of this evidence or just the change-of-beneficiary card sought to be introduced into evidence. The court below commented at one point that, as this was not a jury trial, admission of this evidence did not make that much difference. Thus, it would appear that the trial court considered at least part of this type of evidence, but gave little weight to the evidence.

In any event, even assuming the evidence was excluded and it was error to do so, we are not persuaded this was prejudicial under the evidence here. The change of beneficiary on the life insurance policies was made to be consistent with that of his estate. The plaintiff was the beneficiary of the estate under the will. While it is apparent from some of the evidence that decedent expressed thoughts about changing his will, other evidence, as discussed above, was that he wanted to keep the will that he had attorney Kraus prepare. Had decedent wished to exclude plaintiff from the bulk of his estate, which was the insurance proceeds, he could have made his parents the beneficiaries when he, instead, made the estate the beneficiary. The most the change of beneficiary evidence shows is that decedent during his terminal illness was concerned with who would be the beneficiary of his estate. Other probative evidence indicating this concern was in evidence. No prejudicial error resulted from exclusion of this evidence if, in fact, it was excluded in its entirety.

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

Affirmed.

SCHNAKE and LINDBERG, JJ., concur.


source: Caselaw Access Project

author: JUSTICE GREEN

license: Public Domain

text:
    SANTUCCI CONSTRUCTION COMPANY, Plaintiff-Appellant, v. THE CITY OF DANVILLE, Defendant-Appellee.
    Fourth District
    No. 4—84—0075
    Opinion filed November 26, 1984.

      Speckman & Trittipo, Ltd., of Chicago (Walter E. Trittipo, Jr., of counsel), for appellant.
    Sebat, Swanson, Banks, Lessen & Carman, of Danville (Ralph J. Swanson, of counsel), for appellee.
   JUSTICE GREEN

delivered the opinion of the court:

On February 25, 1982, plaintiff, Santucci Construction Company (Santucci), filed suit in the circuit court of Vermilion County against defendant, city of Danville (city), asserting that the city had breached a contract it had with Santucci for the construction by Santucci of a sewer. On June 10, 1982, the city filed a motion pursuant to section 48(l)(e) of the then Civil Practice Act (Ill. Rev. Stat. 1981, ch. 110, par. 48(l)(e)), now section 2 — 619(a)(5) of the Code of Civil Procedure (Ill. Rev. Stat. 1983, ch. 110, par. 2 — 619(a)(5)), contending that the suit was barred by the lapse of the 10-year period for bringing such an action (Ill. Rev. Stat. 1981, ch. 83, par. 17). After various proceedings, the trial court entered an order on January 6, 1984, which, in effect, ultimately allowed the motion and entered judgment in favor of the city and in bar of the action. Santucci appeals. We reverse and remand.

Santucci’s complaint was grounded upon paragraph 21 of the “General Conditions” of the contract between the parties. That paragraph stated:

“Subsurface Conditions Found Different
Should the Contractor encounter sub-surface and/or latent conditions at the site materially differing from those shown on the Plans or indicated in the Specifications, he shall immediately give notice to the Architect/Engineer of such conditions before they are disturbed. The Architect/Engineer will thereupon promptly investigate the conditions, and if he finds that they materially differ from those shown on the Plans or indicated in the Specifications, he will at once make such changes in the Plans and/or Specifications as he may find necessary, any increase or decrease of cost resulting from such changes to be adjusted in the manner provided in Paragraph 17 of the General Conditions.”

The complaint alleged that (1) in performing the contract, Santucci had encountered concrete subsurface, not shown on the plans and specifications, which were below the existing roadways under which the sewer was to be laid; (2) Santucci had repeatedly requested the city to pay $48,541.02 for work necessitated by those conditions; and (3) the city had refused to make the payment. The city’s motion to dismiss, supported by the uncontradicted affidavit of the mayor, set forth that (1) the foregoing work by Santucci was completed on May 28, 1971; (2) Santucci made demand on August 7, 1971; and (3) both of the foregoing dates were more than 10 years prior to the filing of suit on February 25, 1982.

Santucci does not dispute the accuracy of the dates set forth in the city’s motion and affidavit. Rather, it contends that. (1) the work performed under paragraph 21 of the “General Conditions” was a part of the work it was required to perform under the construction contract; (2) the work to be performed under the contract should be interpreted as all being a part of a single endeavor: the performance of the contract; (3) accordingly, the time for bringing suit did not expire until completion of performance of the entire contract, which occurred some time after April 7, 1972, and within 10 years of the filing of the instant complaint.

The city, on the other hand, relies on the general rule that a cause of action accrues at the instant a creditor may legally demand payment (In re Estate of Chapman (1928), 248 Ill. App. 12), and that when a contract provides for periodic payments which a party may demand when due, a statute of limitations begins to run on each installment from its due date. (Light v. Light (1957), 12 Ill. 2d 502, 147 N.E.2d 34; Brehm v. Sargent & Lundy (1978), 66 Ill. App. 3d 472, 384 N.E.2d 55.) The thrust of its argument is that Santucci had a right to sue for the amounts, if any, which were due it at the time it completed the work necessitated by any' undisclosed conditions, and, accordingly, the time for bringing suit must begin then. Rather than treating Santucci’s required performance under the contract as being a single endeavor, the city would treat the contract as contemplating severable performances by Santucci.

In cases involving construction contracts, the courts of this State have recognized an exception to the rule that statutes of limitation begin to run on the due date of monetary installments due on contracts. In O’Brien v. Sexton (1892), 140 Ill. 517, 30 N.E. 461, a plastering contractor made a written agreement to do the plastering work on a construction project with partial payments to be made when various stages of the work were completed. A suit for work performed was brought by the plastering contractor seeking recovery both on the contract and in quasi contract. The supreme court held that the trial court erred in instructing the jury that the contractor could recover only for work performed .within the period of the statute of limitations. The court explained that, as far as recovery under the contract was concerned, the undertaking of the contractor was a single endeavor, and the statute of limitations did not begin to run until completion of that endeavor.

In Strom v. Lipschultz (1972), 5 Ill. App. 3d 308, 282 N.E.2d 257, the court cited and followed O’Brien. There, a contractor and owner had entered into a written contract for the construction of a dwelling. The contract provided that any additional work must be agreed to in writing. The contractor sought recovery for extra work agreed to orally. A judgment in the contractor’s favor was affirmed. The court held that, although the agreement for the extra work was oral, it would be treated as part of the written contract and subject to the 10-year statute of limitations (Ill. Rev. Stat. 1961, ch. 83, par. 17) for such contracts rather than the five-year statute (Ill. Rev. Stat. 1961, ch. 83, par. 16) covering oral contracts. The court held that, in any event, the statute of limitations would not start to run on any claim for extra work performed until all of the work had been completed, because the contract was for a “continuous piece of work.” Strom v. Lipschultz (1972), 5 Ill. App. 3d 308, 312, 282 N.E.2d 257, 260.

The exception for construction contracts is recognized in other jurisdictions as well. (See Rich v. Arancio (1931), 277 Mass. 310, 178 N.E.743; City & County of Dallas Levee Improvement District v. Halsey, Stuart & Co. (Tex. Civ. App. 1947), 202 S.W.2d 957; 13 Am. Jur. 2d Building & Construction Contracts sec. 114, at 106-07 (1964).) We need not analyze the application of the exception in detail on the basis of whether the construction contract is unitary or divisible and severable, because we agree with a noted authority on contracts that the concept is confusing and courts tend to deem contracts to be unitary for some purposes and divisible and severable for others. (3A Corbin, Contracts sec. 694, at 277 (1960).) We consider the rule to be that when a construction contract is involved, the period of limitation will begin to run against the contractor’s claim for payment prior to the completion of the contract only in very rare circumstances.

