author: PRESIDING JUSTICE JOHNSON

text:
    THE PEOPLE OF THE STATE OF ILLINOIS, Plaintiff-Appellee, v. JOSEPH FUELNER, Defendant-Appellant.
    First District (4th Division)
    No. 80-705
    Opinion filed February 4, 1982.

      Ralph Ruebner, Steven Clark, and Phillip J. Zisook, all of State Appellate Defender’s Office, of Chicago, for appellant.
    Richard M. Daley, State’s Attorney, of Chicago (Michael E. Shabat, Joel A. Stein, and Raymond F. Brogan, Assistant State’s Attorneys, of counsel), for the People.
   PRESIDING JUSTICE JOHNSON

delivered the opinion of the court:

Defendant, Joseph Fuelner, was charged by information with kidnaping, aggravated kidnaping, rape, and armed violence (Ill. Rev. Stat. 1977, eh. 38, pars. 10 — 1,10—2,11—1, 33A — 2). The jury found defendant not guilty of kidnaping and aggravating kidnaping, and guilty of rape and armed violence. Defendant was sentenced to two concurrent 30-year prison terms. He appeals.

The following issues are presented for review: (1) whether defendant was proved guilty beyond a reasonable doubt; (2) whether the trial court erred in allowing the State’s witnesses to testify regarding their conversations with the complaining witness; (3) whether the trial court erred when it admitted testimony regarding the complainant’s suicide attempt and 5-week hospitalization in a psychiatric ward; (4) whether the prosecutor’s closing argument was prejudicial; (5) whether defendant received effective assistance of counsel; and (6) whether the trial court erred in entering judgments of conviction and imposing separate sentences for both rape and armed violence.

We reverse and remand for a new trial.

The complainant’s testimony at trial included the following.

On June 4,1979, the complaining witness was 20 years old. She lived with her 16-year-old sister, Sandra, in an apartment at Cicero and Laramie in Cicero, Illinois. The complainant worked as a bartender and bookkeeper at the His and Mine lounge, also located at Cicero and Laramie. She had also tended bar for 2 days at the Eros tavern within the week of June 4,1979.

The complaining witness stated that she had promised to drive Sandra to a boyfriend’s house on the evening of June 4, 1979. She did not own a car and planned to borrow one from her employer. Shortly after 9:30 that evening, the complainant went to the Eros tavern located around the corner from her apartment. The bartender on duty was a woman named Chris. Joseph Fuelner, the defendant, was in the bar with a group of people. The complainant knew that defendant’s name was Joe and that he was a trucker. She had seen him on two previous occasions: once in the Eros bar and once when he was coming out of that bar. On this occasion, June 4, she talked with defendant, who offered to buy her a drink, but she declined. Complainant stated that she was in the bar for about 40 minutes, leaving around 10:30 p.m. Defendant had left the bar about 5 minutes prior to her leaving.

After leaving the bar, the complaining witness began crossing an empty lot. When she had reached the middle of the lot, she turned around and saw defendant holding a gun. He took her by the arm, thereafter placing the gun in his pocket, and they proceeded to Laramie Street, a distance of 15 to 20 feet. He told her to get into a car — an old white Lincoln Continental with a rear view mirror on the dashboard. Defendant walked around the back of the car and entered on the driver’s side. The complainant did not see the gun again until they were both in the car. Defendant drove south on Laramie and stopped at a gas station. He warned the complainant that his friend owned the station and that she should not “do anything stupid.” Defendant got out of the car, laughed and talked with the attendant, and put gas in the car.

After driving away from the station, defendant repeatedly hit complainant lightly on the shoulder with the gun. He talked about his friends as he drove for 40 or 45 minutes. Defendant drove into an area where the complainant saw only trees and water at the sides of two hills. He told her not to move; he then got out of the car, leaving for 2 minutes. Defendant returned to the car and then drove farther on. The complainant asked defendant why he displayed the gun. He said he was going to rape her. Eventually, defendant put the gun away but brought out a knife with a 9-or 10-inch blade. Defendant repeatedly threatened complainant and told her that he had a friend working for the Secretary of State who would “get him out of anything.” He also warned her that if she complained he would rape her sister and then he would kill the complainant, for he did not want her to die until she knew that, because of her, her sister had been raped.

When the complainant told defendant that she needed air, he let her out of the car but held onto her left wrist. They walked to the top of the hill and then back to the car. Then, defendant threw complainant onto the car hood, hit her in the back of her head, and pulled down her pants. He touched her vagina and thereafter ordered her to go to the back of the car. Defendant opened the car trunk and removed a blanket and a jar of Vaseline. He then took the knife out of the car and placed the blanket on the ground behind the car. The complaining witness was told to lie down on the blanket on her back. Defendant put the knife on the ground and partially removed her lower garments. Thereafter, defendant returned to the car, knelt down and put on a condom. He then raped complainant. He took off the condom and threw it toward the nearby canal.

Defendant resumed talking to the complaining witness, saying that he was sorry, that he did not know what made him rape her, and that he had never done “anything like that.” He said he would make it up to the complainant; he would teach her how to drive a truck. While complainant adjusted her clothing, defendant put the blanket and the Vaseline back in the car trunk and picked up the knife. They entered the car and drove from the scene. Moments later, defendant stopped the car, wiped off the knife and gun with a towel, and emptied the gun. He exited the car, threw the knife toward the canal and then threw the gun away, returned to the car, and drove off. He offered to drive the complaining witness home, but she asked to be let out at a nearby gas station.

At the gas station, while complainant was pacing back and forth, trying to decide whom she would telephone, a man drove up and asked her what was wrong. The complainant did not know the man and said nothing. Her hand was bleeding. The man said he would call the police but the complainant told him not to call. The man drove complainant to within four blocks of her apartment. Once in the apartment, she found a note from her sister, Sandra. At about 1 or 1:30 a.m., the complainant called Sandra and said that she was sorry she had not kept her promise to come back for her. When her sister asked the complainant whether she was alright, the complainant responded that she had been attacked, almost raped, but that she was fine. Sandra inquired as to whether she had called the police; complainant responded that she was not going to call the police.

The complaining witness made another telephone call to Mickey, the sister of Sandra’s boyfriend. The complainant wanted Mickey to allow Sandra to stay that night in her home. Complainant then sat down on her bed, fully clothed, and went to sleep.

The next morning, June 5, 1979, the complaining witness was awakened by her older sister, Debbie. The complainant babysat for Debbie from about 9 a.m. to 4 p.m. that day. The complainant then returned to her apartment. At about 10:10 that evening, the complainant revealed to her younger sister, Sandra, that she had been raped rather than attacked, and that she did not want to go to a doctor because the doctor would then have to involve the police. At approximately 10:30 p.m., the complainant talked with Debbie and told her that she could not see Debbie’s son, Bobby, anymore because she (complainant) was “dirty.” Debbie sent a cab to pick up the complaining witness. Some time later, complainant told Debbie that she had been attacked. The complainant did not want to go to the police because her attacker had threatened that her younger sister would be raped if she contacted the police. At about 2 a.m., June 6, the alleged rape was reported to the Cicero police.

At 9 a.m., June 6, the complainant returned to the police station to give a description of her assailant, in order that the composite sketch might be drawn of the attacker, and to attempt to locate the area where the rape incident occurred. On June 8, the complaining witness visited a physician who gave her a pelvic examination and prescriptions for antibiotics, valium and sleeping pills.

On June 12, 1979, the complainant was staying with an aunt. The telephone rang and complainant answered, but there was no response. Over defense objection, the complainant testified that she called the police and told them that she had been raped and that she thought the man who attacked her was in the house. She ran into the street, hysterical. That evening the complainant swallowed all of the sleeping pills and valium. Over defense objection, the complaining witness stated that she told her aunt that she was .tired of living, that she could no longer stand jumping at shadows, that she could not walk to the store, and that she was paranoid. The complainant was taken to the hospital and was later transferred to the psychiatric ward of another hospital.

During her hospital stay, the complainant told her father that her assailant’s name was Joe and that he was a truck driver. She had not told this to the police because of a fear of retaliation. In a photographic lineup on June 21, 1979, the complainant identified Joseph Fuelner as the man who raped her. At trial, complainant identified photographs of defendant’s car and the area where she was raped; she also identified the knife allegedly possessed by defendant at the time of the alleged rape.

On cross-examination, the complaining witness stated that on the evening of the incident, defendant’s car was parked less than a block from the Eros bar. She further stated that when she first entered defendant’s car she made no attempt to get out when defendant walked around to the other side; that during the 40 minutes in which defendant drove, she made no attempt to get out of the car; and that when defendant stopped the car on a dirt road about % to 1 city block away from a truck terminal, she made no attempt to flee. When defendant left the car for 2 minutes, the complainant made no attempt to escape. While defendant was driving, he kept the gun in his lap and would pick it up from time to time. The complainant said that she did not go back to the Eros that night nor did she discuss the incident with Christine McGuffey, the bartender at the Eros. The defense attorney also cross-examined the complainant concerning her suicide attempt and subsequent 5-week hospitalization.

The complainant’s younger sister, Sandra, testified for the State. She stated that on June 4,1979, the complaining witness intended to borrow a car to drive her to her boyfriend’s house. When complainant did not return home, Sandra’s boyfriend picked her up. Sandra left a note for her sister. In a telephone conversation with the complainant at 1 a.m., Sandra was told by the complainant that she was unable to borrow the car; that she had been attacked, but she was okay; that the incident took place near a canal; and that she had been saved by a man. According to Sandra, the complainant sounded quiet and withdrawn. At about 6 p.m. on June 5, the complainant revealed to Sandra that she actually had been raped. At that time, complainant seemed somewhat incoherent.

The complainant’s older sister, Debbie, testified that on the morning of June 5, 1979, she drove to the complaining witness’ apartment to pick her up. She found her sister sleeping, fully dressed. The complainant awakened and said that she had been attacked the night before but refused to go to a doctor and seemed to be in shock. Debbie drove complainant to her house. Complainant stayed there until Debbie returned around 3:40 p.m. and drove the complainant back to her apartment.

At about 10:15 that evening, the complainant called Debbie, telling her that she (complainant) had to go away. Debbie arranged for a cab to bring complainant to her house. The complainant began shaking and said, “Don’t touch me. I’m dirty.” An hour later, the complainant told Debbie that she had been raped. The complainant became hysterical, claiming she did not want to tell the police about the rape because the rapist would kill Sandra. Debbie went to her job where her employer called the Berwyn police who referred them to the Cicero police. Complainant did not tell the Cicero police what had happened to her, but Debbie told them what her sister claimed had happened. Debbie and the complaining witness returned to the police station about 9 a.m. on June 6, 1979.

