author: JUSTICE RIZZI

text:
    UNITED STATES FIDELITY & GUARANTY COMPANY, Plaintiff-Appellee, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY et al., Defendants.—(CORNESHIA BARRON, a Minor, by Gloria Barron et al., her Parents and Next Friends, et al., Defendants-Appellants.)
    First District (3rd Division)
    No. 80-559
    Opinion filed March 31, 1982.
    Rehearing denied July 6, 1982.
    Ronald H. Balson and John P. Block, both of Chicago, and Imming, Faber & Roeser, Chartered, of Elgin (Robert J. Anderson and Stephen M. Deitsch, of Callum, Anderson & Deitsch, of counsel), for appellants.
    Kralovec, Marquard, Doyle, Gibbons & Fraterrigo, Chartered, of Chicago (Michael T. Sprengnether, of counsel), for appellee.
   JUSTICE RIZZI

delivered the opinion of the court:

Plaintiff, United States Fidelity & Guaranty Company, brought a declaratory judgment action against defendants to determine whether it owes a defense and coverage under an insurance policy it issued to defendant Happyland Day Care Center. The trial court granted USF&G’s motion for summary judgment, ruling that there is no coverage under the policy. We reverse and remand.

The underlying complaint alleges a personal injury action brought on behalf of Corneshia Barron, a four-year-old minor, against Laura B. Hargis, individually and d/b/a Happyland Day Care Center, and Patricia Peterson. Hargis was the owner and operator of the Happyland Day Care Center, which Barron attended. Peterson was an employee of Happyland. On September 30, 1975, Peterson transported some children who attended Happyland to a dance class in an automobile owned by Happy-land. Barron was injured when she “fell from, was thrown from, or otherwise exited” the automobile.

In count I of Barron’s complaint, it is alleged that defendants were negligent in operating the day care center; in failing to provide sufficient personnel to adequately care for the children; in failing to retain sufficient control and discipline over the children; and in failing to provide adequate supervision for the children. In count II of the complaint, it is alleged that defendants negligently operated the automobile; failed to provide sufficient personnel; failed to retain sufficient control and discipline over the children; violated the Municipal Code of Chicago in that the automobile was not equipped with safety devices which would make it impossible for a passenger to open the vehicle from the inside; failed to operate the automobile properly and with sufficient regard for the care and safety of its passengers; and failed to provide adequate safety devices to prevent injury to plaintiff.

On the date of the occurrence, an insurance policy issued by State Farm Mutual Insurance Company on the subject automobile was in effect. State Farm tendered the defense of count I to USF&G, which had issued a special multi-peril insurance policy to Happyland Day Care Center. USF&G assumed the defense of count I under a reservation of rights.

USF&G then brought this declaratory judgment action, seeking a declaration that there is no coverage because of an exclusion in the policy. The policy provides:

“The Company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury or property damage to which this insurance applies, caused by an occurrence and arising out of the ownership, maintenance or use of the insured premises and all operations necessary or incidental to the business of the named insured conducted at or from the insured premises.”

The exclusion on which USF&G relies states:

“This insurance does not apply
# # S
(b) to bodily injury or property damage arising out of the ownership, maintenance, operation, use, loading or unloading of
(1) any automobile or aircraft owned or operated by or rented or loaned to any insured, or
(2) any other automobile or aircraft operated by any person in the course of his employment by any insured.”

Defendants argue that USF&G has a duty to defend since the underlying complaint includes allegations which are not related to the operation or use of the automobile, such as negligent operation of the day care center and negligent supervision of the children. They contend that these allegations are within the coverage of the policy and that coverage should not be excluded merely because an automobile was the site of the occurrence. USF&G, on the other hand, argues that regardless of the allegations of negligence or proximate cause, there is no coverage for injuries resulting from the operation or use of an automobile and that the injury could not have occurred without the operation or use of an automobile.

As to the broad issue presented by this case, courts in other jurisdictions have reached different results under varying factual situations. However, we are persuaded by the reasoning and conclusions of the courts in State Farm Mutual Automobile Insurance Co. v. Partridge (1973), 10 Cal. 3d 94, 514 P.2d 123,109 Cal. Rptr. 811, Johns v. State Farm Fire & Casualty Co. (La. App. 1977), 349 So. 2d 481, and Frazier v. State Farm Mutual Automobile Insurance Co. (La. App. 1977), 347 So. 2d 1275, where coverage was found.

In Partridge, the insured had filed the trigger mechanism of his hunting pistol. While on a hunting trip in his vehicle, the insured drove off the paved road onto the adjacent rough terrain. The vehicle hit a bump, and the pistol discharged, injuring one of the passengers. The trial court found that the insured had been negligent in modifying his gun and in driving the vehicle. The trial court further found that the two negligent acts were independent, concurrent proximate causes of the passenger’s injuries. The insured’s homeowners policy contained an exclusion for “bodily injury * * * arising out of the e * # use of * * * any motor vehicle.” In determining that the homeowners policy did provide coverage, the court stated:

“[Although the homeowner’s policy excluded injuries ‘arising out of the use’ of an automobile, such exclusion does not preclude coverage when an accident results from the concurrence of a non-auto-related cause and an auto-related cause. The comprehensive personal liability coverage of the homeowner’s policy affords the insured protection for liability accruing generally from non-auto-related risks. Whenever such a non-auto risk is a proximate cause of an injury, liability attaches to the insured, and coverage for such liability should naturally follow. Coverage cannot be defeated simply because a separate excluded risk constitutes an additional cause of the injury.” 10 Cal. 3d 94, 97, 514 P.2d 123, 125, 109 Cal. Rptr. 811, 817.
“In the instant case, * * * although the accident occurred in a vehicle, the insured’s negligent modification of the gun suffices, in itself, to render him fully liable for the resulting injuries. Under these facts the damages to Vanida are, under the language of the homeowner’s coverage clause, ‘sums which the Insured . . . [became] legally obligated to pay’ because of the negligent filing of the trigger mechanism; inasmuch as the liability of the insured arises from his non-auto-related conduct, and exists independently of any ‘use’ of his car, w:e believe the homeowner’s policy covers that liability.” (10 Cal. 3d 94, 103, 514 P.2d 123, 125, 129, 109 Cal. Rptr. 811, 817.)

See also 7A Appleman, Insurance §4500, at 179 (1979).

In Johns, plaintiff was attempting to remove a dead limb from a tree and was injured when a safety rope broke. One end of the rope was attached around plaintiff’s waist, and the other end was secured to an operating automobile. In his complaint, plaintiff alleged the negligence of the owner of the premises as well as the negligence of the owner’s son, who was the driver of the car. In determining that summary judgment in favor of the insurer was improperly granted, the court stated:

“[W]e note that in Hurston v. Dufour, 006 the First Circuit 000 recognized the soundness of the legal proposition espoused in State Farm Mutual Automobile Insurance Company v. Partridge 000 to the effect that if liability arises from two sources, namely a non-auto related incident as well as an auto related occurrence, the mere fact that one source is excluded under the homeowners policy does not render the homeowners coverage ineffective if the other source of liability is included thereunder.
A review of plaintiff’s petition in this matter reveals that petitioner seeks recovery not only for the alleged negligent acts of [the driver] in failing to properly operate the vehicle but also for certain alleged negligent acts of [the owner] unrelated to the operation or use of the vehicle.
# # «
Clearly plaintiff’s petition charges [the owner] with acts of negligence which are completely independent of and totally unrelated to his ownership and use of the vehicle herein involved. * * * [I]f it be determined that [the owner] was guilty of these alleged acts of negligence which are independent of and unconnected with the use of the vehicle then the insurance coverage applicable would be under [the owner’s] homeowner’s policy.” 349 So. 2d 481, 484-85.

Finally, in Frazier, suit was brought by the mother of a small child who was injured when run over by an automobile driven by the insured’s daughter. The insureds were babysitting for the child at the time of the accident. The petition alleged negligence of the insureds in not properly. attending to the child while babysitting and negligence of the insured’s daughter in operating the automobile. The insurance company argued that the claim was excepted from the homeowners policy because the generating source of the accident was the alleged negligent operation of the automobile. The court pointed out that the petition alleged two distinct causes of action and held that the insurance company could be held liable for the alleged negligence of the insureds even though under the exclusionary clause, the policy did not afford coverage for the operation of the automobile.

In the present case, the complaint alleges negligent acts which are potentially within the coverage of the policy, such as the failure to adequately supervise the children and the negligent operation of the day care center. These alleged acts are separate and distinct from any allegations relating to the negligent operation of the automobile. If it is ultimately determined that the insureds are guilty of these acts, USF&G could be liable under the policy. In other words, if the liability of an insured arises from negligent acts which constitute non-auto-related conduct, the policy should be applicable regardless of the automobile exclusion or the fact that an automobile was involved in the occurrence. If an occurrence is caused by a risk included within the policy, coverage is not vitiated merely because a separate excluded risk constitutes an additional cause of the occurrence.