The O’Brien case is dissimilar to the instant case in that the installment payments there involved were those definitely required by the contract, but they were based upon completion of specific portions of the work to be done. This case is similar to Strom in that the claim sought to be barred is for work not definitely required by the terms of the contract but for work which was possibly contemplated by the contract. Under the precedent cited, even if Santucci had been entitled to sue upon the city’s refusal to pay its demand, the statute of limitations would not have started to run at that time. By analogy to Strom, Santucci’s right to compensation would arise from the terms of the contract. Paragraph 24 of the “General Conditions” of the contract entitles contractors to monthly payments for the work performed in the previous month but authorizes the city to hold back 10% of the amount due until final completion of all of the work. If this provision is applicable to the payments for which claim is made, the hold-back provision would be a further reason why the statute of limitations would be inapplicable. Santucci would not have been entitled to full payment for the work in issue until the completion of the contract.

The only question before the court on this appeal is whether Santucci’s claim was barred by the affirmative defense of untimeliness of filing suit pleaded by a motion under section 48(l)(e) of the then Civil Practice Act. Neither the sufficiency of the complaint to state a cause of action nor the question of compliance by Santucci of conditions precedent to recovery are before us. We reverse the judgment dismissing the complaint and remand to the circuit court of Vermilion County for further proceedings.

Reversed and remanded.

MILLER and WEBBER, JJ., concur.


author: JUSTICE SCOTT

text:
    FRANCIS VAN VLECK, Plaintiff-Appellant, v. THE OHIO CASUALTY INSURANCE COMPANY, Defendant-Appellee.
    Third District
    No. 3—84—0027
    Opinion filed November 16, 1984.
    Edward G. Vogt, of Kankakee, for appellant.
    Michael Gahan, of Thomas, Wallace, Feehan, Baron & Kaplan, Ltd., of Joliet, for appellee.
   JUSTICE SCOTT

delivered the opinion of the court:

The plaintiff, Francis Van Vleck, filed a two-count complaint in the circuit court of Kankakee County against the Ohio Casualty Insurance Company (Ohio Casualty) based upon the defendant company’s alleged failure to settle in good faith a claim against its insured. The circuit court dismissed both counts of the complaint. The plaintiff, Van Vleck, appeals.

On November 1, 1978, Van Vleck and Richard C. Barbee were involved in an automobile accident which resulted in personal injuries to Van Vleck. The automobile that Richard Barbee was driving at the time of the accident was owned by Mitzi Glumac. Barbee, at the time of the accident, was an employee of Turbine Transmission Service Center (Service Center). Barbee, as the Service Center’s agent, was delivering the car to Mitzi Glumac’s son, who worked as a physical education instructor at the local high school. Glumac’s son had requested that Barbee deliver the car to him after repairs had been completed. Richard Barbee was a high school student and part-time worker for the Service Center.

More than a year later, on December 20, 1979, Van Vleck hired an attorney to represent him in his claim for damages as a result of the accident. Named as defendants were Barbee, the Service Center and Mitzi Glumac. The Glumac automobile was insured by State Farm Mutual Auto Insurance Company. The Service Center’s insurer was Ohio Casualty Insurance Company. Barbee was, at the time of the accident, a member of his father’s household and insured under his father’s policy. That policy was also written by Ohio Casualty Insurance Company.

Subsequent to the filing of suit by Van Vleck, Ohio Casualty filed a declaratory judgment suit in Cook County to determine whether its policy of insurance for the Service Center or State Farm’s policy for Glumac would provide coverage for Van Vleck’s injuries. That litigation was concluded on April 12, 1982, when the Cook County circuit court entered a judgment finding that at the time of the accident, Barbee was acting as the Service Center’s agent, not Glumac’s, and that Ohio Casualty’s policy afforded coverage, not State Farm’s. On the same day, Van Vleck accepted $103,982.50 under a covenant not to sue the Service Center.

Thereafter, on April 13, 1982, judgment was rendered in Van Vleck’s suit against Barbee in the amount of $188,800. The amount of this judgment was reduced by the $100,000 paid on behalf of the Service Center, leaving $88,000 due on the judgment. This remaining amount was the basis of a garnishment action against Ohio Casualty, under the policy of insurance issued to Barbee’s father. This action was unsuccessful because of the automobile business exclusion in that policy. See Van Vleck v. Barbee (1983), 115 Ill. App. 3d 936, 451 N.E.2d 25.

The instant action is brought by Van Vleck, as assignee of Bar-bee’s cause of action against Ohio Casualty, for its alleged failure to settle in good faith the claims brought by Van Vleck against Barbee. The complaint alleges that Ohio Casualty failed to make any offer of settlement or to advise Van Vleck of the $100,000 policy limits. The complaint also asserts that Ohio Casualty rejected a tendered settlement offer in the amount of $160,333 prior to trial. Count I of the complaint purports that these acts and omissions by Ohio Casualty constituted an improper claims practice under section 154.6 of the lilinois Insurance Code (Ill. Rev. Stat. 1981, ch. 73, par. 766.6(d)), for which Van Vleck, as the assignee of Barbee, should recover $88,800 plus interest and costs. Count II of the complaint alleged that Ohio Casualty’s conduct constituted a breach of its duty of good faith to its insured for which damages in the same amount should be recovered. As earlier recounted, the circuit court dismissed both counts of the assignee’s complaint.

With regard to the allegations in count I, we find the authorities in agreement with the decision rendered by the circuit court. Section 154.6 merely provides a list of acts which constitute improper claims practices by insurers. Subparagraph (d) establishes the following as an improper claims practice:

“Not attempting in good faith to effectuate prompt, fair and equitable settlement of claims submitted in which liability has become reasonably clear.”

However, section 154.6 provides no private cause of action or remedy beyond those powers given to the State Director of Insurance in section 154.7, and, accordingly, Van Vleck’s purported cause of action was properly dismissed. Hoffman v. Allstate Insurance Co. (1980), 85 Ill. App. 3d 631, 407 N.E.2d 156; Hamilton v. Safeway Insurance Co. (1982), 104 Ill. App. 3d 353, 432 N.E.2d 996.

The elements of the common law cause of action against an insurer for the breach of its duty of good faith to its insured are described in Phelan v. State Farm Mutual Auto Insurance Co. (1983), 114 Ill. App. 3d 96, 448 N.E.2d 579. Therein it states:

“Where it appears that the probability of an adverse finding on liability is great and the amount of damages would exceed the policy limits, the insurer has a duty to settle within the policy limits or face an excess liability claim for a breach of the duty owed to the insured.” 114 Ill. App. 3d 96, 104, 448 N.E.2d 579, 585.

The duty to settle within the policy limits does not impose upon the insurer the obligation to perform the impossible. Indeed, settlement requires the agreement of two parties.

“If an opportunity appears to settle within the policy limits, thereby protecting the insured from excess liability, the insurer must faithfully consider it, giving the insured’s interests at least as much respect as its own. [Citations.] The insurer need not submit to extortion; it may reject a bad deal without waiving the protection the policy limit gives it against the vagaries of lawsuits. But if the honest and prudent course is to settle, the insurer must follow that route. If it deviates from that course, it will be liable for the whole judgment, so as to give the insured the protection that the policy was intended to provide. In cases within the policy limits, the insured was to be held entirely harmless. If the insurer by its own fault converts such a case — one the insurer could have disposed of for a fair sum within the policy limits — into a case beyond the policy limits, the insurer cannot complain of the size of the judgment, a consequence of its own bad faith, fraud or negligence.” (Emphasis added.) La Rotunda v. Royal Globe Insurance Co. (1980), 87 Ill. App. 3d 446, 454, 408 N.E.2d 928, 935-36.

