author: JUSTICE STAMOS JUSTICE DOWNING,

text:
      In re APPLICATION OF EDWARD J. ROSEWELL, Cook County Treasurer and Ex-Officio County Collector (Dorothy Ware, Appellant, v. Chicago Park District, Appellee).
    First District (2nd Division)
    No. 83—78
    Opinion filed July 3, 1984.

      DOWNING, J., dissenting.
    Cook Partners, Ltd., of Chicago (Rufus Cook, of counsel), for appellant.
    Rick Halprin, of Chicago (Allan R. Stasica, of counsel), for appellee.
   JUSTICE STAMOS

delivered the opinion of the court:

On June 10, 1976, the property at 5017 South Ellis Avenue, Chicago, was sold for nonpayment of taxes. A certificate of sale was issued to Phoenix Realty, which thereafter assigned the certificate to Dorothy Ware. On June 7, 1978, in anticipation of the expiration of the period of redemption, Ware filed a petition for a tax deed to the property. At the hearing on the petition on October 17, 1978, an attorney for the Chicago Park District (Park District) appeared and produced a sheriff’s deed to the property in issue. The Park District attorney alleged that the Park District had not received the requisite personal notice of the expiration of the period of redemption and that therefore Ware’s petition should be denied. The trial court denied the petition.

Ware filed a post-trial motion in which she alleged that new evidence had been discovered which would require that the court issue a tax deed to Ware. The court granted Ware a new trial at which the new evidence was presented. Despite this evidence, the trial court again denied Ware’s petition. Ware appeals from this order.

The property which is the subject of this appeal, 5017 South Ellis Avenue, Chicago, was deeded to the Illinois Protestant Children’s Home (the home) in 1947. Thereafter, the subject property was conveyed to Florence Budd and then to Flo Budd Antiques, Inc. In 1970, the Illinois Attorney General’s office sued to set aside these latter conveyances on the grounds that they were without corporate authority and were for Budd’s personal benefit.

The matter came before Judge Epstein, who ordered that the subject property be conveyed back to the home. The foregoing proceedings were concluded on March 5, 1973. During these proceedings, the structure on the subject property was damaged by fire and was demolished by the city of Chicago in 1972. The city thereby acquired a demolition lien of $4,500, which it sought to foreclose in 1973.

While the demolition lien foreclosure proceedings were pending, Judge Epstein was attempting to find an organization to accept the subject property. It was impossible for the home to take the property back because it had been dissolved by decree in 1962. Judge Epstein sought to find an organization that could utilize the property for recreational use. Among those contacted was the Chicago Park District. The commissioners of the Park District elected to attempt to acquire the subject property. Accordingly, the Park District filed a petition before Judge Epstein in December 1975 asking him to utilize the cy pres doctrine to convey title to the Park District. Judge Epstein granted the Park District’s petition on January 9, 1976, and ordered that a sheriff’s deed be delivered to the Park District. For reasons which are not apparent from the record on appeal, the Park District did not seek to obtain the sheriff’s deed until October 13, 1978, over 2/2 years after Judge Epstein’s order.

On June 10, 1976, the subject property was put up for sale, pursuant to court order, for nonpayment of taxes from 1947 to 1974. The property was purchased at the tax sale by Phoenix Realty, which thereafter assigned the certificate of sale to Dorothy Ware (appellant).

On October 27, 1977, Ware filed a petition for appointment as receiver to prevent waste to the property in issue. The Park District appeared at the hearing on the petition by one of its attorneys, who rep-, resented to the court that the Park District had- “no interest whatever” in the subject property. Ware’s petition to be appointed receiver was granted.

Meanwhile, the city of Chicago’s suit to foreclose on its demolition lien led to an order authorizing a sale of the subject property to satisfy the city's lien. The sale was scheduled for November 16, 1977. On November 14, 1977, Ware tendered to the city a sum sufficient to redeem the property from the demolition lien. This tender was rejected. On the morning of November 16, 1977, Ware secured a temporary restraining order to prevent the demolition lien sale from proceeding. Nonetheless, the sale took place and the subject property was sold. Ware was later able to suspend the results of the sale, and the city thereafter accepted Ware’s payment of the demolition lien.

On June 7, 1978, Ware filed her petition for a tax deed in anticipation of the expiration of the two-year redemption period following a tax sale. Ware did not give personal notice of the expiration of the redemption period to the Park District. The redemption period expired on September 29, 1978, and a hearing on Ware’s petition was held on October 17, 1978. The Park District appeared at this hearing by the same attorney who had appeared at the hearing on receivership. The attorney produced a sheriff’s deed to the subject property which had been issued on October 13, 1978, pursuant to Judge Epstein’s order of January 9, 1976. The court denied Ware’s petition on the grounds that Ware had failed to give proper notice to the Park District of the expiration of the redemption period. The court ruled that the order of January 9, 1976, could not be collaterally attacked and held that the Park District attorney’s earlier statement that the Park District had no interest in the subject property was not a waiver of the Park District’s rights and did not estop the Park District from asserting its sheriff’s deed.

Ware filed a motion for a new trial. A new trial was granted on the basis of a letter indicating that the Park District had lost interest in acquiring the subject property as early as the time of the purported waiver by the Park District attorney. Despite this new evidence, the trial court again denied Ware’s petition. Ware appeals from this order.

Appellant first contends that the trial court erred in ruling that the order of January 9, 1976, could not be collaterally attacked. That order directed the sheriff of Cook County to deliver a deed to the property in issue to the Chicago Park District and it authorized the Park District to accept the deed. A sheriff’s deed was executed on October 13, 1978. The Park District produced this deed at the hearing on the instant petition for a tax deed and it was this deed which established the Park District’s right to receive personal notice of the expiration of the redemption period. Appellant’s failure to give the Park District personal notice of the expiration of the redemption period was the basis for the denial of appellant’s petition. On appeal, appellant contends that the order of January 9, 1976, was void and did not, therefore, convey a property interest to the Park District sufficient to entitle them to personal notice of the expiration of the redemption period.

A judgment may be collaterally attacked only when the court which rendered the judgment lacked jurisdiction over the parties and subject matter (Johnston v. City of Bloomington (1979), 77 Ill. 2d 108, 112, 395 N.E.2d 549) or lacked the inherent power to enter the order involved (City of Chicago v. Illinois Fair Employment Practices Com. (1975), 34 Ill. App. 3d 114, 117, 339 N.E.2d 260). Collateral attack on judgments is not permitted for nonjurisdictional errors or irregularities. (See Federal Sign & Signal Corp. v. Czubak (1978), 57 Ill. App. 3d 176, 179, 372 N.E.2d 965.) In the instant case, it is not disputed that the court which rendered the order of January 9, 1976, had jurisdiction of the parties and subject matter involved. The essence of appellant’s contention is that the circumstances in that case did not warrant the court’s use of the cy pres doctrine to direct a conveyance to the Park District. Even assuming that appellant is correct, a wrongful application of the cy pres doctrine does not constitute a jurisdictional defect such as to warrant a collateral attack on the order of January 9, 1976. The court did not lack the power to utilize the cy pres doctrine because it is a court hearing chancery matters in which the doctrine may properly be utilized. (See 8 Ill. L. & Prac. Charities secs. 42, 43, at 57-59, (1954).) Appellant merely contends that the court wrongly applied the doctrine under the circumstances presented. The power of a court to decide includes the power to decide erroneously, and any erroneous decision so made is binding as a court decision until set aside or corrected on appeal. (Baker v. Brown (1939), 372 Ill. 336, 343, 23 N.E.2d 710.) Because appellant does not point to a jurisdictional defect in the judgment of January 9, 1976, the trial court in the instant case properly refused to allow a collateral attack on that judgment.

Appellant next contends that the Park District should have been precluded from presenting its sheriff’s deed to the property in issue in appellant’s proceeding to secure a tax deed. The basis for this argument is a statement made by an attorney for the Park District in an unrelated proceeding to the effect that the Park District had no interest in the subject property. Appellant argues that, based on this statement, the rules of waiver and estoppel should have precluded the Park District from presenting their sheriff’s deed.

The statement which is the subject of this contention was made on October 27, 1977, in a hearing on appellant’s petition to be appointed receiver of the property in issue. The Park District appeared at that hearing by its attorney; who represented to the court that the Park District “has no interest whatever in the property.” By this statement, appellant contends that the Park District (1) waived its rights to the subject property, (2) judicially admitted that it had no interest in the property, or (3) should be estopped from asserting its rights to the property.

It is apparent that appellant’s waiver and judicial admission arguments must fail. The purported waiver in the instant case related to the Park District’s rights to the property in issue and was made by an attorney representing the Park District. An attorney in Illinois has no authority to waive any right of his client without the client’s express authorization. (County of Cook v. Patka (1980), 85 Ill. App. 3d 5, 11, 405 N.E.2d 1376.) In the instant case, there was no evidence that the Park District’s attorney was authorized to waive the Park District’s rights to the property in issue. Absent such evidence, the attorney’s purported waiver of the Park District’s rights was not binding on the Park District. The same reasoning applies to the judicial admission argument because judicial admissions are merely a species of waiver. See Wigmore, Evidence sec. 2588, at 821-22 (Chadbourn rev. 1981).

As with the waiver and judicial admission arguments, appellant’s estoppel argument must fail because of the Park District attorney’s lack of authority. “A finding of estoppel against a public body is not favored. [Citation.] The affirmative acts which induce reliance by a party must be acts of the municipality itself, such as legislation by a city council, rather than merely the unauthorized act of a ministerial officer or a ministerial misinterpretation.” (American National Bank & Trust Co. v. Village of Arlington Heights (1983), 115 Ill. App. 3d 342, 347-48, 450 N.E.2d 898.) As we noted above, the Park District’s attorney was not authorized to waive the Park District’s rights to the property in issue and appellant was not, therefore, justified in relying on the attorney’s representation. “A person who deals with a governmental body takes the risk of having accurately ascertained that he who purports to act for it stays within the bounds of his authority and *** this is so even though the agent himself may have been unaware of the limitations on his authority.” 115 Ill. App. 3d 342, 348.