Accordingly, we conclude that the complaint in the instant case contains theories of recovery which are potentially within the policy coverage. If a complaint sets forth allegations which are within or potentially within the coverage of the policy, the insurer must defend the action. (Thornton v. Paul (1978), 74 Ill. 2d 132,144, 384 N.E.2d 335, 339; La Rotunda v. Royal Globe Insurance Co. (1980), 87 Ill. App. 3d 446,451, 408 N.E.2d 928, 933; Hawkeye Security Insurance Co. v. Hodorowicz (1980), 84 Ill. App. 3d 948, 952, 406 N.E.2d 146,149.) Moreover, the duty to defend extends to cases where the complaint alleges several causes of action or theories of recovery against an insured even if only one or some of them are within the policy coverage. (Maryland Casualty Co. v. Peppers (1976), 64 Ill. 2d 187, 194, 355 N.E.2d 24, 28; Aetna Insurance Co. v. Janson (1978), 60 Ill. App. 3d 957, 960, 377 N.E.2d 296, 298-99.) Also, the insurer may safely refuse to defend only when the allegations clearly show that the claim alleged is beyond coverage. (La Rotunda v. Royal Globe Insurance Co. (1980), 87 Ill. App. 3d 446, 451,408 N.E.2d 928, 933; Reis v. Aetna Casualty & Surety Co. (1978), 69 Ill. App. 3d 777, 784, 387 N.E.2d 700, 706; Tiffiny Decorating Co. v. General Accident Fire & Life Assurance Corp. (1973), 12 Ill. App. 3d 597, 600, 299 N.E.2d 378, 380.) Since the allegations of the complaint in the present case do not clearly show that the claims are beyond coverage, USF&G is obligated to defend its insureds.

The summary judgment in favor of USF&G is therefore reversed, and the case is remanded for further proceedings consistent with what is stated herein.

Reversed and remanded.

McNAMARA and McGILLICUDDY, JJ., concur.

       But cf. State Farm, Fire & Casualty Co. v. McGlawn (1980), 84 Ill. App. 3d 107, 404 N.E.2d 1122, where the court determined that a similar exclusion precluded coverage where the complaint alleged negligent entrustment by the insured and negligent operation of an automobile by the insured’s son. The court based its conclusion on cases holding that because negligence with an automobile is a necessary part of the proof required in a negligent entrustment action, the actual actionable event was negligence involving a motor vehicle. One judge dissented, concluding that the insurance company had a duty to defend since negligent entrustment is a separate and distinct tort, and injuries resulting from such entrustment do not arise out of the use or operation of the automobile.

       Contrary to USF&G’s assertion, the fact that Barron was injured away from the insured premises is not controlling here.


source: Caselaw Access Project

author: JUSTICE WILSON

license: Public Domain

text:
    CIRCLE SECURITY AGENCY, INC., Plaintiff-Appellee and Cross-Appellant, v. LEWIS D. ROSS, Defendant-Appellant and Cross-Appellee.
    First District (5th Division)
    No. 80-2502
    Opinion filed April 30, 1982.
    Rehearing denied July 7, 1982.

      George V. Bobrinskoy, Jr., and Dennis A. McMahon, both of Mayer, Brown & Platt, of Chicago, for appellant.
    Robert Marks, of Marks, Marks and Kaplan, of Chicago, for appellee.
   JUSTICE WILSON

delivered the opinion of the court:

Plaintiff, Circle Security Agency, Inc. (Circle), brought a declaratory judgment action against Lewis D. Ross for the construction of a contract under which Circle paid Ross for certain services. The trial court found that Ross was entitled to compensation at the rate of $20,000 per year. Ross appeals from the amount awarded only, contending that the terms of the contract entitle him to $30,000 annually. Circle cross-appeals from the judgment, arguing that (1) the trial court erred in ruling that the contract had not been repudiated by Ross; and (2) Circle is entitled to damages. We affirm the judgment, with modification.

Circle is a general agent for Mutual of Omaha and United Benefit Life Insurance Co. Years ago, defendant Ross created and developed Circle and during that time he established excellent rapport with the home office of the Omaha insurers. In 1966, with the approval of the home office, he sold his controlling interest in Circle to Bernard Levin and Harmon Kravitz, who were at the time operating a subagency under another general agent of the insurers.

The sale of the business was effectuated through several related documents, an agreement and plan of reorganization, a warranty agreement, and an employment agreement. The latter document, which is the basis of the present litigation, provides for Ross to be employed by Circle “in an executive and managerial capacity” for “the remainder of his life” at specified rates of compensation. In return, Ross is obligated to apply his “knowledge, skill, attention and experience to the best of his ability in the discharge of the duties and obligations thereof and to use his best efforts to further the interest of Circle.”

From 1966 to 1971 Ross maintained an office for Circle in downtown Chicago. Pursuant to the terms of paragraph 2 of the agreement he received an annual salary of $35,000. After these first five years of Ross’ employment, paragraph 2 provided that his salary would increase to $40,000 for his remaining years of service. In 1971, however, Levin and Kravitz closed Circle’s downtown office, which they were entitled to do, and Ross then elected (under paragraph 6 of the contract) “to perform services to Circle on a consulting basis only, upon the terms and rate of compensation provided for such consulting services in paragraph 3 hereof.” In pertinent part, paragraph 3 provides that

“[If Ross becomes] physically incapacitated to such an extent as to prevent him, in the opinion of his physician, from reasonably performing his full time services hereunder, then from and after delivery to Circle of a letter or certificate of the physician to such effect, Ross shall only be required to render consulting services to Circle and shall only be required to devote such time in his employment as shall be consistent with the state of his health. If such incapacity shall continue for a period of more than 12 months, the compensation payable to Ross by Circle shall be reduced by $10,000 commencing on a date which is 12 months after delivery of the physician’s letter or certificate referred to above.”

During the next seven years Levin and Kravitz made few requests of Ross for his consulting services, although the men regularly met to discuss general operations. Ross’ major function was to maintain good relations with the insurers’ home office, to protect Circle’s status.

The facts that led to this lawsuit occurred over a period of months in 1978, during which time the parties communicated primarily through letters. According to Bernard Levin’s trial testimony, certain changes in marketing conditions caused him and Harmon Kravitz (Circle’s operating officers), to reassess Circle’s operations and status. In a letter to Ross dated February 17, 1978, Levin and Kravitz listed some of the economic and political factors which led to their review of Circle’s structure. The letter indicated that they had consulted with their attorney concerning Ross’ “contract of employment, the amount due * * * thereunder, and the quantity of services that Circle had a right to expect therefor.” The February 17 letter further noted that they had “been rather lax up to now in not insisting on full compliance with the contract” but that they had “no choice but to insist upon such full and complete compliance so that the correct amount of salary to be paid [him could] be determined.” The letter requested Ross to furnish a statement from his doctor attesting to his physical capacity or incapacity to perform under the contract, and concluded with a request for a meeting. Ross did not respond to this letter.

The record indicates that Ross had suffered a severe heart attack shortly after receiving the February 17 letter and was hospitalized until September. He was further confined to his home until October 1978, at which time he prepared to leave for his annual winter trip to his home in Arizona. For medical reasons he had spent winters in Arizona for a number of years. He also testified at trial that he viewed his consultant status as being similar to that of an independent contractor rather than as an employee in the master-servant sense.

In September 1978, the parties’ attorneys met with Levin, Kravitz, and Ross’ son to discuss a possible amendment or settlement of the contract. The negotiations were unsuccessful. Ross’ son informed Kravitz and Levin that his father’s health had improved to the point that he was able to perform his consulting duties.

In a letter dated October 4, 1978, Ross’ attorney wrote to plaintiff’s attorney regarding several matters and concluded with the statement that “[i]f Circle wishes Mr. Ross to perform specific consulting services consistent with the state of his health as provided in Exhibit B of the Agreement, Mr. Ross is entirely willing to do so. Circle should communicate its desire on this point in writing to Mr. Ross * * *."

In response to this letter, Levin wrote to Ross on October 12,1978. He told Ross that Circle needed Ross’ assistance with several major problems that Circle was facing, the most pressing being the home office’s changing attitude toward its general agents. Expressing the fear, that Circle might be eliminated by the home office, Levin asked Ross to accompany him to a meeting in Omaha, Nebraska, on November 13, 1978. He also expressed the desire to consult with Ross before the meeting if Ross was unable to attend. Finally, he reiterated the need for a face-to-face meeting, and told Ross that, regarding his vacation time, they needed to know his whereabouts and availability at all times.

Ross responded to the October 12 letter on October 24, 1978. He explained that he received Levin’s letter as he was preparing to leave for his winter home in Phoenix. Ross stated that, having for years operated as a consultant pursuant to paragraph 6 of the contract, he was “not required to deal with others on your behalf, nor subject to your control over my vacation time or other use as to my time allocations.” He further noted his belief that “undue urgency” was not necessary as to matters which have involved the general agents such as Circle for “some twenty years.” He concluded with a request for certain information in order to prepare his consulting advice to them.

Before Ross’ October 24 letter reached Kravitz and Levin, they sent him one dated October 25, 1978. In it they expressed concern that Ross had not responded to their October 12 letter and concluded that he did “not intend to honor” his contractual obligations. They also warned Ross that they would consider the contract terminated and intended to take action if he did not respond by October 30.

Ross then sent another letter, from Phoenix, dated October 31, 1978. In this letter he outlined his advice to Circle for use at the November meeting in Omaha.