Joseph Bax of the Cicero police department testified that on June 6, 1979, at approximately 3:30 a.m., he received a message to go to the station to see a complainant. Bax met with complainant and her sister. The complainant stated that she had been raped. She was very disturbed, crying and shaking, but refused medical assistance.

Complainant’s father, Joseph, a police officer for the Secretary of State, testified on behalf of the State. Over defense objection, he testified that on June 16 or 17, 1979, his daughter, Debbie, telephoned him saying that the complaining witness had been attacked and raped. On the next day, Joseph went to the hospital and talked with complainant for a few hours. She was upset, crying, and appeared frightened. Complainant told him that the man who attacked her would kill her and her sister, Sandra, if she mentioned the rape to anyone. Joseph assured his daughter that he would protect her and asked for a description of the offender. The defense objection to this conversation was overruled, but the court stated it would sustain any objection relative to any inquiry as to the details of the rape. According to Joseph, the complainant said that the offender’s name was Joe, that he was a truck driver who drove a green and white truck, that he drove a 1964 or 1965 Lincoln Continental automobile, and that the rape occurred around 71st and Harlem Avenue. The witness stated that while conducting an investigation, he located a trucking company at 71st and Harlem that had green and white tractors. He later found a 1965 Lincoln Continental parked on the premises of the trucking company. After running a check on the license plate, he learned the car was registered to Joseph Fuelner.

Robert Biziarek, a Cicero police detective, was the next witness for the State. He testified that on June 21,1979, he showed seven photographs to the complaining witness. The parties stipulated that complainant identified the defendant as the person who raped her on June 4. Over defense objection, Biziarek stated that after showing her the photographs, complainant began crying and shaking and then ran from the room.

Lawrence Cipowski, an investigator for the Secretary of State, testified that on June 27,1979, he discovered a knife in a heavily wooded and brushed area during a “shoulder to shoulder search.” On the previous day, another officer had discovered a prophylactic device in the area nearby.

Testimony by Albert Romito, an evidence technician, and Joseph Mortimer, a latent print examiner, established that a fingerprint of the complainant was recovered from the rear view mirror of defendant’s car.

Dennis Maziecka, a physician, testified that on June 8, 1979, he met the complaining witness at his office. Over defense objection, he stated that complainant’s mother said that her daughter was raped on June 4, 1979. Maziecka gave complainant a general and vaginal examination. She seemed nervous and complained of insomnia. He prescribed valium, sleeping pills and penicillin.

Paul Suits was the first defense witness. He stated that he had known defendant for 2 years and the complaining witness for 1 year. On June 4, 1979, Suits saw defendant and complainant sitting together at the Eros bar around 10 p.m. Shortly afterwards, they left together. He saw them again after midnight when they returned to the Eros, sat down and had a drink. When Suits left 30 minutes later, defendant and complainant were still there.

The next defense witnesses were Robert Braun, Sr., James Jarocki, Robert Braun, Jr., Robert Lozau, Robert Kaczmarek, John LaRocco, Larry Howell and Donald Gary. They are truck drivers who worked for Arlington Trucking where defendant was employed. They had known defendant for several years and had met complainant when she was with defendant. ,

Braun, Sr., Braun, Jr., LaRocco and Howell all testified that they saw defendant and complainant together at the Arlington garage in mid-May 1979 and at a “hill climb” on June 1, 1979.

On June 1, 1979, Braun, Sr., first saw defendant and complainant around 6:30 that evening. Jarocki and Lozau saw defendant and complainant together only once in the middle of May 1979 at the Arlington garage.

Robert Kaczmerak met the complaining witness at the end of April or beginning of May 1979 at the Eros lounge. He was introduced to her by a friend. He saw complainant with defendant in a tavern in May, and at the Arlington garage and at the “hill climb” around the first of June. On cross-examination, Kaczmerak said that the “hill climb” took place on the second weekend in May.

LaRocco first met complainant at the Eros tavern in the middle of April 1979. He saw her two or three times thereafter in the Eros with defendant and another person.

Gary testified that he saw complainant and defendant together at the Eros lounge sometime in late May or early June. Complainant was in the bar when Gary and defendant arrived. When defendant began talking to complainant, she moved next to him. After an hour, Gary, defendant and complainant went in Gary’s car to the location of the “hill climb.” They remained there, drinking beer, for about 30 minutes. Gary drove defendant and complainant back to defendant’s car.

Theodore Isaac, a construction worker, stated that he had met defendant and complaining witness in the Eros lounge. On June 4, 1979, he saw both of them in the lounge. Isaac arrived at about 4:30 p.m., defendant arrived about 5:30 p.m., and complainant arrived at approximately 10 p.m. When complainant entered, she sat down next to defendant who bought her a drink. Defendant borrowed $5 from Isaac for gas and left with complainant at 10:30 or 10:45 p.m. He saw them together later that evening, around 12:30 a.m. They came back to the lounge together and sat together, each consuming a couple of drinks. When Isaac left at 1 a.m., complainant and defendant were still in the lounge.

Christine McGuffey, a bartender at the Eros, knew defendant as a customer and knew complainant as a co-worker and customer. On June 4, 1979, McGuffey saw defendant arrive around 5:30 p.m. and saw complainant arrive around 10 or 10:30 p.m. Complainant sat down next to defendant who paid for her drink. They left together around 10:30 or 10:45 p.m. and returned together about midnight and ordered drinks. Complainant asked McGuffey to accompany her to the restroom where complainant said that someone had tried to rape her at gunpoint; that she talked her attacker into putting the gun away, but then he pulled out a knife; that nothing happened and she got away; and that the incident occurred at the Berwyn theater. Complainant returned to the seat next to defendant. She seemed normal. When McGuffey left at 1 a.m., complainant and defendant were still in the lounge.

The State called several rebuttal witnesses. Bruce Kilborne, a neighbor, stated that about 6 p.m. on a Friday in late May or early June, complainant asked to borrow a suitcase for a weekend trip to Wisconsin. Complainant’s mother testified that on Friday, June 1, 1979, at approximately 7 p.m., she received a telephone call from her daughter, the complainant, who said that she was going to Wisconsin for the weekend. Philip Delarosa picked up complainant about 9:30 p.m. on June 1 for the trip to Wisconsin. Cathy Hannigan saw complainant about 10 p.m. on June 1 at her home in Oak Park prior to leaving for Wisconsin.

The complaining witness was recalled and corroborated the testimony concerning her trip to Wisconsin. She denied going to Arlington Trucking Company on a Friday in mid-May with defendant and stated that she did not go to the area where the rape occurred on June 1,1979, as alleged by defense witnesses. The State rested its case in rebuttal and then the defense rested. The jury found defendant not guilty of kidnaping and aggravated kidnaping and guilty of rape and armed violence. Defendant was sentenced to two concurrent 30-year terms.

Defendant complains that the trial court erred in allowing the State’s witnesses to testify regarding their conversations with complainant. Sandra, complainant’s younger sister, testified that at about 1 a.m. on June 5, 1979, complainant said that she had been attacked. Later that day, at about 6 p.m., complainant said that she had been raped. Debbie, complainant’s older sister, testified that when she woke complainant on the morning of June 5, complainant said she had been attacked. Later, at around midnight, complainant told Debbie she had been raped. Officer Bax of the Cicero police department testified that in the early morning hours of June 6, complainant said that she had been raped. Complainant’s father stated that on June 16 or 17, his daughter, Debbie, told him complainant revealed that she had been raped. Upon visiting complainant in the hospital, complainant herself told him that her assailant had threatened her, that his name was Joe, that he drove a green and white truck and a 1964 or 1965 Lincoln Continental automobile, and that the incident occurred around 71st and Harlem Avenue. Maziecka, a physician, testified that complainant’s mother told him her daughter had been raped on June 4.

Defendant contends that all of these preceding statements were inadmissible hearsay. The State contends the testimony of the victim’s sisters was admissible either as spontaneous exclamations of the victim or as corroborative statements of the victim, and their testimony was not offered to prove the truth of the matter but to show the victim’s emotional state and her disorientation resulting from the alleged rape, and to show why the victim hesitated naming her attacker. According to the State, the statements by the complainant’s father were admissible to explain subsequent actions of the police in their investigations, and the physician’s statement was admissible for purposes of medical treatment. Finally, the State argues that defendant waived any claim of error by failing to object to most of the statements at trial.

Statements by a rape victim have been admitted where they came within either the spontaneous declaration or corroborative statement exceptions to the hearsay rule. (People v. Damen (1963), 28 Ill. 2d 464, 193 N.E.2d 25.) The rationale of the spontaneous declaration exception is that the “ ‘utterance is made under the immediate and uncontrolled domination of the senses, rather than reason and reflection, and during the brief period when consideration of self-interest could not have been fully brought to bear, the utterance may be taken as expressing the real belief of the speaker as to the facts just observed by him.’ ” (People v. Damen (1963), 28 Ill. 2d 464, 471.) Three factors are necessary to bring a statement within the spontaneous declaration exception: (1) an occurrence sufficiently startling to produce a spontaneous and unreflecting statement; (2) absence of time to fabricate; and (3) the statement must relate to the circumstances of the occurrence. (People v. Damen (1963), 28 Ill. 2d 464, 471.) We hold that in the case at bar the statements of the complainant’s sisters do not come within the spontaneous declaration exception because complainant had time to fabricate.

The basis for the corroborative statement exception is that it is entirely natural that a rape victim would have spoken out regarding the rape, and the fact that she did not do so would be evidence of the fact that nothing occurred. (People v. Damen (1963), 28 Ill. 2d 464, 472.) Consequently, if proof of a complaint was not permitted, the trier of fact might assume that no complaint was made. To forestall this assumption, the prosecution is allowed to show that the alleged victim was not silent but made a complaint. (People v. Damen (1963), 28 Ill. 2d 464, 472.) The complaint must be promptly made, although there is no fixed or definite time limit, and the complaint must be made without inconsistent or unexplained delay. (People v. Damen (1963), 28 Ill. 2d 464, 473.) Delays have been viewed as consistent or explained where, during the delay, the complainants were incoherent, fearful, hysterical and/or emotional and, when they found a place or person lending them security, they made the charge as an outpouring of injury. (People v. Houck (1977), 50 Ill. App. 3d 274, 285, 365 N.E.2d 576, 584.) The complaint must be spontaneous and not made as a result of a series of questions to which answers were given. (People v. Damen (1963), 28 Ill. 2d 464, 473.) Only the fact of the complaint and not the details may be adfriitted, and the complainant must be a witness in the proceeding in which the statement is introduced. {People v. Damen (1963), 28 Ill. 2d 464, 473.) It is unnecessary to show details because the fact of the making of the complaint is sufficient to negate the presumption arising from silence. People v. Damen (1963), 28 Ill. 2d 464, 473.