Appellant also asserts that the court’s ruling on appellant’s petition for receivership is res judicata on the issue of the validity of the Park District’s interest in the subject property. It was in the hearing on the petition for receivership that the Park District’s attorney disavowed any interest in the subject property by the Park District. At the conclusion of this hearing, the court appointed appellant as receiver of the property. Appellant asserts that, in reaching its decision, it was necessary for the court to decide whether the Park District had any interest in the property. We disagree.

The Park District did not appear at the hearing on the petition to “contest” the petition as appellant asserts. Rather, the Park District appeared because it had received notice. Thus, at the hearing, the court was not presented with, and therefore could not have decided, the issue of the validity of the Park District’s interest in the subject property. Indeed, the statute pursuant to which the petition was filed does not require the court to rule on the validity of a party’s interests. All the court need determine is whether the holder of the certificate of purchase from the tax sale has filed the petition and whether the subject property is in danger of waste. (Ill. Rev. Stat. 1981, ch. 120, par. 734a.) After determining that the requisite parties have received notice of the petition, the court is free to appoint the holder of the certificate of purchase as receiver regardless of the quality of the interests of the other parties to the petition. (Ill. Rev. Stat. 1981, ch. 120, par. 734a.) The statute does not require the court to rule on either the validity or the superiority of those interests. Thus, appellant is mistaken in its assertion that the question of the Park District’s interest in the subject property was in issue. The court’s appointment of appellant as receiver in no way reflects on the Park District’s right to subsequently claim title to the property in issue.

Appellant also asserts that the Park District ratified, or at least acquiesced in, the purported waiver by its attorney of the Park District’s interest in the subject property, thereby waiving its rights to the property in issue. But the evidence of ratification or acquiescence cited by appellant are all instances of inaction by the Park District. These instances include the failure (1) to obtain a sheriff’s deed, (2) to defend against the demolition lien foreclosure action, (3) to prevent the November 16 foreclosure sale, or (4) to redeem from that sale. Such instances of inaction, however, do not constitute ratification. Cf. United States ex rel. Baez v. Circuit Court (N.D. Ill. 1975), 395 F. Supp. 1285, 1287 (client’s failure to object to attorney’s waiver of client’s right does not bind client to attorney’s actions); County of Cook v. Patka (1980), 85 Ill. App. 3d 5, 13, 405 N.E.2d 1376 (inaction insufficient to work an estoppel against county).

Appellant’s final contention concerns the trial court’s finding that appellant failed to give the requisite notice to the Park District of the petition for a tax deed. This failure was cited by the court as the basis for denying the petition. Appellant contends that, under the circumstances, the Park District was not entitled to personal notice and that notice by publication was sufficient.

“[Pjarties interested in the premises” which are the subject of a tax sale must be given notice of the sale and of the expiration of the period of redemption. (Ill. Rev. Stat. 1981, ch. 120, par. 744; see Ill. Const. 1970, art. 9, sec. 8(b).) The notice of the expiration of the period of redemption must be given not less than three nor more than five months prior to the expiration date. (Ill. Rev. Stat. 1981, ch. 120, par. 744.) “[O]wners, occupants and parties interested in the premises” must receive personal notice; “unknown owners or parties interested” in premises may be served by publication. (Ill. Rev. Stat. 1981, ch. 120, par. 744.) A purchaser at a tax sale is not entitled to a tax deed at the expiration of the period of redemption unless notice is effected in strict compliance with the above requirements. Ill. Rev. Stat. 1981, ch. 120, par. 744; see In re Application of Cook County Collector (Petition of Ohr) (1981), 100 Ill. App. 3d 178, 179-80, 426 N.E.2d 947.

In the instant case, the Park District received an enforceable interest in the property in issue as a result of the order of January 9, 1976, which directed that a sheriff’s deed to the subject property be issued to the Park District. Despite the fact that this order was never vacated or reversed, appellant contends that the Park District’s interest in the subject property was extinguished by the statement of the Park District’s attorney that the District had no interest in the property. But as has been discussed earlier, the attorney was not authorized to waive the Park District’s interest and appellant was not justified in relying on the attorney’s purported waiver. Nonetheless, appellant cites the purported waiver as the basis for her failure to give the Park District the requisite personal notice of the petition for a tax deed. According to appellant, as a result of the purported waiver, she treated the Park District as an “unknown party” in the petition for a tax deed, and, accordingly, service was made by publication only. But appellant had actual knowledge of the order of January 9, 1976, which she was not free to ignore despite the purported waiver. (See In re Application of County Collector (Petition of Burdash) (1977), 48 Ill. App. 3d 572, 588, 362 N.E.2d 1335.) Based on appellant’s knowledge, the Park District was a party interested in the premises and was therefore entitled to personal notice of appellant’s petition for a tax deed. (See Ill. Rev. Stat. 1981, ch. 120, par. 744.) Because personal notice was not given, the trial court properly denied appellant’s petition.

For the reasons expressed herein, the judgment of the circuit court is affirmed.

Affirmed.

PERLIN, J., concurs.

JUSTICE DOWNING,

dissenting:

There is a well-accepted maxim that “equity regards and treats that as done which in good conscience ought to be done.” In my opinion, good conscience does not justify applying technical principles to permit the Park District to claim rights which the record does not establish. Equity demands that the trial court’s holding be reversed and that personal notice to the Park District in this case was not necessary.

It is not necessary to repeat the facts set forth in the majority opinion. However, emphasis will be placed on certain significant parts of the record.

On January 9, 1976, the trial court granted the Park District’s petition to acquire the subject property and ordered a sheriff’s deed. However, the Park District took no affirmative step with respect to acquiring the sheriff’s deed until October 13,1978.

In the meantime, other actions were taking place. On June 10, 1976, when the property was put up for sale due to delinquent taxes for the years 1947 to 1974, it was purchased by Phoenix Realty, who assigned their rights to appellant Ware. Thereafter, in an action by appellant for the appointment of a receiver to prevent waste on the subject property, a hearing was held in the circuit court of Cook County. The Park District received notice from the appellant as to this petition. On October 27, 1977, Leslie P. Liss, attorney for the Park District, appeared before the court and represented that the Park District “has no interest whatsoever in the property.” Consequently, a receiver was appointed. The record also indicates that the Park District’s attorney, during this period, had informed the corporation counsel’s office of the city of Chicago that the Park District had no interest in the property.

In November 1977, the city of Chicago obtained an order authorizing sale of the subject property to satisfy the city’s lien. Appellant paid the city the amount of the demolition lien.

On June 7, 1978, appellant filed a petition for a tax deed but did not give personal notice to the Park District. On that date, the Park District did not have title to the subject property. The two-year redemption period expired on September 29, 1978. A hearing was scheduled on October 17, 1978, regarding the petition for the tax deed. In the meantime, the Park District’s attorney, on October 13, 1978, obtained the sheriff’s deed which was then produced at the October 17 hearing. Because of the deed, the trial court denied the petition on the grounds that appellant failed to give proper notice to the Park District.

As discussed below, I believe the principles of waiver, judicial admission and estoppel should be applied. My colleagues reject appellant’s arguments on these issues. Relying upon County of Cook v. Patka (1980), 85 Ill. App. 3d 5, 11, 405 N.E.2d 1376, the majority says that an attorney cannot waive any right of his client without the client’s express authorization, that estoppel against a public body is not favored, and in any respect in dealing with a municipality, be sure you deal with a person in authority. In Patka (involving the awarding to the county of a demolition lien), this court also noted that there was no showing that the parties acted in reliance on the unauthorized act of the county.

In the instant case, based upon the record, I think there was a binding judicial admission. And, based upon the acts and failure to act by the Park District, there has been a valid waiver of any rights by the Park District, thereby creating an estoppel against the Park District.

The Chicago Park District operates under statutory authority (Ill. Rev. Stat. 1983, ch. 105, par. 333.1 et seq.) different than other park districts in this State (Park District Code par. 1 — 1 et seq.). The Park District is operated by five commissioners appointed by the mayor of the city of Chicago with the approval of the city council. The statute also provides for a “General Superintendent” appointed for a term of four years, who shall “manage the affairs of the district.” (Park District Code par. 333.5.) It is a matter of historical knowledge, of which the court can take judicial notice, that the general superintendent of the Chicago Park District operates that body. And, when the general superintendent speaks, it is as the “voice” of the Park District. This structural distinction in park districts and the recognition of the general superintendent’s authority is important in the pragmatic and equitable resolution of this case.

The majority concludes that the record does not establish that the Park District’s attorney was speaking with authority of the commissioners when he stated in court that the Park District had no interest in the subject property. However, in addition to the facts set forth in the majority opinion, the record does show that on June 12, 1978, attorney Howard M. Brody wrote a letter to Park District commissioner Theodore Jones concerning the subject property. As a result of the letter, on June 19, 1978, the assistant record and estimate engineer of the Park District wrote an interoffice memo to the chief engineer setting forth certain information concerning the subject property. On June 27, 1978, the following letter was written to attorney Harold M. Brody:

This communication, signed by the general superintendent in response to a letter to Park District commissioner Jones, clearly supports and corroborates the position taken in court by Park District attorney Liss, on October 27, 1977 and June 7, 1978. Coupled with the failure of the Park District to secure the deed, notwithstanding Judge Epstein’s order of January 9, 1976, justified the failure of appellant to send notice on June 7, 1978, to the Park District when appellant petitioned for the tax deed. The Park District was not the record title holder of the property until October 13, 1978. Requiring formal action by the park commissioner in this situation is allowing the Park District to hide behind “form” rather than recognizing and accepting the realities of their position.

In my opinion, estoppel should apply against the Park District for the following reasons: (1) the record clearly establishes that the Park District attorney made a judicial admission that the District was not interested in the property; and (2) relying on the judicial admission, appellant did not send personal notice. In Jordan v. City of Chenoa (1897), 166 Ill. 530, 47 N.E. 191, a case involving a question of the acceptance by a municipality of streets and alleys based on the recording of a plat of dedication, it was held that defense of equitable estop-pel from abandonment or nonuser may be applied against a municipality. By not acting to secure title to the property between January 9, 1976, and October 13, 1978, the Park District should be estopped from asserting a claim of no notice.