Levin’s response, dated November 3, 1978, thanked Ross for his advice but again requested a face-to-face meeting, stressing the need to discuss other problems as well as the one involving the home office. He also stated that Ross labored under a “gross misconception” regarding his rights as “Circle’s employee” and that nothing gave him the right to unilaterally set conditions upon the rendition of his services or time and duration of his vacations. Finally, Levin enclosed a paycheck while reserving Circle’s rights to recover any payments made if the contract was found to be terminated.

A November 13,1978, letter from Ross indicated that he would abide by his own attorney’s interpretation of the contract. He also stated that face-to-face meetings were not required under the contract and that he could give his recommendations in writing. He agreed to meet, however, if they would come to Arizona, because he would not be returning to Chicago until spring, as was his custom.

On December 27,1978, plaintiff filed the complaint for a declaratory judgment. The trial court granted plaintiff’s request for a preliminary injunction on January 23, 1979, to prevent defendant from notifying the home office that plaintiff was in default, which would have permitted the home office to cancel Circle’s contract. Plaintiff’s payments to defendant under the contract were expressly made without a waiver of rights.

At the trial on the merits, Ross introduced evidence relating to his health. His treating doctor in Chicago, Mark Pomerance, was deceased at the time of trial and his affidavit was not allowed into evidence. The testimony of Dr. Alan Gordon, Ross’ Arizona physician, was read into the record from an evidence deposition. He testified that Ross suffered from ischemic heart disease, a serious condition which affects the coronary arteries and restricts the blood flow to the heart. Ross also had suffered certain complications, congestive heart failure and abnormal heart rhythm. According to Dr. Gordon, Ross’ condition did not impair his mental abilities but did restrict his physical activities. Cold weather would increase the severity of the symptoms. Dr. Gordon further testified that toward the end of October 1978, Ross’ angina and fatigue had increased to the point that he could not walk a block without discomfort and that he should not be in a cold climate. In the doctor’s opinion, because of the state of Ross’ health in October 1978, he would have advised Ross not to travel to the November 13 meeting in Omaha, Nebraska; such a trip could have been life-threatening. When Dr. Gordon examined Ross in Phoenix in late October of 1978, he found no indication of congestive heart failure or abnormal heart rhythm but Ross complained of generalized aching and weakness. Dr. Gordon also saw Ross on November 7, at which time he told Ross to return again in two or three weeks because his health was still a serious concern. Although the doctor and Ross never discussed the advisability of Ross’ travelling to Omaha,, the doctor testified that he would not have advised travel at that time.

Following the admission of Dr. Gordon’s evidence deposition, defendant read certain portions of the discovery deposition of Harmon Kravitz, vice president of Circle. Ross’ counsel asked,

“[I]s it a fact * * * that you and Mr. Levin expressed a desire to Mr. Ross somewhat prior to February, 1978, if some method could be worked out where a reduced form of lifetime payment to Mr. Ross could be agreed upon?

A. Yes, yes.

Q. And that was the essential purpose of your letter of February 17,1978, is that correct?

A. Yes.”

Kravitz then elaborated, after his counsel’s objection to the question, by stating, “That was one part of the letter of 1978 that we sent to him, because in there we were also stating that we wanted to talk to him about his particular duties as a consultant.” His attorney then added that the letter should speak for itself.

After further information from the deposition was read into evidence, plaintiff called Kravitz to testify in rebuttal. He said he had visited Ross in the hospital in August of 1978. In September of 1978, however, Ross’ son told Kravitz and Levin that defendant had recovered his health and was available to do consulting work. From that time to the present, he was not told that travel or work would be deleterious to Ross’ health. On cross-examination he reiterated that he did not know of any difficulties that Ross would face in travelling from Arizona to the Omaha meeting or to Chicago, but then admitted that he had indicated to the contrary in his discovery deposition.

After closing arguments, the trial court ruled that Mr. Ross was a consultant/employee of Circle’s and as such, subject to plaintiff’s reasonable terms of employment, consistent with the state of his health; that the evidence established that Ross had a heart condition of which all parties were aware; that the employment contract was intended to be a lifetime arrangement and was part of the consideration of the sale of Ross’ controlling interest in Circle to Levin and Kravitz. Further, the court held that Ross breached a condition of the contract by failing to provide Circle with a physician’s certificate as to his health, but that the breach was not material and did not justify termination of the contract. Accordingly, construing the compensation portion of the contract, the court held that Ross should receive $20,000 a year for his consulting services. This appeal followed.

Opinion

I

Plaintiff’s cross-appeal from the judgment centers on Ross’ employment status and his alleged refusal to perform as plaintiff directed. Such disobedience, Circle maintains, effectively terminated the contract and thus released Circle from its obligation to continue paying him. In sharp opposition to this view, defendant argues that Circle’s request for his attendance of the Omaha meeting (and the series of letters beginning with the one dated February 17, 1978) was motivated by Circle’s bad faith attempt to renegotiate or end the employment contract. Ross also agrees with the trial court’s belief that his health was an important consideration in construing the contract, an issue that plaintiff minimizes.

The resolution of this controversy depends on the judicial construction of the parties’ employment agreement. As in the case of interpreting any other type of contract, the main objective is to determine the intent of the parties. (AZL Resources, Inc. v. Bromagen (1979), 79 Ill. App. 3d 76, 398 N.E.2d 292.) The trial court judges the witnesses’ credibility and evaluates the evidence in resolving conflicting versions of facts; our role in reviewing the judgment is limited to determining whether it is against the manifest weight of the evidence or whether the trial court misapplied the relevant law.

Initially, we reject plaintiff’s argument that the trial court failed to consider all the evidence or to definitively rule on plaintiff’s allegations that Ross had repudiated the contract. Absent contrary indications, which are not present here, we do not presume that the trial court ignores relevant evidence. Nor are we persuaded by Circle’s belief that the trial judge failed to rule on its theories because he “made no finding that the evidence was insufficient to establish either a repudiation of the contract tantamount to an anticipatory breach or a deliberate, gross insubordination and disobedience by defendant as plaintiff’s employee.” (Emphasis added.) Circle’s logic is patently flawed; the trial court’s judgment in favor of Ross was an implicit rejection of plaintiff’s contention that Ross’ conduct amounted to a material breach of contract. Indeed, the court found that Ross’ only breach was his failure to furnish Circle with a physician’s certificate that he was unable to perform fully because of the state of his health. This failure, the court concluded, was not material and did not justify the forfeiture of the lifetime employment contract that was part of the consideration for Ross’ sale of the controlling interest in Circle. We agree with the trial court’s conclusion and find that it is not against the manifest weight of the evidence.

Circle apparently believes, however, that the trial judge misapprehended the legal effect resulting from his finding that Ross was plaintiff’s employee. Circle argues that, as Ross’ employer, it had the absolute right to set reasonable terms and conditions of his performance under the contract; Ross’ failure to comply with its reasonable requests for face-to-face conferences constituted insubordination, which terminated the employment relationship and gave rise to plaintiff’s cause of action. In support of its contentions, plaintiff cites general principles of law, anticipatory breach of contract and rules governing master-servant relationships. If, as plaintiff contends, defendant by his words or actions failed to perform his duties without valid excuse, he would be liable for breach of contract and Circle’s remedies would depend on whether the breach was found to be material or minor. (See Restatement of Contracts sec. 275 (1932); Restatement (Second) of Contracts sec. 241 (1981), which provide guidelines for determining whether a breach is material or minor.) A minor breach is compensable in damages but will not generally give rise to a cause of action on the entire contract, nor excuse the non-breaching party’s duty of counterperformance. Cf. Restatement (Second) of Contracts secs. 231-60 (1981), which explains the effects of nonperformance and uses the terms “total” and “partial” breach.

Focusing on Ross’ role as Circle’s employee, plaintiff argues that Ross’ “unilateral” interpretation of his consulting duties amounts to a material breach because it usurps Circle’s absolute control over its employee. Circle points out that the essential characteristic of the employer and employee relation is the employer’s exercise of control over his employee’s work (17 Ill. L. & Prac. Employment sec. 2 (1956)); without a valid excuse, the employee is not entitled to refuse to do the work he is employed to do. (56 C.J.S. Master and Servant sec. 62 (1948); 17 Ill. L. & Prac. Employment sec. 41 (1956).) Therefore, an employee’s deliberate insubordination is grounds for his termination. 17 Ill. L. & Prac. Employment sec. 25 (1956).

While we accept those principles of law, we disagree with plaintiff’s application of them to the facts of this case. It is true that Ross testified that he viewed himself as more of an “independent contractor” than as an employee in the master-servant sense. He told Levin and Kravitz that he was not subject to their control over his vacation time; he did not agree that a face-to-face meeting was necessary; and he refused to leave his Arizona home in the winter to fly to Chicago or to Omaha for the meeting. Further, he informed Kravitz and Levin that he could satisfy his consulting duties in writing and that they should send him written requests that detailed the nature of the problem and other information. We do not believe, however, that these actions amount to “insubordination.” Ross never refused to perform as a consultant, although he disagreed as to the means by which his duties could be performed. We do not find his conduct unreasonable in light of the nature of consulting work, the parties’ long-term business relationship and Ross’ apparently satisfactory previous performance, and the condition of his health.

