author: JUSTICE CAMPBELL

text:
    CONTINENTAL ILLINOIS NATIONAL BANK AND TRUST COMPANY OF CHICAGO et al., Plaintiffs-Appellees, v. DANIEL J. LENCKOS, Acting Director of the Illinois Department of Revenue et al., Defendants-Appellants.
    First District (1st Division)
    No. 81—962
    Opinion filed May 31, 1983.
    Rehearing denied July 11, 1983.

      Tyrone C. Fahner, Attorney General, and Lloyd B. Foster, of Illinois Department of Revenue, both of Chicago (John D. Whitenack, Special Assistant Attorney General, of counsel), for appellants.
    Edward C. Rustigan and Martin G. Rosenstein, both of Mayer, Brown &
      Platt, of Chicago, for appellees.
   JUSTICE CAMPBELL

delivered the opinion of the court:

Plaintiffs, Continental Illinois National Bank and Trust Company of Chicago (hereinafter the bank), a corporation, and seven subsidiary corporations, Continental Illinois Corporation, Continental Illinois Leasing Corporation, Marina City Building Corporation, Cobak Corporation, Continental Illinois (Delaware) Limited, Continental Illinois Overseas Service Corporation, and Continental Illinois Service Corporation, brought this action seeking income tax refunds. The taxes were paid by the bank under protest pursuant to sections 1 through 2a. 1 of “An Act in relation to the payment and disposition of moneys received by officers and employees of the State of Illinois by virtue of their office or employment” (Ill. Rev. Stat. 1977, ch. 127, pars. 170 through 172a) and held in a protest account pending the final disposition of the case. Defendants are the Department of Revenue of the State of Illinois, the Director of Revenue of the Department of Revenue of the State of Illinois, and the Treasurer of the State of Illinois. Defendants have appealed from the judgment entered in favor of plaintiffs on January 13, 1981, and the order of March 20, 1981, denying the motion for reconsideration of said judgment. The Multistate Tax Commission, with leave of court, was allowed to file an amicus curiae brief.

The issues presented for review are as follows: (1) Whether apportionment of multistate business income to Illinois shall include interest received on United States obligations, which interest is exempt from Illinois income tax, in applying the apportionment formula prescribed in section 304(c) of the Illinois Income Tax Act (Ill. Rev. Stat. 1977, ch. 120, par. 3 — 304(c)); (2) Whether all amounts paid or accrued to the taxpayer as interest on State and municipal bonds during the taxable year to the extent excluded from (U.S.) gross income, must be included in Illinois income; and (3) Whether underpayment of estimated income taxes, without correction by the final assessment date, requires an underpayment penalty.

The trial court ruled that the following amounts were assessed wrongly and improperly and contrary to law:

TAXABLE YEAR
Issue 1973 1974 1975
Apportionment (#1) $12,175 $22,714 $60,694
Amortization (#2) 48,611 17,749 49,394
Penalty (#3) - - 48,132

and held that plaintiff was entitled to a credit for those monies paid under protest for the taxable year in question.

I

The first issue presents a question of first impression in Illinois and relates to whether under the provisions of article 3 of the Illinois Income Tax Act (Ill. Rev. Stat. 1977, ch. 120, par. 3 — 301 et seq.) the numerator and denominator of the apportionment factor of plaintiff for the years 1973, 1974 and 1975 properly should include the amount of plaintiffs interest income for such years from United States government obligations, even though such interest income was exempt from the Illinois income tax.

Apportionment Formula

Whenever a corporation conducts business in more than one State, a question arises as to how much business income is earned in each of the States where business is transacted. Under the apportionment method, a one-, two-, or three- factor formula is commonly used to determine the percentage of a corporation’s business actually conducted within the State. This percentage is multiplied by the corporation’s total taxable business income (tax base) in order to determine the portion of taxable income earned within the State. (Ill. Rev. Stat. 1979, ch. 120, par. 3 — 304.) Apportionment does not increase or decrease the tax base (total taxable income); it determines what portion of that income was earned in each of the States in which a taxpayer transacts business. A corporation’s tax base remains constant. “The purpose of the uniform act and article 3 of the Illinois act is to assure that 100%, and no more or no less, of the business income of a corporation doing multistate business is taxed by the States having jurisdiction to tax it.” GTE Automatic Electric, Inc. v. Allphin (1977), 68 Ill. 2d 326. 335. 369 N.E.2d 841, 845.

In Caterpillar Tractor Co. v. Lenchos (1981), 84 Ill. 2d 102, 106-07, 417 N.E.2d 1343, 1346, the supreme court stated:

“Under section 304(a), the Director of Revenue (Director) applies a three-factor (sales, payroll and property) apportionment formula which separately compares the total value of a corporation’s in-State and out-of-State sales, payroll, and property, both tangible and intangible, with the total value of the corporation’s in-State sales, payroll, and property alone. To illustrate: if the total multistate sales of a corporation are $10 million and its total Illinois sales are $1 million, the Illinois sales would represent one-tenth of the total multistate sales of the corporation, giving a sales factor of 10%. Once the percentage of the other factors, payroll and property, is calculated, the three factors are averaged. This average is then multiplied by the total amount of business income generated by the corporation’s in-State and out-of-State operations. If, for example, the sales, payroll and property multistate factors of the corporation are each 10% and its combined business income is $20 million, the amount of business income attributable to Illinois is $2 million.”

Article 3 of the Illinois Income Tax Act, which provides for the three-factor formula for the allocation and apportionment of the income of a corporation doing multistate business, contains the language of the Uniform Division of Income for Tax Purposes Act (GTE Automatic Electric, Inc. v. Allphin (1977), 68 Ill. 2d 326, 369 N.E.2d 841), and the customary three-factor formula is utilized by most States to measure in-State business activity as follows:

equals Percentage of business activity conducted In-State

Section 304(c) provides as follows:

“Business income of a financial organization shall be apportioned to this State by multiplying such income by a fraction, the numerator of which is its business income from sources within this State, and the denominator of which is its business income for all sources. For the purposes of this subsection, the
business income of a financial organization from sources within this State is the sum of:
* * *
(3) Interest and dividends received within this State.” Ill. Rev. Stat. 1977, ch. 120, par. 3 — -304(c).

However, in Illinois the General Assembly chose to use a one factor formula measuring the business activity of banks, as follows:

Illinois Gross Receipts Percentage of business
_ equals Activity conducted
Gross Receipts From Everywhere in Illinois

During the taxable years here involved the bank received in Illinois the following amounts as interest on obligations of the United States government.

Year Amount

1973 $43,145,641

1974 62,176,825

1975 54,679,968

The Director of Revenue concedes that such amounts of interest were exempt from the Illinois income tax. (See Willcuts v. Bunn (1931), 282 U.S. 216, 75 L. Ed. 304, 51 S. Ct. 125.) The issue before this court is whether such interest, which is wholly exempt from Illinois income tax, may be taken into account in applying the one factor apportionment formula.

The Director argues that Illinois uses a one-factor apportionment formula to determine the amount of a financial organization’s income which is subject to tax in Illinois and that the statute requires all interest received to be included in the measure of business activity. Interest received within this State is included in the numerator of the one-factor formula and the denominator includes interest from all sources. The language of the statute is clear and unambiguous and it is not in need of interpretation. The statute clearly provides that these sums must be included in the numerator and denominator of the apportionment formula.

The Director claims that the Department of Revenue is not seeking to tax interest as such which is exempt. If the intent of the statute was to exclude tax-exempt interest from the apportionment formula, the statute could have been limited to taxable interest received in this State, or the statute could have allowed a deduction for tax-exempt interest similar to the deduction in section 203(b)(2) of the Illinois Income Tax Act (Ill. Rev. Stat. 1977, ch. 120, par. 2— 203(b)(2)). The statute is not so limited in either of these ways.

The bank has countered with the observation that “there is no specific reference in the Act to the fact that interest on United States obligations is exempt from the Illinois income tax.” The bank argues that section 203(b)(2)(H) of the Act simply exempts “all amounts *** which are exempt from taxation by this State either by reason of its Constitution or by reason of the Constitution, treaties or statutes of the United States.” (Ill. Rev. Stat. 1977, ch. 120, par. 2 — 203(b)(2)(H).) The exemption from Illinois income taxation of interest on United States obligations is derived not from the Illinois Income Tax Act but from Federal law and the United States Constitution. Since there is no specific reference anywhere in the Act to such tax-exempt interest, it can hardly be expected that the General Assembly would have thought it necessary specifically to exclude such tax-exempt interest from the section 304(c) apportionment formula. Accordingly, the failure of the section 304(c) definition specifically to exclude tax-exempt interest on United States obligations does not provide a basis for the Department’s contention that such interest was meant to be included.

In examining the legislative intent the bank asserts that interest on United States obligations is wholly exempt from Illinois income tax and also barred under Federal law. (31 U.S.C. sec. 742 (1959); Miller v. City of Milwaukee (1927), 272 U.S. 713, 71 L. Ed. 487, 47 S. Ct. 280.) Section 742 provides as follows:

“Except as otherwise provided by law, all stocks, bonds, Treasury notes, and other obligations of the United States, shall be exempt from taxation by or under State or municipal or local authority. This exemption extends to every form of taxation that would require that either the obligations or the interest thereon, or both, be considered, directly or indirectly, in the computation of the tax, except nondiscriminatory franchise or other nonproperty taxes in lieu thereof imposed on corporations and except estate taxes or inheritance taxes.” 31 U.S.C. sec. 742 (1959).

The bank also asserts that such transactions are exempt and the Department’s interpretation of the Illinois Income Tax Act contravenes the supremacy clause of the United States Constitution (U.S. Const., art. VI) and article I, section 8, which provides Congress with the power “[t]o borrow Money on the credit of the United States.” U.S. Const., art. I, sec. 8.

We gather from the bank’s argument that the application of the apportionment formula under section 304(c) results in a direct or indirect tax on exempt interest which is prohibited. Under this argument each item or transaction is identified and excluded from the inState overall business activity for State income tax purposes.