There can be no doubt that the admission by a party’s attorney is binding upon the party. (Neiman v. City of Chicago (1962), 37 Ill. App. 2d 309, 185 N.E .2d 358, appeal denied (1963), 25 Ill. 2d 623.) An admission by counsel of a party upon the trial supersedes all proofs upon the point in question. (Darling v. Charleston Community Memorial Hospital (1964), 50 Ill. App. 2d 253, 328, 200 N.E .2d 149, affd (1965), 33 Ill. 2d 326, 211 N.E .2d 253, cert. denied (1966), 383 U.S. 946, 16 L. Ed. 2d 209, 86 S. Ct. 1204.) As stated in Hunter, Trial Handbook for Illinois Lawyers sec. 68.15, at 943-44 (5th ed. 1983), “[w]hat constitutes a judicial admission must be decided under the circumstances in each case ***” and “[t]he attorney has prima facie authority to make relevant judicial admissions.” See also 2 Gard, Illinois Evidence Manual Rule 15:18, at 141-42 (2d ed. 1979), and Cleary & M. Graham, Illinois Evidence sec. 802.11 at 541 (4th ed. 1984).

In the instant case, the record established that not only did the general superintendent in writing represent that the Park District could not be involved in the property, such representation was approved by the general attorney. It certainly is reasonable and equitable to conclude that attorney Liss was merely representing in court the official position of the Park District as set forth by the general superintendent, who has the statutory authority to manage the affairs of the District. (See Park District Code par. 333.5.) As the supreme court said in American Car & Foundry Co. v. Industrial Com. (1929), 335 Ill. 322, 332, 167 N.E. 80, “[w]here an attorney is counsel of record for his client, his agreements and stipulations made in the conduct and management of the litigation must be considered as the agreement of his client, and if any of his acts are without sufficient authority as between him and his client, the remedy of the client is against the counsel.”

Under the circumstances and record of this case, I do not think it equitable to hold that the Park District was entitled to the requisite personal notice of the expiration of the period of redemption. In fact, not only had the Park District waived by their action any such requirement, but it is reasonable to assume that the Park District had actual notice of what was taking place and waited until the redemption period expired on September 27, 1978, before securing the sheriff’s deed on October 13, 1978. Then, in court, the Park District could yell, “Foul — see, we have a deed and did not receive notice.” The action of the Park District should not be condoned. It permits the Park District to hide behind technicalities with judicial sanction. I would reverse the judgment of the circuit court of Cook County.

      Hereinafter referred to by section number as the “Park District Code.”


source: Caselaw Access Project

author: JUSTICE McGLOON

license: Public Domain

text:
    THE FIRST TRUST AND SAVINGS BANK et al., Plaintiffs-Appellants, v. SKOKIE FEDERAL SAVINGS AND LOAN ASSOCIATION, Defendant-Appellee.
    First District (1st Division)
    No. 83—1318
    Opinion filed June 25, 1984.
    Edward A. Berman, of Berman, Roberts & Kelly, of Chicago, for appellant.

      Stephen P. Kikoler and Gerald Prokopowicz, both of Rosenthal & Schan-field, of Chicago, for appellee.
   JUSTICE McGLOON

delivered the opinion of the court:

This is an appeal from a summary judgment order granted in favor of defendant Skokie Federal Savings and Loan Association (Sko-kie Federal) against First Trust and Savings Bank of Glenview (First Trust).

We affirm.

In October 1978, Skokie Federal loaned Spanish Court II, Ltd. (Spanish Court), $2,400,000 to finance the construction of a 32-unit condominium in Highland Park. Under the terms of the construction loan agreement, proceeds for the payment of “profit and overhead expenses” were to be disbursed to Spanish Court as various phases of the project were completed. An additional $100,000, needed to purchase labor and materials to commence construction, was obtained from First Trust. This loan was secured by the collateral assignment of the construction loan proceeds that Spanish Court was to receive from Skokie Federal.

The language contained in the agreement read as follows:

“For value received, I hereby sell, assign, transfer and set unto The First Trust and Savings Bank, Glenview and Robert L. Munzer, their successors and assigns all rights to profit and overhead from a certain construction loan granted to Spanish Court II, Ltd. by Skokie Federal Savings and Loan Association per their Loan Commitment and Construction Loan Agreement dated October 16, 1978 attached hereto as Exhibit ‘A’ and made a part hereof and General Contractor’s sworn statement attached hereto as Exhibit ’B’ and made a part hereof.
Said Assignment is made to secure a loan in the amount of $100,000.00 to Spanish Court II, Ltd., which will be used for the start-up costs (labor and materials) prior to the opening of Skokie Federal Savings and Loan Association’s Construction Loan.
I hereby authorize Skokie Federal Savings and Loan Association to direct Pioneer National Title Insurance Company as Construction Payout Agent to make all payouts for profit and overhead payable to The First Trust and Savings Bank and Robert L. Munzer.”

The assignment was accepted by First Trust and acknowledged by Skokie Federal on October 23, 1978. Between October 1978 and May 1981, First Trust did not receive any payments of profit and overhead. Although the owner of Spanish Court, Louis Frappier, occasionally discussed the $100,000 loan with a loan officer at First Trust, Stephen Miles, he never disclosed that Spanish Court was receiving disbursements of construction loan proceeds from Skokie Federal. On May 15, 1981, the final installment of the construction loan proceeds was made to Spanish Court. Thereafter, First Trust made a demand upon Skokie Federal for payment of the construction loan proceeds due under the assignment. Skokie Federal rejected the demand.

First Trust filed an action for declaratory judgment urging the court to determine that Skokie Federal had wrongfully paid funds directly to Spanish Court in derogation of First Trust’s rights under the assignment. Thereafter, a motion for summary judgment was filed by Skokie Federal. After a hearing, the trial court granted summary judgment in favor of Skokie Federal based upon its finding that Sko-kie Federal did not receive an explicit direction to pay First Trust the assigned proceeds.

The sole issue presented for our determination is whether Skokie Federal, as the debtor of an account that had been assigned to First Trust, received sufficient notification that future payments should be made to the assignee to render it liable for continuing to disburse construction loan proceeds directly to Spanish Court.

Section 9 — 318(3) of the Uniform Commercial Code governs the situation in which a creditor has assigned its right to receive payments to another party. (Ill. Rev. Stat. 1981, ch. 26, par. 9 — 318(3).) That section provides:

“The account debtor is authorized to pay the assignor until the account debtor receives notification that the amount due or to become due has been assigned and that payment is to be made to the assignee. A notification which does not reasonably identify the rights assigned is ineffective. If requested by the account debtor, the assignee must seasonably furnish reasonable proof that the assignment has been made and unless he does so the account debtor may pay the assignor.”

Section 9 — 318(3) has been interpreted as an express authorization for an account debtor to make payments to an assignor until the account debtor receives notification that the right to receive payments has been assigned and that the future payments are to be made to the assignee. (First National Bank v. Board of Education (1979), 68 Ill. App. 3d 21, 385 N.E.2d 811.) Uniform Commercial Code Comment to section 9 — 318 further indicates that an account debtor may continue to pay the assignor even though the account debtor has knowledge of the assignment. (Ill. Ann. Stat., ch. 26, par. 9 — 318, Uniform Commercial Code Comment, at 259-60 (Smith-Hurd 1974). See also Chemical Bank v. Penny Plate, Inc. (1976), 144 N.J. Super. 390, 365 A.2d 945; Valley National Bank v. Flagstaff Dairy (Ariz. App. 1977), 116 Ariz. 513, 570 P.2d 200.) The Illinois eases which rely on section 9 — 318(3) of the Code hold that enforcement of an assignee’s rights under the assignment requires both notification of the assignment and a demand that future payments be made to the assignee. (First National Bank v. Board of Education (1979), 68 Ill. App. 3d 21, 385 N.E.2d 811; First Finance Co. v. Akathiotis (1969), 110 Ill. App. 2d 377, 249 N.E.2d 663.) This holding is in accord with the plain language of the statute as clarified by Uniform Commercial Code Comment to section 9-318(3).

In the instant case, the assignment does not contain an explicit demand for Skokie Federal to make future disbursements of its construction loan proceeds to First Trust. The relevant language, which we have quoted above, merely “authorizes” Skokie Federal to direct the payout agent to make the disbursements to First Trust. Our review of the record supports the trial court’s conclusion that, although Skokie Federal received notice of the existence of the assignment, it did not receive a demand that payments were to be made to First Trust. The uncontradicted affidavit of Steven Munson, an officer of Skokie Federal, states that Skokie Federal received no notification to pay any amount due under the assignment until after Skokie Federal made its final payment to Spanish Court.

Here, as in First National Bank, the trial court’s conclusion that the assignment itself was not intended as a demand for payment directly to First Trust is fortified by the fact that First Trust acquiesced for so long in the payments to the assignor. In First National Bank, the assignee-bank took no action to enforce its right to payments under the assignment for over three years. The court concluded that the bank’s failure to take action amounted to a waiver of its rights against the account debtor. It emphasized that “common prudence would seem to have dictated an earlier and more searching investigation and insistence in clear terms that payments be made directly to the [assignee] bank ***.” (First National Bank v. Board of Education (1979), 68 Ill. App. 3d 21, 25.) First Trust’s failure in the present case to investigate whether and to whom payments were being made for over a 2V2 year period constituted a lack of common prudence at least equal to that demonstrated by the bank in First National Bank. Accordingly, we hold that First Trust, by its failure to demand direct payments, waived its rights to impose liability upon Skokie Federal.

For the foregoing reasons, we affirm the judgment of the circuit court of Cook County.

Judgment affirmed.

BUCKLEY, P.J., and CAMPBELL, J., concur.


author: JUSTICE LORENZ

text:
    JOVITA (ESTHER) LOPEZ, Plaintiff-Appellant, v. WINCHELL’S DONUT HOUSE, Defendant-Appellee.
    First District (5th Division)
    No. 83—1656
    Opinion filed July 20, 1984.