A consultant who gives expert advice as a professional may be an employee, but his status is not identical to .that of a clerical worker or laborer. The latter type of worker generally performs definable tasks that are nondiscretionary or routine, whereas an employee of some authority, such as a corporate officer, exercises business judgment to a greater degree. We believe that Ross, either as a part-time consultant or a full-time executive, was paid to exercise professional judgment. Ross’ contractual duties include advising plaintiff on matters involving the insurance industry and maintaining cordial relations with the home office of Circle’s principal, Mutual of Omaha. Ross did offer plaintiff his advice regarding the Omaha meeting and further indicated his willingness to respond in writing to any specific consulting requests. His status as an employee does not transform his differences of opinion with Circle into insubordination sufficient to terminate the employment contract. Furthermore, plaintiff’s letter of February 17,1978, and Kravitz’ deposition statements support an inference that part of plaintiff’s reason for accelerating its demands for Ross’ services was to reduce his compensation under the contract. While Circle’s desire to modify or even end the contract is not in itself wrongful, the trial court could have inferred that plaintiff’s demands for meetings and other requests were made under a pretext. We conclude that the mere labelling of Ross as Circle’s employee did not transform his conduct in the case into sufficient grounds for terminating the contract.

Ross’ health is another factor that is directly relevant to his failure to meet some of Circle’s requests. The trial court emphasized the significance of Ross’ heart condition and the medical testimony regarding the inadvisability of Ross’ leaving his Arizona home to travel to Omaha or Chicago for meetings with Kravitz and Levin. The record supports the court’s findings on the health issue, and we reject plaintiff’s argument that Ross’ refusal to obey its requests were unrelated to his health. Moreover, the contract itself indicates that the parties explicitly considered Ross’ health when they entered into the agreement. The document provides that in the event that Ross became physically incapacitated to the point where he could not safely render full-time services in the physician’s opinion, he would “only be required to devote such time as is consistent with the state of his health.” If the incapacity continued for more than 12 months, Ross’ full-time salary would be reduced by $10,000. If he were totally incapacitated and could not perform any services, he still would be entitled to $15,000 per year. This latter provision is a strong indication that the employment agreement was meant to provide Ross with a certain amount of financial security for life, even if he ceased to be capable of any performance thereunder. As long as he is able to perform, of course, he must comply with Circle’s reasonable requests for his consulting services. We agree with the trial court that the major contractual limitation on Circle’s demands is Ross’ physical condition; he may not be required to comply with any requests which endanger his health. (See 9 Williston, Contracts sec. 1013R, at 51-52 (3d ed. 1967).) Therefore, to the extent his failure to comply with Circle’s requests for a face-to-face meeting was caused by his annual trip to Arizona, a medical necessity of which plaintiffs were aware, we find that his actions were justified.

In view of Ross’ health, his expert consultant status, and the parties’ long-term business association, therefore, we hold that Ross was not insubordinate and did not materially breach his contract. His expression of opinion as to the scope of his duties does not equate with a refusal to obey orders in the circumstances of this case, especially considering Circle’s alleged motivation to modify or end his contract. To avoid future controversy however, we admonish both parties to use good faith in honoring their contract. Thus, if Ross is asked to meet with Levin and Kravitz while he is in Chicago, he cannot ignore the request merely because he decides . it is unnecessary. Assuming he is physically able to comply, he must do so. Plaintiff on the other hand, cannot make numerous demands for services that are not needed under the guise of its right as an employer to control its employees.

II

Although we conclude that the evidence amply supports the trial court’s factual finding that Ross had not materially breached the contract, we believe that the court misconstrued the compensation provisions of the contract. As previously indicated the agreement provides for different levels of compensation to be paid upon the happening of certain contingencies. Under paragraph 2 of the contract Ross was to receive $35,000 per year for the first five years of full-time employment and thereafter, $40,000 per year. Paragraph 3 states that if Ross becomes physically incapacitated for more than 12 months and his physician certifies that Ross is unable to perform full-time services, “the compensation payable to Ross by Circle shall be reduced by $10,000 commencing on a date which is 12 months after the delivery of the physician’s letter ° ° Thus, if and when the health-related contingency of paragraph 3 occurs, Ross’ full-time salary of either $35,000 or $40,000 would be reduced to $25,000 or $30,000 and he would become a “consultant.” The lower figure would be appropriate if he became a consultant in the first five years of service.

Paragraph 3 further discusses the effect of Ross’ mental incapacity, providing that Ross’ compensation would be reduced to $15,000 a year if and when Ross is adjudicated mentally ill or incapacitated or if his physician so certifies. Upon the restoration of his mental health, however, paragraph 3 provides that:

“his physician shall by letter or certificate state that Ross has recovered from his total incapacity or mental illness and setting forth the facts upon which statement or certificate is based, then Ross shall resume his duties, either on a full-time basis or on a consulting basis, and his compensation shall be reinstated at the rate of $40,000 per year, $35,000 per year, $30,000 per year, or $25,000 per year, as the case may he.” (Emphasis added.)

As the facts indicate, Ross had become eligible to receive $40,000 per year at the time he became a consultant pursuant to paragraph 6 of the contract. This paragraph required Circle to maintain a downtown office for Ross for at least five years and further provided that if and when the office was closed, Ross could, “upon thirty (30) days written notice to Circle, elect to perform services to Circle on a consulting basis only, upon the terms and rate of compensation provided for such consulting services in Paragraph 3 hereof.” It is undisputed that Circle paid Ross $30,000 after it closed the downtown office and Ross became a consultant.

The trial court, in construing these provisions, held that Ross should receive only $20,000, which represents a second $10,000 reduction from Ross’ full-time rate of $40,000. Circle, as cross-appellee, justifies this result by arguing that the paragraph 6 consultant status is for “general” consulting services, whereas the paragraph 3 consultant status applies to “limited” consulting services based on Ross’ health. Accordingly, Circle argues, since Ross was receiving $30,000 per year in 1978, the court was correct in further reducing Ross’ salary to $20,000 under paragraph 3 when his health deteriorated to the point where he could only perform limited consultation.

We cannot agree with the above interpretation of the contract’s provisions because there is nothing in the document that indicates a different rate of compensation for the consulting services rendered pursuant to paragraph 6 as opposed to paragraph 3. Whether Ross ceased to perform full-time under the contract because of his health or because Circle closed its downtown offices, the contract specifies only one salary cut of $10,000 from the full-time to consultant status. Hence, because paragraph 6 expressly incorporates the compensation rate for consulting services included in paragraph 3, we must follow the necessary import of paragraph 3. As the language itself indicates, Ross could be compensated at only one of the following rates: (1) $35,000 (full-time for the first 5 years of service); (2) $40,000 (full-time rate for service after 5 years); (3) $25,000 (consultant rate based on $10,000 reduction from $35,000); (4) $30,000 (consultant rate based on $10,000 reduction from $40,000); or (5) $15,000 (payment if Ross is totally incapacitated). These figures are specifically listed in paragraph 3, and we believe that no other levels of compensation were contemplated in the contract. Therefore, construing the document as a whole and attempting to give effect to the provisions as they relate to each other, we hold that the proper rate of Ross’ compensation under the contract is $30,000 per year. See Martindell v. Lake Shore National Bank (1958), 15 Ill. 2d 272, 154 N.E.2d 683.

For the reasons herein set forth we affirm the trial court’s judgment that defendant Ross did not materially breach the employment contract but modify the amount of compensation to be paid Ross from $20,000 to $30,000 per year.

Affirmed as modified.

LORENZ and MEJDA, JJ., concur.

       After 1971, when he became a consultant, Ross' salary was decreased to $30,000 annually, which presumably represents the $10,000 reduction that applies pursuant to paragraph 3. He continued to be compensated at this amount until this litigation, when the trial court ruled that he should receive $20,000 instead.

       The agency can be terminated by Mutual and United upon 30 days’ notice.

       This being the essential issue as to liability, we need not discuss Circle’s anticipatory breach theory, which generally is used to provide a party with an immediate right of action against a reneging party whose performance is not currently due under an executory contract. (See generally 4 Corbin on Contracts sec. 959, at 852-53; sec. 973, at 905, 911-12 (1951); Farwell Construction Co. v. Ticktin (1978), 59 Ill. App. 3d 954, 376 N.E.2d 621, affd on remand (1980), 84 Ill. App. 3d 791, 405 N.E.2d 1051.)


author: PRESIDING JUSTICE CAMPBELL

text:
    ROGER LEE HEATH, Plaintiff-Appellant, v. ELIAS R. ZENKICH et al., Defendants-Appellees.
    First District (1st Division)
    No. 81-82
    Opinion filed May 3, 1982.
    Rehearing denied July 12, 1982.
    Gomer W. Walters, of Haight, Hofeldt, Davis & Jamb or, of Chicago, for appellant.

      Richard S. Phillips, James P. Zeller, and Jean M. Dudek, all of Wegner, Stellman, McCord, Wood & Dalton, of Chicago, for appellees.
   PRESIDING JUSTICE CAMPBELL

delivered the opinion of the court:

Plaintiff appeals from an order of the circuit court of Cook County which dismissed his complaint. Plaintiff sought equitable and declaratory relief in this action in which plaintiff claimed that he was the inventor and owner of two medical devices for which defendants had filed applications for letters patent with the United States Patent and Trademark Office. On appeal, plaintiff raises two issues: (1) whether the State courts have jurisdiction to determine title to inventions and patent applications; and (2) whether a request for an order compelling defendants to inform the Patent and Trademark Office of the factual findings of the circuit court relating to inventorship constitutes a claim upon which relief may be granted.