We hold that in the instant case the statements complained of do not meet the criteria of the corroborative statement exception. The victim did not make her complaint as soon as practicable. When the victim returned to her apartment she telephoned her younger sister and told her that she had been attacked but not raped. She made another telephone call that evening, and in the morning she told her older sister that she had been attacked, not raped. 'It was not until the evening of the day after the incident that the complaining witness revealed that she had been raped. This is not the type of delay for which Illinois courts have found statements admissible under the corroborative statement exception. See People v. Secret (1978), 72 Ill. 2d 371, 381 N.E.2d 285; People v. Hood (1974), 59 Ill. 2d 315, 319 N.E.2d 802; People v. Slavin (1978), 66 Ill. App. 3d 525, 383 N.E.2d 1303; People v. Houck (1977), 50 Ill. App. 3d 274, 365 N.E.2d 576; People v. Bush (1973), 11 Ill. App. 3d 31, 295 N.E.2d 548.

The State contends that complainant’s statements to her father were admissible to explain subsequent police action. This argument has no merit, and the case cited by the State is not in point. In People v. Egan (1978), 65 Ill. App. 3d 501, 382 N.E.2d 477, a police officer testified that during the course of his investigation the defendant’s mother said that the defendant was not at home. The testimony was admitted to show how the officer conducted his investigation rather than for the truth of the matter asserted. The testimony reflected an investigatory procedure entirely within the officer’s personal knowledge and its admission was proper. People v. Egan (1978), 65 Ill. App. 3d 501, 511.

In the instant case, the complaining witness talked with her father because he was her parent and not because he was a police officer. The statements to her father were prior consistent statements which bolstered her testimony. As a general rule, it is error to allow a witness’ testimony to be corroborated or bolstered by introducing a prior out-of-court statement of similar import, thus implying that the witness’ court testimony is true because he told the same story on a previous occasion when he had no ulterior motive to do so. (People v. Tidwell (1980), 88 Ill. App. 3d 808, 810, 410 N.E.2d 1163, 1165.) There are two exceptions to this general rule. A prior consistent statement may be admitted to refute the charge that the in-court testimony is a recent fabrication, or, if it is contended that the witness has a positive motive to testify falsely, the statement may be introduced to show that the witness told the same story when no motive existed or could have been foreseen. (People v. Tidwell (1980), 88 Ill. App. 3d 808, 810-11.) The two exceptions do not apply in this case, because the prior consistent statements were introduced on direct examination. Therefore, the testimony of the victim’s father repeating their conversation was inadmissible hearsay.

The State also argues that the physician’s testimony was admissible because it was a statement adopted by the victim to her physician for purposes of medical treatment. The complainant’s mother had told the physician that her daughter had been raped. Statements of presently existing bodily condition made by a patient to a doctor consulted for treatment are almost universally admitted as evidence of the facts stated. (People v. Gant (1974), 58 Ill. 2d 178, 186, 317 N.E.2d 564, 569.) This exception may be taken one step further to encompass statements made to a physician concerning the cause or the external source of the condition to be treated. (People v. Gant (1974), 58 Ill. 2d 178, 186.) But, here, the physician’s statement does not fall within the exception because it was not made by the victim, but by the victim’s mother. We hold, therefore, that the physician’s statement was inadmissible hearsay.

Another issue raised by defendant is that testimony regarding complainant’s suicide attempt and her 5-week hospitalization in a psychiatric ward was irrelevant, unduly prejudicial and denied him a fair trial. The testimony was elicited from complainant, her father, and the treating physician. In People v. Gillman (1980), 91 Ill. App. 3d 53,414 N.E.2d 240, the defendant was convicted of contributing to the sexual delinquency of a minor. At trial, the prosecution elicited testimony that the victim had undergone psychiatric treatment. The appellate court reversed, holding that the testimony was irrelevant to the issue of the defendant’s guilt or innocence of the charge and tended to prejudice the defendant and confuse the jury. (People v. Gillman (1980), 91 Ill. App. 3d 53, 60.) In our opinion, the testimony on the suicide attempt and 5-week hospitalization was irrelevant to defendant’s guilt or innocence of the crime of rape and prejudiced the jury against defendant.

The State argues that defendant has waived these issues involving inadmissible and prejudicial evidence by failing to object at trial. However, the waiver rule is not absolute. (People v. Jackson (1981), 84 Ill. 2d 350, 359, 418 N.E.2d 739, 743.) Even in the absence of objection, substantial error may be considered if the error was so seriously prejudicial as to prevent the defendant from receiving a fair trial. (People v. Jackson (1981), 84 Ill. 2d 350, 359.) Before plain error can be considered as a means of circumventing the general waiver rule, it must be plainly apparent from the record that an error affecting substantial rights was committed. (People v. Jackson (1981), 84 Ill. 2d 350, 359.) Where the evidence is closely balanced, a court may consider errors that have not been properly preserved for review. People v. Jackson (1981), 84 Ill. 2d 350, 360.

We regard the evidence in this case as closely balanced. The complaining witness testified that on the night of the incident she left the lounge after defendant did, but three witnesses for the defense testified that she left with the defendant and returned with him a few hours later. Apparently the jury did not believe complainant had been abducted at gunpoint, because they found defendant not guilty of kidnaping and aggravated kidnaping. Complainant identified the knife with which defendant threatened her, and her fingerprint was found in his car. But defense witnesses testified that defendant and complainant had been social companions and had been seen in the area where the alleged rape occurred some days and weeks prior to the incident. There was no medical evidence of a rape, and the complaint was made more than 24 hours after the incident. Initially, complainant stated that she had been attacked rather than raped. There were no witnesses to the offense, and the improper bolstering of the complaining witness’ testimony so prejudiced the defendant before the jury as to deprive him of his right to a fair trial. People v. Buckley (1976), 43 Ill. App. 3d 53, 56, 356 N.E.2d 1113, 1115.

Accordingly, we hold that the conviction here must be reversed and the case remanded for a new trial in view of the cumulative errors. Because we reverse defendant’s conviction and remand for a new trial, we need not consider the other issues raised by defendant.

Reversed and remanded.

LINN and JIGANTI, JJ., concur.


source: Caselaw Access Project

author: JUSTICE LINN

license: Public Domain

text:
    ALEXANDRA HAMILTON et al., Plaintiffs-Appellants, v. SAFEWAY INSURANCE COMPANY, Defendants-Appellees.
    First District (4th Division)
    No. 80-2739
    Opinion filed February 4, 1982.
    Ronald S. Fishman, of Chicago, for appellants.
    Michael J. O’Halloran, of Parrillo, Weiss & Moss, of Chicago, for appellees.
   JUSTICE LINN

delivered the opinion of the court:

Plaintiffs appeal from the dismissal of count III, the class action count, of their three-count complaint filed March 14,1980, in the chancery division of the circuit court of Cook County. In count I, plaintiffs Alexandra Hamilton, her two-year-old son Alfredo, and Refugia Gabaldon alleged that they were involved in an automobile accident with an uninsured motorist. The automobile they occupied was insured by the defendant, Safeway Insurance Company. The plaintiffs complained that Safeway refused to proceed to arbitration as required by the uninsured motorist provision of the insurance policy issued by it. In count II, plaintiffs Charles Fisher and his 11-year-old daughter Gia alleged that they too were insured by defendant Safeway, which had refused arbitration after their automobile accident involving an uninsured motorist. Plaintiffs Hamilton and Fisher both requested an order requiring Safeway to proceed into arbitration and to pay all costs, attorney’s fees, and arbitrator’s fees incurred.

In count III, all five plaintiffs in counts I and II, individually and as a class for all other persons similarly situated (people entitled to uninsured motorist or hit-and-run benefits under insurance policies issued by Safeway), alleged that they had been damaged by Safeway’s having done the following: refused to settle or arbitrate claims; engaged in dilatory tactics which required plaintiffs, even those with small claims, to submit to unnecessary medical examinations and to give unnecessary oral statements or depositions; engaged in “annoying, expensive and delaying procedures” to make settlement of plaintiffs’ uninsured motorist or hit-and-run claims extremely difficult; and generally ignored claims submitted to “make it as difficult as possible for claimants * * * to settle or collect anything.”

The plaintiffs alleged that “the numbers of the class are entirely unknown and it is therefore impractical to bring all persons before this Court”; that questions of law or fact exist which are common to the class and the plaintiffs’ claims are typical; and that the plaintiffs will fairly and adequately protect the interest of the class. Plaintiffs requested an order enjoining defendant to end the alleged violations; appointment of a receiver to take over Safeway; and an order of liquidation or rehabilitation of Safeway.

Plaintiffs listed 13 alleged activities of Safeway which are improper claims practices under the Insurance Code of Illinois (Ill. Rev. Stat. 1979, ch. 73, par. 766 et seq.). Safeway filed its motion to dismiss all three counts. The trial court denied defendant’s motion to dismiss counts I and II. It denied the motion to dismiss count III without prejudice, stating, “It should more properly be heard when there is a motion to certify the class.”

Shortly thereafter, plaintiffs filed their motion for certification of a class. Safeway’s response asserted that Highsmith v. Allstate Insurance Co. (1974), 17 Ill. App. 3d 615, 308 N.E.2d 204, which found that uninsured motorist claimants did not constitute a bona fide class, was dispositive of the issue. Highsmith denied class certification because it found that the facts of the claims would differ from case to case. Safeway listed several factual differences between the Hamilton and Fisher claims. Safeway asserted that certification of a class in this matter would create a lawsuit of “preposterous complexity” covering the multiple issues of policy construction, the nature of liability and damages, and proof of the absence of insurance coverage.