In this connection, the Multistate Tax Commission in support of the Department has argued that unlike Illinois, most States do not have a special apportionment formula for banks. The customary three-factor formula, property, payroll and sales is utilized, to measure in-State business activity. If a bank, such as Continental, has a staff of personnel whose duties include acquiring, managing and profitably disposing of United States securities, it follows that their payroll, offices, desks, telephones and sales will be fully reflected in the property, payroll and sales apportionment formula. Should this staff of personnel work only in Illinois, none of the three-factor formula States can apportion in those States any of the Illinois property, payroll or sales connected with the business activity relating to the securities. Then, if Illinois is also prevented from including any measure of such business activity by the bank, the bank would escape all measurement of that business activity contrary to the holding in GTE Automatic Electric, Inc. v. Allphin (1977), 68 Ill. 2d 326, 369 N.E.2d 841.

We are not persuaded that the cases cited by the bank (Missouri v. Gehner (1930), 281 U.S. 313, 74 L. Ed. 870, 50 S. Ct. 326; Miller v. City of Milwaukee (1927), 272 U.S. 713, 71 L. Ed. 487, 47 S. Ct. 280; Gibbons v. Ogden (1824), 22 U.S. (9 Wheat.) 1, 6 L. Ed. 23), support the position that through the use of the apportionment formula that the same results in a direct tax or indirect tax on particular items of income. Rather, the factors that are included in the apportionment formula need not be attributable to particular transactions or activities associated with the bank’s business. When an item of income or transaction is included in the apportionment formula the item of income is no longer identifiable as a separate item or entity, but is intended to and does become a part of the completed computation of the entire in-State business income. Thereafter, the total formula is properly a reflection and measure of the overall in-State business activity in the State, and we do not view this application of the formula as a tax on a particular transaction.

We may have been inclined to accept the arguments of the Department and the Multistate Tax Commission except for an additional authority brought to our attention by the bank, after oral ar-

guments had been completed. In Federal Products Corp. v. Norberg (1981), _ RI. _, 429 A.2d 447, the taxpayer corporation had invested a substantial portion of its cash in common stock and in United States Treasury notes and bonds. Later the notes and bonds were sold and the taxpayer was assessed with a deficiency based upon the tax administrator’s inclusion of the proceeds and the interest derived from these securities as “gross receipts” in the computation of the Business Corporation Tax. The tax administrator pointed out “that the proceeds and the interest derived from these obligations were not included in the total taxable income but were merely used to measure the amount of the net income subject to tax.” (_ RI. _, _, 429 A.2d 447, 448.) On appeal, the Rhode Island Supreme Court stated:

“The fact that the administrator did not directly tax the proceeds and interest from the U.S. Treasury notes and bonds and common stock is not determinative, for it is clear that 31 U.S.C.A. 8 742 prohibits an indirect tax on such items. Although the administrator contends that he included the proceeds from the sale of the federal obligations and the interest merely as a measure to determine the corporate income tax due Rhode Island, he somehow overlooks the fact that the amount of the tax assessed was increased by more than $11,000 by the inclusion of the tax-exempt obligations in the measure of the tax. The only reasonable conclusion to draw is that this was an indirect tax upon federal securities and, thus, invalid.” (_R.I____, 429 A.2d 447, 449.)

(See also First Federal Savings & Loan Association v. Department of Revenue (1982), _ Mont. _, 654 P.2d 496.) The Federal Products Corp. case involves the precise issue involved herein, and we perceive no reason to depart from its reasoning and holding. (See Comment, Federal Immunity from State Taxation: A reassessment, 45 U. Chi. L. Rev. 695 (1978).) We agree with the argument that there has been a substantial erosion in the per se prohibition or absolute immunity of the Federal immunity doctrine from McCulloch v. Maryland (1819), 17 U.S. (4 Wheat.) 316, 4 L. Ed. 579; see also Washington v. United States (1983), 460 U.S. _, 75 L. Ed. 2d 264, 103 S. Ct. 1344, but such rejection should not be extended to the facts of the instant case where the subject of the tax is a natural and traditional source of Federal revenue. It follows that the action of the Department of Revenue was improper and the judgment of the trial court was correct as to the above issue.

II

The second issue also concerns an item of interest payments and the dispute relates to the treatment of premiums paid for State municipal bonds under the Illinois Income Tax Act. During each of the taxable years 1973, 1975 and 1976, the bank received interest on certain State and municipal bonds which was exempt from Federal taxation and the bank claims in computing its net income for Illinois income tax purposes, it added back to its Federal taxable income for the years in question only the true interest portion of each such payment. The bank’s position is that a portion of each periodic receipt of interest on bonds will in fact represent merely a return of capital invested to acquire the bond and does not amount to an attempt to create a deduction. The bank maintains that what is involved is merely the obligation to construe the word “interest” that is susceptible to a proper construction as meaning true interest. As a result of this construction, the bank, in computing its net income for Illinois income tax purposes, excluded the amortized bond premium from the interest payments when computing its base income. Generally, for Illinois income tax purposes, the bank must include the interest to determine its base income. Ill. Rev. Stat. 1977, ch-. 120, par. 2— 203(b)(2)(A).

The bank insists that the position of the Department of Revenue in this dispute results in an unconstitutional discrimination in the administration of the Act in violation of the due process and equal protection clause of the fourteenth amendment to the United States Constitution (U.S. Const., amend. XIV, sec. 1) and the due process and equal protection clause and the uniformity provisions of the Illinois Constitution of 1970 (Ill. Const. 1970, art. I, sec. 2; art. IX, sec.2).

In its brief the bank does not question that under the Act interest received on Federal exempt bonds is income which is taxable for Illinois’ purposes. However, such interest was intended to be taxed in the same manner as interest on federally taxable bonds. The effect of the Department’s position would be to tax federally exempt bonds purchased at a premium at a higher rate of Illinois income tax than bonds purchased at a premium which are not federally exempt.

The Department contends that the entire interest payment must be reported as interest income in accordance with section 203(b)(2)(A) of the Act (Ill. Rev. Stat. 1977, ch. 120, par. 2 — 203(b)(2)(A)), which provides:

“An amount equal to all amounts paid or accrued to the taxpayer as interest during the taxable year to the extent ex-eluded from gross income in the computation of taxable income [shall be added to Illinois income].”

Both parties admit that prior to the Revenue Act of 1942 there was no deduction under the Federal income tax law for amortizable bond premiums. “Whether or not the purchase price exceeded the face value of the bond, the holder considered the full price as the basis for capital gain or loss, and reported all taxable interest received as income.” Commissioner v. Korell (1950), 339 U.S. 619, 621, 94 L. Ed. 1108, 1110, 70 S. Ct. 905, 906.

The Department claims that it is only because Congress authorized a deduction for the amortized bond premium charges that this item of expense is presently deductible. (26 U.S.C. sec. 171 (1976).) Thus, the amount of State and local bond interest exempted from Federal tax and excluded from Federal gross income is gross interest, not net. Where the legislature defines State and local bond interest as the amount of interest excluded from Federal gross income (see section 203(b)(2)(A)), it also meant gross State and local interest, not net. If the legislature had intended net State and local interest to be added to Illinois income, it would be net of all expenses, not just the premium expenses. No such legislative intent can be gathered from the language in the Act.

The bank has cited Hanover Bank v. Commissioner (1962), 369 U.S. 672, 8 L. Ed. 2d 187, 82 S. Ct. 1080, for the proposition that the actual income earned on a bond purchased at a premium is less than the amount of the interest payment received. Commissioner v. Korell (1950), 339 U.S. 619, 94 L. Ed. 1108, 70 S. Ct. 905, was also cited, suggesting that the view of the United States Treasury when the deduction for bond premium amortization was proposed in 1942, was that part of the interest on a bond purchased at a premium was a restoration of capital. The discussion of the legislative history in the Korell case did not suggest that Congress adopted this view, and it appears that the court did not decide whether the amortization of a bond premium represents a return of capital. However, an analysis of the language employed in Old Colony R.R. Co. v. Commissioner of Internal Revenue (1932), 284 U.S. 552, 560-61, 76 L. Ed. 484, 489, 52 S. Ct. 211, 213-14, suggests that it is not. The bank has offered other examples and arguments of discrimination in treatment involving bonds issued by private corporations and federally taxable bonds, but the facts of the instant case do not involve such bonds. That the two taxing statutes in question are not precisely identical does not deprive the bank of any constitutional right as claimed.

The statutory language of section 203(b)(2)(A) of the Act should now be reviewed to determine the effects on the basic proposition asserted by the bank that bond premiums should be amortized and excluded in computing the amount of interest income from State and municipal bonds. The Department has cited Bodine Electric Co. v. Allphin (1980), 81 Ill. 2d 502, 410 N.E.2d 828, for the proposition that the General Assembly has not enacted or authorized any purported recognition or treatment or exclusion for periodic amortization of bond premiums on State, local and municipal bonds. The bank has responded and claimed that the Department misunderstands the Federal tax law and the bank’s position. The bank maintains that section 171(a)(2) of the Internal Revenue Code does not permit a Federal deduction for amortizable bond premiums on State and municipal bonds, and the bank is not trying to create a new deduction for amortizable bond premiums under the Act. Instead, the legislature has already decided in section 203(b)(2)(A) to modify taxable income by adding thereto “all amounts paid or accrued to the taxpayer as interest *** to the extent excluded from gross income.” The bank contends that the language of this modification must be construed in accordance with the legislative intent to impose a tax under the Act measured by the net income and not measured by a return of capital. Amortization of bond premiums is proper in computing the amount of interest.

One major obstacle to the bank approach is that the Illinois Income Tax Act, section 203(b)(2)(A), by its terms does not appear to offer support for the position urged. We do not perceive any reason to construe the word “interest” any differently than we have in other sections of the Act. In sum, the plain language of the Act strongly suggests that there is no such exclusion, treatment, or allowance as claimed. The plain language is controlling unless a different legislative intent is apparent from the purpose and history of the Act. (Bodine Electric Co. v. Allphin (1980), 81 Ill. 2d 502, 410 N.E.2d 828; Mitchell v. Mahin (1972), 51 Ill. 2d 452, 283 N.E.2d 465, cert. denied (1972), 409 U.S. 982, 34 L. Ed. 2d 245, 93 S. Ct. 317; Thorpe v. Mahin (1969), 43 Ill. 2d 36, 250 N.E.2d 633.) “The legislative intent should be sought primarily from the language used in the statute, and if such intent can be ascertained therefrom, it should prevail without resorting to other aids for construction.” (Louis A. Weiss Memorial Hospital v. Kroncke (1957), 12 Ill. 2d 98, 105, 145 N.E.2d 71, 74.) Under the plain meaning of the Act there is a complete lack of authority to permit the bank to restructure the transactions to make the disputed premium appear as a return of capital as separate accounting items. (See Old Colony R.R. Co. v. Commissioner.) There is no basis in the record or statute to support the view or concept urged by the bank.