According to plaintiff’s complaint, defendant Elias R. Zenkich was the sole owner of defendant Zenex Corporation and its related companies, Zenco Engineering Corporation and Medizenco, U.S.A., Ltd. Plaintiff, as an independent contractor, agreed to repair and service various medical equipment for which Medizenco was a distributor. Plaintiff was paid a commission for the work which he performed and from this commission he paid to Medizenco his rental and overhead expenses. Plaintiff later agreed to sell the products which Medizenco distributed. Subsequently, the operations of Medizenco were transferred to Zenex and plaintiff continued to sell, repair and service the equipment as he had done for Medizenco. Plaintiff claims that his sole agreement with Medizenco and Zenex involved the repair, maintenance and sale of the companies’ equipment and that plaintiff was not employed by the two companies for the purpose of making inventions or discoveries. Plaintiff claims that there was no agreement with either of the two companies concerning any inventions or discoveries which he might make.

During the time that he was providing repair and maintenance service for Zenex, plaintiff developed two inventions. The first involved an improved grounding pad for use during electrosurgical procedures (Bi-Pad) . Plaintiff’s second invention involved a system to permit defibrillation of a patient during physiological monitoring by using one pair of pre-applied and preconnected electrodes for both defibrillation and physiological monitoring (Bi-Pak 2). Plaintiff had prepared sketches and written descriptions for the two inventions and had assembled a model of the Bi-Pak 2. Plaintiff claims that he inquired whether defendant Zenkich was interested in either of plaintiff’s two inventions in exchange for appropriate remuneratiori. Zenkich and plaintiff refined the Bi-Pak 2 and assembled a model of the Bi-Pak. This work was performed at Zenex after regular working hours. Both of these devices subsequently were manufactured and sold by Zenex.

Plaintiff was requested by Zenkich to assist a patent attorney in the preparation of patent applications for both devices. Plaintiff alleged that he did not file patent applications in his name because he believed that the applications on which he assisted the attorney were being filed in his name. The devices had been on sale for more than one year at the time that plaintiff first learned that the patent applications had been filed in defendant’s name. Therefore, plaintiff was barred from filing applications for letters patent in his name pursuant to 35 U.S.C. sec. 102(b) (1976). Plaintiff subsequently requested Zenkich to file an affidavit with the Patent and Trademark Office to correct the name of the inventor on the applications. Zenkich refused and informed plaintiff that Zenkich believed himself to be the inventor of the two devices.

Plaintiff subsequently filed his complaint in the circuit court of Cook County seeking equitable and declaratory relief. Count I sought an order compelling Zenkich “to file appropriate documentation in the United States Patent and Trademark Office setting forth the facts regarding inventorship, as found by [the circuit court]” for the Bi-Pad device. Count II sought a similar order for the Bi-Pak 2 device. Count III sought a declaratory judgment that plaintiff was either the sole inventor or a joint inventor of the two devices and also sought a declaration as to plaintiff’s ownership rights in the two patent applications, the inventions and the patents which may issue. Count IV sought an order compelling Zenex and Zenkich to execute documentation necessary to vest in plaintiff the ownership rights to the inventions, patent applications and the patents which may issue. Defendants moved to dismiss the complaint for failure to state a claim upon which relief may be granted and for lack of subject matter jurisdiction pursuant to sections 45 and 48, respectively, of the Illinois Civil Practice Act. (Ill. Rev. Stat. 1979, ch. 110, pars. 45, 48.) The circuit court dismissed counts I and II pursuant to section 45, count III pursuant to sections 45 and 48 and count IV pursuant to section 48.

Plaintiff first argues that unless the circuit court exercises jurisdiction in this matter, he will be deprived of a forum to have his claim to the titles of the two inventions heard. Plaintiff contends that Federal courts do not have jurisdiction to hear cases in which title to inventions is at issue. (See Laning v. National Ribbon & Carbon Paper Manufacturing Co. (7th Cir. 1942), 125 F.2d 565; Lion Manufacturing Corp. v. Chicago Flexible Shaft Co. (7th Cir. 1939), 106 F.2d 930.) Plaintiff argues that in the instant case, the questions relating to Federal patent law are collateral issues and that jurisdiction exists in the State courts to hear this matter. (See Jones v. Ulrich (1950), 342 Ill. App. 16, 95 N.E.2d 113.) Plaintiff urges that at issue in this case is his common law right to make, use and sell his inventions and to exercise other rights accruing to him through ownership of the inventions and that these rights do not depend upon Federal patent law. (See Crown Die & Tool Co. v. Nye Tool & Machine Works (1923), 261 U.S. 24, 67 L. Ed. 516, 43 S. Ct. 254.) Plaintiff claims that it is State law which protects his common law rights to his inventions. See Aronson v. Quick Point Pencil Co. (1979), 440 U.S. 257, 59 L. Ed. 2d 296, 99 S. Ct. 1096; Kewanee Oil Co. v. Bicron Corp. (1974), 416 U.S. 470, 40 L. Ed. 2d 315, 94 S. Ct. 1879.

Defendants argue that at issue in this case is the validity of federally created interests in the applications for letters patent and that, therefore, this matter falls within the exclusive and original jurisdiction of Federal district court pursuant to 28 U.S.C. sec. 1338(a). Defendants urge that plaintiff’s pleading establishes that a “case,” rather than a “question,” involving Federal patent law exists and that the proper forum for plaintiff’s claim is the Federal district court. (See Pratt v. Paris Gaslight & Coke Co. (1897), 168 U.S. 255, 42 L. Ed. 458, 18 S. Ct. 62.) Defendants contend that plaintiff’s sole basis for claiming ownership of the two devices is that he was the inventor and that where a cause of action is based solely upon inventorship, exclusive jurisdiction rests in the Federal courts. (See Forster v. Brown Hoisting Machinery Co. (1914), 266 Ill. 287, 107 N.E. 588.) Defendants argue that in the instant case the validity of any patents that may issue is at stake and that, because of this, the State courts lack jurisdiction to hear plaintiff’s claim.

Pursuant to 28 U.S.C. sec. 1338(a) (1976), the Federal district courts have exclusive and original jurisdiction of causes of action arising under the patent laws. “To constitute such a cause the plaintiff must set up some right, title, or interest under the patent laws, or at least make it appear that some right or privilege will be defeated by one construction, or sustained by the opposite construction, of these laws.” (Pratt v. Paris Gaslight & Coke Co. (1897), 168 U.S. 255, 259, 42 L. Ed. 458, 460, 18 S. Ct. 62, 64.) This section, however, does not deprive State courts of exercising jurisdiction in cases where a “question” involving Federal patent law arises; rather, it precludes State courts from assuming jurisdiction only in “cases” involving Federal patent law. (Pratt v. Paris Gaslight & Coke Co.; see Burke v. Pittway Corp. (1978), 63 Ill. App. 3d 354, 380 N.E.2d 1, cert. denied (1979), 441 U.S. 908, 60 L. Ed. 2d 377, 99 S. Ct. 2000.) The test to be applied in determining whether a cause of action arises under State law or Federal patent law was set forth in American Well Works Co. v. Layne & Bowler Co. (1916), 241 U.S. 257, 260, 60 L. Ed. 987, 989, 36 S. Ct. 585, 586: “A suit arises under the law that creates the cause of action.” Thus, we must determine whether plaintiff’s claim arises under State law or Federal patent law.

In support for his contention that Illinois courts have jurisdiction of actions involving the title to patents, plaintiff cites two Seventh Circuit cases. In Lion Manufacturing Corp. v. Chicago Flexible Shaft Co. (7th Cir. 1939), 106 F.2d 930, plaintiff claimed equitable title to a patent for an electric shaver invented by defendant Brueker while he was employed by plaintiff. Brueker subsequently worked for defendant Chicago Flexible Shaft Co., who began to manufacture and sell the electric shaver embodied in the patent held by Brueker. Plaintiff claimed that it was the equitable owner of the patent by virtue of Brueker’s work on the invention while he was employed by plaintiff. The court determined that plaintiff’s complaint sought an order compelling the assignment of legal title to the invention and that plaintiff’s prayer for injunctive relief and an accounting depended upon a determination of the title issue. The court concluded that this cause of action arose under State law, rather than Federal patent law, and that the district court properly refused to exercise jurisdiction. In Laning v. National Ribbon & Carbon Paper Manufacturing Co. (N.D. Ill. 1941), 40 F. Supp. 1005, rev’d (7th Cir. 1942), 125 F.2d 565, plaintiff sought a declaratory judgment to determine title to certain patents and trademarks and for infringement. Plaintiff claimed his title from an Illinois corporation which had been dissolved prior to the assignment of title to plaintiff. The district court viewed the issue as being whether the corporation was still alive for purposes of winding up its affairs and concluded that it was not in existence. Accordingly, the district court held that the assignment of title to plaintiff was a nullity and dismissed the action. On appeal, the Seventh Circuit held that the gravamen of plaintiff’s complaint was one for a determination of title and that Federal jurisdiction was improperly exerted because the question of plaintiff’s title was dependent upon the construction of Illinois law.