The assignee’s complaint in the instant case is deficient in that it fails to allege that Ohio Casualty had an opportunity to settle on Bar-bee’s behalf within the $100,000 limit of its policy. Specifically, the only demand received by Ohio Casualty, as set forth in the instant complaint, was for an amount in excess of the policy limits by $60,000. This is not a case where Ohio Casualty could have disposed of the claim for a fair sum but failed to do so as a consequence of its own bad faith, fraud or negligence. For this reason, we believe count II was properly dismissed.

In reliance on the authorities set forth above, and after a careful review of the arguments of counsel and the record on appeal, we affirm the decision of the circuit court of Kankakee County.

Affirmed.

HEIPLE and STOUDER, JJ., concur.


author: JUSTICE UNVERZAGT JUSTICE REINHARD,

text:
    BATES & ROGERS CONSTRUCTION CORPORATION et al., Plaintiffs-Appellants, v. NORTH SHORE SANITARY DISTRICT et al., Defendants-Appellees.
    Second District
    No. 83—813
    Opinion filed November 14, 1984.
    Rehearing denied December 27, 1984.

      REINHARD, J., specially concurring.
    Donald V. O’Brien and LaDonna M. Loitz, both of O’Brien and O’Rourke, of Chicago, for appellants.
    Kevin R. Sido and Stephen R. Swofford, both of Hinshaw, Culbertson, Moelmann, Hoban & Fuller, of Chicago, for appellees.
   JUSTICE UNVERZAGT

delivered the opinion of the court:

The question presented by this appeal is whether the economic loss doctrine of Moorman Manufacturing Co. v. National Tank Co. (1982), 91 Ill. 2d 69, bars the suit of a contractor against an architect/ engineer where there is no contract between them, and where the contractor claims the architect/engineer was negligent in the design and administration of a project under construction.

This cause is appealed to this court for the second time. The first appeal was taken from the Lake County circuit court’s grant of motions to strike and/or dismiss the complaint; this appeal is taken from the same court’s subsequent grant of defendant Greeley & Hansen’s motion for summary judgment following this court’s partial affirmance and partial reversal, and remand for further proceedings. Bates & Rogers Construction Corp. v. North Shore Sanitary District (1980), 92 Ill. App. 3d 90.

The plaintiffs in the first cause were, and are here as well, Bates & Rogers Construction Corporation (the Contractor) and two of its subcontractors, Economy Mechanical Industries, Inc., and Goldberg & O’Brien Electric Company (the Subcontractors). Plaintiffs sued defendants North Shore Sanitary District (NSSD) and its engineers, d/b/a individually and as Greeley & Hansen Engineers, a partnership (referred to collectively as defendants or Engineers), claiming damages arising from the construction of portions of the Gurnee Sewage Treatment Plant. After remand, plaintiffs settled their claim against the NSSD, and it is not involved as a party to this second appeal.

In the first appeal, plaintiffs sought reversal of the trial court’s dismissal of its amended five-count complaint on the grounds of multifariousness and failure to state a cause of action. This court affirmed the dismissal of counts I, III and V against NSSD, but reversed the dismissal by the trial court of counts II and IV against the Engineers. The stated ground of the trial court for dismissing the counts was that the Engineers owed no duty to the Contractor as a matter of law. This court disagreed, noting it had recently held that an engineer owes the contractor a duty of care in the design and administration of the project. (Bates & Rogers Construction Corp. v. North Shore Sanitary District (1980), 92 Ill. App. 3d 90, 96-98, citing, inter alia, W. H. Lyman Construction Co. v. Village of Gurnee (1980), 84 Ill. App. 3d 28, 40.) We also disagreed that Alfred N. Koplin & Co., Inc. v. Chrysler Corp. (1977), 49 Ill. App. 3d 194, was persuasive authority for the proposition that the plaintiffs’ complaint failed to state a cause of action because it claimed economic damages. We observed that the reasoning of Koplin, which involved products liability, had not been applied in design malpractice cases such as Lyman, noted above, and Rozny v. Marnul (1969), 43 Ill. 2d 54. (Bates & Rogers Construction Corp. v. North Shore Sanitary District (1980), 92 Ill. App. 3d 90, 98.) Accordingly, we reversed and remanded the cause for further proceedings pursuant to our opinion. We later modified our opinion in order to reverse the portion of the trial court’s judgment dismissing count V against NSSD insofar as that count amounted to a claim for the retainage held by NSSD under the contract, and for interest on that amount.

Upon remand, plaintiffs filed a three-count second amended complaint on December 28, 1981. Counts I and II against the Engineers alleged they were negligent in their design and administration of the project. Counts I and II were substantively the same as former counts II and IV, which were involved in the previous appeal. Count III, formerly count V in the previous appeal, was for the retainage and interest thereon held by the NSSD. Plaintiffs and the NSSD later settled, and an agreed judgment order was entered on May 5, 1983, dismissing count III of the second amended complaint with prejudice.

Plaintiffs’ complaint against the Engineers essentially alleged that they were negligent in their design of certain equipment and negligent in their supervision of the Gurnee Sewage Treatment Plant project. Defendants had a contract -with the NSSD to provide certain engineering and architectural services in connection with the construction of the Gurnee Sewage Treatment Plant. Bates & Rogers had a contract with the NSSD to be the prime contractor for two divisions of the project, specifically known as contract divisions P12A-P12B and P12C-P12D. In connection with both of these divisions, Bates & Rogers subcontracted with plaintiff Economy Mechanical Industries, Inc., for the performance of certain mechanical work, including the piping for the project. In connection with the latter division only, Bates & Rogers subcontracted with the remaining plaintiff, Goldberg & O’Brien Electric Company, for all the electrical work to be performed. There was no contractual privity between Bates & Rogers and Greeley & Hansen. Plaintiffs’ complaint specifically alleged the Engineers were negligent because they:

“a) Carelessly and negligently failed to include within the design criteria for the electrical switchgear sufficient and adequate information as to the existing power source facilities when they knew or in the exercise of ordinary care ought to have known that' such failure would result in a lack of electrical power to the construction site and would burden, obstruct and interfere with the ordinary prosecution of the work by plaintiffs;
b) Carelessly and negligently failed to cure the design defects described above in timely fashion;
c) Carelessly and negligently caused a re-design of the switchgear after the switchgear had been ordered from the supplier, Westinghouse Electric Co., and substantial work on it had been done, so as to make the same compatible with generators purchased under a separate contract when they knew or in the exercise of ordinary care ought to have known that plaintiffs’ work would be forced out of sequence, would proceed inefficiently, and the cost thereof would be burdened;
d) Carelessly and negligently administered and exercised their powers as the Engineer under the Contract documents so as to deny access to the plaintiffs to the work, and to interfere with plaintiffs’ performance of the work when they knew or in the exercise of ordinary care ought to have known that plaintiffs’ costs and productivity would be severely prejudiced;
e) Carelessly and negligently failed to provide electrical service to plaintiffs’ job site in accordance with the specifications when they knew or in the exercise of ordinary care ought to have known that such failure would force plaintiffs’ work out of sequence and burden the cost thereof.”

As a direct and proximate result:

“15. [N]o electrical service was furnished the work site until more than a year after the same was required, and plaintiffs were denied access to a material portion of the work, the sequence of plaintiffs’ work was disrupted and burdened so as to increase the cost thereof and decrease its productivity and to cause the proliferation and duplication of labor and labor operations not otherwise necessary.”