      John Panici, of Chicago, for appellant.
    Hubbard, Hubbard, O’Brien & Hall, of Chicago (Frederick W. Temple and John Skapars, of counsel), for appellee.
   JUSTICE LORENZ

delivered the opinion of the court:

Plaintiff appeals from an order of the circuit court granting defendant corporation’s motion for summary judgment. Plaintiff contends that the trial court erred in entering summary judgment against her because a genuine issue of material fact existed concerning her charge that she was falsely detained and imprisoned. For the reasons which follow, we affirm the trial court’s decision.

Count I of plaintiff’s unverified two-count complaint alleged that plaintiff was employed as a clerk in defendant’s donut shop in Woodridge, for approximately three years; that on or about April 8, 1981, defendant, through its agents and employees, Ralph Bell and James Cesario, accused her of selling donuts without registering sales and thereby pocketing defendant’s monies; and that she was falsely detained and imprisoned against her will in a room located on defendant’s premises, with force, and without probable and reasonable cause, by defendant’s employees. Count I of her complaint also alleged that as a result of defendant’s employees’ wilful and wanton false imprisonment, she was exposed to public disgrace; greatly injured in her good name and reputation; suffered, and still suffers, great mental anguish, humiliation and shock; wrongfully terminated from her employment; required to seek medical attention; all of which prevented her from attending to her usual affairs.

Defendant filed its answer on August 19, 1981, denying the material allegations of count I of plaintiff’s complaint. Further, on February 9, 1983, defendant amended its answer by filling an affirmative defense that alleged, inter alia, it was a merchant; that any questioning of plaintiff by its employees was performed only after said employees had reasonable grounds to believe that plaintiff had committed retail theft while working for defendant; that any alleged detention for questioning was limited solely to an inquiry as to whether plaintiff had failed to ring certain retail sales; and that such inquiry took place in a reasonable manner and for a reasonable length of time.

Defendant’s motion for summary judgment on count I of the complaint set forth the argument that plaintiff’s complaint, sounding in false imprisonment and alleging that she was held against her will by her employers in a certain room of a Winchell’s Donut House, was contradicted by her testimony in a discovery deposition. Defendant argued that plaintiff testified in this deposition that she had voluntarily complied with Messrs. Bell and Cesario’s request to speak privately with her regarding the matter of shortages in her register on April 9, 1981. Defendant further argued that plaintiff testified that when she no longer wished to continue her conversation with her employers, she got up and went home, electing never to return to her job.

The motion included portions of plaintiff’s deposition which disclosed the following. James Cesario telephoned plaintiff at her home at 4:30 p.m. on April 9, 1981, and asked her to come down to the donut shop; he did not explain his reasons for wanting her to do so. As a result of this call, plaintiff walked to the store from her home, arriving 10 minutes later. Upon her arrival at the store, Cesario asked her to accompany him into the baking room, which was located at the rear of the store; Ralph Bell was also present in the room. After Cesario asked plaintiff to sit down, she indicated that they (Cesario and Bell) closed the door and locked it by putting a “little latch on.” She stated that the two men told her that they had proof that spotters going from store to store had purchased two dozen donuts from her, but that her register had not shown the sale. After refusing her request to view the “proof,” plaintiff stated that she was “too upset” to respond to their questioning regarding the length of time that her alleged “shorting” of the cash drawer had been going on.

She further stated that defendant’s employees never told her that she had to answer their questions or face the loss of her job; never directly threatened to fire her; and made no threats of any kind to her during the interrogation. She further testified that she at no time during the interrogation feared for her safety; that she at no time refused to answer any question put to her; that there was never a point in the interrogation that she said, “I want to leave” and was prevented from doing so; and that she got up, left the room and went home when she first decided to do so.

Plaintiff’s written response to defendant’s motion for summary judgment did not contradict the statements that she had made in her discovery deposition. In her affidavit filed in support of her response to defendant’s motion for summary judgment, plaintiff averred that (1) she left the baking room after she began to shake, and when she felt that she was becoming ill; and (2) she was terminated from her employment by defendant.

The trial court entered summary judgment for defendant. Plaintiff appeals from that order. Count II of her complaint alleging defamation of character remains pending in the trial court.

Opinion

It is well established that summary judgment determines whether any genuine issue of material fact exists and summarily disposes of cases where no such fact exists in order to avoid congestion of trial calendars and the expense of unnecessary trials. (Loveland v. City of Lewistown (1980), 84 Ill. App. 3d 190, 192, 405 N.E.2d 453.) The motion should be granted where the pleadings, exhibits, depositions and affidavits of record show that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law. (Ill. Rev. Stat. 1981, ch. 110, par. 2 — 1005(c).) In addition, discovery depositions may be used in the context of summary judgment proceedings “for any purpose for which an affidavit may be used.” See 87 Ill. 2d R. 212(a)(4); see also Sierens v. Clausen (1975), 60 Ill. 2d 585, 588, 328 N.E.2d 559.

In ruling on a motion for summary judgment, the trial court must construe pleadings, depositions and affidavits included therein most strictly against the movant and most liberally in favor of the nonmovant. (Blaylock v. Toledo, Peoria & Western R.R. Co. (1976), 43 Ill. App. 3d 35, 37, 356 N.E.2d 639.) The defendant may at any time move for summary judgment in his favor for all or any part of relief sought against him. (Kusiciel v. LaSalle National Bank (1982), 106 Ill. App. 3d 333, 338.) However, because summary judgment is a drastic method of disposing of litigation, it should be granted only when the right of the movant is clear and free from doubt. Hillblom v. Ivancsits (1979), 76 Ill. App. 3d 306, 310, 395 N.E.2d 119.

Plaintiff asserts that the trial court erred in granting defendant’s motion for summary judgment as there exists a genuine issue of material fact. She posits that she felt compelled to remain in the baking room so that she could protect her reputation by protesting her innocence to the two men, and that she left the room once she began to shake and feel ill. Additionally, she attributes her “serious emotional upset” to her feelings of intimidation that she contends were caused by: James Cesario’s sitting directly next to her during questioning, yellow pad and pencil in hand; Ralph Bell’s repeated statement that his briefcase contained proof of her guilt; and his raised voice.

The common law tort of false imprisonment is defined as an unlawful restraint of an individual’s personal liberty or freedom of locomotion. (Johnson v. Jackson (1963), 43 Ill. App. 2d 251, 258, 193 N.E.2d 485; Shelton v. Barry (1946), 328 Ill. App. 497, 506, 66 N.E.2d 697.) Imprisonment has been defined as “any unlawful exercise or show of force by which a person is compelled to remain where he does not wish to remain or to go where he does not wish to go.” (McKendree v. Christy (1961), 29 Ill. App. 2d 195, 199, 172 N.E. 2d 380.) In order for a false imprisonment to be present, there must be actual or legal intent to restrain. Campbell v. Kaczmarek (1976), 39 Ill. App. 3d 465, 469, 350 N.E.2d 97.

Unlawful restraint may be effected by words alone, by acts alone or both (Hassenauer v. F. W. Woolworth Co. (1942), 314 Ill. App. 569, 41 N.E.2d 979 (abstract of opinion)); actual force is unnecessary to an action in false imprisonment. (Winans v. Congress Hotel Co. (1922), 227 Ill. App. 276, 282.) The Restatement of Torts specifies ways in which an actor may bring about the confinement required as an element of false imprisonment, including (1) actual or apparent physical barriers; (2) overpowering physical force, or by submission to physical force; (3) threats of physical force; (4) other duress; and (5) asserted legal authority. Restatement (Second) of Torts secs. 38 through 41 (1965).

It is essential, however, that the confinement be against the plaintiff’s will, and if a person voluntarily consents to the confinement there can be no false imprisonment. (Fort v. Smith (1980), 85 Ill. App. 3d 479, 481, 407 N.E.2d 117.) “Moral pressure, as where the plaintiff remains with the defendant to clear himself of suspicion of theft *** is not enough; nor, as in the case of assault, are threats for the future ***. Any remedy for such wrongs must lie with the more modern tort of the intentional infliction of mental distress.” Prosser, Torts sec. 11, at 45 (4th ed. 1971).

Plaintiff principally relies on the court’s decision in Marcus v. Liebman (1978), 59 Ill. App. 3d 337, 375 N.E.2d 486, for support of her position that summary judgment should not have been granted in the instant case. In Marcus v. Liebman, the court extensively examined the concept that threats of a future action are not enough to constitute confinement. (59 Ill. App. 3d 337, 341.) There, the defendant psychiatrist threatened to have plaintiff committed to the Elgin State Hospital, and the Marcus court found that this was a present threat, constituting false imprisonment, as opposed to a threat of future action. The court in Marcus concluded that the lower court had incorrectly directed a verdict for the defendant, and reversed and remanded the case for trial on the question of imprisonment. The court noted that plaintiff was already voluntarily committed to the psychiatric wing of a private hospital when the defendant made the threat to commit her to a state mental hospital and reasoned, “[A]t the time the alleged threat was made plaintiff was already confined. It was certainly reasonable for the plaintiff to believe that before her release [from the private hospital] commitment procedures could have been concluded.” 59 Ill. App. 3d 337, 341.

Our analysis of the Marcus decision, as well as the other cases cited by plailntiff, does not support plaintiff’s position. All of these cases are easily distinguishable from the present case, as in each, either physical restraint or present threats of such were present.

In the case at bar, we are confronted with plaintiff’s testimony, given under oath, that she voluntarily accompanied James Cesario to the baking room; that she stayed in the room in order to protect her reputation; that she was never threatened with the loss of her job; that she was never in fear of her safety; and that at no time was she prevented from exiting the baking room. Her affidavit, in which she averred that she left the baking room after she began to shake and when she felt that she was becoming ill, does not place into issue material facts which she had previously removed from contention. (Foun-taine v. Hadlock (1971), 132 Ill. App. 2d 343, 347, 270 N.E.2d 222.) In her discovery deposition, given under oath, she stated that she “got up and left” when Ralph Bell asked her how long the cash register “shorting” had been going on.