Both parties have called our attention to Moline National Bank v. Department of Revenue (1983), 111 Ill. App. 3d 1086, 444 N.E.2d 1164. This recent case holds that the taxpayer may exclude an amortized municipal or State bond premium from base income and that “[t]he amortized premium does not represent income or interest. It is a return of capital.” (111 Ill. App. 3d 1086, 1088, 444 N.E.2d 1164, 1166.) In its opinion the court also stressed the application of generally accepted principles of accounting and standard accounting practices as controlling. We have given detailed thought and consideration to this opinion, and we are compelled to respectfully differ and to reaffirm our views as expressed herein.

We do not perceive that the issue in this case is controlled by generally accepted principles of accounting or standard accounting practices or whether the parties may use said principles of accounting to abrogate the clear intention of the statute. It appears that a taxpayer is free to treat and adopt any method of accounting that is not contrary to law, but under the facts of this case said treatment or method of accounting to reflect a return of capital is not binding on the Department of Revenue. If the taxpayer feels that there is an inequity in the statute, the matter should be addressed to the attention of the legislature. It follows that the trial court erred in entering judgment for the plaintiffs on this issue.

Ill

The final issue relates to sections 801 through 803 of the Illinois Income Tax Act requiring taxpayers to declare and pay estimated tax in four equal installments. (Ill. Rev. Stat. 1977, ch. 120, pars. 8 — 801 through 8 — 803.) Section 804 of the Act imposes a penalty on taxpayers who fail to pay (or who underpay) any such quarterly installment. (Ill. Rev. Stat. 1977, ch. 120, par. 8 — 804.) The bank paid $300,000 as its installment of estimated Illinois income tax for the first quarter of 1975, or one fourth of the $1,200,000 which the bank estimated would be its total 1975 Illinois income tax liability. The estimate was based on the amount the bank believed would be its 1974 liability. A return subsequently filed by the bank for 1974 showed an Illinois income tax liability for 1974 of $1,263,100. An amended return for 1974 indicated a tax liability of $1,149,387.

The Department has claimed that when the 1974 figure of $1,263,100 was filed by the bank on the last day for filing, it became assessed, that is, locked in under Illinois for all future computation purposes. (Ill. Rev. Stat. 1977, ch. 120, par. 9 — 903.) The bank has not brought itself within any of the exceptions in section 804(d) (Ill. Rev. Stat. 1977 ch. 120, par. 8 — 804(d)), and the underpayment penalty was proper.

The bank has in effect argued that the filing of an amended return relates back to the filing of the original estimated quarterly return for purposes of avoiding the underpayment penalty. The bank has not cited any authority for this novel concept, and we reject said effort to avoid the clear and unambiguous language of the statute. Therefore, it follows that the statute is controlling and the action of the Department was proper.

The judgment of the circuit is affirmed in part, reversed in part, and remanded for further proceedings not inconsistent with this opinion.

Affirmed in part, reversed in part, and remanded.

McGLOON and O’CONNOR, JJ., concur.

      The Multistate Tax Commission (the Commission) is the official administrative agency of the Multistate Tax Compact (the Compact) entered into currently by 19 States and the District of Columbia as full members, and by 11 States as associate members. See C. Bowsher, Comptroller General, “Report to the Chairman, House Committee on Ways and Means; Key Issues Affecting State Taxation of Multijurisdictional Corporate Income Need Resolving” (General Accounting Office, United States Government, 1982); GTE Automatic Electric, Inc. v. Allphin (1977), 68 Ill. 2d 326, 335. 369 N.E.2d 841. 845.


source: Caselaw Access Project

author: JUSTICE MEJDA

license: Public Domain

text:
      In re MARRIAGE OF GEORGE CUISANCE, Petitioner-Appellee and Cross-Appellant, and WANDA CUISANCE, Respondent-Appellant and Cross-Appellee.
    First District (5th Division)
    No. 82—1288
    Opinion filed June 17, 1983.

      John P. Rinella and Douglas Polsky, both of Chicago, for appellant.
    Steven R. Lake and Alan J. Toback, both of Lake, Rosenberg & Associates, Ltd., of Chicago, for appellee.
   JUSTICE MEJDA

delivered the opinion of the court:

Respondent Wanda Cuisance appeals from those portions of the judgment of dissolution of marriage pertaining to the award to her of marital property and maintenance. Petitioner George Cuisance cross-appeals from the modification of the judgment order awarding respondent additional property and from the portion of the judgment requiring him to pay respondent’s attorney fees and costs of $17,299.55.

The issues presented are whether: (1) the award of maintenance set by the trial court was inadequate; (2) the division of marital property was improper; (3) the award of additional property was error; and (4) the award of attorney fees was improper and excessive. We reverse and remand.

Wanda and George Cuisance were married on July 3, 1967. No children were born to the marriage. In December 1978 George filed his petition for dissolution of marriage. An ex parte judgment for dissolution was entered in April 1979 which was later vacated in June 1980. In June 1980 Wanda filed her counterpetition for dissolution of marriage. In October 1980 after a hearing, the trial court entered an order finding grounds to dissolve the marriage and reserving the remaining issues for later determination. Thereafter, a trial relating to division of property and the award of maintenance commenced in February 1981.

At the trial, the following relevant evidence was adduced.

During the marriage the parties acquired the following assets: a Chicago condominium; 10 unimproved parcels of land located in Pensacola, Florida; approximately 1,625 shares of stock in various companies, valued at $58,675, and which generate annual dividends of about $400 to $500; a restaurant business known as Le Bordeaux Restaurant, located at 3 West Madison Street, Chicago; certain checking and savings accounts in Chicago and abroad; a condominium located in Vesoul, France; a house and farm located at Neurey, France; and various items of personal property, household goods, furniture and furnishings.

George Cuisance testified that in 1976 he purchased 200 shares representing 50% of the stock of the restaurant business, Le Bordeaux, from his former partner for $125,000 and that he now owns 100% of the restaurant.

A1 Richman, accountant for Le Bordeaux and George’s personal accountant, testified that George bought out the former co-owner of the restaurant for about $104,000; that George gave the co-owner a note for $64,000 payable within three years, a note for $15,000 payable on a monthly basis until the expiration of the restaurant’s lease in 1985, and $25,000 in cash. George was forced to buy out the co-owner’s shares because the latter was moving from Chicago and would not be able to help George operate the restaurant.

In 1976 the restaurant’s gross receipts were $510,647, and in 1980 they were $645,853. Richman stated that considering assets and liabilities, the net worth of the restaurant on December 30, 1980, was $63,285. The liquidation value of the restaurant would be up to 30 cents on the dollar. A new location for the restaurant was being sought due to the expiration of the lease in 1985.

In 1977 George drew compensation from the restaurant in the amount of $72,250; in 1978, $80,754; in 1979, $75,984; and in 1980, $58,734. In 1980 he left $20,186.49 in the corporation for certain income tax advantages. In addition, the business pays for George’s life and health insurance.

Marshall Frishman, an accountant, testified on behalf of Wanda over petitioner’s objections. He reviewed the restaurant’s books and records and concluded that notwithstanding the lease, the fair market value of the restaurant was in excess of $200,000. This figure took into consideration the restaurant’s good will. He could not, however, place a value on the business in the event of its relocation.

The parties’ Chicago condominium located at 1440 North Lake Shore Drive was purchased in 1972 for $57,000. The mortgage balance at trial was $30,143.35. The parties stipulated to an exterior real estate appraisal value of the condominium of $174,000. Wanda testified that interior spaces of the condominium are in a bad state of repair and that $20,000 would be needed to make necessary repairs. She valued the premises in its present condition at between $120,000 to $130,000.

George testified that he also owns a condominium, a house and a 40-acre farm in France. He stated that he inherited the condominium upon his mother’s death in June 1979 and that title to all these properties are in his name. No testimony was given establishing the manner of acquisition of the farm property. George testified that his uncle Luden Henriot resides in the stone house located on the farm and that he has sent money to this uncle for remodeling expenses. He also maintained that his uncle pays the taxes on the farm. Wanda testified that George had told her that the French condominium was his property and that he had paid for it. No evidence of value of any of the French properties was adduced at trial.

Ten unimproved lots in Pensacola, Florida, were purchased during the marriage for $10,000 to $12,000. George has never seen these lots and it was his understanding that they tend to be flooded when it rains. He testified that these lots are worth less today than when they were purchased. No other evidence as to their value was adduced.

The parties’ household goods, furniture and furnishings were valued by George at around $25,000 to $30,000.

Wanda testified that she has no independent means of income and no employment. She claimed average monthly expenses of $2,802. Of this amount, $942 is attributable to maintaining the condominium residence.

When Wanda immigrated to this country 20 years ago, she possessed no English language skills. She still has language difficulties although she is a high school graduate. During the marriage Wanda was employed in the restaurant. Her duties there included work in the checkroom, answering the telephone, hosting and other tasks. In 1980 she earned $6,108 net pay at the restaurant. She has had no specific job or vocational training and she possesses no meaningful job skills. Although she once enrolled in a nail sculpturing school, she withdrew due to nervousness. She testified that she was in good health generally but that she had a liver problem and had been nervous. Since the separation she has been unable to find gainful employment. Wanda was 35 years old in September 1980. George was 47 years old.

During the marriage Wanda enjoyed the use of numerous credit cards and accumulated an extensive wardrobe including at least four furs. The parties maintained a very comfortable lifestyle, often dining in expensive restaurants.

In 1980 George vacationed often, traveling to Canada, Europe and the Island of Martinique. According to Wanda, George had also recently traveled to Arizona, Mexico, Florida, Martinique, Canada, France and Belgium. His monthly expenses included $525 for rent for his apartment and $20 for phone and electricity.

After hearing the evidence, the trial court found that the parties’ marital property consisted of the condominium, the restaurant, the lots in Florida, a number of bank accounts, and the stock. George’s condominium, farm and bank account in France were found to be non-marital property. Wanda was found to be in good health. The trial court awarded Wanda the Chicago condominium, $25,000 in cash, the contents of the condominium, and temporary rehabilitative maintenance of $1,000 per month for 18 months. George received the restaurant, a bank account, the stock, and the undeveloped Florida property.