Thereupon, the trial court denied plaintiffs’ motion to certify the proposed class under count III and dismissed count III with prejudice. Based on the pleadings, motions, and memoranda on file and on oral arguments of counsel, the trial court found that although the plaintiffs’ claims satisfied one statutory prerequisite for maintenance of a class action, numerosity (Ill. Rev. Stat. 1979, ch. 110, par. 57.2(a)(1)), plaintiffs failed to satisfy the other requirements of the statute, which are that common questions predominate, class interests will be protected, and a class action is an appropriate method for adjudication (Ill. Rev. Stat. 1979, ch. 110, par. 57.2(a)(2), (3), (4)). Accordingly, counts I and II were severed from count III and transferred to the law division of the circuit court. Plaintiffs appeal the order dismissing count III and denying class certification.

Opinion

There is no indication in the record that the trial court considered the validity of the cause of action stated in count III independently of the question whether a class action would be an appropriate vehicle for asserting it. Safeway’s motion to dismiss the count was based exclusively on its contention that the proposed class of insureds was not certifiable under Highsmith v. Allstate Insurance Co. (1974), 17 Ill. App. 3d 615, 308 N.E.2d 204, and that the count was thus “substantially insufficient in law and equity.” The trial court’s order indicating that the motion to dismiss count III should “be heard when there is a motion to certify the class” implies that the trial court felt the issue was whether the proposed class was proper. The record indicates that the trial judge never considered whether the plaintiffs stated a cause of action by claiming that Safeway violated the Illinois Insurance Code through its alleged corporate policy of deliberately engaging in improper claims practices. On appeal neither plaintiffs nor defendant addressed the issue of whether count III stated a cause of action.

In Landesman v. General Motors Corp. (1978), 72 Ill. 2d 44, 377 N.E.2d 813, the plaintiff’s complaint had been dismissed by the trial court because it did not allege proper grounds for a class action suit. The appellate court reversed, holding that a class action was proper, but refused to address the issue of whether the plaintiff’s complaint stated a cause of action, “since such issue is not properly before us.” (Landesman v. General Motors Corp. (1976), 42 Ill. App. 3d 363, 367, 356 N.E.2d 105, 108.) The Illinois Supreme Court held that in ruling on the propriety of the class action it was necessary to determine whether the plaintiffs possessed a valid cause of action because such a requirement is subsumed in the Illinois statute governing class actions:

“(a) An action may be maintained as a class action in any court of this State and a party may sue or be sued as a representative party of the class only if the court finds:
(1) The class is so numerous that joinder of all members is impracticable.
(2) There are questions of fact or law common to the class, which common questions predominate over any questions affecting only individual members.
(3) The representative parties will fairly and adequately protect the interest of the class.
(4) The class action is an appropriate method for the fair and efficient adjudication of the controversy.” (Emphasis added.) (Ill. Rev. Stat. 1979, ch. 110, par. 57.2(a).)

The court found the assumption of the emphasized language to be that a valid cause of action is a prerequisite to certification of a class. The cause was remanded to the circuit court with directions to determine, first, whether a cause of action was stated, and if so, to make the findings required by section 57.2(a) of the Civil Practice Act quoted above.

In Schlessinger v. Olsen (1981), 86 Ill. 2d 314, 427 N.E.2d 122, the supreme court found that certification of a class presupposes that a valid cause of action has been stated. It then held that a court could dismiss an insufficient complaint without reaching the certification issue. These cases indicate that when class certification is requested, the initial inquiry must be whether the representative plaintiff could bring the action in the first instance.

Count III alleges violations of section 154.6 of the Insurance Code (Ill. Rev. Stat. 1979, ch. 73, par. 766.6). It requests, among other things, an order enjoining defendant to cease and desist from committing the alleged violations; appointment of a receiver to take over the assets and operation of defendant company; and an order of liquidation or rehabilitation. We find the relief requested to be unavailable to plaintiffs.

This court recently held in Hoffman v. Allstate Insurance Co. (1980), 85 Ill. App. 3d 631, 407 N.E.2d 156, that a complaint alleging improper claims practices under section 154.6 was properly dismissed because that section merely defines acts which are improper, and provides no remedy. The remedies which are available consist of money damages, and are listed in section 155 (Ill. Rev. Stat. 1979, ch. 73, par. 767), under which plaintiffs have made no claim in count III. In enacting section 155 the legislature preempted the field of remedies available to an insured who has difficulties with an unreasonable and vexatious insurance company. See, e.g., Hoffman v. Allstate Insurance Co.; Tobolt v. Allstate Insurance Co. (1979), 75 Ill. App. 3d 57, 393 N.E.2d 1171; DeBolt v. Mutual of Omaha (1978), 56 Ill. App. 3d Ill, 371 N.E.2d 373.

Section 154.7 of the Insurance Code (Ill. Rev. Stat. 1979, ch. 73, par. 766.7) provides that the Director of Insurance shall take action against a company when he finds that it is engaging in improper claims practices. Furthermore, section 201 of the Insurance Code (Ill. Rev. Stat. 1979, ch. 73, par. 813) provides that appointment of a receiver or liquidator may be done only upon the complaint of the Director. Thus we find that the legislature has chosen to make the relief requested in count III available only through action of the Director of Insurance. Such relief is unavailable to plaintiffs here because “[t]he legislature, had it intended to grant a private right of action for injunctive relief, would have explicitly done so * 0 V’ Brooks v. Midas-International Corp. (1977), 47 Ill. App. 3d 266, 277, 361 N.E.2d 815, 822 (finding that legislative intent precluded a private suit for injunctive relief under the Consumer Fraud and Deceptive Business Practices Act (Ill. Rev. Stat. 1973, ch. 121%, par. 267)).

Because we find that count III fails to state a valid cause of action, Landesman v. General Motors Corp. and Schlessinger v. Olsen require that the trial court’s dismissal of count III be affirmed. Accordingly, we affirm the order of dismissal of count III while expressing no opinion on the issue of whether certification of the proposed class would have been proper if the count had stated a cause of action.

Affirmed. ■

JOHNSON, P. J., and ROMITI, J., concur.


text:
    INDUSTRIAL LIFT TRUCK SERVICE CORPORATION, Plaintiff-Appellant, v. MITSUBISHI INTERNATIONAL CORPORATION, Defendant-Appellee.
    First District (4th Division)
    No. 81-11
    Opinion filed February 4, 1982.

      Moriarty, Hultquist, McDevitt and Hewlett, Ltd., of Chicago (Maurice J. Moriarty and Richard F. Hudzik, of counsel), for appellant.
    Masuda, Funai, Eiffert & Mitchell, Ltd., of Chicago (James R. Mitchell and Sally Hastings, of counsel), for appellee.
   JUSTICE LINN

delivered the opinion of the court:

Plaintiff, Industrial Lift Truck Service Corporation, appeals from an order entered in the circuit court of Cook County which dismissed three counts of plaintiff’s five-count second amended complaint. The counts dismissed were III, IV, and V. The primary issues on appeal are whether counts III and IV stated a valid cause of action for recovery in quasi-contract, and whether count V was barred by the previous dismissal of three counts of plaintiff’s first amended complaint.

We affirm.

Background

Plaintiff, Industrial Lift, is an Illinois corporation in the business of selling and servicing fork-lift trucks. Defendant, Mitsubishi International Corporation, is the United States distributor of fork-lift trucks manufactured by Nippon Yusoki Corporation of Japan. In 1973, plaintiff and defendant entered into a dealership agreement under which plaintiff would purchase fork-lift trucks from defendant and use its best efforts to sell the trucks to plaintiff’s customers. Plaintiff was also required to service the trucks it sold under the manufacturer’s warranty.

In November 1976, the original agreement was terminated and replaced by a new agreement under which plaintiff would use its best efforts to sell and service defendant’s product. The agreement contained numerous terms and was designated to be the entire and exclusive agreement of the parties and could be amended only by written agreement. The terms in the contract important to this case were the following:

(1) defendant could terminate the agreement without cause by giving 90 days written notice except that such termination could not occur during the first year of the agreement;
(2) following termination, defendant would not be liable for any losses incurred by plaintiff as a result of termination.

From 1973 through 1977, plaintiff enjoyed success in selling defendant’s product and allegedly became the nation’s largest dealer in the product as a result of “great expenditures of time, effort, and money.” Among the “great expenditures of time, effort, and money” were expenditures that went into making several design changes, which we need not detail, in defendant’s product. These design changes were made by plaintiff because it believed them necessary to adapt defendant’s Japanese product to an American market. The changes were not made because of any express or implied request or demand by defendant. Apparently, plaintiff sold many trucks with the design changes, and eventually defendant incorporated the changes into the products it sold to its other dealers.

In August 1978, defendant sent plaintiff notice of termination of the dealership agreement. Defendant cited as cause plaintiff’s declining sales in the previous year, but indicated that it was exercising its right to terminate under the 90-day notice-of-termination-without-cause term in the contract. Thereafter, plaintiff brought this action. Of importance here are parts of plaintiff’s first amended complaint and second amended complaint.

Plaintiff’s first amended complaint contained three counts based on breach of contract. In these counts, plaintiff alleged that the dealership agreement was a transaction involving goods under the Uniform Commercial Code. (Ill. Rev. Stat. 1979, ch. 26, par. 2 — 102.) In one count, plaintiff, citing the Commercial Code, alleged that defendant had an obligation under the contract to act in good faith. (Ill. Rev. Stat. 1979, ch. 26, par. 1 — 203.) Plaintiff contended that termination of the agreement without cause violated the duty of good faith and constituted breach of contract. In another count, plaintiff, citing the Commercial Code, alleged that defendant was required to give reasonable notice of termination. (Ill. Rev. Stat. 1979, ch. 26, par. 2 — 309(3).) Plaintiff contended that the 90-day notice of termination given was unreasonable because if did not give plaintiff sufficient time to recoup the expenses it had incurred in making the design changes. In a third count, plaintiff contended that the notice of termination given did not comply with the terms of the contract and thus the termination was improper and constituted breach of contract.

The above three counts of the first amended complaint were dismissed with prejudice and with a finding that there was no just reason to delay enforcement or appeal of the dismissal order. The order was entered on April 22, 1980. No appeal was taken. Plaintiff’s second amended complaint, filed on May 23, 1980, included count V which is now before us. In this count, plaintiff alleged that the dealership agreement was a contract of adhesion and as a result the 90-day notice-of-termination-without-cause term of the contract was invalid and defendant’s termination of the contract without cause constituted breach of contract. The trial court dismissed this count finding that it was barred by its order dismissing the three breach-of-contract counts in the first amended complaint.