In the tort of false imprisonment, it is not enough for the plaintiff to have felt “compelled” to remain in the baking room in order to protect her reputation (see Prosser, Torts sec. 11 (4th ed. 1971)), for the evidence must establish a restraint against the plaintiff’s will, as where she yields to force, to the threat of force or the assertion of authority. (See Restatement (Second) of Torts secs. 38 through 41 (1965).) In the present case, our search of the record reveals no evidence that plaintiff yielded to constraint of a threat, express or implied, or to physical force of any kind. Also, absent evidence that plaintiff accompanied Cesario against her will, we cannot say that she was imprisoned or unlawfully detained by defendant’s employees. Finally, we find no merit to plaintiff’s argument that defendant’s affirmative defense constituted an admission of an unlawful restraint.

For the reasons stated above, we conclude that the trial court properly granted defendant’s motion for summary judgment, as there exists no question of material fact in the present case.

Affirmed.

MEJDA, P.J., and SULLIVAN, J., concur.


author: PRESIDING JUSTICE SEIDENFELD

text:
    MARY G. BLUME, et al., Plaintiffs-Appellants, v. EVANS FUR COMPANY, Defendant-Appellee.
    Second District
    No. 2—83—0761
    Opinion filed July 27, 1984.
    Karen J. Johnson, of Brittain, Ketcham, Strass, Terlizzi, Flanagan, Weir & Johnson, P.C., of Elgin, for appellants.

      David B. McAfee, Victor J. Cassato, and George D. Gardner, all of Clausen, Miller, Gorman, Caffrey & Witous, P.C., of Chicago, for appellee.
   PRESIDING JUSTICE SEIDENFELD

delivered the opinion of the court:

Whether a limitation of liability in a contract of bailment is binding upon an insurer who is not a party to the contract, is the principal question in this appeal.

The Evans Fur Company (Evans) stored a black mink coat owned by Mary G. Blume (Blume) and subsequently lost it. The “fur-call” receipt issued by Evans to Blume and signed by her stated the value of the coat at $300 and in a further provision limited Evans’ liability “for any reason whatsoever” to $100 “except as otherwise specifically provided.” Blume testified that the clerk at Evans who handled the transaction knew that she carried her own insurance. The same clerk had previously appraised the coat at her request for insurance purposes at $4,296.

Blume was paid $300 by Evans. She claimed and received payment of $3,131 from her insurance carrier, Allstate Insurance Company (Allstate). Allstate then notified Evans of its subrogation claim. Evans’ insurance carrier denied liability exceeding $300. Allstate, claiming as Blume’s subrogee, and Blume filed a complaint against Evans. Evans filed a motion for summary judgment alleging that a valuation of $300 had been placed on the coat when the agreement form had been made out and thereafter signed by Blume. The circuit court granted Evans’ motion for summary judgment, finding that the delivery of the coat created a bailment, that Blume’s conduct limited the liability of the bailee to the sum of $300, that Allstate stands in the same stead as its insured subrogee, and therefore its limit of liability is established at $300.

I

Blume and Allstate argue first that a bailee for hire, as a matter of public policy, may not unreasonably limit its liability for the loss or destruction of the bailed property resulting from its negligence. The authority it cites, O’Callaghan v. Waller & Beckwith Realty Co. (1958), 15 Ill. 2d 436, does not support the argument. In O’Callaghan, an exculpatory clause in a lease was upheld for the stated reason that “the relation of lessor and lessee has been considered a matter of private concern.” (15 Ill. 2d 436, 438-39.) The supreme court distinguished the contract from other relationships which have monopolistic characteristics, as, for example, those of common carriers and telegraph companies, with compelling considerations of “obvious public interest *** coupled with the dominant position of those seeking exculpation.” (O’Callaghan v. Waller & Beckwith Realty Co. (1958), 15 Ill. 2d 436, 438; see also McClure Engineering Associates, Inc. v. Reuben H. Donnelley Corp. (1983), 95 Ill. 2d 68, 71-74.) In this case no matter of obvious public interest coupled with a dominant position of the party seeking exculpation is involved.

A bailment is a contractual relationship in which the parties may limit liability, “provided the contract was not in violation of law or public policy.” (Schaefer v. Washington Safety Deposit Co. (1917), 281 Ill. 43, 50.) In Schoen v. Wallace (1948), 334 Ill. App. 294, on facts essentially similar to those here presented, Mrs. Schoen’s mink coat valued at $3,500 was left with Wallace, a furrier, for storage and later was lost. The bailment contract limited the loss to $100. The agreement was upheld over the contention that the result would encourage furriers to convert furs left for storage or to exercise minimum care in storing them. The court stated:

“It was a private transaction in which the public is in no way concerned. Nor is it a matter of public interest whether the loss shall be borne by the plaintiff’s insurer or by the defendant.” 334 Ill. App. 294, 297.

We conclude that the limitation of liability in the bailment agreement was binding and enforceable.

II

Allstate’s further argument that an insurer should not be bound by contractual limitations entered into by its insured with knowledge that the insured item is of greater value must also be rejected.

A subrogee has no greater rights than the subrogor and can enforce only the rights of the subrogor. (McCormick v. Zander Reum Co. (1962), 25 Ill. 2d 241, 244; Dworak v. Tempel (1959), 17 Ill. 2d 181, 189.) Our conclusion that Evans could limit its liability to Blume to $300 similarly limits Allstate’s subrogation rights.

Allstate relies on Home Insurance Co. v. Hertz Corp. (1978), 71 Ill. 2d 210, for the proposition that an unlimited release executed by an insured subrogor which does not specifically include the amount of the insurer’s subrogation interest does not bar a subsequent action by the insurer against the tortfeasor where the release is procured with knowledge of the subrogor’s interest. (Home Insurance Co. v. Hertz Corp. (1978), 71 Ill. 2d 210, 215; see also Country Mutual Insurance Co. v. Transit Casualty Co. (1978), 59 Ill. App. 3d 283, 285.) In both cases the releases were executed subsequent to the loss and thus impaired the right of the subrogee to recover against the tortfeasor. Under general subrogation principles, the subrogor’s loss is a prerequisite to the accrual of subrogation rights (Dworak v. Tempel (1959), 17 Ill. 2d 181, 189), and the subrogor’s rights do not accrue until the subrogee has paid the debt. (Village of Crainville v. Argonaut Insurance Co. (1980), 81 Ill. 2d 399, 403.) Thus, the principles of the Home ruling are inapplicable under the circumstances of this case, in which the limitation of liability, which we have found to have been legally entered into, prevented any additional subrogation rights from coming into being.

The judgment of the circuit court of Du Page County is affirmed.

Affirmed.

LINDBERG and NASH, JJ., concur.


author: JUSTICE SULLIVAN

text:
    DAVID FREER, Plaintiff-Appellee, v. HYSAN CORPORATION et al., Defendants (The Village of Glendale Heights for the Use of Travelers Insurance Company, Intervening-Appellant).
    First District (5th Division)
    No. 82—2789
    Opinion filed July 20, 1984.

      Johnson, Cusack & Bell, Ltd., of Chicago (Thomas H. Fegan, of counsel), for appellant.
    Corboy & Demetrio, P.C., of Chicago (Philip H. Corboy and David A. Novoselsky, of counsel), for appellee.
   JUSTICE SULLIVAN

delivered the opinion of the court:

The village of Glendale Heights for the use of Travelers Insurance Company appeals from an order of the trial court adjudicating its right to reimbursement under section 5(b) of the Illinois Workmen’s Compensation Act (the Act) (Ill. Rev. Stat. 1975, ch. 48, par. 138.5(b)) for benefits paid and to be paid under the Act.

Plaintiff was an employee of the village who was awarded compensation of $115.71 weekly for life because of severe burns received in the course of his employment when a container of sewer solvent exploded. He also brought an action seeking damages for the same injuries against the manufacturer and distributor of the solvent. The village intervened in that action to protect its right to reimbursement under section 5(b) of the Act.

Plaintiff subsequently settled his lawsuit for $1,750,000, and, at the hearings concerning the disposition of the village’s intervening petition, the parties agreed that the Act gave the village a lien on plaintiff’s third-party recovery for the benefits paid or to be paid. (See De-nius v. Robertson (1981), 98 Ill. App. 3d 83, 424 N.E.2d 336.) They also agreed that the sum subject to the lien was the settlement amount less plaintiff’s attorney fees and his pro rata share of expenses. The village argued that it was entitled to a credit in the form of a suspension of future payments until the net amount of the recovery was exhausted. It was the position of plaintiff in the trial court that the Illinois Industrial Commission (the Commission) should have been requested to reduce the future payments to a lump sum amount which, when paid to plaintiff, would be ordered by the trial court to be repaid from the net amount recovered before any of the recovery sum is paid to plaintiff, or that the village should continue its weekly payments — as it was required to do under the Act — and plaintiff would then immediately return the amount of each such payment to the village.

The village would not agree to a lump sum order by the Commission, and when the trial court refused to apply the credit formula and instead provided, in effect, that the net recovery be paid to plaintiff, who was then to reimburse the village for its future weekly payments, this appeal followed.

Opinion

The village asserts no impropriety as to the method of reimbursement ordered by the trial court. Its sole contention here is that the trial court “erred in refusing to credit the amount of plaintiff’s recovery towards the payment by the employer of future Workmen’s Compensation payments.” It maintains that the refusal to do so contravened section 5(b) of the Act (Ill. Rev. Stat. 1975, ch. 48, par. 138.5(b)), which states in relevant part:

“Where the injury or death for which compensation is payable under this Act was caused under circumstances creating a legal liability for damages on the part of some person other than his employer to pay damages, then legal proceedings may be taken against such other person to recover damages notwithstanding such employer’s payment of or liability to pay compensation under this Act. In such case, however, if the action against such other person is brought by the injured employee or his personal representative and judgment is obtained and paid, or settlement is made with such other person, either with or without suit, then from the amount received by such employee or personal representative there shall be paid to the employer the amount of compensation paid or to be paid by him to such employee or personal representative including amounts paid or to be paid pursuant to paragraph (a) of Section 8 of this Act.” (Emphasis added.)

According to the village, the above-underlined language in section 5(b) of the Act means that when plaintiff obtained the recovery in his third-party action, it (the village) was entitled to receive a credit by a suspension of its obligation to make future compensation benefits until the net amount recovered by plaintiff is exhausted.