In January 1982, after a hearing on Wanda’s petition to vacate or reconsider judgment, the trial court modified the cash award to Wanda, awarding her an additional $10,000 due to the condition of the condominium. The trial court also heard testimony on Wanda’s petition for attorney fees. Her attorney testified that his customary charge per court hour is $150. An office hour is $100. He had spent 52 court hours on the case, amounting to $7,800 in fees, and 124 office hours on the case, amounting to $12,450. Court costs were $274. In addition, Wanda’s expert witness, Mr. Frishman, was paid $2,500 for his services. Following the testimony, the trial court found that George had a greater ability to pay than Wanda. After making certain deductions, the trial court found proven court time to be 37 hours and office time to be 1241/2 hours. Accordingly, Wanda was awarded $17,299.55 in attorney fees and costs.

Opinion

We first address Wanda’s claim that the trial court erred in its award of property. Wanda argues that the trial court’s failure to value both the marital and nonmarital property mandates remandment for further proceedings. Specifically, she contends that the trial court was presented "with no evidence of the value of the French real properties and bank account, the Florida real properties, the three bank accounts in Chicago and the personal property in the possession of the parties. She also contends that evidence of the value of the restaurant, Le Bordeaux, was disparate and that the trial court erred in failing to enter a finding as to the value of this principal marital asset. Wanda argues that as a result of the failure to value the parties’ assets, there was an insufficient basis upon which to divide them under section 503 of the Illinois Marriage and Dissolution of Marriage Act. Ill. Rev. Stat. 1981, ch. 40, par. 503.

Initially, we note that there is no requirement under the Act that the court place a specific value on each item of property, but only that there be competent evidence of value and that the trial court’s division of the property be supported by the evidence. (In re Marriage of Miller (1983), 112 Ill. App. 3d 203, 445 N.E.2d 811; In re Marriage of Hyland (1981), 95 Ill. App. 3d 31, 419 N.E.2d 662.) However, where evidence in the record as to valuation of such assets is lacking, there is no basis upon which a reviewing court can determine the propriety of the trial court’s award of marital property. (In re Marriage of Boone (1980), 86 Ill. App. 3d 250, 408 N.E.2d 96; In re Marriage of Leon (1980), 80 Ill. App. 3d 383, 399 N.E.2d 1006.) Additionally, the failure to offer evidence of the value of such assets does not necessarily waive the right to appeal on this issue. (In re Marriage of Reib (1983), 114 Ill. App. 3d 993; In re Marriage of Kundit (1982), 107 Ill. App. 3d 310, 437 N.E.2d 777; but see In re Marriage of Smith (1983), 114 Ill. App. 3d 47.) Moreover, under the Act the value of nonmarital assets is a factor to be considered in the division of the marital property. (In re Marriage of Meyer (1981), 103 Ill. App. 3d 44, 430 N.E.2d 610.) Thus, evidence of valuation of the nonmarital assets must be also shown on the record in order for a reviewing court to determine the propriety of the division of the marital property. In re Marriage of Hapaniewski (1982), 107 Ill. App. 3d 848, 438 N.E.2d 466.

In the instant case, there is no evidence of the value of the French properties. Even accepting the trial court’s determination that these are George’s nonmarital assets, their value was, nonetheless, a factor to be considered in the division of the marital property. In the absence of evidence of valuation, we do not believe that the division of the parties’ marital property could have been fully determined by the trial court and, therefore, this case must be remanded for further proceedings.

We note here also that the evidence as to the nonmarital nature of these properties was unclear and inconclusive. For example, George testified that the condominium in Vesoul was originally acquired by his mother, but that title was always in his name. As to the farm and house, we cannot find any evidence on the record establishing the manner in which this property was acquired. Under section 503(b) of the Illinois Marriage and Dissolution of Marriage Act (Ill. Rev. Stat. 1981, ch. 40, par. 503(b)), all property acquired after the marriage is presumed to be marital property, and the party claiming that such property is nonmarital has the burden of overcoming this presumption. (In re Marriage of Smith (1979), 77 Ill. App. 3d 858, 396 N.E.2d 859.) In the absence of contrary evidence, this statutory presumption will be controlling, regardless of the manner in which title is held by the spouse. (Smith.) Since such evidence is unclear and even lacking in the instant case with respect to the French properties, this issue must be further determined on the basis of competent evidence on remand.

Similarly, there is no evidence of the present value of the Florida properties. While the approximate purchase price of the lots in question was established, the only other evidence presented regarding their value was George’s testimony that he believed they had depreciated in value and that they are prone to flooding. He admitted, however, that he had never seen the properties. The trial court should, on remand, hear competent evidence as to the present value of this asset.

With respect to Wanda’s contention that the evidence did not establish the value of Le Bordeaux Restaurant, we note that the trial court did not fix the value of this asset. Two experts, however, testified offering disparate estimates of the restaurant’s value. One witness estimated the net worth or book value of the business at $63,285 while the other gave the value in excess of $200,000. The latter valuation was based essentially on the price George paid to purchase all of the stock held by his former co-owner. Apparently, the trial court accepted the lower valuation.

It has been held that the market value of stock in a closely held corporation can be ascertained from the price which a willing purchaser will pay a willing seller in a voluntary transaction. (In re Mar riage of Reib (1983), 114 Ill. App. 3d 993; Olsher v. Olsher (1979), 78 Ill. App. 3d 627, 397 N.E.2d 488.) Also, the value of a closely held corporation, such as Le Bordeaux, is not necessarily the book value of its assets, although book value may be of importance in determining market price. Reib; Olsher.

The trial court here did not fix the value of the Le Bordeaux stock, yet the record reveals that at trial there was presented evidence that George paid either $125,000 or $104,000 for 50% of the restaurant stock in 1976. Due to the inconclusive and disparate evidence adduced on the value of Le Bordeaux, a principal marital asset, there is no basis upon which to ascertain on review whether the final property distribution was justly proportioned. Accordingly, in addition to the above, the cause must be remanded for further evidentiary hearings to establish the value of this asset. See In re Marriage of Hellwig (1981), 100 Ill. App. 3d 452, 426 N.E.2d 1087.

Although we remand this case for further hearings on the issue of valuation of the assets mentioned, we find it necessary to note two recent opinions of this court which aptly express our view that all too often reversals of this kind are unnecessarily occasioned by the parties’ failure to present evidence on valuation. In In re Marriage of Smith (1983), 114 Ill. App. 3d 47, 54, the judgment of the trial court was affirmed even though the parties presented no solid evidence of their assets. The appellate court observed that “it is the parties’ obligation to present the court with sufficient evidence of the value of the property. Reviewing courts cannot continue to reverse and remand dissolution cases where the parties have had an adequate opportunity to introduce evidence but have failed to do so. Parties should not be allowed to benefit on review from their failure to introduce evidence at trial. In re Marriage of Miller (1983), 112 Ill. App. 3d 203, 209; see In re Marriage of Melton (1981), 93 Ill. App. 3d 338, 341, 417 N.E.2d 220, 223.” This view was cited with approval recently in Reib. In Reib, however, the court opined that under the particular circumstances of that case it would have been a harsh, unequitable, and legally inappropriate result to affirm, on the basis of Smith, the trial court’s judgment in the absence of sufficient credible evidence to establish the valuation of several major assets, and therefore the judgment was reversed. In the instant case there was no credible evidence presented to suggest the value of the French real properties, and only disparate evidence of the value of the restaurant business. Moreover, there was insufficient evidence presented to overcome the presumption that the French properties were the parties’ marital assets. Accordingly, we believe that reversal of this cause is mandated.

Next, Wanda contends that the award of maintenance to her was inadequate. Under the Illinois Marriage and Dissolution of Marriage Act, issues of maintenance and child support relate directly to the final property disposition, which must be reached first. (See Ill. Rev. Stat. 1981, ch. 40, pars. 503, 504; Reib; In re Marriage of Leon (1980), 80 Ill. App. 3d 383, 399 N.E.2d 1006.) Thus, where the cause is remanded with specific instructions to take evidence establishing valuation and division of the parties’ various assets, it follows that the award of maintenance must too be reversed and the cause remanded to consider further a just award of maintenance. (Reib; Leon.) On remand, we note that the trial court should be guided by the standards enunciated in section 504 of the Act. See In re Marriage of Thornton (1980), 89 Ill. App. 3d 1078, 412 N.E.2d 1336.

We next consider George’s cross-appeal from the award of attorney fees of $17,299.55 to be paid by him to Wanda’s attorney. The general rule in dissolution cases is that to justify allowance of attorney fees the party seeking the relief must show financial inability to pay and the ability of the other spouse to do so. (Gasperini v. Gasperini (1978), 57 Ill. App. 3d 578, 373 N.E.2d 576.) Since the ability of either spouse in this context is based largely upon the valuation and just distribution of the parties’ assets, in the absence of evidence of valuation we are unable to determine that the relative financial abilities of the parties has been adequately considered or determined by the trial court. Upon remand, the trial court should be guided by the general standard that any allowance should be only in such amount as will compensate for the services rendered, and must be fair and just to all parties concerned, namely the attorney to be compensated, the client, and the person required to make payment. See generally Gasperini; see also Green v. Green (1976), 41 Ill. App. 3d 154, 354 N.E.2d 661.

Finally, we find it unnecessary to address George’s contention that the trial court’s modification of the judgment awarding Wanda additional property was error since we hold that the question of the division of marital property must be further determined on remand to the trial court.

For the foregoing reasons, the judgment of the circuit court is reversed and the cause remanded for further proceedings.

Reversed and remanded.

SULLIVAN and LORENZ, JJ., concur.


author: PRESIDING JUSTICE McNAMARA

text:
    EDWARD SULLIVAN et al., Plaintiffs-Appellants, v. COMMONWEALTH EDISON COMPANY et al., Defendants-Appellees.
    First District (3rd Division)
    No. 81—92
    Opinion filed April 27, 1983.
    Modified on denial of rehearing July 13, 1983.