The first amended complaint also contained a count seeking recovery based on quasi-contract principles. This count was dismissed with leave to amend. As a result, plaintiff, in its second amended complaint, brought two counts, III and IV, seeking recovery based on quasi-contract principles. Though the parties on appeal have attempted to argue distinctions in the two counts, except for some minor additions and changes, we find that count IV is merely a repetition of count III, and we will treat the counts as one. Other than the facts which have already been set out in this opinion, these two counts alleged that defendant was profitting from the design changes made by plaintiff, that defendant had failed to reimburse plaintiff for the costs incurred in developing the design changes, that defendant’s retention of the benefits accruing to it as a result of the design changes was unjust, and that plaintiff should receive restitution for those benefits including the reasonable value of the expenses plaintiff had incurred in developing the design changes. The quasi-contract counts of the second amended complaint were dismissed as failing to state a cause of action.

Opinion

I

Quasi-contract

A contract implied in law, or a quasi-contract, is fictitious and arises by implication of law wholly apart from the usual rules relating to contract. (Town of Montebello v. Lehr (1974), 17 Ill. App. 3d 1017, 309 N.E.2d 231.) Quasi-contractual claims involving services usually arise when there is no contract, either express or implied, between the parties. One party performs a service that benefits another. The benefitting party has not requested the service but accepts the benefit. Circumstances indicate that the services were not intended to be gratuitous. As a result, the law will sometimes impose a duty on the benefitting party to pay for the services rendered despite the lack of a contract. See Hamilton v. American Gage & Machine Corp. (1976), 35 Ill. App. 3d 845, 342 N.E.2d 758.

Difficulties arise with quasi-contractual claims when there is an express contract between the parties. The general rule is that no quasi-contractual claim can arise when a contract exists between the parties concerning the same subject matter on which the quasi-contractual claim rests. (See La Throp v. Bell Federal Savings & Loan Association (1977), 68 Ill. 2d 375, 370 N.E.2d 188, cert, denied (1978), 436 U.S. 925, 56 L. Ed. 2d 768, 98 S. Ct. 2818; Goodman v. Motor Products Corp. (1959), 22 Ill. App. 2d 378, 161 N.E.2d 31.) The reason for this rule is not difficult to discern. When parties enter into a contract they assume certain risks with an expectation of a return. Sometimes, their expectations are not realized, but they discover that under the contract they have assumed the risk of having those expectations defeated. As a result, they have no remedy under the contract for restoring their expectations. In desperation, they turn to quasi-contract for recovery. This the law will not allow. Quasi-contract is not a means for shifting a risk one has assumed under contract. See Tondre v. Pontiac School District No. 105 (1975), 33 Ill. App. 3d 838, 342 N.E.2d 290.

Plaintiff asserts its complaint states a valid cause of action in quasi-contract despite the existence of a contract because the contract does not cover the specific service plaintiff rendered — the development of the design changes. It is perhaps true that the contract did not expressly cover the design changes, but it does not follow that an action in quasi-contract is therefore allowable. If a quasi-contract action could be brought every time a party under contract performs a service not precisely covered by the contract, then the rule preventing quasi-contract actions when a contract exists would have little meaning. Parties to a contract often perform services not expressly demanded by the contract. They do so to enhance their position under the contract and not because they expect a different remuneration for those services from what they could receive under the contract.

In the present case, plaintiff obviously made the design changes with a view to being compensated pursuant to the contract terms. By its own admission, the design changes allowed plaintiff to become one of the nation’s largest dealers in defendant’s product. When the changes were made, plaintiff knew the risk involved. It knew the contract could be terminated as it was terminated, and thus knew when it made the changes that it might not be compensated under the contract to the extent it hoped to be compensated. Now that a situation plaintiff knew could occur has occurred, plaintiff seeks to shift a risk it assumed in light of the contract to defendant. In essence, plaintiff is seeking to use quasi-contract as a means to circumvent the realities of a contract it freely entered into.

Moreover, the contract was declared to be the entire agreement of the parties and could only be amended by express agreement of the parties. Plaintiff was forewarned that any changes in the agreement could only be made with the express consent of defendant. If the services rendered bore a reasonable relationship to the contract, it was incumbent upon plaintiff to seek an amendment to the agreement if plaintiff expected more compensation than it could recover pursuant to the contract terms.

The contract defined the entire relationship of the parties with respect to its general subject matter — the sale and servicing of defendant’s products. Plaintiff’s attempt here to bring a quasi-contract action is nothing more than an attempt to unilaterally amend the agreement in a manner prohibited by the agreement. In such circumstances, the benefit received by defendant can hardly be considered unjust. (See) Tondre v. Pontiac School District No. 105 (1975), 33 Ill. App. 3d 838, 342 N.E.2d 290.) Defendant had a right to assume that the contract defined the entire relationship of the parties with respect to all matters related to defendant’s product. Defendant had a right to assume, absent a valid amendment to the agreement, that it should not have to compensate plaintiff for any acts done in relation to the subject matter of the contract except pursuant to the contract terms.

Accordingly, we must hold that the contract in this case barred plaintiff’s action in quasi-contract and that plaintiff’s counts in quasi-contract were properly dismissed.

II

Res judicata

The second issue we must determine is whether count V of plaintiff’s second amended complaint was barred by the dismissal of the three breach-of-contract counts contained in plaintiff’s first amended complaint.

Issues of bar and estoppel by judgment may arise in the same proceeding. (Van Slambrouck v. Marshall Field & Co. (1981), 98 Ill. App. 3d 485, 424 N.E.2d 679.) In the present case, three counts of plaintiff’s first amended complaint were dismissed with prejudice and no just reason to delay enforcement or appeal. As a result, plaintiff was prohibited from attempting to bring the same or a similar cause of action in its second amended complaint as the cause of actions dismissed in the first amended complaint. Van Slambrouck v. Marshall Field & Co.

Plaintiff contends that count V of the second amended complaint could be maintained despite the previous dismissal because count V alleged the contract was one of adhesion and plaintiff had not pursued such a contention in the first amended complaint. Plaintiff’s argument is too narrow an interpretation of what was determined when its first amended complaint was dismissed. All counts alleging breach of contract in the first amended complaint were dismissed with prejudice. One of the primary allegations asserted in plaintiff’s breach-of-contract claims was the unreasonableness of the 90-day notice of termination provision of the contract. When the trial court dismissed those counts it in effect held that the contract was not breached and that the 90-day notice of termination provision in the contract was valid and reasonable. Count V of plaintiff’s second amended complaint was merely an attempt to plead over that the contract was breached and that the 90-day notice of termination provision was unreasonable and invalid. Plaintiff was barred from doing this. To attempt to call the contract one of adhesion was merely an attempt to relitigate that which had already been determined against plaintiff under a similar theory. Thus, we find that count V of plaintiff’s second amended complaint was barred by the previous dismissal of the three breach-of-contract counts in the first amended complaint.

For the reasons noted, we affirm the trial court’s order dismissing counts III, IV and V of plaintiff’s second amended complaint.

Affirmed.

JIGANTI and ROMITI, JJ., concur.


author: JUSTICE ROMITI

text:
    NORTH BANK, Plaintiff-Appellee, v. CIRCLE INVESTMENT CO. et al., Defendants.—(ARITA VALESSARES, Defendant-Appellant.)
    First District (4th Division)
    No. 81-227
    Opinion filed February 4, 1982.

      Russell J. Hoover, of Jenner & Block, of Chicago, for appellant.
    Raymond E. Stachnik, of Chicago (Abramson & Fox, of counsel), for appellee.
   JUSTICE ROMITI

delivered the opinion of the court:

The plaintiff filed suit against appellant, an accommodation guarantor of a secured note and certain other parties, to receive the amount due. The trial court after hearing the evidence dismissed the jury and directed a verdict for the plaintiff. Only Valessares has appealed, contending:

1. the plaintiff’s extension of time for payment without the consent of the guarantor and without reserving rights released the guarantor;

2. the plaintiff’s failure to insist on the performance of an agreement to pledge the beneficial interest in a land trust acted as an impairment of collateral and released the guarantor.

We agree with both contentions and reverse and enter judgment for the defendant-appellant.

On December 9, 1970, the plaintiff, North Bank, loaned $30,000 to Circle Investment Co., an investment group or joint venture whose members owned percentage interests in a land trust. This note was later renewed in 1971. Defendant Valessares (defendant) was not a party to either the initial note or the first renewal.

From the outset, North Bank carried the loan on its books as one for which collateral had been pledged. The security was to be the beneficial interests in the land trust. No collateral was actually delivered to the bank. But sometime prior to March 1972, the bank obtained four “Agreements to Pledge,” on printed forms apparently belonging to the bank. These were signed in blank by the makers of the note, by Keefe (another member of the Circle group) and by defendant who was the mother-in-law of one of the co-makers. The evidence is undisputed, however, that defendant had no interest in the land.

Samuel Partipilo, who had been executive vice president of North Bank from February 1972 to February 1973, testified that the forms used were the kind customarily used at North Bank to obtain collateral security. The body of the document would be filled out by the bank, and the document would then be recorded so that the bank would have a lien against the property. In this case the forms were not filled out but were kept in the file. Partipilo continually brought to the attention of the president of the bank, who originally made the loan, that the documentation on the loan still had not been completed. Sometime between 1970 and 1975 the property was sold by Circle to another investment group, the sellers receiving between $340,000 and $370,000 for their portion.

In April 1972, the bank agreed to renew the note, which was in default, if defendant would guarantee it. This renewal note was a demand note in the principal amount of $27,000, 9% interest payable per annum and after maturity. The form of note prepared by the bank was that which it customarily used for secured loans. The printed portion of the note recited that as collateral security there had been deposited with the bank “the following property, vis.” In the blank which followed Partipilo had written in the words “Collateral per register.” He meant the words to mean that the note was secured by certain collateral which was indicated in the bank’s credit file. Defendant’s signature appears as guarantor on the back of the note; the bank concedes she is only an accommodation party. Unlike many such guarantees, there are no provisions in this guarantee permitting matters such as extensions of time and the release of collateral.

Because the note was long overdue and Rieke, one of the co-makers and co-guarantors of the original note, had never signed the 1972 renewal, the bank on September 24, 1973, demanded substantial payment on the note. Following this demand, Zouvas, the remaining co-maker, and Keefe made a commitment to pay off the loan on November 15,1973. This time was, however, repeatedly extended with the bank’s agreement, until the bank in June 1975 confessed judgment on the note. At no time was defendant given notice by the bank of these extensions of time for payment.