As a consequence, plaintiffs sustained:

“16. [E]normous cost overruns in the actual performance and prosecution of their work under the contract, including but not limited to excessive labor costs, labor ‘add-ons’, excessive supervision, winter protection of their work, increased overhead, bond and insurance costs, interest on moneys borrowed and expended and the loss of anticipated profit ***.”

Defendants moved for summary judgment on the ground that the damages claimed, even if proved, were economic damages, recovery of which is barred in negligence as a matter of law. The motion included citation to three Illinois Supreme Court cases decided subsequent to the parties’ first appeal of this cause. After briefing and argument by both parties, the court granted summary judgment, including a finding there was no just cause to delay enforcement or appeal.

The parties raise these two issues: (1) whether the trial court erred in finding that plaintiffs could not recover economic loss resulting from the Engineers’ professional negligence; and (2) whether the Engineers owe plaintiffs a duty in tort.

Defendants argued for summary judgment below primarily on the authority of Moorman Manufacturing Co. v. National Tank Co. (1982), 91 Ill. 2d 69, Redarowicz v. Ohlendorf (1982), 92 Ill. 2d 171, and Foxcroft Townhome Owners Association v. Hoffman Rosner Corp. (1983), 96 Ill. 2d 150. Defendants rely heavily on these same cases here as well, with the addition of this court’s recent decision in Palatine National Bank v. Charles W. Greengard Associates, Inc. (1983), 119 Ill. App. 3d 376, which they urge is controlling.

Plaintiffs vigorously argued below the inapplicability of Moorman, Redarowicz and Foxcroft, contending instead that the facts of this case bring it within the Rozny v. Marnul situation specifically noted in the Moorman decision. (Rozny v. Marnul (1969), 43 Ill. 2d 54.) Plaintiffs maintain that position here as well, and although we denied them leave to file a supplemental reply brief upon defendants’ objections, they were permitted to file two recent decisions as additional authority in support of their position: Ferentchak v. Village of Frankfort (1984), 121 Ill. App. 3d 599, and Rosos Litho Supply Corp. v. Hansen (1984), 123 Ill. App. 3d 290. For the reasons discussed below, we affirm the trial court’s grant of defendants’ motion for summary judgment.

Initially, we note the court’s judgment was entered on the defendants’ motion for summary judgment under section 2 — 1005 of the Civil Practice Law (Ill. Rev. Stat. 1983, ch. 110, par. 2 — 1005), and the standard of review of such a judgment under that section applies. The defendants’ motion alleged in substance that “the damages plaintiffs seek to recover, even if proved, are economic damages, recovery of which is barred in negligence.” It has been held that, although there may exist an issue of fact, the trial court, when viewing the evidence in the light most favorable to the nonmoving party, may grant summary judgment where it concludes that, as a matter of law, no liability exists. Dale v. Groebe & Co., Realtors (1981), 103 Ill. App. 3d 649, 652; McCann v. Bethesda Hospital (1979), 80 Ill. App. 3d 544.

The reasoning underlying the Koplin case (Alfred N. Koplin & Co. v. Chrysler Corp. (1977), 49 Ill. App. 3d 194), which we construed in the first appeal of this cause to be limited to products liability cases, was extended in Moorman Manufacturing Co. v. National Tank Co. (1982), 91 Ill. 2d 69, to bar recovery of solely “economic losses” in negligence actions as well. The court held that purely economic loss arising from disappointed commercial expectations is limited to recovery in contract, not tort.

The plaintiff there had purchased a large steel grain storage tank manufactured by the defendant which developed a large crack shortly after it was erected, and it sought recovery of its damages — the cost of repairs and reinforcement and loss of use of the tank — in tort. The court determined that the case presented only an instance of disappointed commercial expectations and that contract law alone provided a framework for recovery. (Moorman Manufacturing Co. v. National Tank Co. (1982), 91 Ill. 2d 69, 85-91.) The court defined economic loss with reference to commercial expectations, to wit: “the defect is of a qualitative nature and the harm relates to the consumer’s expectation that a product is of a particular quality so that it is fit for ordinary use ***.” (91 Ill. 2d 69, 88.) The remedy for losses suffered by a purchaser for disappointed expectations due to deterioration, internal breakdown, or nonaccidental cause lies in contract, whereas tort theory “is appropriately suited for personal injury or property damage resulting from a sudden or dangerous occurrence ***.” (91 Ill. 2d 69, 86.) Because the plaintiff there had suffered solely economic loss as defined there, the court concluded it could not recover under a negligence theory.

Significantly, however, the court noted, but did not reject or overrule, two cases in which economic loss was found recoverable in tort; i.e., “where one intentionally makes false representations (Soules v. General Motors Corp. (1980), 79 Ill. 2d 282), and where one who is in the business of supplying information for the guidance of others in their business transactions makes negligent representations (Rozny v. Marnul (1969), 43 Ill. 2d 54).” Moorman Manufacturing Co. v. National Tank Co. (1982), 91 Ill. 2d 69, 88-89.

The crux of plaintiffs’ position here is that the facts of this case distinguish it from Moorman and its progeny, and place it within the exception to the economic loss doctrine impliedly created by Moor-man’s recognition of the Rozny case. They assert that money damages which arise from professional negligence do not constitute economic loss, and recovery thereof in tort is not barred.

Two cases decided by the Illinois Supreme Court after Moorman, Redarowicz v. Ohlendorf (1982), 92 Ill. 2d 171, and Foxcroft Townhome Owners Association v. Hoffman Rosner Corp. (1983), 96 Ill. 2d 150, extended the Moorman economic loss doctrine beyond the products area, and explicitly applied the principles of economic loss to realty, barring recovery for negligent construction of a residence. Notably, there was no privity between the parties in Redarowicz, where the plaintiff was a subsequent homeowner of a residence constructed by the defendant, although the parties were in the chain of ownership of a home, however. In this case, there is likewise no privity between Bates & Rogers and Greeley & Hansen. Redarowicz did not reach an analysis of the scope of the duty owed there by the defendant to the plaintiff, since it found no reason to treat a disappointed consumer of a storage tank (as in Moorman) or a disgruntled purchaser of a certain house (as in the case before it) any differently. There was no showing of harm beyond the plaintiff’s disappointed commercial expectations, nor was there any harm to persons or other property. The court construed that the plaintiff’s complaint alleged essentially only a qualitative defect in a product.

There was a factual situation similar to Redarowicz in the Foxcroft case. (96 Ill. 2d 150.) That is, there was no privity between the plaintiffs on appeal, who were the subsequent purchasers of the condominiums and the defendant; there were latent construction defects in the residences; there was no physical injury to persons or other property; and the losses claimed were economic. The court there relied on Moorman and Redarowicz as authority for denying plaintiff recovery for its economic losses in tort. Foxcroft Townhome Owners Association v. Hoffman Rosner Corp. (1983), 96 Ill. 2d 150,156-57.

The noncritical mention of Rozny in the course of the supreme court’s Moorman opinion, in addition to his view that that decision was the result of the court having applied an implicit tort analysis to the facts of that case, has caused at least one author to conclude that economic loss is recoverable in tort “where public policy considerations warrant the imposition of a social duty,” and where there is “a showing of harm beyond mere disappointed expectations, as in Rozny.” (Bertschy, Negligent Performance of Service Contracts & the Economic Loss Doctrine, 17 J. Mar. 249, 269 (1984).) In the same and in a related article (Bertschy, The Economic Loss Doctrine in Illinois After Moorman, 71 Ill. B.J. 346 (1983)), the author rejects any notion that tort and contract are competing theories of law, noting that contract and tort are commonly found to exist on the same facts. “Whether economic loss is recoverable in tort depends upon a rigid application of traditional tort principles”; to wit: foreseeability, the likelihood of injury, the nature of the risk, the magnitude of the burden of guarding against the injury, and the consequences of placing the burden on the defendant. 71 Ill. B.J. 346, 350-51.