      William J. Harte, Ltd., and Plotkin & Jacobs, Ltd., both of Chicago (William J. Harte, Robert Plotkin, John G. Jacobs, and Robert P. Schuwerk, of counsel), for appellants.
    James R. Bryant, Michael J. Karson, John T. Lenahan, Klein, Thorpe & Jenkins, Ltd., and Ancel, Glink, Diamond, Murphy & Cope, all of Chicago, for appellees City of Evanston, Village of Oak Park, Village of Park Forest, Village of River Forest, and Village of Rosemont.
    Richard G. Ferguson, Paul W. Schroeder, and Alan P. Bielawski, all of Isham, Lincoln & Beale, of Chicago, for appellee Commonwealth Edison Company.
    Robert A. Helman, Stephen J. Mattson, Leslie A. Stulberg, and Richard J. Klein, all of Mayer, Brown & Platt, of Chicago, for appellee Northern Illinois Gas Company.
    Tyrone C. Fahner, Attorney General, of Springfield (Patricia Rosen, Assistant Attorney General, of counsel), for appellee James Zagel, Director of Illinois Department of Revenue.
   PRESIDING JUSTICE McNAMARA

delivered the opinion of the

court: Plaintiffs are residents of various suburban Cook County municipalities and customers of defendant utilities, Commonwealth Edison Company, Illinois Bell Telephone Company, and Northern Illinois Gas Company. They brought this class action complaint on behalf of all similarly situated utility customers in their municipalities against the municipalities, the utilities, and the Illinois Department of Revenue, alleging that defendants had collected unlawfully inflated municipal and State utility taxes. Plaintiffs sought damages and declaratory and injunctive relief.

The trial court granted defendants’ motion to dismiss some allegations as substantially insufficient in law. Other allegations were dismissed as to some defendants on the ground that other class actions were pending between the same parties for the same cause of action. Plaintiffs appeal the dismissals.

Plaintiffs’ complaint alleged that defendants had erroneously interpreted “gross receipts” as used in various statutory provisions relating to the taxation of public utilities by State and municipal governments. Such interpretation allegedly resulted in an inflated tax base which caused the utility taxes to be excessive. Plaintiffs’ interest stems from the fact that, pursuant to statute, the burden of these taxes is substantially passed on by the utilities to the customer.

Section 8 — 11—2 of the Illinois Municipal Code (Ill. Rev. Stat. 1979, ch. 24, par. 8 — 11—2) authorizes municipal governments to tax public utilities which supply service within the municipality at a rate not to exceed 5% of the utilities’ “gross receipts.” Pursuant to section 36(a) of the Public Utilities Act (Ill. Rev. Stat. 1979, ch. lll2/3, par. 36(a)), the utilities in turn are permitted to pass on the burden of this tax to the customer by charging an additional charge equal to the sum of (1) an amount equal to such municipal tax, or any part thereof; (2) 3% of such amount to cover accounting costs; “and (3) an amount equal to the increase in taxes and other payments to governmental bodies resulting from the amount of such additional charge.”

Similarly, a State tax of 5% of gross receipts is imposed upon defendant utilities pursuant to section 2 of the Messages Tax Act (Ill. Rev. Stat. 1979, ch. 120, par. 467.2), section 2 of the Gas Revenue Tax Act (Ill. Rev. Stat. 1979, ch. 120, par. 467.17), and section 2 of the Public Utilities Revenue Act (Ill. Rev. Stat. 1979, ch. 120, par. 469). In addition, the utilities are taxed at .08% of gross revenue pursuant to section 7a.5 of the Public Utilities Act (Ill. Rev. Stat. 1979, ch. lll2/3, par. 7a.5), to defray the expense of the Illinois Commerce Commission. The utilities are not, however, authorized to pass on to their customers the entire burden of these various State taxes. Rather, pursuant to section 36(b) of the Public Utilities Act (Ill. Rev. Stat. 1979, ch. lll2/s, par. 36(b)), only that portion of the 5% tax which exceeds 3% of gross receipts can be passed on. No portion of the .08% tax on gross revenue may be passed on, nor can the utilities collect a fee to cover their accounting costs.

The gist of plaintiffs’ complaint was that, for purposes of computing the State utility tax, defendants erroneously inflated the State tax base by including in gross receipts the section 36(a) additional charge collected from customers to offset the municipal tax. Similarly, in computing the municipal utility tax, defendants included in gross receipts not only the amount collected pursuant to section 36(b) to offset the State tax, but also the section 36(a) charge which was based on the municipal tax itself. In addition, defendants included the section 36(a) charges in gross revenue for purposes of computing the .08% State tax imposed by section 7a.5. Plaintiffs take the position that gross receipts should include only those sums received by the utility from the customer to cover the utility service itself. They alleged that defendants’ interpretation of gross receipts and gross revenue was unauthorized and resulted in defendants being unjustly enriched and plaintiffs being required to pay taxes upon taxes. Plaintiffs alleged further that defendants’ conduct violated both the Federal and State constitutions.

The trial court recognized that defendants’ practice of including in the municipal tax base the amounts collected to offset the municipal tax itself was declared impermissible by our supreme court in Getto v. City of Chicago (1979), 77 Ill. 2d 346, 396 N.E.2d 544. The court found, however, that the practice was already being challenged in two pending class actions involving Illinois Bell, Commonwealth Edison and the municipal defendants. It therefore dismissed this allegation as to those parties.

The trial court found the other methods of computation challenged in plaintiffs’ complaint to be proper and authorized by statute. It therefore dismissed allegations arising from or related to such methods of computation as substantially insufficient at law.

On appeal, plaintiffs contend that the reasoning employed by the court in Getto requires a finding that none of the tax computation practices challenged in this case were authorized by statute; that if the trial court correctly construed the statutes in question such statutes are unconstitutional; and that the dismissal of any of plaintiffs’ allegations was improper.

We first address plaintiffs’ contention that the decision in Getto renders invalid all of the tax computation practices challenged in the present case. As here, Getto involved a challenge by a utility customer of the utility’s and municipality’s interpretation of gross receipts as used in section 8 — 11—2 of the Illinois Municipal Code for purposes of computing the municipal utility tax. Unlike the present case, however, the only practice challenged was the inclusion in the municipal tax base of the section 36(a) charge collected from utility customers to offset the municipal tax itself. Recognizing that the economic burden of the tax had been passed on to the customer pursuant to section 36(a), the court found that the customer had standing to challenge the tax. The court then turned to the definition of gross receipts found in section 8 — 11—2 but found it to be inconclusive with regard to the challenged practice. In light of this doubt, the court applied the maxim that application of tax laws, when in doubt, should be construed against the taxing body and in favor of the taxpayer and found defendants’ construction of gross receipts to be erroneous. Plaintiffs were given the benefit of this maxim because they were required to pay the additional section 36(a) charge prior to the time the utility incurred any liability for the tax itself.

We reject plaintiffs’ argument that Getto stands for the proposition that utility taxes apply only to amounts which actually have been received by a utility for services rendered. The determination in Getto that the utility received the money from its customer to cover the tax before it actually became liable for the tax did not in itself invalidate the utility’s manner of tax computation. Rather, this element of timing was relevant only in that it required that the customer, not the utility, be given the benefit of the doubt in interpreting the taxing statute. Similarly, in the present case, if examination of the statutory language in question leaves us in doubt as to its proper construction, that doubt must be resolved in favor of plaintiffs.

Each of the utility tax provisions in question contains its own definition of .gross receipts. The definitions found in the State tax provisions are essentially identical. We will first consider the State provisions and then turn to the definition found in the municipal tax provision.

Section 1 of the Messages Tax Act (Ill. Rev. Stat. 1979, ch. 120, par. 467.1) (as well as section 1 of the Gas Revenue Tax Act (Ill. Rev. Stat. 1979, ch. 120, par. 467.16) and section 1 of the Public Utilities Revenue Act (Ill. Rev. Stat. 1979, ch. 120, par. 468)) defines “gross receipts” as “consideration received for the transmission of messages [and for gas and electricity distributed] *** without any deduction on account of the cost of” providing the utility service “or any other expense whatsoever. However, any charges added to customers’ bills pursuant to the provisions of paragraph (b) of Section 36 *** shall be excluded in determining such gross receipts.”

In accord with this definition, defendants excluded the section 36(b) charge from gross receipts in computing the State tax but did include the amounts collected pursuant to section 36(a). We agree with the trial court that their interpretation of the statute in this regard was proper. The municipal utility tax is an occupation tax (Commercial National Bank v. City of Chicago (1981), 89 Ill. 2d 45, 432 N.E.2d 227) imposed upon the utility. (Ill. Rev. Stat. 1979, ch. 24, par. 8 — 11—2.) As such it is part of the cost to the utility of providing the utility service. (Agron v. Illinois Bell Telephone Co. (7th Cir. 1971), 449 F.2d 906, cert. denied (1971), 405 U.S. 954, 31 L. Ed. 2d 231, 92 S. Ct. 1171.) The additional charge passed on to the customer pursuant to section 36(a) to offset that tax is not a tax on the customer but rather an additional charge for utility service. (Waukegan Community Unit School District No. 60 v. City of Waukegan (1983), 95 Ill. 2d 244; City of Naperville v. Department of Revenue (1982), 103 Ill. App. 3d 312, 431 N.E.2d 54; Agron v. Illinois Bell Telephone Co.) The legal incidence of the tax rests on the utility even if the burden does not. (Waukegan Community Unit School District No. 60 v. City of Waukegan; Martin Oil Service, Inc. v. Department of Revenue (1971), 49 Ill. 2d 260, 273 N.E.2d 823, cert. denied (1972), 405 U.S. 923, 30 L. Ed. 2d 794, 92 S. Ct. 961; City of Naperville v. Department of Revenue; Commonwealth Edison Co. v. Community Unit School District (1976), 44 Ill. App. 3d 665, 358 N.E.2d 688.) We therefore find that the section 36(a) charge constitutes “consideration received” by the utility for providing the utility service and it was properly included in gross receipts for purposes of computing the State utility taxes. The fact that the utilities’ liability for the municipal tax, on which the section 36(a) charge was based, may have arisen simultaneously with that of the State tax is of no legal significance on this question. Martin Oil Service, Inc. v. Department of Revenue.

We find significant the fact that the legislature specifically provided that the section 36(b) charge should be excluded from gross receipts yet made no mention of the section 36(a) charge. It is a general rule of statutory construction that an expression of one specific exception precludes other exceptions not mentioned. (Landfill, Inc. v. Pol lution Control Board (1978), 74 Ill. 2d 541, 387 N.E.2d 258; City Savings Association v. International Guaranty & Insurance Co. (1959), 17 Ill. 2d 609, 162 N.E.2d 345.) Had the legislature intended that the section 36(a) charge should also be excluded from gross receipts it surely would have so provided. (City of Naperville v. Department of Revenue.) We also note that the legislature, in enacting section 36(a)(3), obviously recognized that the amount collected by the utility pursuant to section 36(a) would itself be subject to other taxes. That provision allows the utility to charge the customer an additional amount to cover “the increase in taxes *** to governmental bodies resulting from the amount of” the section 36(a) charge. (Ill. Rev. Stat. 1981, ch. lll2/s, par. 36(a).) Therefore, since examination of the State utility tax provisions does not leave us in doubt as to their application to plaintiffs, we need not utilize the maxim employed in Getto that all doubts must be resolved in favor of the taxpayer.