In support of its position, the village cites several cases in which credits for future payments of compensation were given employers against third-party recoveries by employees receiving compensation benefits. We note, however, that in all of these cases the trial court had initially ordered such credits and, on appeal, the issue presented in each of them was whether the trial court’s calculation of that credit was proper. By way of comparison, the trial court here did not apply a credit formula, and the single issue presented is whether it was required to do so. We think not.

In the first of the cases cited by the village, Vandygriff v. Commonwealth Edison Co. (1979), 68 Ill. App. 3d 396, 386 N.E.2d 318, the trial court had ordered a credit to an employer for future compensation payments against the amount of a third-party recovery. The relevant issue on appeal, however, concerned only the amount of the recovery subject to the credit and, holding that the trial court erred in reducing the amount of the employer’s credit by requiring it to pay the employee’s attorney a fee of 40% rather than 25% — as provided by statute — we adjusted the amount to be credited on the basis of a 25% fee. We then concluded that the employer “shall be given credit for any payments which they may be obligated to pay *** until such sums or obligations or bills shall have been paid in full, but not to exceed the total of [the amount recovered by the employee less his attorney fees and pro rata costs of litigation].” (68 Ill. App. 3d 396, 399, 386 N.E.2d 318, 320.) In the second case cited by the village, De-nius v. Robertson (1981), 98 Ill. App. 3d 83, 424 N.E.2d 336, the trial court also ordered a credit to the employer against a recovery by an employee from a third party, but the issue on appeal concerned only the amount of the credit, and this court — following the reasoning of Vandygriff— made an adjustment of the credit.

A credit procedure of - suspending an employer’s obligation to make future compensation payments until the balance of a third-party recovery is exhausted was ordered by the trial court and upheld in another case cited by the village, Jones v. Melroe Division, Clark Equipment Co. (1981), 102 Ill. App. 3d 1103, 430 N.E.2d 1385, although the formula for determining the amount of the recovery subject to the credit differed from that used in Vandygriff and Denius. In Jones, the court reached this amount by adding the compensation benefits already paid by the employer to the third-party recovery and subtracting from this gross figure the employee’s attorney fees and costs.

In the fourth case cited by the village, Lewis v. Riverside Hospital (1983), 116 Ill. App. 3d 845, 452 N.E.2d 611, where there was a credit to the employer ordered against an employee’s third-party recovery, the appeal also raised only a question as to the amount of the credit. Disagreeing with the formula used in Jones, it was determined in Lewis that the amount to be credited was the total third-party recovery less compensation benefits already paid, the employee’s attorney fees, and his pro rata share of the litigation expenses as provided in section 5(b) of the Act.

Because neither Vandygriff, Jones, Denius, or Lewis answers the question of whether the trial court is required to apply a credit for future payments of compensation against a third-party recovery, the reliance of the village on these cases is misplaced. Instead, our reading of them leads us to conclude that where compensation benefits are being paid by reason of injury to or death of an employee and a third-party recovery is made for the same injury or death, a court, in protecting the employer’s reimbursement lien, under section 5(b) of the Act, may but is not required to apply a credit to the employer for benefits to be paid against the employee’s third-party recovery. It appears that another method has also been used to protect the lien rights of the employer as to future payments where there has been a third-party recovery; i.e., the entry of an order requiring that the recovery balance be placed in a trust account, with the employer continuing his weekly payment and being reimbursed therefor from the trust account until it is exhausted. (See Shelby v. Sun Express, Inc. (1982), 107 Ill. App. 3d 362, 437 N.E.2d 764.) In addition, where the parties have agreed to an approval of a lump sum settlement of the future benefits, the courts have ordered that when the approved amount is paid, the employer is to be immediately reimbursed from the third-party recovery fund before any payment from it to the employee.

In the instant case, none of these alternatives were used; instead, after requiring reimbursement to the village from the third-party recovery of plaintiff for the compensation benefits already paid, the trial court ordered that the net recovery be paid to plaintiff and his attorney “impressed and encumbered with a lien for any future payments by the Village.” The parties agree that this order requires the village to continue the weekly payments to plaintiff, who then must immediately reimburse the village for the amount of each payment.

The notice of appeal of the village asks only that the said order “be reversed and that the cause be remanded to the trial court for the entry of an order giving the intervenor [the Village] full credit for any future payments that they are or will become obligated to pay in addition to any credit allowed for payments already paid.” In its brief here, the village contends only that the trial court “erred in refusing to credit the amount of plaintiff’s recovery towards the payment by the employer of future Workmen’s Compensation payments.” Thus, the village raises only the single issue of whether the trial court was required to apply the credit formula it proposed.

Section 5(b) of the Act provides in relevant part that from the amount of a third-party recovery by an injured employee or his personal representative “there shall be paid to the employer the amount of compensation paid or to be paid by him to such employee ***.” There is, however, no provision in the Act as to the manner in which such payment should be made and, specifically, there is no requirement that a credit for future payments must be given. As pointed out above, none of the cases cited by the village require the application of a credit formula. See also McCormick v. McDougal-Hartmann Co. (1969), 111 Ill. App. 2d 346, 249 N.E.2d 275, aff’d on other grounds (1970), 47 Ill. 2d 340, 265 N.E.2d 610, where the court rejected an employer’s contention that it could take the amount of its employee’s third-party recovery as a credit against its obligation to pay compensation benefits. We conclude that the trial court was not required to do so, and we therefore find that the trial court did not err in failing to order such a credit.

We point out, however, that while there was no requirement that the trial court apply the credit formula proposed by the village, the parties are in accord that the court was required under section 5(b) of the Act to protect the village’s right to reimbursement of compensation benefits paid and to be paid. Here, it is our view that the reimbursement right of the village was not property protected as to future payments. The trial court ordered that the balance of the recovery fund, after deductions for plaintiff’s attorney fees and a pro rata sharing of the cost, was to be paid to plaintiff “impressed and encumbered with a lien for any future payments by the Village.” By this order, after plaintiff had received a weekly payment benefit from the village, he was to immediately reimburse the village from the balance of the recovery funds that the court had ordered paid to him.

We initially note that the trial court was not empowered to impress a lien upon the recovery funds after ordering that they be paid to plaintiff. The lien provided for in section 5(b) is upon a fund out of which plaintiff “might be compensated from *** [a] third party.” The lien here thus ceased to exist as to the recovery fund when it was paid to plaintiff, as there then was no longer a fund out of which plaintiff might be compensated. Furthermore, there was nothing in section 5(b) of the Act authorising the impression of a lien on the recovery funds in plaintiffs possession, and a lien may not be created by the court. 25 Ill. L. & Prac. Liens sec. 3 (1956).

In any event, even if a lien could have been impressed on the funds in plaintiff's possession, it would have been of no protective value to the village because, if for any reason, plaintiff does not repay the village for the future weekly benefits it was required to pay, further legal action would be required by the village to obtain repayment.

In view thereof, it is clear that the trial court did not properly protect, as required by section 5(b), the reimbursement right of the village as to future benefits it must pay. We are of the belief, under the particular circumstances here, that the application of the credit formula is now an appropriate method of protecting its reimbursement right.

Accordingly, the order appealed from is reversed, and this cause is remanded with a direction that an order be entered consistent with the foregoing.

Reversed and remanded with a direction.

MEJDA, P.J., and LORENZ, J., concur.

      The Act is now known as the Workers’ Compensation Act (Ill. Rev. Stat. 1981, ch. 48, par. 138.1).

      The Commission will enter such lump sum orders only upon agreement of the parties.

      Plaintiff’s attorney fees were specifically excluded from this lien.

      Upon the death of Justice Wilson, the writing of this opinion was assigned to Justice Sullivan, and Justice Mejda — who did not participate in the oral arguments— has reviewed the briefs, the record, and the tape of the oral arguments.


author: PRESIDING JUSTICE MEJDA

text:
    OPEN KITCHENS, INC., Plaintiff-Appellant, v. GULLO INTERNATIONAL DEVELOPMENT CORPORATION, Defendant-Appellee and Third-Party Plaintiff-Appellant (P & W Heating and Cooling Company, Inc., Third-Party Defendant-Appellee).
    First District (5th Division)
    No. 83—2535
    Opinion filed July 20, 1984.
    5. Joseph Formusa, of Rabens, Formusa & Classman, Ltd., of Chicago, for appellant Open Kitchens, Inc.
    William J. Cook and Peter W. Schoonmaker, both of Condon, Cook & Roche, of Chicago, for appellee Gullo International Development Corp.
    Terrence J. Madden, of Rooks, Pitts, Fullager & Poust, of Chicago, for appellee P & W Heating and Cooling Co.
   PRESIDING JUSTICE MEJDA

delivered the opinion of the court:

Plaintiff, Open Kitchens, Inc., appeals from the trial court’s dismissal of two counts of its complaint. This is an action for damages arising from the allegedly deficient construction of a freezer room and associated systems in plaintiff’s food processing plant. Defendant Gullo International Development Corporation (Gullo) and third-party defendant P & W Heating and Cooling Company, Inc. (P & W) moved to dismiss counts II and III of the complaint. The trial court granted the motions and, pursuant to Supreme Court Rule 304(a), found that there was no just reason to delay enforcement or appeal of the order. Count I remains pending. On appeal, plaintiff contends that the trial court erred in dismissing count II of the complaint in that a cause of action based on the breach of an express indemnity contract was stated. Plaintiff also asserts that the trial court erred in dismissing count III of the amended complaint in that economic losses may be recovered in a tort action which arises from a contract. For the reasons which follow we affirm the order of the circuit court.

A motion to dismiss admits as true all well-pleaded facts in the complaint as well as the reasonable inferences which may be drawn therefrom. (Kerr Steamship Co. v. Chicago Title & Trust Co. (1983), 120 Ill. App. 3d 998, 1004, 458 N.E.2d 1009.) Count II of the complaint alleged that plaintiff, through an agent, entered into a written agreement with defendant Gullo by which Gullo agreed to construct a building for the operation of plaintiff’s food processing business. As part of its work Gullo agreed to build an air circulation system, including ducts, vents, underfloor insulation, and a circulation fan. Gullo engaged various subcontractors to perform this work and these subcontractors failed to install the circulation fan or the insulation. As a result, it is alleged that the soil below the freezer floor froze and expanded causing damage to the floor and freezer.