In the Rozny case, the plaintiffs brought suit against the defendant, a surveyor, for his preparation of an inaccurate survey several years before for a different party than the plaintiffs. The plaintiffs relied on the survey in the placement and construction of a garage on their property. It was later discovered that portions of the garage and driveway encroached on neighboring property as the result of locating the driveway and the garage in reliance on markers placed according to the inaccurate survey. Although the loss suffered by the plaintiffs there was clearly economic loss, the supreme court permitted recovery in tort, citing the following factors as relevant to its holding:

“(1) The express, unrestricted and wholly voluntary ‘absolute guarantee for accuracy’ appearing on the face of the inaccurate plat;

(2) Defendant’s knowledge that this plat would be used and relied on by others than the person ordering it, including plaintiffs;

(3) The fact that potential liability in this case is restricted to a comparatively small group, and that, ordinarily, only one member of that group will suffer loss;

(4) The absence of proof that copies of the corrected plat were delivered to anyone;

(5) The undesirability of requiring an innocent reliant party to carry the burden of a surveyor’s professional mistakes;

(6) That recovery here by a reliant user whose ultimate use was foreseeable will promote cautionary techniques among surveyors.” Rozny v. Marnul (1969), 43 Ill. 2d 54, 67-68.

Plaintiffs argue in detail that the same factors considered relevant in Rozny are also found in the case at bar, and they urge that they be allowed to recover the monetary damages they suffered as a result of the defendants’ negligence. They distinguish Redarowicz and Foxcroft on the basis that neither involved professional services, nor the furnishing of information for the use of another party. They point out that the relationship between the parties in those cases is unlike the contractor-architect/engineer relationship in this case, and that the nature of the damages sought here “are, quite simply, not economic losses.” They assert that in each of the three cases — Moorman, Redarowicz and Foxcroft — the plaintiff was a purchaser of some “thing,” a physical object that proved to be less than what the plaintiff had anticipated, and in each case there was a “chain of sale” of the item which could be traced from the defendant to the plaintiff.

Despite plaintiffs’ argument detailing the existence of the Rozny factors in the context of the instant cause, we are bound to consider the import of three other recent cases which have construed Moor-man.

The first, Palatine National Bank v. Charles W. Greengard Associates, Inc. (1983), 119 Ill. App. 3d 376, was decided by this court and concerned the application of the economic loss doctrine in a context which principally involved a service contract. As noted, the defendants consider Palatine to be controlling here. The defendant in Palatine, Charles W. Greengard Associates, Inc., was retained to perform professional engineering services for a construction project. The Palatine plaintiffs sued Greengard alleging that its design for a storm and surface water drainage system was inadequate and, as a consequence, the project flooded and its progress was delayed. The delay, in turn, resulted in mortgage foreclosure proceedings, and plaintiffs lost all of their rights in the development. Plaintiffs sued Greengard in negligence, seeking damages for expenses and lost profits, as well as attorney fees incurred by plaintiffs in other litigation. The trial court dismissed plaintiffs’ negligence action based on the economic loss doctrine of Moorman. On appeal, we affirmed the dismissal based on our view that the “product” sold in that case consisted of the design and construction of a storm and surface water removal system to be constructed on Loch Wood Acres. The only defect alleged in the complaint was that the system failed to perform its function as represented, and the damages sought were not for personal injury or property damage but for economic losses. Accordingly, we determined Moorman barred the action. The cause was reversed in part, but remanded, however, for trial on a remaining count for breach of warranty which was premised upon the written agreement between the parties.

We agree that Palatine can be distinguished fairly from the case at bar in that there was a direct contractual relationship between Investco, the developer, and Greengard, the professional engineers. Additionally, we did not undertake an analysis as to whether the facts of that cause would bring it within the Rozny public policy exception to the economic loss doctrine. In light of cases subsequent to our decision in Palatine which further construed Moorman, it would seem that notwithstanding the lack of such an analysis, we nevertheless would be compelled to reach the same result.

We refer here to the plaintiffs’ additional authority submitted on leave after their reply brief was filed, Ferentchak v. Village of Frankfort (1984), 121 Ill. App. 3d 599, appeal allowed (1984), 101 Ill. 2d 546, and Rosos Litho Supply Corp. v. Hansen (1984), 123 Ill. App. 3d 290. The court in Ferentchak concluded that economic losses relating to the plaintiffs’ reasonable expectations with respect to the defendants’ acts could be recovered in tort where the defendants’ own negligence under traditional tort analysis had caused injury and where there was no contract or warranty action available to the plaintiffs against the defendants. Specifically, the court stated:

“We read Moorman and subsequent cases to establish that economic losses are not recoverable in tort against a defendant where the injuries caused by that defendant relate directly to plaintiff’s reasonable commercial expectations respecting the defendant’s actions and where plaintiff has or had appropriate and adequate contract or warranty actions as against the defendant for such harm. In such circumstances, and where the injury is to the item supplied or produced by that defendant, contractual benefit-of-bargain expectations damages are the appropriate measure of recovery. However, the same economic losses are recoverable in tort, as against defendants who by their own negligence, as measured by traditional tort analysis, have caused the injuries and against whom no contract or warranty recovery is available. As to these defendants, when unconnected with the contract-warranty defendant, the harm caused by them is not related to the plaintiff’s commercial expectations, but to traditional societal expectations and conduct.” (Emphasis added.) Ferentchak v. Village of Frankfort (1984), 121 Ill. App. 3d 599, 606.

The “contract-warranty” defendant there was the builder, from whom the plaintiffs purchased their home. The builder had purchased the lot from the developer and constructed the home. The developer had engaged Robert Hamilton, a civil engineer, to design and oversee the construction work on the subdivision in Frankfort, which plans included a surface water drainage system. Hamilton testified that the omission from the plans of certain shape and depth specifications for a surface water drainage channel easement was deliberate since they were not required by ordinance, individual development of the lots would be possible, and the village would retain the ability to restore the natural drainage through use of the channel easement.

The village of Frankfort code administrator advised the builder as to the foundation level requirements pursuant to the village code, and while at the site prior to the pouring of the cement, he personally directed that the foundation be raised as much as possible and still remain on good, bearing soil. An occupancy permit was withheld until the builder constructed a drainage swale according to instructions received from Hamilton’s office and the code administrator. After the ' Ferentchaks occupied the home, they experienced water ponding on the lot, as well as water in the basement family room, and water oozing into the lower level of the house. Basement waterproofing was unsuccessful in solving the problem.

The opinion of the plaintiffs’ expert witness at trial was that the foundation grade had been set too low, and that this fact, coupled with an inadequate and improper drainage system, resulted in the damage to the plaintiffs’ home. The jury returned verdicts in the plaintiffs’ favor and against both defendants, Hamilton and the village of Frankfort. One of the issues raised on appeal was whether the plaintiffs’ causes of action sounding in negligence against each defendant were barred by virtue of the Moorman decision.

In deciding that the Ferentchaks’ negligence action was not barred by Moorman, the court emphasized the fact that even though the Ferentchaks may have had an adequate contract-warranty remedy against the builder, the architect was not an employee of the builder nor was he otherwise in privity with him. Since it was concluded that the harm to the plaintiffs’ consumer expectations was caused by the architect for the developer, but that the Ferentchaks’ only apparent recourse under Moorman was a cause of action against the builder as contract-warranty defendant, the court determined that the Moorman decision was not intended to bar tort recovery as against the architect in the instant case.