Our determination that the section 36(a) additional charge to cover municipal taxes was properly included in the State utility tax base was likewise reached by this court in City of Naperville v. Department of Revenue. In that case the court found Getto to be distinguishable in that it involved a tax base which included the anticipated receipt of the very same tax rather than a separate tax. Similarly, in Agron v. Illinois Bell Telephone Co., the court held that the additional charges to cover both the municipal and the State utility taxes were properly includable in the base on which the Federal excise tax was computed. Similar to the present case, the Federal tax was based on amounts paid for the utility service. The Agron court recognized that if the municipal and State taxes in question were direct taxes on the utility customers then the amounts attributable to such taxes could not be included in the Federal tax base. Finding their legal incidence to be on the utility, however, the court held that the additional charges passed onto the customer pursuant to sections 36(a) and (b) to cover those taxes were merely part of the cost of providing the utility service.

Relying on East St. Louis v. Union Electric Co. (1967), 37 Ill. 2d 537, 229 N.E.2d 552, cert. denied (1967), 390 U.S. 948, 19 L. Ed. 2d 1136, 88 S. Ct. 1034, and Getto, plaintiffs argue that the customer, not the utility, is the real taxpayer and that Agron would have been decided differently had it been preceded by Getto. We disagree. East St. Louis involved a municipal franchise ordinance which required the utility to pay the municipality an amount by which a certain percentage of its gross revenue exceeded other fees and taxes which it paid to the municipality. The -court determined that since the tax was passed on to the customer pursuant to section 36(a), the section 8— 11 — 2 municipal utility tax was not a “tax” within the meaning of the franchise ordinance so as to permit a set-off. The court, however, was not holding that the customer was the taxpayer. Waukegan Community Unit School District v. City of Waukegan; Commonwealth Edison Co. v. Community Unit School District (1976), 44 Ill. App. 3d 665, 358 N.E.2d 688.

Similarly, while the court in Getto held that the utility customers who had borne the economic burden of the municipal utility tax thereby obtained standing to challenge the validity of the tax, the court carefully distinguished between the issues of standing and legal incidence. In Waukegan Community Unit School District v. City of Waukegan, the Illinois Supreme Court clarified its position on this point, specifically holding that the municipal utility tax constitutes an occupation tax the legal incidence of which is on the utility. The court noted further that in Getto it had cited Agron with approval on this point. Getto found Agron to be distinguishable on the question of the propriety of the tax computation in that Agron did not involve a tax on the same tax. In that respect the present case is likewise distinguishable from Getto.

Plaintiffs also contend that even if the section 36(a) charge was properly included in the utilities’ gross receipts for purposes of computing the State utility tax, that tax was necessarily excessive because the municipal utility tax, on which the section 36(a) charge was based, was computed in a manner declared impermissible in Getto. That erroneous computation thereby rendered the State tax excessive to the extent that it was based upon an excessive section 36(a) charge.

We recognize the fact that the State tax would have been lower if the municipal tax on itself had not been included in the base on which it was computed. The utilities, not the plaintiffs, had the legal obligation to pay the State tax, however, and they were required by statute to include in their State tax base all consideration actually received, including the full section 36(a) charge. Although it was subsequently determined in Getto that one component of that charge was excessive, that determination in itself in no way reduced the utilities’ gross receipts. Absent such a reduction in gross receipts, the State utility tax base remains the same. Keystone Chevrolet Co. v. Kirk (1978), 69 Ill. 2d 483, 372 N.E.2d 651.

We next turn to the provision which defines gross receipts for purposes of computing the municipal utility tax. Section 8 — 11—2 of the Illinois Municipal Code (Ill. Rev. Stat. 1979, ch. 24, par. 8 — 11—2) defines gross receipts as:

“the consideration received for the transmission of messages, the consideration received for distributing, supplying, furnishing or selling gas for use or consumption and not for resale, and the consideration received for distributing, supplying, furnishing or selling electricity for use or consumption and not for resale, and the consideration received for distributing, supplying, furnishing or selling water for use or consumption and not for resale *** and shall be determined without any deduction on account of the cost of [providing such utility service] *** or any other expenses whatsoever.”

Except for the sentence in the State utility tax provision specifically excluding from gross receipts the section 36(b) additional charge, this definition is essentially the same as that found in the State tax provision. Consequently, we find that the same reasoning which justifies inclusion of the section 36(a) municipal tax charge in the State tax base likewise justified the inclusion of the section 36(b) State tax charge in the municipal tax base. Specifically, payment by the utility of State utility taxes is part of the cost to the utility of providing the utility service. (Agron.) The additional charge passed on to the customer pursuant to section 36(b) to partially cover that tax is not a tax to the customer, but rather an additional charge for utility service. (Waukegan Community Unit School District.) Consequently, the section 36(b) charge constitutes “consideration received” by the utility for providing the service and is properly included in gross receipts for purposes of computing the section 8 — 11—2 municipal utility tax.

Plaintiffs correctly point out that this is the same provision which was at issue in Getto. The court’s failure in that case to find statutory authorization for the inclusion in the municipal tax base of the amount received to cover that same tax does not, however, preclude our finding such authorization for inclusion of an amount to cover a separate tax. Indeed, as previously noted, the court in Getto distinguished Agron on that very basis.

The other practice challenged by plaintiffs involve defendants’ inclusion of the section 36(a) charge in “gross revenue” when computing the .08% tax on gross revenue imposed by section 7a.5 of the Public Utilities Act. (Ill. Rev. Stat. 1979, ch. HP/s, par. 7a.5.) “Gross revenue” is defined in section 7a.4 as “all revenue which (1) is collected by a public utility * * * (a) pursuant to the rates, other charges, and classifications *** and (b) pursuant to emergency rates * * * and (2) is derived from the intrastate public utility business of such a utility.” While there is no statutory provision specifically authorizing the utility to pass this tax on to the customer, that portion which is based on the section 36(a) charge is passed on pursuant to section 36(b)(3). Section 36(a)(3) authorizes the utility to charge its customers for “an amount equal to the increase in taxes *** to governmental bodies resulting from *** [the section 36a] additional charge.”

We find that the same reasoning which justifies inclusion of the section 36(a) charge in “gross receipts” for the purposes of computing the State utility tax also applies here. We note further that the enactment of section 36(a)(3) indicates the legislature’s intent that the section 36(a) charge should itself be subject to other taxes.

We reject plaintiffs’ argument that defendants’ interpretation of the provisions in question results in their imposition of a tax on a tax in violation of due process. The State tax is not imposed upon the municipal tax. Rather, the State tax is imposed upon consideration received by the utility for the services it has provided to the customer, which consideration includes the cost to the utility of providing such service. The fact that part of that cost is the utility’s municipal tax expense does not result in a tax on a tax situation. The utility, not the customer, is the taxpayer. The same reasoning negates plaintiffs’ position that the municipal tax is imposed upon the State tax. We find no double taxation.

We finally consider plaintiffs’ contention that the trial court erred in dismissing portions of the complaint on the ground that another action was pending between the same parties for the same cause. Prior to plaintiffs’ filing of the present suit, two similar class actions were filed by Chicago resident Charles Getto on behalf of the public utility customers in the city of Chicago. Joined as defendants in those suits were Illinois Bell, Commonwealth Edison, and the city of Chicago. Getto challenged the defendants’ practice of imposing the municipal tax on the section 36(a) municipal additional charge. On October 19, 1979, our supreme court affirmed the trial court’s denial of motions to dismiss the case against Bell, holding that the challenged practice was unauthorized by statute. Getto v. City of Chicago (1979), 77 Ill. 2d 346, 396 N.E.2d 544.

The present suit was filed three days after the Getto decision, at which time the plaintiff class in the Getto actions involved only Chicago utility customers and defendants included only the city of Chicago and the two utilities. On October 24 and 25, 1979, Getto was granted leave to amend his complaints to add as defendants various suburban municipalities, including those joined in the present case. In addition, the trial court enjoined all persons in the potential class of plaintiffs from filing any similar action until farther order of the court. Motions to dismiss Getto’s amended complaint were filed by the municipalities challenging Getto’s standing to bring suit against them.

On December 19, 1978, and again on February 13, 1980, subsequent to the filing of Getto’s amended complaint, the court entered orders certifying a class of Chicago customers in Getto’s action against Bell. A comparable class was certified in the Edison case. As noted by the court in Getto v. City of Chicago (1981), 86 Ill. 2d 39, 426 N.E.2d 844, Getto withdrew his motion seeking redefinition and certification of the plaintiff class and instead maintained that the class certified by the court’s December 19 order was adequate. We find no evidence to date that the plaintiff class in either of the Getto cases has been recertified to include the present plaintiffs.

In the present case the trial court found that, to the extent plaintiffs’ allegations arose from the practice invalidated in Getto, such allegations were already the subject of other pending actions for the same cause involving the same parties. (Ill. Rev. Stat. 1979, ch. 110, par. 48(l)(c).) It therefore dismissed such allegations against Illinois Bell, Commonwealth Edison, and the municipalities taxing those utilities in the manner challenged in Getto.

On appeal, plaintiffs maintain that at the time this action was filed, the Getto case did not involve the same parties; that section 48(l)(c) of the Civil Practice Act was never intended to be applied to dismiss competing class actions; and that dismissal would deny plaintiffs due process since Getto has not only failed to pursue their claims but lacks standing to do so.

Section 48(l)(c) provides that a motion for dismissal or for other appropriate relief, may be made where “there is another action pending between the same parties for the same cause.” Dismissal is not mandatory, however, nor is it the only form of relief afforded by the statute. Rather, the trial court possesses some discretion in determining whether actions should proceed "simultaneously. (A.E. Staley Manufacturing Co. v. Swift & Co. (1980), 84 Ill. 2d 245, 419 N.E.2d 23.) In exercising such discretion the court’s analysis should be geared toward effectuating the purpose of the statute which is to avoid duplicative litigation. A.E. Staley Manufacturing Co. v. Swift & Co.; People ex rel. Phillips Petroleum Co. v. Gitchoff (1976), 65 Ill. 2d 249, 357 N.E.2d 534.