In both of the foregoing cases, plaintiff’s claim for relief depended upon the interpretation of State law. In the instant case, we view plaintiff’s claim to be one for the determination of his rights which inure to him by virtue of his claimed inventorship and, accordingly, jurisdiction properly rests in the State courts. (See Lion Manufacturing Corp. v. Chicago Flexible Shaft Co.; Laning v. National Ribbon & Carbon Paper Co.) We note that plaintiff does not seek to void any patents which may issue, nor has plaintiff sought to enjoin defendants from utilizing the two inventions. Plaintiff merely is seeking a determination by the State courts of his ownership interests in the two inventions, and we view this type of action to arise independent of Federal patent law. (See Zemba v. Rodgers (1965), 87 N.J. Super. 518, 210 A.2d 95.) Defendants argue that the effect of a favorable decision for plaintiff in the State courts would be to invalidate any patents which may issue; however, a favorable decision for plaintiff would not invalidate any patents which may issue since there is a difference between establishing the fact of inventorship and giving it effect by judgment. (Becher v. Contoure Laboratories, Inc. (1929), 279 U.S. 388, 391, 73 L. Ed. 752, 754, 49 S. Ct. 356, 357.) A decree which will void any patent which may issue is a matter for the courts of the United States and, absent such a decree, there is no procedure to void or cancel any patents which may issue to defendants. (See Becher v. Contoure Laboratories, Inc.; Eckert v. Braun (7th Cir. 1946), 155 F.2d 517.) Therefore, the effect of a determination of the parties’ rights by an Illinois court will not serve to invalidate any patents which may issue. Accordingly, we hold that the circuit court improperly declined to exercise jurisdiction over counts III and IV of plaintiff’s complaint.

As to the trial court’s dismissal of counts I, II and III for failure to state a claim upon which relief may be granted, we believe that count III stated a claim and was a proper subject for declaratory judgment. Counts I and II seek remedies for the claimed violation of plaintiff’s ownership rights in the two inventions. Under the circumstances of this case, we do not believe that it was proper to dismiss these two counts and believe that if plaintiff prevails, the trial court should have latitude in fashioning an appropriate remedy.

Accordingly, this case is reversed and remanded to the circuit court of Cook County for further proceedings which are consistent with this opinion.

Judgment reversed and remanded.

GOLDBERG and O’CONNOR, JJ., concur.


author: JUSTICE JIGANTI

text:
    WALTER OAKES, Plaintiff-Appellant, v. ALBERT GAINES, Indiv. and d/b/a Theatrical Services Company, Defendant-Appellee.
    First District (4th Division)
    No. 81-1566
    Opinion filed June 3, 1982.

      James J. Reidy, Ltd., of Chicago (William A. Murphy, of counsel), for appellant.
    Conklin and Adler, Ltd., of Chicago, for appellee.
   JUSTICE JIGANTI

delivered the opinion of the court:

The plaintiff, Walter Oakes, and the defendant, Albert Gaines, were employees of the Chicagoland Commerce & Industry Exposition (Chicagoland). Oakes was injured during the course of a show put on by Chicagoland and brought an action against Gaines alleging both negligence and violations of the Structural Work Act (Ill. Rev. Stat. 1975, ch. 48, par. 60 et seq.). Gaines contended that as a co-employee he was immune from liability under section 5(a) of the Illinois Workmen’s Compensation Act, which bars personal injury suits against co-employees. (Ill. Rev. Stat. 1975, ch. 48, par. 138.5(a).) Oakes contends that at the time of the injury Gaines was acting in a capacity other than that of a co-employee and that he was suing Gaines in that separate capacity. This theory has been referred to as the dual capacity doctrine, and was applied recently by the Illinois Supreme Court in Smith v. Metropolitan Sanitary District (1979), 77 Ill. 2d 313, 396 N.E.2d 524. The trial court granted Gaines’ motion for summary judgment and Oakes brought this appeal. The focus of our attention is on whether Oakes’ injury was caused by the conduct of Gaines as an employee of Chicagoland or in his separate capacity involving their common employer, Chicagoland.

Oakes is a sound technician and stagehand and was hired by Chicagoland to operate equipment during the course of the show. He worked from a sound booth located above and behind the bleachers from which the audience viewed the show. He would get to this booth by way of a ladder and was injured while ascending the ladder. The ladder had “A1 Gaines” written on it in large letters. The ladder and its placement are the only connections between Gaines and his alleged dual capacity.

Gaines was hired by Chicagoland as a technical director. As such, he was a co-employee of Oakes. His alleged dual capacity stems from two apparently separate occurrences. First, Gaines is the sole owner of Theatrical Services Company, which is in the business of designing and building theatrical productions. In May of 1976, Theatrical Services entered into a contract with Chicagoland whereby Theatrical Services would transform a barge into a floating stage. Essentially, the contract provided that Theatrical Services would construct and install in the barge a stage floor and scaffolding. The stage floor and scaffolding would remain in the barge from June 19, 1976, through July 18, 1976, when Theatrical Services would restore the barge to its original condition. The contract further provided that Theatrical Services would repair and maintain the stage and scaffolding to keep them in first class operating condition throughout this period. After Theatrical Services delivered the barge with the stage constructed, Gaines was hired by Chicagoland through the stagehands’ union as the technical director of the show. The union records regarding this job indicated that Gaines and the plaintiff Oakes were on the same payroll at the time of Oakes’ injury.

The second occurrence which Oakes uses to support his allegations of Gaines’ dual capacity involves an arrangement between Chicagoland and Gaines whereby Gaines purchased construction materials and bunting for Chicagoland. The record shows that Theatrical Services sent a series of invoices to Chicagoland during the course of the show which billed Chicagoland for bunting and construction materials. According to Gaines’ deposition, construction on the barge was completed by Theatrical Services before any work was done by the union stagehands. Gaines stated that Theatrical Services received no remuneration for work performed in constructing the booths and bleachers where the plaintiff’s injuries occurred. He explained that he obtained the bunting and construction materials for Chicagoland as a matter of convenience because he was familiar with the suppliers. Gaines was then reimbursed by Chicagoland. Theatrical Services realized no profit or benefit from the acquisition and supply of this equipment.

The dual capacity doctrine has been used to allow suits by employees against employers which would normally be barred by section 5(a) of the Workmen’s Compensation Act. A suit may be brought against an employer if he occupies, in addition to his capacity as an employer, a second capacity that confers on him obligations independent of those imposed on him as an employer. (Smith v. Metropolitan Sanitary District (1979), 77 Ill. 2d 313, 396 N.E.2d 524.) For example, in Smith the plaintiff employee was allowed to maintain a strict liability claim against the defendant, one of two members of the joint venture which employed the plaintiff, for injuries caused by an allegedly defective truck leased by the defendant-employer to the joint venture. In Marcus v. Green (1973), 13 Ill. App. 3d 699, 300 N.E.2d 512, the plaintiff employee was allowed to bring a Structural Work Act claim against his employer, a contractor, in .the employer’s second capacity as a member of a partnership which had charge of the work performed by the plaintiff.

Although these cases involve attempts by an employee to sue his employer in a separate capacity, in the cause before us the plaintiff is attempting to sue a co-employee in a separate capacity. The defendant, relying on McCormick v. Caterpillar Tractor Co. (1980), 82 Ill. App. 3d 77, 402 N.E.2d 412, affd in part, rev’d in part (1981), 85 Ill. 2d 352, 423 N.E.2d 876, makes the assertion that the dual capacity doctrine cannot be applied in a situation involving an employee suing a co-employee.

In McCormick, the plaintiff brought suit against his employer and medical practitioners hired by his employer to recover for malpractice by those practitioners in treating him for a job related injury. Apparently, the employer chose to furnish the medical treatment through its own employees rather than pay outside doctors to do it. The court, applying the dual capacity doctrine, held that by furnishing medical treatment the employer was acting in a separate capacity from its capacity as an employer. However, it found that the individual medical practitioners were still the plaintiff’s “co-employees” within the meaning of section 5(a) of the Workmen’s Compensation Act and as such were entitled to statutory immunity from the plaintiff’s suit. In coming to this conclusion, the court stated that there was no indication by the Illinois Supreme Court in Smith v. Metropolitan Sanitary District, where it recently applied the dual capacity doctrine, that the co-employee immunity should be waived “merely because an employee might be serving an employer in a capacity different than that of another employee whom he might injure.” (McCormick v. Caterpillar Tractor Co. (1980), 82 Ill. App. 3d 77, 80, 402 N.E.2d 412, 415.) The implication in McCormick is that where an employer occupies two capacities and hires employees in each of its capacities, the employees are “co-employees’ within the meaning of section 5(a) and as such are entitled to the immunity provided for in that statute. The Illinois Supreme Court subsequently reversed the appellate court’s application of the dual capacity doctrine in McCormick, holding that the employer was not acting in a separate capacity when it furnished medical services to the plaintiff. (McCormick v. Caterpillar Tractor Co. (1981), 85 Ill. 2d 352, 423 N.E.2d 876.) However, since no petition for leave to appeal was filed as to the dismissal of the individual co-employees, the court did not consider the appellate court’s holding on the issue which we are considering. Here, Oakes is not attempting to avoid the immunity provision by asserting that Gaines was hired by Chicagoland while Chicagoland was acting in a dual capacity. Rather, Oakes is alleging that Gaines himself was acting in two capacities, that of a technical director and that of an independent contractor doing business with Chicagoland. We do not believe that the McCormick case in every situation bars employees from bringing actions against co-employees.