Implicit in the underlying rationale of the court’s decision was, we believe, the court’s overriding concern that the defendants, whose combined negligence was the incipient cause of the ultimate qualitative defect, would remain unaccountable. It noted that neither the architect nor the village was connected with the contract-warranty defendant, the builder, and neither was a party for whom the builder of the home assumed responsibility. The relationship of the parties in the case at bar, however, is in evident contrast to that of the parties in Ferentchak, and we believe a different result is warranted.

The contract-warranty defendant under the facts here was the NSSD which, unlike the builder in Ferentchak, had effectively “assumed responsibility” for the plaintiffs’ damages caused by the Engineers’ defective plans. This is by virtue of the well-established principle that an owner impliedly warrants that the plans and specifications it furnishes for the job will enable the contractor to successfully do the work; and that if the “ ‘plans are faulty thereby requiring the contractor to incur additional costs, the [owner] must reimburse the contractor for damages incurred because of the breach of the implied warranty ***.’ ” (Bates & Rogers Construction Corp. v. North Shore Sanitary District (1980), 92 Ill. App. 3d 90, 94, citing W. H. Lyman Construction Co. v. Village of Gurnee (1980), 84 Ill. App. 3d 28, 37.) Also, unlike the architect and village in Ferentchak, who were “unconnected with the contract-warranty defendant,” the architect/engineers here were directly connected with the NSSD by virtue of their contract. Without having the benefit of a copy of that contract in the record, it cannot be stated with assurance what direct remedies would or would not be available to the NSSD against the Engineers. Based on the facts available in the record of the instant cause, it would appear that the NSSD might have available to it an implied right of indemnity analogous to that found in Maxfield v. Simmons (1983), 96 Ill. 2d 81. In that case, the plaintiff sued the defendant Simmons, contending that a house Simmons built for him failed to meet the contract specifications because the roof was constructed in a “ ‘poor and shoddy manner as to cause the roof thereon to buckle, bend and dip, and caused the interior ceiling to crack, split at the seams and bulge.’ ” (96 Ill. 2d 81, 83.) Simmons in turn filed a third-party complaint which alleged that if he were liable to Maxfield, it would be because the trusses supplied by DeNeal and manufactured by Holt were defective, and therefore the third-party defendants must indemnify him. The appellate court dismissed the third-party complaint, relying on Board of Education v. Joseph J. Duffy Co. (1968), 97 Ill. App. 2d 158, and Talandis Construction Corp. v. Illinois Building Authority (1974), 23 Ill. App. 3d 929, and held that the third-party complaint failed to state a cause of action for the reason that “a stranger to a contract between two parties cannot be compelled to indemnify one of the parties for breach of contract absent the stranger’s express agreement to so indemnify.” Maxfield v. Simmons (1982), 107 Ill. App. 3d 341, 343.

The supreme court reversed, finding the situation analogous to a products liability case in which the assembler of the completed product is entitled to indemnity from the manufacturer of a defective component part. The court reasoned that if Simmons was liable to Max-field, it would not be because Simmons breached his contract with Maxfield, but due to DeNeal’s and Holt’s tortious conduct. Maxfield v. Simmons (1983), 96 Ill. 2d 81, 87.

The conclusion that such a cause of action might be available to the NSSD in this case in the event it had been or would be found liable in any original action brought by plaintiffs here would, at least, appear to flow from and be consistent with our equation of a contract for professional engineering services to a “product” in our Palatine case. Palatine National Bank v. Charles W. Greengard Associates, Inc. (1983), 119 Ill. App. 3d 376, 380.

We note a case decided after Ferentchak, Rosos Litho Supply Corp. v. Hansen (1984), 123 Ill. App. 3d 290, declined to follow the lead of Palatine because Rosos involved the negligence of a professional, an architect, and the Rosos court noted Palatine’s analysis did not distinguish between professional services negligently rendered and defective products, the latter of which was the subject of Moor-man. Although there was a contract between the plaintiff and the defendant, Rosos declined to limit the plaintiff’s remedy to its contract claim, and refused to construe Moorman broadly as having abolished by inference all professional malpractice actions claiming economic losses arising from the negligent performance of professional service contracts. The court stated:

“Such a significant departure from established law, which would affect not only architect’s malpractice, but similar actions against other professionals, should be signalled expressly by the supreme court itself.” Rosos Litho Supply Corp. v. Hansen (1984), 123 Ill. App. 3d 290, 297.

The defendant architect and the plaintiff in Rosos were in direct privity of contract. As such, the plaintiff’s remedy would have been limited by Moorman to its contract claim. The Rosos court determined, however, that the plaintiff would have no warranty remedy against the architect since the Uniform Commercial Code (UCC) (Ill. Rev. Stat. 1981, ch. 26, par. 1 — 101 et seq.) is inapplicable to the provision of professional services, nor is there any other implied common law or statutory warranty applicable to an architect’s services. “In Illinois, ‘in the absence of a special agreement [the architect] does not imply or guarantee a perfect plan or satisfactory result.’ ” (123 Ill. App. 3d 290, 296.) (In the interest of accuracy, we point out Rosos’ citation to our decision in the first appeal of this cause incorrectly construes the procedural posture of that case. There was no finding the Engineers were “guilty of professional negligence”; the cause was appealed from the trial court’s dismissal of the complaint on the grounds of multifariousness and failure to state a cause of action. (Bates & Rogers Construction Corp. v. North Shore Sanitary District (1980), 92 Ill. App. 3d 90, 91.) Consequently, Rosos declined to construe Moorman so as to deprive the plaintiff of an action in tort against the architect.

Rosos cited the Ferentchak case generally as one which could be “profitably compared” with it and, indeed, it may since in both cases the court found a means of avoiding the application of the economic loss doctrine. In both cases, a primary consideration was either the lack of a remedy or the lack of an adequate remedy to compensate the disappointed expectation interest. As indicated earlier, the supreme court has granted leave to appeal in the Ferentchak case. Ferentchak v. Village of Frankfort (1984), 121 Ill. App. 3d 599, appeal allowed (1984), 101 Ill. 2d 546.

The Rosos court recognized that above and beyond the plaintiff’s disappointed expectation interest in the architect’s performance of the work called for by the contract, the negligent performance of the architect also disappointed the expectation interest which would be held by anyone who employed a professional that he or she would perform to the level expected of such a professional under similar circumstances. Thus, the Rosos plaintiff had a sort of “secondary” expectation interest which arose by virtue of the plaintiff’s employment of the defendant, who held himself out to be an expert in his line of endeavor.

We distinguish Rosos because, under the facts of the case at bar, the damage suffered by the plaintiffs was to their “expectation interest” that they would be able to successfully complete their performance of the contract, and that the NSSD would not hinder them in the performance of their contract, thereby allowing them to receive the full benefit of their bargain with the NSSD. In our view, this is clearly an interest which is meant to be protected by the law of contract, since each party to a construction contract impliedly warrants not to do anything to hinder the performance of the other party. (W. H. Lyman Construction Co. v. Village of Gurnee (1980), 84 Ill. App. 3d 28, 37.) It is noted in Corbin on Contracts, sec. 1328, at 1104-05 (1952) that:

“As a general rule, every contractor must carry the risk of frustration of his hopes and expectations when subsequent events cause a decline in the value of that for which he bargained. This is not a case in which the rendition of the specific performance for which he bargained has become impossible in any sense of that abused term; it is a case in which events have prevented the realization and enjoyment of expected values from a promised performance actually rendered. In a comparatively small number of cases, it has been held that a contractor does not carry the risk of a catastrophic collapse of value. In such cases it is found that the contractor did not in fact assume the risk and that the circumstances are so extraordinary that justice requires that he should not be compelled to carry it.”