I

It is clear from the record that plaintiff repeatedly agreed to extend the time for payment. It is also clear from the record that under Illinois law there was no consideration for plaintiff’s agreement. The accrual of interest after the demand does not constitute additional consideration since the makers of the note were already obligated by the note to pay interest after the maturity of the note. (Waters v. Simpson (1845), 7 Ill. 570; Theodosakis v. Austin Bank (1981), 93 Ill. App. 3d 634, 417 N.E.2d 806; but see Philco Finance Co. v. Patton (1967), 248 Or. 310, 432 P.2d 686.) Likewise the maker’s promise to pay the loan from the proceeds from certain financing when that deal was completed cannot be considered as consideration since no payment was in fact made and any implied agreement to secure the debt was unexecuted. Newell v. Waller (1882), 12 Ill. App. 306.

Accordingly the issue before this court is whether under the Uniform Commercial Code an agreement to extend the time for payment is effective to discharge the surety where there was no consideration for the agreement. It is clear that both at common law and under the Negotiable Instruments Law, before the surety was discharged there had to be a binding agreement to extend the time for payment, that is there had to be consideration. Mitchell v. Peterson (1981), 97 Ill. App. 3d 363, 422 N.E.2d 1026; Lee v. Pioneer State Bank (1981), 97 Ill. App. 3d 97, 423 N.E.2d 218; Many, Blanc & Co. v. Jacobson (1909), 149 Ill. App. 240; section 119(5) of the Negotiable Instruments Law (Ill. Rev. Stat. 1959, ch. 98, par. 141(5), repealed with the enactment of the Uniform Commercial Code in Illinois).

Thus unless the Uniform Commercial Code has changed the common law, the bank’s repeated extensions of time for nearly two years did not act to discharge the defendant. Section 3 — 606 of the Code (Ill. Rev. Stat. 1973, ch. 26, par. 3 — 606) provides:

“Impairment of Recourse or of Collateral. (1) The holder discharges any party to the instrument to the extent that without such party’s consent the holder
(a) without express reservation of rights releases or agrees not to sue any person against whom the party has to the knowledge of the holder a right of recourse or agrees to suspend the right to enforce against such person the instrument or collateral or otherwise discharges such person, except that failure or delay in effecting any required presentment, protest or notice of dishonor with respect to any such person does not discharge any party as to whom presentment, protest or notice of dishonor is effective or unnecessary; or
(b) unjustifiably impairs any collateral for the instrument given by or on behalf of the party or any person against whom he has a right of recourse.
(2) By express reservation of rights against a party with a right of recourse the holder preserves
(a) all his rights against such party as of the time when the instrument was originally due; and
(b) the right of the party to pay the instrument as of that time; and
(c) all rights of such party to recourse against others.”

The official comment to this section gives as a definitional cross-reference “Agreement” “Section 1 — 201.” That section provides:

“(3) ‘Agreement’ means the bargain of the parties in fact as found in their language or by implication from other circumstances including course of dealing or usage of trade or course of performance as provided in this Act (Sections 1 — 205 and 2 — 208). Whether an agreement has legal consequences is determined by the provisions of this Act, if applicable; otherwise by the law of contracts (Section 1 — 103).” Ill. Rev. Stat. 1973, ch. 26, par. 1 — 201(3).

The parties have cited no Illinois cases, and we have been able to find none, which have construed section 3 — 606(1)(a) or the definition of “agreement.” Likewise none of the cases from other States relied on by plaintiff (Stanley v. Ames (Mass. 1979), 391 N.E.2d 908; Mechanics National Bank v. Shear (1979), 7 Mass. App. 255, 386 N.E.2d 1299; Glover v. National Bank of Commerce (1975), 258 Ark. 771, 529 S.W.2d 333) discuss section 1 — 201 and its effect on 3 — 606(1)(a). In Stanley the court merely states, as dictum, that an accommodation party is generally discharged from liability by binding extension of time. In Mechanics the court, relying on Glover, states as dictum that mere delay is not the equivalent of an agreement to suspend and that it did not believe section 3 — 606(1) (a) was intended to change the .express requirement of the Negotiable Instruments Law that the agreement be binding upon the holder. In Glover, the court quotes from section 3 — 606(1) (a) and then states without further discussion “Of course the statute means an enforceable contract.” (258 Ark. 771, 772, 529 S.W.2d 333, 335.) The court in Glover does not discuss or even refer to section 1 — 201.

We find Lee Federal Credit Union v. Gussie (4th Cir. 1976), 542 F.2d 887, the only case cited by the parties or that this court has been able to find that discusses the change in the statute and the effect of sections 1 — 201 or 3 — 606(1) (a), to be persuasive. That court states:

“We recognize it is at least arguable that the agreed extension of time may not have been binding upon Credit and that it may have been able to institute proceedings against Lee prior to the date the check became payable. Yet, under the UCC in Virginia, it is the agreement which is controlling and not whether that agreement is necessarily binding. This represents a change from earlier Virginia law as is pointed out by the Virginia Comments to §8.3 — 606. There, it states:
‘Under the NIL [Negotiable Instruments Law] an agreement to extend the time of payment in order to have the effect of discharging parties secondarily liable had to be “binding upon the holder.” The UCC, in accordance with its general definition of an agreement as being a bargain in fact, as distinguished from a contract, which is the effect given by law to an agreement, eliminates the requirement that the agreement be binding.’
Compare, e.g., Cawley v. Hanes, 173 Va. 381, 389, 4 S.E.2d 376 (1939); Cape Charles Bank, Inc. v. Farmers Mutual Exchange, 120 Va. 771, 92 S.E. 918 (1917) dealing with the requirements under the NIL. The evidence clearly indicates that Credit agreed to extend additional time for payment on the note to Ernest Lee in exchange for the post-dated check which he tendered in August. This agreement, having been reached without the consent of either Rowe or Gussie, was sufficient to relieve them from further liability.” 542 F.2d 887, 890.

The plaintiff contends that the court in Gussie would have had to reach a different result under Illinois law since our code does not contain the comment referred to by the court. We disagree. The language of the two statutes referred to in the Virginia comment is the same in Illinois; that comment in no way extends the law beyond its clear meaning. Plaintiff erroneously argues that the Illinois comments imply that a binding extension agreement remains necessary under section 3 — 606(1) (a). All that comment says is that section 3 — 606(1) (a) also embraces release by extension of time which was covered by section 119(5) of the Illinois Negotiable Instruments Law. It in no way states that the law remained the same; indeed, in light of the marked change in wording from “by an agreement in favor of the principal debtor binding upon the holder to extend the time of payment, or to postpone the holder’s right to enforce the instrument” (emphasis added) to simply “agrees to suspend,” it would be difficult not to conclude that a change in meaning was intended.

II

Even if defendant was not discharged by the extension of terms, however, she was discharged because of the bank’s failure to perfect its security interest in the beneficial interests in the land trust. A creditor has a special duty towards a surety to take reasonable care to protect and preserve collateral. (Executive Bank v. Tighe (1978), 66 App. Div. 2d 70, 411 N.Y.S.2d 939; also American Bank of Commerce v. Covolo (1975), 88 N.M. 405, 540 P.2d 1294.) While a few cases have limited the application of section 3 — 606(1) (b) of the Code to direct impairment of the value of collateral in the possession of the creditor, the better and majority rule (see Peoples Bank v. Pied Piper Retreat, Inc. (W.Va. 1974), 209 S.E.2d 573) is that the section applies also to unreasonable acts which make the collateral unavailable to the surety and thus increase his risks even though the collateral is not in the creditor’s possession or control. (Beneficial Finance Co. v. Marshall (Okla. App. 1976), 551 P.2d 315.) As that court remarked “[tjhis view seems to be in accord with both the common law of suretyship and the expectations of the parties to a suretyship agreement.” (551 P.2d 315, 320.) Thus it has been held that the failure to obtain insurance required by a note (Arlington Bank & Trust v. Nowell Motors, Inc. (Tex. Civ. App. 1974), 511 S.W.2d 415; DeKalb County Bank v. Haldi (1978), 146 Ga. App. 257,246 S.E.2d 116, cert, denied) or a failure to file a claim under an insurance policy constituted an impairment of collateral releasing the surety. (Tennessee Farmers Mutual Insurance Co. v. Scott (Tenn. App. 1970), 8 U.C.C Rep. 399.) And the majority of States, including Illinois, agree that a failure to perfect a security interest constitutes an unjustifiable impairment of collateral. Wohlhuter v. St. Charles Lumber & Fuel Co. (1975), 25 Ill. App. 3d 812, 323 N.E.2d 134, affd (1975), 62 Ill. 2d 16, 338 N.E.2d 179; First Bank & Trust Co. v. Post (1973), 10 Ill. App. 3d 127, 293 N.E.2d 907; Farmers State Bank v. Cooper (1980), 227 Kan. 547, 608 P.2d 929; Baitcher v. National Industrial Bank (Fla. App. 1979), 368 So. 2d 439; Beneficial Finance Co. v. Marshall (Okla. App. 1976), 551 P.2d 315; Executive Bank v. Tighe (1978), 66 App. Div. 2d 70,411 N.Y.S.2d 939; Langeveld v. L.R.Z.H. Corp. (1977), 74 N.J. 45, 376 A.2d 931; In re Estate of Voelker (Iowa 1977), 252 N.W.2d 400; American Bank of Commerce v. Covolo (1975), 88 N.M. 405, 540 P.2d 1294; Peoples Bank v. Pied Piper Retreat, Inc. (W.Va. 1974), 209 S.E.2d 573; White v. Household Finance Corp. (1973), 158 Ind. App. 394, 302 N.E.2d 828; Shaffer v. Davidson (Wyo. 1968), 445 P.2d 13.

As provided in the Illinois Commercial Code — Secured Transactions, sections 9 — 106, 302, a security interest may be created in a beneficial interest of a land trust. Such security interest is enforceable against third parties if properly perfected and is enforceable in any event against persons who are not secured parties and who give value with knowledge of the security interest. (Ill. Rev. Stat. 1971, ch. 26, par. 9 — 301.) Before the middle of 1973, the creditor had to file a financing statement to perfect his security interest in a beneficial interest in a land trust. (Mid-West National Bank v. Metcoff (1974), 23 Ill. App. 3d 607, 319 N.E.2d 336; Levine v. Pascal (1968), 94 Ill. App. 2d 43, 236 N.E.2d 425, appeal denied (1968), 39 Ill. 2d 626.) Since then, a financing statement is not required. Ill. Rev. Stat. 1973, ch. 26, par. 9 — 302.

