text:
    THE PEOPLE ex rel. TYRONE C. FAHNER, Attorney General of Illinois, Plaintiff-Appellee, v. COMMUNITY HOSPITAL OF EVANSTON et al., Defendants.—(COMMUNITY HOSPITAL OF EVANSTON, Defendant-Appellant; MORGAN, WHITESIDE, BLOCK AND COMPANY, INC., Intervening Defendant-Appellee and Cross-Appellant.)
    First District (5th Division)
    Nos. 81-342, 81-1929, 81-2028, 81-2151 cons.
    Opinion filed August 20, 1982.
    Rehearing denied October 7, 1982.

      Leo E. Holt, of Harvey, and Raymond D. Pijon and Joshua Sachs, both of Chicago, for appellant Community Hospital of Evanston.

      Tyrone C. Fahner, Attorney General, of Springfield (Patricia Rosen, Assistant Attorney General, of counsel), for appellee.
    Robert W. Berliner, Jr., Jill Ann Coleman, and Marilyn Klawiter, all of Levy and Erens, of Chicago, for appellee Morgan, Whiteside, Block and Company, Inc.
   JUSTICE MEJDA

delivered the opinion of the court:

These consolidated appeals stem from the appointment of a receiver for defendant Community Hospital of Evanston (Community) and the entry of a preliminary injunction by the trial court, pursuant to a complaint brought by the Attorney General. Community and intervening defendant Morgan, Whiteside, Block and Company, Inc. (Morgan), appeal.

Community raises the following issues: (1) whether the court properly denied Community’s motion to dismiss the complaint; (2) whether the entry of the preliminary injunction and the appointment of the receiver and other relief granted by the trial court were an abuse of discretion; (3) whether the orders of the court subsequent to the entry of the preliminary injunction denied Community due process of law; and (4) whether Morgan is barred as a matter of law from enforcing its finder’s fees in Illinois courts.

Morgan also raises a number of issues: (1) whether the complaint states a cause of action relative to Morgan and adequately supports the injunction prohibiting payment of Morgan’s fees; (2) whether the court properly ordered that the $150,000 held in escrow pass to the receiver; (3) whether Morgan is entitled to damages and attorney fees pursuant to section 12 of the Injunction Act (Ill. Rev. Stat. 1979, ch. 69, par. 12), because of the preliminary injunction; (4) whether Morgan is entitled to damages and attorney fees pursuant to section 1 of “An Act concerning the appointment and discharge of receivers” (Ill. Rev. Stat. 1979, ch. 110, par. 407), because of the receiver’s appointed control over the $150,000 in escrow; and (5) whether the trial court should have entered judgment for Morgan in the amount of $150,000 rather than $100,000.

In August 1980 Gilbert Bailey, chairman of the board of Community, sent a letter to Leo E Block, Morgan’s chairman, agreeing to retain Morgan to identify on a nonexclusive basis a viable purchaser of Community. By the terms of the agreement Morgan’s fee, payable upon closing, was “ *** five (5%) percent of the first $1,000,000 and ten (10%) percent over $1,000,000.” Block contacted Bernard Lach-ner, president of Evanston Hospital, to see if Evanston would be interested in purchasing Community. After Evanston’s board rejected the structure of the acquisition proposal suggested by Block in Community’s behalf, an “Acquisition Agreement” between the parties was reached which called for Evanston to purchase substantially all of Community’s assets for $2,000,000. According to the terms of the escrow agreement also concluded at this time, the purchase price and the documents necessary for closing were to be deposited into an escrow account with Chicago Title and Trust as escrowee. On the closing date the escrowee was directed to pay from the escrow funds on deposit certain costs and fees incurred in conjunction with the sale; to pay Morgan’s commission of $150,000; to transfer $500,000 to another bank for deposit into “Evanston Hospital Pavilion Special Fund,” an account established by Evanston for the benefit of any health care facility operated by Evanston on the real estate; and to pay the balance of the remaining funds to Community.

On December 10, 1980, the Attorney General filed a seven-count complaint against Community, its directors, and Chicago Title and Trust Company, as escrowee, alleging violations of “An Act to regulate solicitation and collection of funds for charitable purposes ***” (Ill. Rev. Stat. 1979, ch. 23, par. 5101 et seq.) (hereinafter Charitable Solicitations Act) and the General Not for Profit Corporation Act (Ill. Rev. Stat. 1979, ch. 32, par. 163a et seq) (hereinafter the Not for Profit Corporation Act), the Trusts and Trustees Act (Ill. Rev. Stat. 1979, ch. 148, par. 101 et seq), as well as fraud, ultra vires, self-dealing and conversion. The complaint sought an accounting, the appointment of a receiver, liquidation of Community’s assets, dissolution of the corporation, and injunctive and other relief. Pursuant to plaintiff’s motion, the court entered a temporary restraining order on December 12, 1980, enjoining Chicago Title and Trust Company from distributing any of the funds held in escrow pursuant to its agreement with Community and Evanston and from paying any fee to Morgan. Morgan was given leave to intervene. On January 26, 1981, Community filed a motion to dismiss the action which was denied by the court. A hearing was held on the Attorney General’s motion for a preliminary injunction order enjoining the escrowee from disbursing any funds and from paying Morgan. An order was entered which authorized the escrowee to invest the escrow funds in U.S. Treasury Bills. Community was restrained from disbursing any of its funds or assets without court order. A receiver was appointed to handle and control all the assets and liabilities of Community and directed that custody of Community’s books and records be given to the receiver. On February 3, 1981, Community appealed this order. On February 11, 1981, the court amended its preliminary injunction order to specifically provide that the $150,000 held in escrow for payment of Morgan’s fee was included as an asset of Community to pass to the receiver. Morgan appealed this order.