Under the present circumstances we believe it to be an abuse of discretion to dismiss these allegations. We find it significant that in the time since Getto amended his complaint, the plaintiff class in Getto has not been modified to include the present plaintiffs. A dismissal of the present allegations could leave plaintiffs without a remedy, particularly in light of the court order enjoining future actions of this type. We do not believe that the policy of avoiding duplicative litigation requires this result.

For the reasons stated, the order of the circuit court of Cook County-dismissing certain allegations of plaintiffs’ complaint as insufficient in law is affirmed. The order dismissing allegations as to some defendants on the ground that other class actions were pending is reversed and the cause is remanded.

Affirmed in part; reversed and remanded in part.

McGILLICUDDY and WHITE, JJ., concur.


author: JUSTICE VAN DEUSEN

text:
    ERNEST RAY JACKSON, Plaintiff-Appellee, v. POLAR-MOHR, DefendantAppellee—(National Ben Franklin Insurance Company of Illinois, Inc., Intervening Petitioner-Appellant).
    Second District
    No. 82—697
    Opinion filed June 16, 1983.
    Rehearing denied July 22, 1983.

      Helen M. Krawzak, of Aries, Hoyt & Williams, of Chicago, for appellant.
    Aldo E. Botti, Peter A. Monahan, and Walter P. Maksym, Jr., all of Botti, Marinaccion & Maksym, Ltd., of Oak Brook, for appellees.
   JUSTICE VAN DEUSEN

delivered the opinion of the court:

On January 10, 1979, plaintiff, Ernest Ray Jackson, brought a products liability action against defendant Polar-Mohr and others for personal injuries. On June 22, 1979, upon notice to the parties and with leave of court, the National Ben Franklin Insurance Company of Illinois, Inc. (Ben Franklin) filed its intervening petition in this cause as subrogee of Bullís Litho Company, the employer of plaintiff, seeking a lien in the amount of $2,961.27 against any recovery plaintiff might secure against the defendants. The lien was asserted pursuant to the provisions of section 5(b) of the Workers’ Compensation Act (Ill. Rev. Stat. 1979, ch. 48, par. 138.5(b)) for monies paid under the Act to plaintiff or on his behalf. The June 22 order granting Ben Franklin leave to file its intervening petition also ordered Ben Franklin not to participate in the trial. Neither the plaintiff nor the defendant Polar-Mohr has filed any pleadings denying the allegations of the intervening petition.

On May 25, 1982, judgment was entered on a jury verdict in favor of the plaintiff and against the defendant Polar-Mohr in the amount of $10,000. On June 22, 1982, defendant Polar-Mohr filed its post-trial motion, and, on June 24, 1982, plaintiff filed its post-trial motion asking that its judgment against Polar-Mohr be set aside and for a new trial.

Also on June 24, 1982, the 30th day following the entry of judgment, the plaintiff filed a motion to dismiss the intervening petition of Ben Franklin on the grounds that Ben Franklin did not participate in the trial of the cause and at no time presented proofs of the allegations contained in its intervening petition.

On August 4, 1982, the trial court granted plaintiff’s motion to dismiss and denied the intervening petition of Ben Franklin, not on its merits but on the grounds that Ben Franklin had a duty, within 30 days of the date of plaintiff’s judgment against the defendant PolarMohr, to cause the court to act upon its intervening petition and for the further reason that the trial court lacked jurisdiction. In the same order the trial court denied the post-trial motions of the plaintiff and of the defendant Polar-Mohr. Ben Franklin appealed.

We find that the trial court erred in entering its order of August 4,1982, denying Ben Franklin’s intervening petition.

Plaintiff assumes erroneously, as did the trial court, that section 68.1 of the Civil Practice Act (Ill. Rev. Stat. 1979, ch. 110, par. 68.1), now recodified as section 2 — 1202 of the Code of Civil Procedure (Ill. Rev. Stat. 1981, ch. 110, par. 2 — 1202) applied in determining the lack of Ben Franklin’s timeliness in securing its lien. Section 68.1, which provides that a post-trial motion must be filed within 30 days after the entry of judgment, concerns motions which request the trial court to correct trial error. (See Wolter v. Chicago Melrose Park Associates (1979), 68 Ill. App. 3d 1011, 1016; People ex rel. Gustafson v. City of Calumet City (1968), 101 Ill. App. 2d 8, 11.) Since the issue before the trial court did not concern trial error but rather a distinct and collateral claim by an intervening party, section 68.1 does not apply. Ben Franklin did not seek to challenge the validity or correctness of the judgment, but simply to assert its lien on the proceeds of that judgment.

Plaintiff attempts to augment his argument by citation to Augsburg v. Frank’s Car Wash, Inc. (1982), 103 Ill. App. 3d 329, and argues that the intervening petitioner must exercise due diligence and affirmatively establish its entitlement to a lien in order to recover. Augsburg is inapposite. It dealt with the denial of a section 72 petition (Ill. Rev. Stat. 1979, ch. 110, par. 72, now Ill. Rev. Stat. 1981, ch. 110, par. 2 — 1401), which does require the showing of diligence. The petitioner in this case, having been granted leave to file its intervening petition, was under no duty to present proofs in support of the allegations of its petition so long as they remained unanswered and undenied by the plaintiff.

Under the Workers’ Compensation Act, an employer may intervene in an employee’s cause of action at any stage prior to the satisfaction of judgment. (Arnold Lies Co. v. Legler (1960), 26 Ill. App. 2d 365, 375.) Since the employer’s interest in the judgment is in the form of a lien (Denius v. Robertson (1981), 98 Ill. App. 3d 83, 86; Kimpling v. Canty (1973), 13 Ill. App. 3d 919, 921), his intervention is limited to protecting the lien in all orders of the court after hearing and judgment (Arnold Lies Co. v. Legler (1960), 26 Ill. App. 2d 365, 375). No satisfaction of the judgment or settlement in the action is valid without the written consent of the employer unless the employer has been fully indemnified or protected by court order. Ill. Rev. Stat. 1979, ch. 48, par. 138.5.

In Galvan v. John Caretti Co. (1972), 6 Ill. App. 3d 894, the trial court, prior to judgment in the plaintiff-employee’s civil tort action and pursuant to the employer’s petition to intervene, entered an order protecting the employer’s rights and interests in any judgment or settlement in the employee’s favor. Approximately three months after the jury returned a verdict in favor of the employee, the employer filed a petition requesting, in essence, a lien in the amount it might be required to pay in an upcoming Industrial Commission proceeding. The trial court granted the employer an award or credit in the nature of a setoff or prepayment on any award which the Industrial Commission might enter. The appellate court rejected the employee’s argument on appeal, similar to the present one, that the trial court had no jurisdiction to enter an order adjudicating the rights of litigants more than 30 days after final judgment had been rendered. The court held that the trial court had jurisdiction to grant the employer ah award because no satisfaction of the employee’s judgment would be valid until such an order was entered.

The reasoning in Galvan applies in the instant case. In its petition to intervene, Ben Franklin alleged that it was subrogated to the rights of Jackson’s employer and was entitled to reimbursement for the amount it previously paid to plaintiff under the Act, requested the court to protect its rights, and prayed for a lien on any judgment entered in Jackson’s favor. The court’s subsequent order, unlike that in Galvan, did not specifically protect the insurance company’s rights; it merely granted it leave to file the petition. However, such language in the court’s order is not necessary since the filing of the petition in itself established the lien and notified plaintiff, defendant and the trial court of its existence. (See Hartford Accident & Indemnity Co. v. D. F. Bast, Inc. (1977), 56 Ill. App. 3d 960 (lien breached where the tortfeasor’s insurance company and plaintiffs settled after notice by worker’s compensation insurance company of lien).) Since no court order protected the insurance company’s rights, the validity of any satisfaction of the judgment required the insurance company’s consent. Cf. Kleeman v. Fragman Construction Co. (1980), 91 Ill. App. 3d 455 (court order protected employer’s interest so that employer’s consent was not required to have a valid judgment).

Thus, it was incumbent upon Jackson and Polar-Mohr to get Ben Franklin’s consent prior to the satisfaction of judgment or to challenge the asserted lien (see Esin v. Liberty Mutual Insurance Co. (1981), 99 Ill. App. 3d 75 (employee’s widow sought declaratory judgment regarding validity of insurance company’s lien)). The record in the instant case does not indicate that Ben Franklin gave such consent, so that no valid satisfaction of judgment could be entered into by Jackson and Polar-Mohr. Since an employer may intervene at any time prior to the satisfaction of judgment, it is obvious in this case that, because Ben Franklin had filed its intervening petition for lien well in advance of trial and prior to satisfaction of judgment, the trial court had jurisdiction to consider the limits of Ben Franklin’s lien.

Plaintiff also contends that the appeal has been rendered moot because Ben Franklin did not obtain a stay of the order from which it appealed. Plaintiff has attached exhibits as part of the appendix to its brief which would indicate that plaintiff has now received $10,000 from defendant insurance company in exchange for a purported satisfaction of judgment and has spent or is in the process of spending these proceeds. In support of his argument he relies on Horvath v. Loesch (1980), 87 Ill. App. 3d 615, 619-20, and Supreme Court Rule 305(i) (87 Ill. 2d R. 305(i)) for the proposition that, in the absence of a stay, an appeal is moot if possession or ownership of specific property which is inextricably involved in the relief being sought on appeal has been conveyed to third parties.

Plaintiff’s reasoning is fatally flawed in two respects. First, Rule 305(i) has no application to money judgments, since money does not constitute a specific identifiable property. Second, Rule 305(i) specifically protects the rights and interests of nonparties in the absence of a stay of judgment and would not protect the rights of plaintiff or defendant, both parties in this cause, from reversal on appeal. Therefore, Ben Franklin’s failure to obtain a stay does not render this appeal moot. (Schaumburg State Bank v. Seyffert (1979), 71 Ill. App. 3d 630, 636.) As the Supreme Court of Illinois stated in discussing a predecessor of Rule 305(i):

“A party to a suit is presumed to know all the errors in the record, and such party cannot acquire any rights or interests based on such erroneous decree that will not be abrogated by a subsequent reversal thereof. If such party has received benefits from the erroneous decree or judgment, he must, after reversal, make restitution, and, if he has sold property erroneously adjudged to belong to him, he must account to the true owner for the value.” First National Bank v. Road District No. 8 (1945), 389 Ill. 156, 161-62.