The cases in which the dual capacity doctrine has been applied establish that the plaintiff in this type of case must meet two requirements. First he must show that the defendant acted in two separate capacities. For example, the plaintiff in Marcus, who was employed as a carpenter by the defendant contractor, had to show that the defendant occupied another capacity as a member of a partnership which had charge of the work. In Smith, the plaintiff had to show that the defendant employer occupied another capacity, that of an independent business leasing trucks to the joint venture. Applying this requirement to the instant cause, Oakes must show that Gaines occupied a separate capacity in addition to his capacity as a technical director. In other words, he had to show that Gaines occupied the status of an independent contractor providing services to Chicagoland other than those which he provided as a technical director.

The second thing that the plaintiff must show in order to trigger the dual capacity doctrine is that he was injured as a result of activities performed by the defendant while the defendant was engaged in its second capacity. In Marcus, the plaintiff had to show that he was injured because the defendant breached duties arising out of his capacity as a member of a partnership which had charge of the work performed by the plaintiff. Similarly, in Smith, the plaintiff was required to establish that the defendant breached duties arising out of his capacity as the lessor of an allegedly defective truck. Thus, in the instant cause, Oakes must show that his injuries were occasioned by Gaines while Gaines was performing acts connected to his separate capacity as an independent contractor.

Although Oakes was able to meet the first requirement of showing that Gaines occupied two capacities in his relationship with Chicagoland, he failed to meet the second requirement of showing that Gaines was acting in his capacity as an independent contractor when he performed the acts which allegedly caused Oakes’ injuries. The facts before the trial court did not establish that Gaines’ activities, which the plaintiff alleges create a basis for liability, were in any way related to his activities as an independent contractor in constructing a stage on the barge or in purchasing materials for Chicagoland. The evidence established that the contract between Theatrical Services and Chicagoland called for the construction of a stage floor and scaffolding and did not include construction of the sound booth where the plaintiff was injured. Gaines’ affidavit states that Theatrical Services’ part in the construction was completed before any work was done by the union stagehands. The plaintiff’s own deposition corroborated this when he stated that the construction of the sound booth was performed by union stagehands and not by the same men employed by Theatrical Services to do the earlier construction work. There is nothing to suggest that Theatrical Services was in any way involved in the ongoing construction.

In conclusion, Oakes’ cause of action must fail because it does not show that Gaines performed the acts which caused Oakes’ injuries while acting in a capacity independent of and separate from his capacity as that of co-employee. The only pertinent allegation is that the ladder on which Oakes was injured was Gaines’ ladder. There is no showing that this ladder was related to Gaines’ other capacity.

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

JOHNSON, P. J., and LINN, J., concur.


author: JUSTICE McGLOON

text:
      In re MARRIAGE OF THOMAS H. ARMSTRONG, Petitioner, and MARY ALICE ARMSTRONG, Respondent.—(MARY ALICE ARMSTRONG, Appellant, v. WILLIAM A. MAROVITZ, Appellee.)
    First District (1st Division)
    Nos. 81-343, 81-1287 cons.
    Opinion filed June 7, 1982.
    Rehearing denied July 6, 1982.

      James J. Reagan and Stephen C. Tennant, both of Northbrook, for appellant.
    William A. Marovitz, of Marovitz, Powell, Pizer and Edelstein, of Chicago (David A. Novoselsky, of counsel), for appellee.
   JUSTICE McGLOON

delivered the opinion of the court:

In two appeals consolidated by this court, respondent challenges the amount awarded as a fee for services rendered by the attorney initially retained by her and the assignment of maintenance to satisfy the award. The issues raised on appeal are (1) whether the amount awarded as fees is supported by the evidence, and (2) whether the trial court may order one party to pay maintenance to the other party’s attorney to satisfy a judgment for fees.

We affirm in part and reverse in part.

The petition for dissolution of marriage was filed on January 23, 1979. Respondent initially retained appellee to represent her. However, on October 2, 1980, James Reagan was substituted as attorney for respondent. The trial court entered an order allowing appellee to file a petition for attorney’s fees at a later date.

On December 15,1980, after a hearing on the petition for dissolution of marriage and the entry of a judgment thereon, a hearing was held on appellee’s petition for fees. On December 22,1980, the trial court entered an order awarding appellee $5,550. Respondent was credited $750 paid as a retainer fee. Additionally, petitioner was ordered to pay $480 for this fee as his pro rata share of the amount allotted as the fee for a real estate closing performed by a partner in appellee’s firm. On January 5,1981, the order was amended by agreement to reflect a total award of $5,070.

After respondent filed notice of appeal from the order for fees, appellee filed a petition for assignment of maintenance. The trial court considered a memorandum filed by the parties, heard arguments and thereafter ordered petitioner to pay appellee the monthly maintenance due respondent until the judgment for fees was satisfied.

Initially, we address appellee’s motion to dismiss the appeals for respondent’s failure to file a report of proceedings within the time specified in Supreme Court Rule 323(b) (Ill. Rev. Stat. 1979, ch. 110A, par. 323(b)). Dismissal based upon noncompliance with supreme court rules regarding filing of records and reports of proceedings is discretionary. (See Venturi v. Bulk Petroleum Corp. (1979), 70 Ill. App. 3d 967, 388 N.E.2d 1147.) Where the opposing party can establish prejudice caused by the delay, the appeal should be dismissed. However, in this case, the appellee has reviewed the report of proceedings and record, found no errors or omissions, and claims no prejudice from the untimely filing. Thus, we elect to consider this appeal.

We now turn to the issues raised by respondent. First, respondent contends that the amount of fees as determined by the trial court is excessive and not supported by the evidence. The well-established rule pertaining to this issue is that the amount awarded is within the discretion of the trial court whose decision will not be reversed absent a clear abuse of discretion. (In re Marriage of Rogers (1980), 86 Ill. App. 3d 904, 408 N.E.2d 448; In re Marriage of Scott (1980), 85 Ill. App. 3d 773, 407 N.E.2d 1045.) The factors to be considered in determining the amount of a fee are: the skill and standing of the attorney, the nature of the case, the novelty and difficulty of the questions in issue, the amount and importance of the subject matter, the degree of responsibility, the usual and customary charges, and the benefits resulting to the client. (In re Marriage of Reczek (1981), 95 Ill. App. 3d 220, 420 N.E.2d 161; Donnelley v. Donnelley (1980), 80 Ill. App. 3d 597, 400 N.E.2d 56.) The trial court may also consider experience and knowledge of the value of legal services which it has acquired in the discharge of its professional duties. In re Sharp (1978), 65 Ill. App. 3d 945, 382 N.E.2d 1279.

We find that the trial court did not abuse its discretion. The evidence in the record indicates that appellee represented respondent for approximately 20 months. During this time appellee was instrumental in helping the parties reach an almost complete settlement of their affairs.

Furthermore, his firm performed all the services necessary for the sale of the marital residence. A partner in his firm testified that he devoted 15 or 16 hours in preparing and reviewing documents, conferring with respondent and bank officials, and attending the closing. He further testified that one of his areas of legal expertise was real estate law, that he had practiced law since 1934, and that he normally would charge $2,500 for a similar closing. The trial court allowed $1,200 of the fee for his services. In view of his expertise and experience, we do not believe that portion of the fee is unreasonable.

Additionally, appellee succeeded in obtaining for respondent a spinoff policy from petitioner’s health insurance policy. Appellee stated that the insurance company initially refused to issue such a policy. He consulted several people on this matter, including the Illinois director of insurance. As a result of his efforts and after a great deal of negotiation among himself, the parties, and the insurance company, the insurance company reversed its initial decision and agreed to issue the policy. Obtaining this policy was of the utmost importance to respondent because she had had major surgery and had serious medical problems.

Also included in the fees was $500 to be paid by appellee to an accountant for services rendered in relation to the dissolution proceedings. The accountant testified that he investigated the assets of the parties and the tax consequences of different forms of property distribution. He discussed the tax matters with petitioner’s attorney, and met with respondent and appellee. He submitted his bill for five hours of services to respondent through appellee. Certainly the tax consequences of property distribution are very important in dissolution proceedings. We cannot say that the services rendered by the accountant in this case were needless. Rather, we believe they were reasonably necessary to ensure the most practical and equitable distribution.

In addition to the aforementioned services, evidence of numerous phone conversations between respondent and appellee or members of his firm was introduced. The trial court also noted that appellee was instrumental in negotiating an out-of-court agreement between the parties regarding mortgage payments on the marital residence. Petitioner’s attorney stated that after reviewing his file, he determined that he spent 16 hours discussing the case and appearing in court with appellee. Furthermore, respondent appeared to be highly satisfied with the caliber of representation. Several letters written by her to the appellee wherein she expressed her appreciation and complimented the quality of representation were introduced as exhibits.

We recognize that the matter was uncontested and few court appearances were made. However, we agree with the observation made by the trial court that many matters in dissolution proceedings are handled out of court and that in this case, the out-of-court services were significant and directly inured to respondent’s benefit. In conclusion, we find that the trial court considered the relevant factors and that the amount awarded is supported by the evidence.