In this regard, we note our decision to affirm the dismissal of two of the Contractor’s counts against the NSSD in the first appeal of this cause was for the reason the contract included an exculpatory no-damages-for-delay clause. Although the Contractor specifically disclaimed the damages it sought were for delay, we determined it was, in fact, claiming such damages but had not pleaded any of the exceptions to the application of the exculpatory clause which we found, therefore, defeated its claim; e.g., “[wjhere the contractee is not acting in good faith, the delay is unreasonable in duration, the cause for the delay is not within the contemplation of the parties, or delay is attributable to inexcusable ignorance or incompetence of the engineer ***.” Bates & Rogers Construction Corp. v. North Shore Sanitary District (1980) 92 Ill. App. 3d 90, 95.

On the othet hand, tort law is appropriately suited for personal injury or property damages resulting from a sudden or dangerous occurrence. Insofar as the impetus for Illinois requirements that architects be licensed and engineers be registered is for the protection of life, health, and property (Ill. Rev. Stat. 1981, ch. 111, pars. 1205, 5101), tort law may indeed be an appropriate framework within which persons whose reasonable expectations in engaging such professionals have been disappointed to their economic detriment. Plaintiffs here did not engage the Engineers, however, nor were they remediless, in that the economic losses suffered by them related strictly to their disappointed expectation interest in receiving the benefit of their contract with NSSD.

For the reasons detailed above, we conclude the trial court did not err in its judgment that the plaintiffs could not recover their damages in tort against Greeley & Hansen, even if proved.

The judgment of the circuit court of Lake County is affirmed.

Judgment affirmed.

NASH, J., concurs.

JUSTICE REINHARD,

specially concurring:

In my view, the holdings in Moorman Manufacturing Co. v. National Tank Co. (1982), 91 Ill. 2d 69, 435 N.E.2d 443, Redarowicz v. Ohlendorf (1982), 92 Ill. 2d 171, 441 N.E.2d 324, and Foxcroft Townhome Owners Association v. Hoffman Rosner Corp. (1983), 96 Ill. 2d 150, 449 N.E.2d 125, would appear to be broadly applicable to all negligence cases, except those based on intentional false representations, and negligent representations in the context of Rozny v. Marnul (1969), 43 Ill. 2d 54, 250 N.E.2d 656, where economic losses are sought and where there is no personal injury or property damage resulting from a sudden or dangerous occurrence. Although the court in Rosos Litho Supply Corp. v. Hansen (1984), 123 Ill. App. 3d 290, 462 N.E.2d 566, in a well-written analysis, reasoned that professional malpractice actions are not within the purview of Moorman, I believe the carving out of any exception to the Moorman rationale should be left to our supreme court. The implications of Moorman and its progeny are not without considerable debate among legal writers (see Bertschy, The Economic Loss Doctrine in Illinois after Moorman, 71 Ill. B.J. 346 (1983), and Stein, Cottrell & Friedlander, A Blueprint for the Duties and Liabilities of Design Professionals After Moorman, 60 Chi.-Kent L. Rev. 163 (1984)) and, as I believe the majority opinion in an effort to distinguish Rosos and another important case, Ferentchak v. Village of Frankfort (1984), 121 Ill. App. 3d 599, 459 N.E.2d 1085, appeal allowed (1984), 101 Ill. 2d 546, rather than declining to follow them, adds additional confusion to the subject, I concur only in the result reached by the majority.


author: JUSTICE SCHNAKE

text:
    J.W. O’BRIEN CORP., Plaintiff-Appellant, v. ALLOY PIPING, INC., et al., Defendants-Appellees.
    Second District
    No. 83—1037
    Opinion filed November 26, 1984.
    Robert R. Benjamin, of Chicago, for appellant.

      Robert C. Liston, of Liston & Mauter, of Wheaton, for appellee.
   JUSTICE SCHNAKE

delivered the opinion of the court:

On February 5, 1981, the plaintiff, J.W. O’Brien Corp., filed a two-count complaint against the named defendants in the circuit court of Du Page County. The action was based on the furnishing of electrical goods, equipment and services supplied by the plaintiff in connection with the construction of a new building. Count I was a mechanic’s lien foreclosure against property allegedly owned by the defendant, Burke Development. The plaintiff withdrew count I when discovery showed that Burke Development was not the owner of the property. Count II alleged a breach of contract against the defendant, Alloy Piping, Inc. (Alloy), for failing to pay $10,157.61 on an open account.

On December 28, 1981, Alloy filed answers to plaintiff’s interrogatories which stated that it was Thomas Brewer, Jr., acting on his own behalf and not as an agent of Alloy, who entered into the agreement with the plaintiff. A bench trial was held on October 19, 1983, in which the plaintiff’s sole witness was John W. O’Brien. At the close of the plaintiff’s case, defense counsel moved for a directed finding, which was granted on the basis that the plaintiff had failed to show any contractual relationship between the plaintiff and Alloy. Plaintiff filed a motion to vacate the judgment, which was denied; and on November 28, 1983, the plaintiff filed this appeal.

The first issue for decision is the proper standard to be applied in reviewing a trial court’s granting of a directed finding. The plaintiff asserts that a directed finding should be granted “only in those cases in which all of the evidence, when viewed in its aspect most favorable to the opponent, so overwhelmingly favors movant that no contrary verdict based on that evidence could ever stand.” Pedrick v. Peoria & Eastern R.R. Co. (1967), 37 Ill. 2d 494, 510.

While this may be the proper standard in a jury trial, it is not applicable here. In a bench trial the judge is the finder of fact and, as such, he applies a two-step analysis in ruling on a motion for a directed finding. First, as in a jury trial, the judge must determine whether a prima facie case has been presented, i.e., whether the plaintiff has presented at least some evidence on every element essential to his cause of action. (Kokinis v. Kotrich (1980), 81 Ill. 2d 151, 154-55.) If so, the judge, as the finder of fact, must then “weigh down all the evidence, including any favorable to the defendant, pass on the credibility of witnesses, draw reasonable inferences from the testimony, and generally consider the weight and quality of the evidence.” (Stender v. National Boulevard Bank (1983), 114 Ill. App. 3d 1041, 1046.) If this weighing process does not negate any of the plaintiffs evidence necessary for his prima facie case, then the directed verdict should be denied. On appeal, the decision of the trial court will not be reversed unless it is contrary to the manifest weight of the evidence. City of Evanston v. Ridgeview House, Inc. (1976), 64 Ill. 2d 40.

The second issue for decision is whether the trial court’s directed finding for the defendant, based on plaintiff’s failure to show a contract between the plaintiff and Alloy, was against the manifest weight of the evidence. The plaintiff argues that his evidence showed that Thomas Brewer, Sr., had the apparent authority to bind Alloy on this contract, and that Alloy did enter this contract with the plaintiff through its apparent agent, Thomas Brewer, Sr.