This appeal was not rendered moot by defendant’s expenditure of the proceeds of the judgment.

That portion of the order of the trial court of August 4, 1982, denying Ben Franklin’s intervening petition is vacated; if any satisfaction of the judgment entered in favor of the plaintiff and against the defendant Polar-Mohr has been filed of record with the clerk of the trial court, it is stricken and held for naught; and the cause is remanded to the trial court for further proceedings consistent with this opinion.

Vacated and remanded.

LINDBERG and REINHARD, JJ., concur.


author: JUSTICE McGILLICUDDY

text:
    CONSOLIDATED BROADCASTING CORPORATION, Plaintiff-Appellant, v. AMERICAN ARBITRATION ASSOCIATION et al., DefendantsAppellees.
    First District (3rd Division)
    No. 81—1291
    Opinion filed June 15, 1983.
    Louis L. Biro, P.C., of Chicago (Neal D. Rosenfeld, of counsel), for appellant.
    Alexander P. White, of Chicago, for appellees.
   JUSTICE McGILLICUDDY

delivered the opinion of the court:

Plaintiff, Consolidated Broadcasting Corporation (CBC), appeals from a decision of the circuit court of Cook County ordering plaintiff to proceed to arbitration with defendant, American Federation of Television and Radio Artists (AFTRA), before the American Arbitration Association. Plaintiff had sought an order from the circuit court staying arbitration pursuant to section 2(b) of the Uniform Arbitration Act (Ill. Rev. Stat. 1979, ch. 10, par. 102(b)). Following a hearing, the court denied plaintiff’s application, but granted plaintiff’s motion to stay enforcement of the arbitration order during the pendency of this appeal pursuant to Supreme Court Rule 305 (87 Ill. 2d R. 305(b)(1)).

Plaintiff contends (1) that it is the function of the court rather than an arbitrator to determine whether an agreement to arbitrate exists between the parties; (2) that since defendant did not seek arbitration until 1980, the collective bargaining agreement executed in 1968 by the parties is no longer binding; and (3) that the American Arbitration Association is not authorized to exercise jurisdiction over the parties.

On July 22, 1968, plaintiff and defendant entered into a collective bargaining agreement which remained in effect through 1977. The agreement contained the following provision:

“In the event that there shall be any claim, controversy or dispute arising with respect to this contract or the interpretation or breach thereof between AFTRA and the Company, or between a staff announcer and the Company, AFTRA and the Company agree promptly and in good faith to attempt to settle such dispute amicably. In the event that they are unable to do so, any such claim, controversy or dispute shall be settled by arbitration in accordance with the industrial arbitration rules then obtaining of the American Arbitration Association ***.”

On August 8, 1978, a group of former employees of plaintiff filed suit in a Wisconsin State court to recover money allegedly due them under the terms of the 1968 collective bargaining agreement. All of the claims involved arose between 1969 and 1976 while the individual claimants were employed by plaintiff and the collective bargaining agreement of 1968 remained in full force and effect.

Plaintiff removed the suit to the United States District Court for the Eastern District of Wisconsin on October 10, 1978. The suit was dismissed on the stipulation that the claims:

“*** shall be submitted to arbitration in accordance with the terms and conditions of the Collective Bargaining Agreement executed on July 22, 1968, it being expressly agreed by all the parties that [Consolidated] does not and will not waive its procedural defenses to such arbitration proceedings including untimeliness ***.”

The former employees attempted to arbitrate individually with plaintiff. When plaintiff refused to arbitrate, the employees returned to Federal court in an attempt to reopen the proceedings. On February 4, 1980, the court refused, holding:

“The Collective Bargaining Agreement only requires [Consolidated] to arbitrate with [AFTRA]. The stipulation also expressly reserves [Consolidated’s] right to raise procedural defenses to the arbitration proceedings. This implies that the parties were aware of the possibility that arbitration might not actually take place if [Consolidated] were to raise a legitimate procedural defense. [Consolidated’s] refusal to arbitrate was based on such a defense and [ex-employees] cannot be heard to claim surprise.”

In August 1980, defendant, AFTRA, initiated arbitration proceedings before the American Arbitration Association in Chicago, Illinois, on behalf of the former employees. On October 22, 1980, plaintiff filed an action in the trial court seeking an order staying arbitration. The circuit court of Cook County ordered plaintiff to participate in the arbitration proceedings. Plaintiff appeals.

I

Plaintiff first contends and defendant agrees that it is the function of the court rather than an arbitrator to determine whether an agreement to arbitrate exists when that issue is in genuine dispute. This is a well-established principle of law. United Steel Workers of America v. American Manufacturing Co. (1960), 363 U.S. 564, 4 L. Ed. 2d 1403, 80 S. Ct. 1343; Atkinson v. Sinclair Refining Co. (1962), 370 U.S. 238, 8 L. Ed. 2d 462, 82 S. Ct. 1318; Croom v. City of De Kalb (1979), 71 Ill. App. 3d 370, 389 N.E.2d 647.

Further, the Illinois Uniform Arbitration Act specifically provides in section 2(a):

“On application of a party showing an agreement described in section 1, and the opposing party’s refusal to arbitrate, the court shall order the parties to proceed with arbitration, but if the opposing party denies the existence of the agreement to arbitrate, the court shall proceed summarily to the determination of the issue so raised and shall order arbitration if found for the moving party, otherwise, the application shall be denied.” Ill. Rev. Stat. 1979, ch. 10, par. 102(a).

In the case at bar, the trial court clearly found that the parties had agreed to arbitrate, stating:

“There is no question in my mind that there was an agreement to arbitrate. The question is how long did the agreement last, whether or not they’re bound by laches by delay in filing this action, and whether or not the Union is a necessary party.”

Our review of the record establishes that this decision was well supported by the evidence before the court — the arbitration clause in the collective bargaining agreement, as well as the stipulation of the parties upon the dismissal of the cause from Federal court in 1978. Since the union, AFTRA, initiated arbitration in the instant matter, the issue as to whether the union is a necessary party is moot. The remaining issue, whether defendant is barred by laches, is a procedural question.

The United States Supreme Court addressed the issue of procedural questions arising in the context of arbitration disputes in John Wiley & Sons, Inc. v. Livingston (1964), 376 U.S. 543, 11 L. Ed. 2d 898, 84 S. Ct. 909. Noting the vital role of arbitration in effectuating national labor policy, the court stated that once it had been decided that the parties were obligated to arbitrate the subject matter of a dispute, procedural matters bearing upon the final disposition of that dispute should be left to the arbitrator. (376 U.S. 543, 557, 11 L. Ed. 2d 898, 909, 84 S. Ct. 909, 918.) Although plaintiff seeks to limit Wiley to its facts, a review of case law shows that courts have applied the rule of Wiley to a variety of factual situations involving procedural questions. (See, e.g., Amalgamated Meat Cutters, Local 405 v. Tennessee Dressed Beef Co. (6th Cir. 1970), 428 F.2d 797 (necessity of complying with preliminary grievance procedures prior to arbitration); Bealmer v. Texaco, Inc. (9th Cir. 1970), 427 F.2d 885, cert. denied (1970), 400 U.S. 926, 27 L. Ed. 2d 185, 91 S. Ct. 187 (dispute over proper formula to calculate back-pay due wrongfully discharged employees); Local Lodge 595, Machinists v. Howe Sound Co. (3d Cir. 1965), 350 F.2d 508 (necessity of following grievance procedure following plant closing); Trailways of New England, Inc. v. Motor Coach Employees Division 1318 (1st Cir. 1965), 343 F.2d 815, cert. denied (1965), 382 U.S. 879, 15 L. Ed. 2d 120, 86 S. Ct. 164 (necessity of arbitrating grievances of discharged strikers).) Therefore, we believe the question of whether defendant is barred from arbitration by laches is a procedural question to be resolved by the arbitrator.

Further, in Operating Engineers, Local 150 v. Flair Builders, Inc. (1972), 406 U.S. 487, 32 L. Ed. 2d 248, 92 S. Ct. 1710, the court held that whether a union grievance is barred by laches is a question for the arbitrator on the grounds that the arbitration agreement involved required arbitration of “any difference.” (406 U.S. 487, 491, 32 L. Ed. 2d 248, 252, 92 S. Ct. 1710, 1712.) The court stated that this phraseology encompassed the issue of laches within its broad sweep.

Illinois courts look to the United States Supreme Court for guidance in matters involving labor-management disputes. (Croom v. City of De Kalb (1979), 71 Ill. App. 3d 370, 374, 389 N.E.2d 647, 651.) In the instant matter, the parties agreed to arbitrate “any claim, controversy or dispute.” As in Operating Engineers Local 150 v. Flair Builders, Inc., we believe this language encompasses the issue of laches.

II

Plaintiff next contends that because the defendant did not seek arbitration until 1980, the collective bargaining agreement in effect from 1968 through 1977 was no longer controlling. However, in Nolde Brothers, Inc. v. Local No. 358, Bakery & Confectionary Workers Union (1977), 430 U.S. 243, 51 L. Ed. 2d 300, 97 S. Ct. 1067, the plaintiff also argued without success that the duty to arbitrate, being strictly a creature of contract, expired with the termination of the contract that brought it into existence. The court held that disputes arising under the terms of a collective bargaining agreement remained arbitrable, even though the agreement itself had expired. Plaintiff correctly points out that the court in Nolde declined to determine the arbitrability of claims not voiced within a reasonable time after the expiration of the contract. (430 U.S. 243, 255 n.8, 51 L. Ed. 2d 300, 311 n.8, 97 S. Ct. 1067, 1074 n.8.) However, what constitutes a reasonable time is, in our opinion, best decided by the arbitrator.

III

Plaintiff’s third contention is that the American Arbitration Association is not authorized to exercise jurisdiction over the parties. However, the arbitration agreement executed in 1968 provides:

“[A]ny such claim, controversy or dispute shall be settled by arbitration in accordance with the industrial arbitration rules then obtaining of the American Arbitration Association ***.”

Rule 3 specifically provides:

“When parties agree to arbitrate under these Rules and arbitration is instituted thereunder, they thereby authorize the A.A.A. to administer the arbitration.” (American Arbitration Association Voluntary Labor Arbitration Rules, at 2 (as amended and in effect February 1, 1965).)

Therefore, we find plaintiff’s contention to be without merit.

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

Affirmed.

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