Respondent also contends that no evidence was presented regarding her ability to pay the fee. Immediately prior to the hearing on the petition for fees, the trial court entered judgment for dissolution of marriage. In this judgment, the assets retained by and distributed between the parties were listed. Thus, the trial court was well acquainted with respondent’s financial position and her contention to the contrary is without merit.

Second, respondent contends that the trial court erred in assigning maintenance payments to satisfy the judgment for fees. She maintains that the procedure is not authorized under section 508(b) of the Illinois Marriage and Dissolution of Marriage Act (Ill. Rev. Stat. 1979, ch. 40, par. 508(b)), and violates public policy. We agree.

Section 508(b) of the Act authorizes the court to adjudicate the liability of either spouse for the costs and attorney fees necessarily incurred by the other spouse as well as for his or her own fees. (In re Marriage of Erby (1980), 84 Ill. App. 3d 672, 406 N.E.2d 79.) Section 508(b) provides two methods for the payment of fees: (1) directly to the attorney, or (2) to the other party who is to be reimbursed for fees. No provision exists allowing the party who is to provide maintenance to make these payments to the other party’s attorney to satisfy a judgment for fees.

Furthermore, we do not believe the legislature intended for attorney fees to be paid in this manner. Maintenance is awarded where a spouse has insufficient income or property to provide for his or her own needs. (Bellow v. Bellow (1981), 94 Ill. App. 3d 361, 419 N.E.2d 924.) By assigning maintenance payments, the purpose behind the award is frustrated and the court’s efforts in granting the award are negated. (See In re Fisher (1958), 15 Ill. 2d 139, 153 N.E.2d 832.) For the aforementioned reasons, we find that maintenance payments may not be assigned to satisfy the judgment for attorney fees.

The judgment of the circuit court of Cook County is affirmed in part and reversed in part.

GOLDBERG and O’CONNOR, JJ., concur.


author: JUSTICE DOWNING

text:
    THE CHICAGO PARK DISTRICT et al., Plaintiffs-Appellees, v. KENROY, INC., et al., Defendants-Appellants.
    First District (2nd Division)
    No. 81-2487
    Opinion filed June 8, 1982.
    Friedman & Koven and Burke & Ryan, both of Chicago (Paul Homer, Thomas T. Burke, and Lawrence M. Templer, of counsel), for appellants.
    Sneider and Troy, of Chicago (Richard J. Troy, of counsel), for appellees.
   JUSTICE DOWNING

delivered the opinion of the court:

This permissive interlocutory appeal, taken pursuant to Supreme Court Rule 308 (73 Ill. 2d R. 308), raises the issue of the propriety of the circuit court’s denial of defendants’ motion to dismiss plaintiffs’ complaint for a constructive trust and other relief.

The events which have resulted in the present case have served as the basis for prior judicial determinations by this court and by our supreme court. The underlying facts have been adequately recited by us in Chicago Park District v. Kenroy, Inc. (1978), 58 Ill. App. 3d 879, 374 N.E.2d 370 (Kenroy I), and by the supreme court in Chicago Park District v. Kenroy, Inc. (1980), 78 Ill. 2d 555, 402 N.E.2d 181 (Kenroy II). Therefore, we find it desirable to set forth only those facts which are relevant to the narrow .question before us.

Plaintiffs acquired a parcel of . property owned by defendants by resorting to condemnation proceedings. This transaction was completed in August 1974. Defendants received the sum of $10.3 million from plaintiffs as compensation.

Plaintiffs later were apprised of facts which led them to believe the value of the property had been improperly inflated due to certain alleged acts of defendants. A lawsuit was filed. Kenroy I and Kenroy II are the progeny of that lawsuit. The supreme court’s decision in Kenroy II remanded the action to the circuit court. There, defendants proceeded with the sole matter which the reviewing courts had not yet addressed: the question of the validity of the three-count amended complaint filed by plaintiffs. Defendants filed a motion to dismiss that complaint, asserting its allegations were substantially insufficient in law and failed to state a claim upon which relief could be granted.

Examination of the amended complaint shows plaintiffs alleged in count I that defendants engaged in acts which fraudulently enhanced the value of the property acquired by plaintiffs. Those acts, namely, were the use of bribery and fraud to secure a favorable rezoning of the property, which increased its condemnation value. Plaintiffs allege defendants were thus unjustly enriched by this enhanced value once the condemnation judgment was paid. This count seeks imposition of a constructive trust on the asserted amount of this unjust enrichment, $5 million. The count does not attack the validity of the rezoning ordinance nor does it contest the validity of the condemnation judgment.

Count II relies upon the same factual allegations, and seeks punitive damages for defendants’ acts in the amount of $10 million.

Count III alleges defendants purposefully misrepresented that the rezoning action was proper and that the property was indeed worth $10.3 million. Based upon this alleged tortious misrepresentation, count III seeks compensatory damages of $5 million and punitive damages of $10 million.

The circuit court denied defendants’ motion to dismiss these counts, ruling:

“[U]nder the case law, and applying [Village of Wheeling u.] Stavros [(1st Dist. 1980), 89 Ill. App. 3d 450, 411 N.E.2d 1067, appeal denied (1981), 82 Ill. 2d 588] here, I am going to rule that a cause of action has been set forth.”

The court did, however, determine that the issue was one ripe for presentation to this court under Rule 308, and entered an order providing the opportunity for such. We granted permission for this appeal.

I

Initially, we find it necessary to note that the parties to this appeal, apparently following the lead of the circuit court, have limited themselves to addressing the question of whether plaintiffs have stated a cause of action in count I. Neither defendants nor plaintiffs address the validity of counts II and III; nor did the circuit court appear to assess this issue below. Consequently, we believe defendants have waived any claim that counts II and III are defective. Starting, then, with the premise that these two counts are valid, we shall examine only the propriety of the circuit court’s ruling as to count I, which seeks imposition of a constructive trust.

The recent trend in the Illinois law of constructive trusts has been a broadening of the circumstances in which this remedy is available. A plaintiff may be awarded a constructive trust whenever facts are shown in which a person holding legal title to the property at issue cannot retain the beneficial interest therein without violating some established principle of equity. (In re Estate of Ray (1972), 7 Ill. App. 3d 433, 439-40, 287 N.E.2d 144.) A constructive trust may be imposed where the person in possession of property would be unjustly enriched if he were permitted to retain that property. The remedy is available in circumstances where one has received property which, in equity and good conscience, he ought not be allowed to retain. See Selmaville Community Consolidated School District No. 10 v. Salem Elementary School District No. 111 (1981), 96 Ill. App. 3d 1062, 1065-67, 421 N.E.2d 1087; Village of Wheeling v. Stavros, 89 Ill. App. 3d 450, 454; see also 76 Am. Jur. 2d Trusts sec. 221 (1975).

Summarizing the allegations of count I, we note plaintiffs claim defendants’ receipt of $5 million of the $10.3 million condemnation judgment was a consequence of defendants’ actions in bribing a Chicago alderman. Plaintiffs assert this wrongful act resulted in the rezoning of defendants’ property and the enhancement of that parcel’s value by that stated sum. Plaintiffs allege defendants were unjustly enriched by $5 million to the detriment of plaintiffs, and that a constructive trust should be imposed on this amount.

In our opinion, these allegations are adequate to state an action for the constructive trust remedy. If plaintiffs are able to introduce adequate proof that the value of defendants’ property was inflated by $5 million as a result of defendants’ bribery of the alderman (a not insubstantial task of proof), then in equity and good conscience defendants cannot retain this inflated value. Based upon the allegations of count I, plaintiffs should be allowed the opportunity to present such evidence on this matter as they may have.

In making this decision, we are not unaware of defendants’ argument that the remedy of constructive trusts is limited to circumstances in which there is proof of either actual fraud or breach of a confidential relationship. While earlier cases may have adhered to this narrow approach, we feel bound by the recent trend which has expanded the scope of the remedy.

We are also cognizant of defendants’ claim that plaintiffs should not be allowed to proceed because they have not attacked the validity of either the rezoning ordinance or the condemnation judgment, actions which defendants view as necessary prerequisites to maintaining the present action. We do not consider this fact dispositive of the cause of action. As stated, if plaintiffs are able to prove their allegations, equity cannot allow defendants to retain this unjust enrichment resulting from an admittedly valid legal judgment.

For the foregoing reasons, we affirm the circuit court’s denial of defendants’ motion to dismiss, and remand the case for trial.

Affirmed and remanded.

STAMOS, P. J., and PERLIN, J., concur.

       As defendants state in their appellants’ brief:
      “[T]he sole issue before this Court is whether ° ° ° plaintiffs have nonetheless set forth a cause of action seeking a constructive trust upon the proceeds of the condemnation judgment.”
      Clearly, only count I falls within the scope of this statement of the issues.

       Plaintiffs’ complaint fails to adequately allege elements constituting actual fraud. In their brief, plaintiffs present an imaginative argument that a confidential relationship did indeed exist between the bribed alderman and the taxpayers of plaintiffs so as to allow the action to proceed on the ground of breach of this relationship. However, since we believe a cause of action is stated here without regard to the merits of this argument, we need not address it.