Count II of the complaint set forth paragraph 4.18.1 of the “Supplemental General Conditions of the Agreement” of the parties, which provided:

“To the extent permitted by law, [Gullo] shall indemnify and hold harmless the [plaintiff] and their [sic] agents and employees from and against all claims, damages, losses, expenses, liabilities, and demands, including attorneys’ fees, of whatsoever kind or nature, arising out of, resulting from or connected with the performance of the Work by the Contractor or any Subcontractor for and in behalf of the [plaintiff or Architects. The Contractor shall defend at its own expense, any actions based thereon and shall pay all attorneys’ fees, costs and other expenses arising therefrom.”

The next paragraph of the supplemental general conditions is entitled “Scaffolding Act” and states that the “obligations of the Contractor under this Article shall be deemed to include as an additional liability any injury or damage arising from the failure to use or from the misuse by the Contractor or his agents or employees, of any scaffold, hoist, crane, ladder, support, temporary stairwell, or other mechanical contrivance ***.”

Plaintiff notified Gullo in writing of the damage resulting from the frozen soil and requested that Gullo indemnify plaintiff. Gullo refused. Count II concluded with a prayer for damages including the costs of removing and replacing the damaged parts of the floor and freezer, lost profits, and attorney fees.

Count III alleged the same facts as count II and sought to recover under a negligence theory in that Gullo failed to perform the work in a good and workmanlike manner. Count III sought damages for the costs of removing and replacing the damaged parts of the floor and freezer and for lost profits.

Gullo moved to strike and dismiss count II on the ground that paragraph 4.18.1 of the contract is not an indemnity or warranty clause relating to the performance of the construction but rather was intended to provide for indemnification to plaintiff for claims of third parties arising from the performance of the construction work. P & W, a third-party defendant, moved to dismiss count III on the ground that the damages sought included only economic losses for which a negligence recovery was unavailable. The trial court granted the motions and this appeal ensued.

Opinion

Plaintiff contends that the “indemnity provision at issue here constitutes a promise by the defendant-contractor to pay all losses sustained by the plaintiff-owner by reason of the acts or omissions of third persons, namely, the sub-contractors hired by defendant to perform the work.” Defendant Gullo responds that plaintiff’s interpretation of the contract is based on isolated language and that viewed as a whole, the contract does not warrant such an interpretation and instead is limited to payment of losses occasioned by suits brought by third parties.

“ ‘It is a general rule governing the construction of contracts that unless a contract is ambiguous, its meaning must be determined from the words used; and courts will not, because a more equitable result might be reached thereby, construe into the contract provisions that are not therein.’ ” (Tatar v. Maxon Construction Co. (1973), 54 Ill. 2d 64, 67, 294 N.E.2d 272, quoting Westinghouse Electric Elevator Co. v. LaSalle Monroe Building Corp. (1946), 395 Ill. 429, 432, 70 N.E.2d 604.) The court in Tatar further indicated that an indemnity agreement must “be given a fair and reasonable interpretation based upon a consideration of all of its language and provisions.” (Tatar v. Maxon Construction Co. (1973), 54 Ill. 2d 64, 67.) Viewing a contract as a whole means viewing each part in light of the others. La Throp v. Bell Federal Savings & Loan Association (1977), 68 Ill. 2d 375, 381, 370 N.E.2d 188.

Viewing the language of the instant contract as a whole, the indemnity and hold harmless provisions of the first sentence of paragraph 4.18.1 must be interpreted in light of the next sentence, which provides that the “Contractor shall defend at its own expense, any actions based thereon and shall pay all attorneys’ fees, costs and other expenses arising therefrom.” Plaintiff contends that paragraph 4.18.1 provides for the payment of all losses sustained by plaintiff by reason of the acts or omissions of third parties, i.e., the subcontractors. The words “thereon” and “therefrom” refer to the general language of the first sentence of the paragraph relating to “all claims, damages, losses, liabilities and demands ***.” While the first sentence, read alone, may fairly be read to provide the protection contended for by plaintiff, the next sentence indicates that the indemnity was intended to arise only in the context of liability imposed on plaintiff as a result of losses or injuries incurred by third parties. As defendant contends, no duty to defend could arise unless a third party had initiated an action against plaintiff. We therefore conclude that the trial court correctly granted the motion to dismiss with regard to count II.

Plaintiff next asserts that the trial court erred in dismissing count III of the complaint. Plaintiff relies on Maxfield v. Simmons (1983), 96 Ill. 2d 81, 449 N.E.2d 110, for the proposition that a tort action to recover economic losses may be maintained where the complaint is grounded on the negligent performance of a contractually imposed duty. This reliance is misplaced. Maxfield involved a third-party cause of action for indemnity, not negligence or another tort. In Max- field, the plaintiff sued the defendant for breach of contract in building a house with a defective roof. The defendant filed a third-party-action against the supplier and the manufacturer of a component part of the roof, and alleged in the third-party complaint that the part was defective. The supreme court held that an "implied contract of indemnity arose from the contractual relationship between the parties, but the liability, if any, imposed on [defendant] will be the result not of breach of contract, but of tortious conduct.” (96 Ill. 2d 81, 87, 449 N.E.2d 110.) The tortious conduct was not that of the original defendant but that of the third-party defendants in providing defective component parts. (See Chicago College of Osteopathic Medicine v. George A. Fuller Co. (7th Cir. 1983), 719 F. 2d 1335, 1341, n.6.) The supreme court recognized the viability of an action for implied indemnity under such circumstances, even though recovery for economic loss was sought, because principles of law and equity dictated that such an action be treated no differently than an implied indemnity action based on upstream products liability. (Maxfield v. Simmons (1983), 96 Ill. 2d 81, 86-87, 449 N.E.2d 110.) Maxfield does not hold, as plaintiff suggests, that economic loss may be recoverable in tort where the source of the tort duty is contractual in nature.

In the instant case, plaintiff’s action is not one for implied indemnity but rather seeks damages for its own losses. (Compare Anixter Brothers, Inc. v. Central Steel & Wire Co. (1984), 123 Ill. App. 3d 947, 952, 463 N.E.2d 913.) Counsel for plaintiff has candidly admitted that these damages which occurred over a long period of time are solely of an economic nature. In such a case, “contract law, which protects expectation interests, provides the proper standard when a qualitative defect is involved ***.” (Moorman Manufacturing Co. v. National Tank Co. (1982), 91 Ill. 2d 69, 81, 435 N.E.2d 443.) Our supreme court has explicitly held that “latent construction defects, resulting in solely economic loss, are not recoverable under a negligence theory. (Redarowicz v. Ohlendorf (1982), 92 Ill. 2d 171.)” (Foxcroft Townhome Owners Association v. Hoffman Rosner Corp. (1983), 96 Ill. 2d 150, 156, 449 N.E.2d 125.) The trial court properly granted the motion to dismiss with regard to count III.

For all of the foregoing reasons, the order of the trial court is affirmed.

Affirmed.

LORENZ and SULLIVAN, JJ., concur.


author: JUSTICE ROMITI

text:
      In re MARRIAGE OF ARTHUR L. MOSTOW, Petitioner-Appellee, and LOIS C. MOSTOW, Respondent-Appellee (Feiwell, Galper & Lasky, Ltd., Petitioner-Appellant).
    First District (4th Division)
    No. 82—2144
    Opinion filed July 19, 1984.
    Feiwell, Galper & Lasky, Ltd., of Chicago, pro se (George S. Feiwell and Craig P. Ehrlich, of counsel), for appellant.
    Jerome H. Torshen, Ltd., of Chicago (Mark K. Schoenfield, of counsel), for appellee Lois C. Mo stow.
   JUSTICE ROMITI

delivered the opinion of the court:

Petitioner-appellant Feiwell, Galper & Lasky, Limited (Feiwell), appeals from an order of the circuit court of Cook County denying Feiwell’s petition for a turnover order. It was undisputed that Feiwell had properly obtained a judgment for fees against Arthur L. Mostow (whom Feiwell had represented in a marriage dissolution action still pending at the time of Feiwell’s petition) and had taken all steps necessary to perfect its judgment lien against Arthur’s interest in the marital home. However, the circuit court refused to rule on the petition until it had entered a decree of dissolution in which Arthur’s one-half interest in the marital home was awarded to respondent-appellee Lois C. Mostow. The court then denied the petition for a turnover order, finding in part that granting the petition would be harmful to the interests of the Mostows’ children. Feiwell contends on appeal that the circuit court did not possess the discretionary authority to deny its petition under the circumstances.

We reverse and remand for further proceedings.

Feiwell represented Arthur in the marital litigation until November 1981. On December 31, 1981, Feiwell filed its petition for award of attorney fees and costs before the Honorable Robert C. Buckley. Lois Mostow was notified of the petition but did not appear at the hearing. On January 25, 1982, Feiwell was awarded fees and costs totalling $38,903.48. Five days earlier Lois Mostow had obtained an order appointing a receiver to manage certain companies owned and controlled by Arthur and enjoining him from transferring, encumbering, or otherwise disposing of any of the marital property, including the marital home, a 15-room building located on 872 acres in Highland Park. American National Bank and Trust Company was the trustee of land trust No. 29488, which held title to the home, with the trust’s beneficial interests owned 50% by Arthur and 50% by Lois. It would appear that this was the only known asset of Arthur’s with any equity value.

On March 19, 1982, Feiwell instituted supplementary proceedings to enforce its judgment by causing a citation to discover assets to be served on American National Bank as trustee of the land trust. (Ill. Rev. Stat. 1983, ch. 110, par. 2 — 1402.) On April 2, 1982, Feiwell filed before the Honorable Charles J. Fleck, Jr., a petition for a turnover order, directing the bank to turn over Arthur’s beneficial interest in the marital home to the sheriff for sale, with the proceeds to be applied toward satisfaction of the judgment due Feiwell. An amended petition was filed on April 19, 1982, after Feiwell had placed a writ of execution with the sheriff. The trial court denied Feiwell’s request that distribution of the marital property be postponed until the petition could be ruled upon.