The bank failed to file in this case as required by statute. It also failed to give notice to would-be purchasers. Assuming the bank had had an enforceable security interest, it is clear that its failure to do these acts would, under Illinois law, have discharged the defendant.

The bank argues that despite its failure to perfect its security agreement the defendant should not be discharged because the bank also failed to perfect its pledge arrangement and obtain a valid security interest. Under section 9 — 203 of the Code (Ill. Rev. Stat. 1971, ch. 26, par. 9 — 203), for a security interest to attach, the debtor must have signed a security agreement, that is, an agreement which creates or provides for a security interest (Ill. Rev. Stat. 1971, ch. 26, par. 9 — 105(1) (h)), which contains a description of the collateral. This description need not be specific if it reasonably identifies what is described. Ill. Rev. Stat. 1971, ch. 26, par. 9 — 110.

We agree that the bank failed to comply with section 9 — 203 of the Code. We do not agree, however, with the bank’s contention that the defendant should suffer from the bank’s failure. “The duty imposed on a creditor under UCC §3 — 606(1) (b) encompasses the good faith obligation to exercise reasonable means to protect the rights of guarantors.” (American Bank of Commerce v. Covolo (1975), 88 N.M. 405, 408, 540 P.2d 1294, 1297; Beneficial Finance Co. v. Marshall (Okla. App. 1976), 551 P.2d 315, 319.) It is incumbent upon the creditor to take all normal precautions to perfect all security interests. (Baitcher v. National Industrial Bank (Fla. App. 1979), 368 So. 2d 439.) A guarantor should be entitled to expect a creditor to behave with at least a minimal degree of commercial reasonableness and care and to make a reasonable effort to secure its collateral. (Leslie Fay, Inc. v. Rich (S.D.N.Y. 1979), 478 F. Supp. 1109.) Here the bank did not do so although the note signed by defendant stated that the debt was secured.

Accordingly the judgment of the trial court is reversed and judgment entered for defendant-appellant.

Reversed.

JOHNSON, P. J. and LINN, J„ concur.


text:
    WATERFORD CONDOMINIUM ASSOCIATION et al., Plaintiffs-Appellants, v. DUNBAR CORPORATION et al., Defendants.—(WIESINGERHOLLAND, LTD., et al., Defendants-Appellees.)
    First District (4th Division)
    No. 81-505
    Opinion filed February 4, 1982.

      Terence J. Tyksinski, of Chicago, for appellants.
    James E. Betke and N. Rosie Rosenbaum, both of McDermott, Will & Emery, and Thomas M. Grisham, Stanley J. Davidson, and Laurie A. Siwek', all of Hinshaw, Culbertson, Moelmann, Hoban & Fuller, both of Chicago, for appellees.
   JUSTICE ROMITI

delivered the opinion of the court:

The plaintiffs Waterford Condominium Association as agent and Meyer Karch individually and in a representative capacity on behalf of initial purchasers of units in the Waterford Condominium filed a lawsuit against various persons connected with the building of the condominium in the early 1970’s. (Meyer Karch purchased his unit on July 29,1973.) The suit was filed in 1977 against Dunbar Corporation (Dunbar) and Dunbar Constructors, Inc. (Constructors), the developers, contractors and sellers of the condominium. On May 15, 1980, plaintiffs filed an amended complaint naming for the first time seven companies which were involved in certain phases of the design and construction of the building. Among them were the two defendant-appellees involved in this appeal (hereinafter referred to as defendants). The two are Wiesinger-Holland, Ltd., and Gamze-Korobkin-Caloger, Inc. Wiesinger allegedly was retained by Macsai as its agent to furnish structural engineering services in connection with the planning and construction of the Waterford Condominium. (Allegedly Macsai was retained by Dunbar and Constructors to furnish architectural services.) Gamze allegedly was retained by Dunbar and Constructors as their agent to furnish mechanical, heating and ventilation engineering services. The complaint was based in (1) breach of contract, (2) breach of implied warranty of habitability, (3) misrepresentation and fraud. There was no claim for negligence.

The trial court granted defendants’ motion to dismiss both for failure to state a cause of action and because the claim in fraud was barred by the statute of limitations. We affirm.

I

In the count for breach of contract plaintiffs alleged the making of the contract between Macsai and Wiesinger, and between Dunbar and Gamze (both of which contracts were attached to the complaint), and further alleged that by the terms of the agreements defendants were impliedly bound to perform the services in a professionally good and workmanlike manner, that Waterford Condominium was deficient in many specified respects, and that it was known to and intended by Dunbar and the other defendants as parties to the agreements that the construction required was for the benefit of and sole use of the condominium unit purchasers and Waterford Condominium Association.

The contracts entered into by the defendants were not with the plaintiffs but with the developer and architect respectively. It is well settled in Illinois that, absent privity of contract, a purchaser or owner of real property has no cause of action against a defendant for breach of contract unless he can demonstrate that the contractual obligations and duties were undertaken for his direct benefit. (Altevogt v. Brinkoetter (1981), 85 Ill. 2d 44, 421 N.E.2d 182; Rozny v. Marnul (1969), 43 Ill. 2d 54, 250 N.E.2d 656; Midwest Concrete Products Co. v. La Salle National Bank (1981), 94 Ill. App. 3d 394, 418 N.E.2d 988.) It is not enough that the parties to the contract know, expect or even intend that others will benefit from the construction of the building in that they will be users of it. The contract must be undertaken for the plaintiff’s direct benefit and the contract itself must affirmatively make this intention clear. (Carson Pirie Scott & Co. v. Parrett (1931), 346 Ill. 252, 178 N.E. 498.) As this court recently stated in Midwest Concrete Products Co. v. La Salle National Bank (1981), 94 Ill. App. 3d 394, 396-97, 418 N.E.2d 988, 990;

“In making this determination, it must appear from the language of the contract when properly construed that the contract was made for the direct benefit of the third person and that the benefit was not merely incidental. (Young v. General Insurance Company of America (1975), 33 Ill. App. 3d 119, 337 N.E.2d 739.) It has been observed that:
‘[I]t is not sufficient that the performance of the [contract] may benefit a third person, * * * it must have been entered into for his benefit, or at least such benefit must be the direct result of performance and so within the contemplation of the parties. * * * [I]nasmuch as people usually stipulate for themselves, and not for third persons, a strong presumption obtains in any given case that such was their intention, and that the implication to overcome that presumption must be so strong as to amount practically to an express declaration.’ (17 Am. Jur. 2d Contracts §304, at 729-30 (1964).)
The terms of the contract are controlling with respect to the rights of a third-party beneficiary. Liability cannot be extended beyond the terms of the contract merely on the ground that the situation and circumstances of the parties justify further liability. Carson Pirie Scott & Co. v. W. J. Parrett.”

The contracts entered into by the two defendants here were the typical form contracts usually entered into in such situations. The defendants agreed to perform for the owner and for the architect respectively. There was no language inserted into the contracts providing that defendants were acting for the direct benefit of the condominium owners, either individually or as a class.

Plaintiffs argue that defendants should be held responsible because it was contemplated that members of the public would enter and use the dwellings as owners, guests, invitees or licensees and in effect defendants were simply assuming Dunbar’s responsibilities to cause the building to be completed in accordance with the specifications. This argument however goes to defendants’ liability in tort for negligently failing to perform in a workmanlike manner. (See Rozny v. Marnul (1969), 43 Ill. 2d 54, 250 N.E.2d 656.) We believe plaintiffs’ claim is governed by the recent cases of Altevogt v. Brinkoetter (1981), 85 Ill. 24, 44, 421 N.E.2d 182, and Midwest Concrete Products Co. v. La Salle National Bank (1981), 94 Ill. App. 3d 394, 418 N.E.2d 988, both of which bar any recovery in contract.

In Altevogt, Brinkoetter contracted with Hinton for the latter to build a house on the former’s lot. Brinkoetter also entered into a contract to sell the premises to the plaintiff Altevogt. Altevogt attempted to sue Hinton for breach of a warranty to build the house in a reasonably workmanlike manner. The supreme court held that even if Hinton knew the house was to be sold to a third party, the plaintiff was not a direct beneficiary, quoting illustration 18 of the Restatement (Second) of Contracts §133 (1981):

“A contracts to erect a building for C. B then contracts with A to supply lumber needed for the building. C is an incidental beneficiary of B’s promise, and B is an incidental beneficiary of C’s promise to pay A for the building.”

The supreme court went on to say that where, as in the present case, the plaintiffs were not the owners who contracted for the construction of the buiding but subsequent purchasers, Rozny v. Marnul controlled and plaintiffs could not maintain an action against Hinton as direct beneficiaries.

In Midwest Concrete Products the user of the premises sought to recover damages against a subcontractor. This court held that the user was not a direct beneficiary and could not recover even though the subcontract was made subject to the terms of the general contract which provided for liquidated damages for every day the user was delayed in opening its business.

II

For the same reasons the plaintiffs’ count seeking recovery from defendants for breach of warranty of habitability must fall. Illinois recognizes that a builder-vendor (Petersen v. Hubscham Construction Co. (1979), 76 Ill. 2d 31, 389 N.E.2d 1154), or developer-vendor (Tassan v. United Development Co. (1980), 88 Ill. App. 3d 581, 410 N.E.2d 902, appeal denied (1981), 82 Ill. 2d 588), who sells a newly constructed residence impliedly warrants that the residence is reasonably suited for its intended use. This is because the builder or developer was in the best position to know who could perform the work adequately and see that it was properly done. But the warranty exists between builder (developer-vendors and their vendees (Kramp v. Showcase Builders (1981), 97 Ill. App. 3d 17, 422 N.E.2d 958), and does not apply where, as here, the defendants are not builder (developer) - vendors but merely are employed by the builder. (Wiersema v. Workman Plumbing, Heating & Cooling, Inc. (1980), 87 Ill. App. 3d 535, 409 N.E.2d 159.) Plaintiffs remedy for breach of warranty of habitability is against the developers and sellers.

Plaintiffs for the first time in their brief on appeal suggest that defendants are liable as joint venturers with Dunbar. (See Tassan v. United Development Co. (1980), 88 Ill. App. 3d 581, 410 N.E.2d 902, appeal denied (1981), 82 Ill. 2d 588.) Plaintiffs in their complaint alleged that defendants acted as agents, not as joint venturers. Having failed to raise the issue below, they cannot raise it here. Kravis v. Smith Marine, Inc. (1975), 60 Ill. 2d 141, 324 N.E.2d 417; Marynczak v. D & L Transport Co. (1981), 94 Ill. App. 3d 381, 418 N.E.2d 972.