“ ‘ “An apparent agent is a person who, whether or not authorized, reasonably appears to third persons, because of the manifestations of another, to be authorized to act as agent for such other.” ’ [Citations.] A principal is bound equally by the authority which he actually gives his agent and by that which by his own acts he appears to give. [Citation.] In order to hold the principal liable, however, there must be such conduct by the principal that a reasonably prudent person, using diligence and discretion, would naturally suppose an agent to possess. [Citations.]” (Lynch v. Board of Education (1980), 82 Ill. 2d 415, 426-27.) “As a general rule, the agency and the authority of an officer or agent may be proved by evidence of his having previously exercised certain powers as officer or agent with the approval or recognition of the corporation ***.” 19 C.J.S. Corporations sec. 1030, at 515 (1940); accord, Hooker v. Farmers Mutual Reinsurance Co. (1940), 304 Ill. App. 230.

John W. O’Brien, the plaintiff’s only witness, testified that he had been doing business with Alloy for 30 years; that he had done 15 to 20 jobs for Alloy; that he had usually dealt with Thomas Brewer, Sr.; and that during the fall of 1978, he submitted a bid for electrical work at Alloy’s offices to Thomas Brewer, Sr., and Thomas Brewer, Jr. O’Brien further testified that this bid was verbally accepted at this meeting, but this testimony was excluded by objection. O’Brien’s later testimony that he did the work and was partially paid, however, was sufficient evidence to show that this bid was accepted by Thomas Brewer, Sr. Alloy, having previously made Thomas Brewer, Sr., its agent, or at least having ratified his similar past acts, clothed Thomas Brewer, Sr., with the apparent authority to bind it in this contract. We believe, therefore, that the plaintiff met the prima facie requirement on whether a contract existed between itself and Alloy.

We turn now to the second step of our analysis to decide if the trial court, in weighing all the evidence, including evidence favorable to the defendant, could properly have discounted the evidence necessary to the plaintiff’s prima facie case. There is nothing in the record which places O’Brien’s credibility in question, and the defendant did not attempt to attack his credibility on this issue on cross-examination. The trial court did feel, however, that plaintiff’s exhibit “B” was favorable to the defendant. Exhibit “B” was a statement sent to Alloy listing a total due of $10,157.61 for the plaintiff’s job “with Burke Development Co.” The trial judge interpreted this as evidence that the contractual relationship was between the plaintiff and Burke Development Co. and not between the plaintiff and Alloy. Since the statement was sent to Alloy with attention to Thomas Brewer, Sr., and requested that Alloy give prompt payment of the amount due, we believe the only reasonable inference that could be drawn from exhibit “B” is that the plaintiff believed his contract was with Alloy and not Burke Development Co. Therefore, since nothing in the record had negated any evidence necessary for the plaintiff’s prima facie case, at least at that point in the trial, we hold the trial court’s finding for the defendant was against the manifest weight of the evidence.

Since we reverse on this issue, we need not reach the plaintiff’s second contention that Alloy ratified the contract by making payments on it. The finding entered in favor of the defendant is reversed and this cause is remanded for continuation of the cause, beginning with the defendant’s case in chief.

Reversed and remanded.

REINHARD and HOPE, JJ., concur.


text:
    EVERETT ACKERMAN, Plaintiff-Appellee, v. THE DEPARTMENT OF PUBLIC AID et al., Defendants-Appellants.
    Third District
    No. 3—84—0200
    Opinion filed November 16, 1984.
    Neil F. Hartigan, Attorney General, of Springfield (Karen Konieczny, Assistant Attorney General, of counsel), for appellants.
    Daniel L. Blauw, of Prairie State Legal Services, of Rock Island, and Bernard Shapiro, of Rockford, for appellee.
   JUSTICE SCOTT

delivered the opinion of the court:

The Illinois Administrative Procedure Act provides as follows:

“In any case in which a party has any administrative rule invalidated by a court for any reason, including but not limited to the agency’s exceeding its statutory authority or the agency’s failure to follow statutory procedures in the adoption of the rule, the court shall award the party bringing the action the reasonable expenses of the litigation, including reasonable attorney’s fees.” (Ill. Rev. Stat. 1983, ch. 127, par. 1014.1(b).)

The plaintiff Ackerman brought suit against the Illinois Department of Public Aid, seeking to have the termination of his disability assistance reversed. Also, he sought to have declared invalid the Department’s procedure of holding administrative hearings by telephone conference call. The circuit court of Rock Island County reversed the finding as to plaintiff’s disability, and entered a finding that:

“The defendant, Illinois Department of Public Aid, failed to comply with statutory requirements concerning plaintiff’s right to appear in person before the hearing officer in the County of plaintiff’s residence.”

The plaintiff then applied to the circuit court for an allowance of attorney fees pursuant to section 14.1(b) of the Administrative Procedure Act (Ill. Rev. Stat. 1983, ch. 127, par. 1014.1(b)). The trial court awarded fees in the amount of $1,181.25. It is from this order that the Illinois Department of Public Aid appeals, urging that the trial court’s order did not invalidate any administrative rule nor did it contain a finding that the agency failed to follow statutory procedures in the adoption of a rule.

The Department of Public Aid, in support of its argument, stresses the fact that its practice of conducting administrative hearings by telephone conference calls was never formally adopted as a rule by the Department.

If telephone conference hearings were never authorized by a rule, it could be logically argued that the Department violated section 14.1(b) as to that portion of the section which provided that expenses, including reasonable attorney fees, shall be awarded when an agency has exceeded its statutory authority. That administrative hearings conducted by telephone conference calls is a practice which exceeds statutory authority was established by this court in the recent case of Sleeth v. Department of Public Aid (1984), 125 Ill. App. 3d 847, 466 N.E.2d 703. The trial court in the instant case reached its decision without the benefit of the case of Sleeth. As in Sleeth, the trial court determined that procedures used by the Department of Public Aid for conducting a telephone conference hearing did not comply with the statutory requirement concerning a person’s right to appear in person before a hearing officer in the county where the person resides. Placing requirements upon an individual which are not authorized by statute is clearly a case of overreaching or exceeding authority as contemplated by section 14.1(b).

The Department is correct in its assertion that the procedure it followed in holding administrative hearing by telephone conference call was never formally adopted as a rule of the Department. A rule is defined as a principle, procedure or regulation governing conduct or action. (See The Random House Dictionary (unabr. ed. 1966).) The Department does not deny that administrative hearings were held by a telephone conference call, nor is it denied that a person seeking a hearing was compelled to comply with such a procedure. Failure to submit to such a procedure resulted in no hearing being afforded to the person entitled to one. Though never formally adopted as a rule and included in the Department’s manual, the procedure nevertheless had the effect, force and impact of a rule.

It is interesting to note that, in Rule 235.7 of the Department’s manual of rules concerning aid to the aged, blind and disabled, the following appears:

“In offices where on site hearings are conducted, give a copy of Form DPA 102 to the hearing officer during the hearing. In offices where telephone hearings are conducted, mail a copy of Form DPA 102 and other appeal related documents to the assistance hearing section after the appeal hearing.”

The implication of the above language contained in the Department’s manual is that the procedure of telephone conference hearings was given the status of a rule. Such hearings were obviously condoned by the Department’s manual of rules. Having declared that such hearings were invalid, the trial court correctly awarded attorney fees to the plaintiff Ackerman.

The Department further argues that no statutory authorization of an award of attorney fees exists and hence the trial court’s order is void because a money judgment against the State is barred by sovereign immunity. Having determined that the telephone procedure constituted a rule and then applying the provisions of section 14.1(b) (Ill. Rev. Stat. 1983, ch. 127, par. 1014.1(b)), it can be determined that the sovereign immunity argument of the State is devoid of merit.

For the reasons set forth, the order of the circuit court of Rock Island County is affirmed, and this case is remanded to said court for a determination and allowance of additional fees incurred by the plaintiff in responding to this appeal.

Affirmed and remanded with directions.

HEIPLE and STOUDER, JJ., concur.