Lois Mostow had objected to the petition because, inter alia, the judgment order of January 25, 1982, had failed to state that there was no just reason to delay enforcement of the order. Accordingly, an amended order reciting the requisite language under Supreme Court Rule 304(a) (87 Ill. 2d R. 304(a)) was entered on May 17, 1982. That same day a new citation to discover assets was served upon American National Bank as trustee and another writ of execution was placed with the sheriff. Feiwell then filed a second amended petition for a turnover order. On May 20, 1982, Feiwell served a citation to discover assets on Arthur and on May 28, Feiwell filed its third amended petition for a turnover order, asking that American National Bank and/or Arthur be directed to turn over Arthur’s beneficial interest to the sheriff. That same day the trial court entered its judgment for dissolution of marriage, in which it awarded the marital home to Lois, and ordered Arthur to convey his interest in the home to Lois, finding that:

“Because the marital residence is marital property and under the jurisdiction of this Court, and since the marital residence has been awarded to Lois Mostow and therefore, Arthur Mos-tow no longer has any interest in said property to turnover; and further, in light of the insolvent nature of the marital estate and the needs of the minor child and the psychiatrically impaired other children, a turnover order would be adverse to the proper interests of the minor and adult children and the family.”

The court then denied Feiwell’s third amended petition and subsequently denied its motion to reconsider that denial.

Under section 508 of the Illinois Marriage and Dissolution of Marriage Act, the court is authorized to order the payment of attorney fees and costs by either spouse. (Ill. Rev. Stat. 1983, ch. 40, par. 508.) The court may order that payment be made directly to the attorney and that attorney may enforce the order in his name, with judgment to be entered and execution levied accordingly. In this cause it is undisputed that at least as of May 17, 1982, the date of the entry of the amended judgment order for fees, Feiwell had properly obtained such a judgment against Arthur. On this same date Feiwell established its lien on Arthur’s interest in the marital home by serving a citation to discover assets on American National Bank as trustee of the land trust holding title to the realty. Ill. Rev. Stat. 1983, ch. 110, par. 2 — 1402; Mid-West National Bank v. Metcoff (1974), 23 Ill. App. 3d 607, 319 N.E.2d 336; Bank of Broadway v. Goldblatt (1968), 103 Ill. App. 2d 243, 247, 243 N.E.2d 501, 503.

In denying Feiwell’s request for execution on the judgment despite the existence of a valid judgment and lien, the trial court suggested that because it had awarded the marital residence to Lois that property could not be the subject of a turnover order. But in fact any transfer of Arthur’s interest in that home was subject to the lien previously established by Feiwell. (Sterling Savings & Loan Association v. Schultz (1966), 71 Ill. App. 2d 94, 218 N.E.2d 53.) Respondent-appellee has apparently abandoned this rationale on appeal but does contend that the court could have recognized an inchoate marital interest on her part in Arthur’s half-interest in the home, citing Hofmann v. Hofmann (1983), 94 Ill. 2d 205, 446 N.E.2d 499.) The Hofmann case held that a husband could not defeat his wife’s marital interest in property by conspiring to fraudulently allow a forfeiture of the property to his parents prior to the entry of the decree of dissolution. The court so held while recognizing the general rule, stated in Kujawinski v. Kujawinski (1978), 71 Ill. 2d 563, 376 N.E.2d 1382, that the Illinois Marriage and Dissolution of Marriage Act does not purport to affect property interests during marriage. No fraud is at issue here and in our view the narrow holding of Hofmann is inapplicable to this cause. We also find no significance to the fact, cited by Lois, that Arthur had been enjoined from transferring his interest in the home. It was the circuit court that was being asked to effectuate this transfer by means of the turnover order, not Arthur on his own motion.

The circuit court also indicated that in denying the petition it was exercising its discretion and was taking into consideration the needs of the Mostows’ children. We find no basis in the law for such an exercise of discretion with respect to the execution of a validly created judgment lien. Lois suggests that this discretionary authority flows from the court’s authority to award attorney fees in the first instance, citing case law holding that in awarding such fees the court is to take into consideration such factors as the division of the marital property. (Olsher v. Olsher (1979), 78 Ill. App. 3d 627, 397 N.E.2d 488.) But in this cause we are not concerned with the decision to grant attorney fees. That decision was made in an earlier proceeding by Judge Buckley, and it has not been challenged on appeal. It was at that hearing that the discretion of the trial court was to be exercised. The Illinois legislature has provided for a simplified procedure by which a lawyer may enforce, in a supplemental proceeding, a judgment for fees obtained in a matrimonial case. (Ill. Ann. Stat. ch. 40, par. 508, Historical and Practice Notes, at 640 (Smith-Hurd 1980), Ill. Rev. Stat. 1983, ch. 110, par. 2 — 1402.) We find that the circuit court lacked the authority to effectively deny appellant the use of this procedure by denying his petition for the turnover of the only substantial asset owned by the judgment-debtor. Accordingly the order of the trial court is reversed and the cause remanded for further proceedings not inconsistent with this opinion.

Reversed and remanded.

JOHNSON and JIGANTI, JJ., concur.


author: JUSTICE CAMPBELL

text:
    IRVING R. ZIMMERMAN, d/b/a Irving Zimmerman Associates, Plaintiff-Appellant, v. 1660 CONDOMINIUM ASSOCIATION et al., Defendants-Ap-pellees (Jomeca, Inc., et al., Defendants; Louis Natenshon, Intervenor).
    First District (1st Division)
    No. 83—2149
    Opinion filed June 29, 1984.

      Charles M. Steinberg, of Chicago, for appellant.
    Roger L. Price, Stephen M. Dorfman, and Gary E. Mitchell, all of Chicago, for appellees.
   JUSTICE CAMPBELL

delivered the opinion of the court:

Plaintiff, Irving R. Zimmerman, doing business as Irving Zimmerman Associates, filed suit to foreclose a mechanics’ lien and for unjust enrichment against the defendants, 1660 Condominium Association (the Association), and the board of managers of the 1660 Condominium (the board). The trial court dismissed plaintiff’s suit for failure to name and individually serve each of the owners of the 429 condominium units. On appeal, plaintiff raised the issue whether a party pursuing a mechanics’ lien foreclosure action or an unjust enrichment action involving improvements made to the common elements of a multi-unit condominium may proceed by naming and serving only the condominium board of managers in their representative capacity on behalf of all unit owners. Defendants raise the issue whether plaintiff has waived his right to appeal by filing an amended complaint following dismissal of the complaint at issue.

Plaintiff, a construction contractor, alleges that he expended labor and materials to improve the common areas of the condominium building at 1660 North LaSalle Drive in Chicago for use as a restaurant and that a balance of $14,000 remains due. Plaintiff performed the improvements pursuant to a contract with the lessees of the common area, Jomeca, Inc., Diane Carr and John Gabor. Jomeca, Carr and Gabor subsequently defaulted on the contract and the lease. Although they are defendants in this action, plaintiff states that he has been unable to serve process on them. Counts II and III of plaintiff’s complaint are directed against these defendants and were not dismissed by the trial court.

Count I of plaintiff’s complaint alleges that the improvements were performed to the common areas of the condominium with the permission and express authorization of the lessor, the condominium association and/or the board of managers, and seeks to foreclose a mechanics’ lien against all units of the condominium. Count IV seeks to recover against the Association and the board and the defendant lessees for unjust enrichment. The Association and the board filed a motion to dismiss count I of the complaint because neither the board nor the Association are owners of the condominium and they may not be served as representatives of the unit owners. They also filed a motion to dismiss count IV for failure to name the necessary parties.

On August 16, 1983, the trial court dismissed counts I and IV for failure to specifically name and serve each and every one of the 429 unit owners. On that same day the trial court also granted plaintiff’s motion for leave to file an amended complaint naming each unit owner and for appointment of a special process server to serve the complaint and summons on each owner. The amended complaint was filed on September 16, 1983, and plaintiff has represented that at least 70 owners were served as of December 1983. Plaintiff filed his notice of appeal from the dismissal of the original complaint on September 6,1983.

Defendant argues that plaintiff has waived his right to appeal by filing an amended complaint under Foxcroft Townhome Owners Association v. Hoffman Rosner Corp. (1983), 96 Ill. 2d 150, 449 N.E.2d 125. Although defendant does not specifically raise the issue, we find that we lack jurisdiction to hear this appeal because no final and ap-pealable order was entered by the trial court.

Jurisdiction of the appellate court to hear an appeal is confined to reviewing appeals from final judgments unless one of the exceptions for interlocutory orders specified by the Supreme Court Rule is applicable. (Johnson v. Northwestern Memorial Hospital (1979), 74 Ill. App. 3d 695, 393 N.E.2d 792.) The appealability of an order is determined by the substance as opposed to the form of the order and the trial court cannot confer jurisdiction upon the appellate court by stating that there is no just reason for delaying enforcement or appeal. Johnson v. Northwestern Memorial Hospital (1979), 74 Ill. App. 3d 698, 393 N.E.2d 792; Findley v. Posway (1983), 118 Ill. App. 3d 824, 455 N.E.2d 861.

Generally, an order striking a complaint or granting a motion to dismiss is not appealable unless it shows that a plaintiff will not be allowed to plead over and the litigation between the parties is terminated. (Martin v. Marks (1980), 80 Ill. App. 3d 915, 400 N.E.2d 711.) An order dismissing a case followed by an order allowing the filing of an amended complaint is not a final appealable order. Hassett Storage Warehouse, Inc. v. Board of Election Commissioners (1979), 69 Ill. App. 3d 972, 387 N.E.2d 785.

In the present case, on the same day the trial court dismissed plaintiff’s original complaint, it granted leave to file an amended complaint. Indeed, litigation pursuant to the amended complaint is proceeding in the trial court despite this appeal and any disposition this court may determine appropriate. Plaintiff has represented that the board and the Association were named and served on behalf of all unit owners and not in their own capacity. Accordingly, the dismissal of plaintiff’s original complaint is not a final order which terminates the litigation between the parties, and plaintiff’s appeal must be dismissed.

Appeal dismissed.

BUCKLEY, P.J., and GOLDBERG, J., concur.