III

In the third count of their complaint, plaintiffs alleged that “prior to the purchase of units and during negotiations for the purchase of units, defendants and their agents routinely represented to unit purchasers by way of advertising, brochures, plans, specifications, folders and other written advertisement as to the type, nature and quality of the construction of the Waterford Condominium and the material used; the unit purchasers were so informed that the Waterford Condominium was built in a good and workmanlike manner, that the materials used were of excellent and proper quality, and the building constructed in accordance with approved plans, specifications and building code requirements of the City of Chicago”; that defendants made such representations with the intention that unit purchasers would act on such representations; and did so knowing them to be false and fraudulent in that the condominium was built in a poor and unworkmanlike manner.

We agree with the trial court that the complaint failed to state a cause of action in fraud in that it failed to set out the fraudulent misrepresentations with the specificity, particularity and certainty required. (Goetz v. Avildsen Tool & Machines, Inc. (1980), 82 Ill. App. 3d 1054, 403 N.E.2d 555, appeal denied (1980), 81 Ill. 2d 591; Younger v. Revelle (1979), 78 Ill. App. 3d 1, 397 N.E.2d 221, appeal denied (1980), 79 Ill. 2d 634.) A person has not properly pled a cause of action for fraud unless he has set forth with specificity what the representations were, when they were made, by whom they were made, and to whom they were made. (St. Joseph Data Service, Inc. v. Thomas Jefferson Life Insurance Co. (1979), 73 Ill. App. 3d 935, 393 N.E.2d 611, appeal denied (1979), 79 Ill. 2d 624.) Furthermore, the cause of action is based on a written document, it is necessary to set forth the document or the relevant portion of it in the pleadings or attach it to the pleadings. Ill. Rev. Stat. 1979, ch. 110, par. 36.

In addition, we agree with the trial court that this claim was barred by the five-year statute of limitations. The statements were alleged to have been made before the sale of the units, that is, before spring of 1973. But suit was not brought against these defendants until spring of 1980, over seven years after the representation was allegedly made. Thus, the claim was properly dismissed since it appeared from the face of the complaint that the action was not commenced within the time limited by law. Altevogt v. Brinkoetter (1981), 85 Ill. 2d 44, 421 N.E.2d 182.

Plaintiffs in their brief contend that there is a question of fact as to when plaintiffs discovered the fraud. However it is incumbent upon a plaintiff seeking to take advantage of the discovery rule to plead in the complaint that the fraud remained undiscovered. (Auster v. Keck (1976), 63 Ill. 2d 485, 349 N.E.2d 20; Pratt v. Sears Roebuck & Co. (1979), 71 Ill. App. 3d 825, 390 N.E.2d 471; Chicago Park District v. Kenroy, Inc. (1978), 58 Ill. App. 3d 879, 374 N.E.2d 670, affd in part, revd in part on other grounds (1980), 78 Ill. 2d 555, 402 N.E.2d 181.) This plaintiffs failed to do. Accordingly, as a matter of law, the discovery rule is not applicable.

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

Affirmed.

JIGANTI and LINN, JJ., concur.


author: JUSTICE JIGANTI

text:
    WINE & SPIRITS MERCHANDISERS, INC., Plaintiff-Appellee, v. ILLINOIS LIQUOR CONTROL COMMISSION et al., Defendants-Appellants.
    First District (4th Division)
    No. 81-582
    Opinion filed February 4, 1982.
    Rehearing denied March 8, 1982.
    Tyrone C. Fahner, Attorney General, of Chicago (Karen Konieczny, Assistant Attorney General, of counsel), for appellants.
    Arvey, Hodes, Costello & Burman, of Chicago (Howard Arvey and Irwin I. Zats, of counsel), for appellee.
   JUSTICE JIGANTI

delivered the opinion of the court:

The present litigation began when the defendant, the Illinois Liquor Control Commission (Commission), declined to renew certain distributor licenses held by the plaintiff, Wine & Spirits Merchandisers, Inc. (Wine & Spirits). Wine & Spirits filed a complaint for administrative review in the circuit court of Cook County. The trial court reversed the determination of the Commission, and the Commission brought this appeal contending that distributor licensing of Wine & Spirits is prohibited by article VI, section 3 of the Illinois Liquor Control Act (Act) (Ill. Rev. Stat. 1979, ch. 43, par. 121). For purposes of clarity, the unofficial citation form will be used when referring to the provisions of the Act.

Paragraph 121 is commonly known as a “tied house” law. The purpose of such statutes is to keep liquor distilling separate from liquor distribution, thus preventing horizontal and vertical integration of the industry. (See Weisberg v. Taylor (1951), 409 Ill. 384, 100 N.E.2d 748.) As pertinent to this appeal, paragraph 121(a) provides that no subsidiary of a distiller shall be issued a distributor’s license. The facts clearly indicate that Wine & Spirits is a subsidiary of a subsidiary of a distiller, and no argument is made to the contrary. Rather, the issue to be resolved is whether Wine & Spirits falls within the exception created by paragraph 121(b), which provides as follows:

“The foregoing provisions shall not apply to any person licensed by any licensing authority as a distiller * * # or to any subsidiary or affiliate of any distiller 000 who shall have been heretofore licensed by the State Commission as either an importing distributor or distributor during the annual licensing period expiring June 30, 1947, and shall actually have made sales regularly to retailers.” (Ill. Rev. Stat. 1979, ch. 43, par. 121(b).)

Paragraph 121(c) of the Act imposes restrictions on the brand of alcoholic beverages a paragraph 121(b) licensee may sell to retailers or add to its lines. Paragraph 121(d) restricts a distiller’s ability to have any stock ownership or interest in a distributor’s license.

Wine & Spirits was incorporated in 1955 under the name Merit Liquor Company. It acquired licenses as a distributor, importing distributor and foreign importer. In 1966, all of the company’s shares were sold to Schenley Affiliated Brands Corporation (Affiliated), which also operates as a distributor. Affiliated is a wholly owned subsidiary of Schenley Industries, Inc. (Schenley). The relationship between Affiliated and Schenley was established sometime prior to June 30, 1947. Schenley is licensed as a distiller by several States as well as by the Federal government. Despite Wine & Spirits’ relationship with Affiliated and with Schenley, a distiller, the Commission continued to renew Wine & Spirits’ distributor licenses from 1967 until 1979.

In November of 1979, the Commission issued a citation notifying Wine & Spirits of a hearing to show cause why its application for renewal of its distributor, importing distributor and foreign importer’s licenses should not be denied. The citation recited that Wine & Spirits was in violation of paragraph 121(a) of the Illinois Liquor Control Act (Ill. Rev. Stat. 1979, ch. 43, par. 121(a)) in that Wine & Spirits was 100% owned by Affiliated, which in turn was a 100% owned subsidiary of a distiller— Schenley. A hearing was held, and on April 2, 1980, the Commission denied Wine & Spirits’ application for license renewal. The Commission determined that because of Wine & Spirits’ relationship to a distiller, it was ineligible for licensing as a distributor. It further found that the fact that prior licenses were issued to Wine & Spirits did not bind the Commission to continue the renewal.

Wine & Spirits filed an action for administrative review in the circuit court. The court reversed the Commission’s order and found that Wine & Spirits was eligible to hold the distributor’s licenses in question.

The Commission’s argument on appeal is that the court erred in finding Wine & Spirits eligible for distributor’s licenses because the clear wording of paragraph 121(a) of the Act prohibits the issuance of such licenses to any subsidiary or affiliate of a distiller. The only exception to this broad prohibition is contained in paragraph 121(b) which exempts distillers or their affiliates who held distributor’s licenses prior to June 30, 1947. The Commission contends that this exemption cannot apply to Wine & Spirits because it was not even in existence until 1955.

Wine & Spirits argues, however, that Schenley and Affiliated had a distiller-distributor relationship prior to 1947 and therefore come within the purview of paragraph 121(b). Because paragraph 121(b) expressly provides that the prohibitions of paragraph 121(a) “do not apply” to distillers and distributors such as Schenley and Affiliated, they are not prohibited from receiving distributor’s licenses or acquiring the shares of another distributor. Consequently, Affiliated’s acquisition of Wine & Spirits was an “exempt transaction” which should be treated as though paragraph 121(a) did not exist.

Although Wine & Spirits does not characterize it as such, we believe that paragraph 121(b) is a typical “grandfather” clause. A grandfather clause is commonly regarded as a portion of a statute which establishes different treatment of parties based upon a date certain. (Annot., Construction of “Grandfather Clause” of Statute or Ordinance Regulating or Licensing Business or Occupation, 4 A.L.R.2d 667,691-95 (1949).) Grandfather clauses permit the continuation of otherwise illegal activity in order to obviate unfairness to those who engaged in such activity before it was outlawed by the legislature. (Harris v. Alcoholic Beverage Control Appeals Board (1964), 61 Cal. 2d 305, 392 P.2d 1, 38 Cal. Rptr. 409.) Because they create an exception to the general provisions of the statute, such clauses must be strictly construed. Mid-South Chemical Corp. v. Carpentier (1958), 14 Ill. 2d 514, 153 N.E.2d 72.

It appears that paragraph 121(b) reflects a decision by the legislature to allow the continuation of activity and licensing that was permitted prior to 1947 in order to avoid inequity. Thus, Schenley and Affiliated may preserve the status quo and continue their distiller-distributor relationship despite the fact that such relationships are deemed undesirable and are now prohibited by paragraph 121(a). However, the plain wording of paragraph 121(b) does not protect Wine & Spirits because Wine & Spirits was not in existence prior to 1947. We do not believe that this statute should be construed in a manner which would allow Schenley and Affiliated to extend their limited privilege by acquiring new distributorships such as Wine & Spirits through a purchase of shares. This construction would not only allow nonconforming business arrangements such as the one between Schenley and Affiliated to continue, but would also allow them to gain a competitive advantage over businesses which were not in existence prior to 1947. A result such as this is clearly contrary to the policy reasons behind the enactment of paragraph 121 of the Act. Thus, it is our judgment that the acquisition of Wine & Spirits by Affiliated does not fall within the narrow exemption created by paragraph 121(b).

In summary, distributor licensing of Wine & Spirits is clearly prohibited by paragraph 121(a) because of its relationship to Schenley — a distiller. Because we have found that the paragraph 121(b) exemption does not apply to Wine & Spirits, the judgment of the circuit court must be reversed.

Reversed.

ROMITI and LINN, JJ., concur.