On July 9, 1981, the receiver petitioned the court to settle Morgan’s claim against Community. The petition recited that on June 16, 1981, the receiver, his attorney, plaintiff’s counsel and Morgan’s counsel, met in an effort to settle Morgan’s claim. As a result of the conference, the parties agreed that Morgan was to be paid $100,000 in full satisfaction of its claim against Community and that Morgan would execute a release to Community. Community objected to the receiver’s petition to settle Morgan’s claim and also to other claims submitted by the receiver to the court. On July 13, 1981, the court entered an order authorizing the receiver to pay certain claims against Community and directed the escrowee to deliver to the receiver any of the funds or obligations of the United States it held in escrow. Community was granted an extension of time to file its amended motion to modify the preliminary injunction and the hearing on the petition to pay Morgan’s claim was continued. Community appealed from the payment of the claims totaling $118,854.78 and from the modification of the injunction order. On July 23, 1981, Community filed an amended motion to modify the preliminary injunction which sought vacation of the receivership and of the appointment of the receiver’s attorney; return of its books, records and documents and release of a sum of money from the escrowee for the purpose of preparing its defense. On August 12, 1981, the court denied Community’s foregoing motion. Community appealed the August 12, 1981, order. After a hearing held on Morgan’s claim the court entered judgment in Morgan’s favor against Community for $100,000 on August 21, 1981. Both Community and Morgan appeal from the August 21, 1981, order.

Opinion

Community first asserts that the complaint failed to state a cause of action and hence its motion to dismiss the complaint was improperly denied. Community argues that the denial of its motion is subject to interlocutory appeal pursuant to Supreme Court Rule 307 which allows an appeal from an order granting, modifying or refusing an injunction or an order appointing or refusing to appoint a receiver. (Ill. Rev. Stat. 1979, ch. 110A, pars. 307(a)(1), 307(a)(2).) We disagree. The denial of a motion to strike or dismiss of itself is not an appealable order under Rule 307, but merely an interlocutory order which is not a final disposition of the proceedings sufficient to confer jurisdiction on the appellate court. (Cahokia Sportservice, Inc. v. Illinois Liquor Control Com. (1975), 32 Ill. App. 3d 801, 336 N.E.2d 276.) Therefore, we decline to review the court’s order denying Community’s motion to dismiss.

Community next contends that the entry of the preliminary injunction was improper. The substance of Community’s argument in support of this contention is that the evidence introduced at the hearing to determine if an injunction should issue was totally insufficient to support the allegations of the complaint, and that plaintiff made no showing that his remedy at law was inadequate.

Section 55 of the Not for Profit Corporation Act (Ill. Rev. Stat. 1979, ch. 32, par. 163a54) provides that in proceedings to liquidate the assets and affairs of a not-for-profit corporation the court shall have all ordinary powers of a court of equity to issue injunctions. To support a request for a preliminary injunction the plaintiff must establish the liklihood of success on the merits. (Kable Printing Co. v. Mount Morris Bookbinders Union Local 65-B Graphic Arts International Union (1976), 63 Ill. 2d 514, 349 N.E.2d 36.) In order to show likelihood of success on the merits, a party is not required to make out a case which in all events will warrant relief in the final hearing. (Wessel Co. v. Busa (1975), 28 Ill. App. 3d 686, 329 N.E.2d 414.) All that is necessary is that the petitioning party raise a fair question as to the existence of the right claimed, lead the court to believe that he will be entitled to the relief prayed for if the proof should sustain his allegations, and make it appear advisable that the positions of the parties should remain as they are until the court has had an opportunity to consider the case on the merits. (Wessel.) On appeal, the reviewing court should confine itself to a determination of whether the trial court has properly exercised its broad discretionary powers, and each substantive issue should be considered only insofar as necessary to determine whether there has been an abuse of discretion. Booth v. Greber (1977), 48 Ill. App. 3d 213, 363 N.E.2d 6.

The preliminary injunction entered by the court enjoined the es-crowee from distributing to Community any funds held by it in connection with the sale of Community’s assets or from paying Morgan a broker’s commission of $150,000. The escrowee was directed to invest the funds in U.S. Treasury Bills. Community was restrained from disbursing any funds or assets it currently possessed or from disposing of or transferring any of its records or documents.

The evidence adduced at the hearing held to determine whether a preliminary injunction should issue and whether a receiver should be appointed showed that no financial data for the year 1979 was submitted by Community to the Attorney General in compliance with the Charitable Solicitations Act (Ill. Rev. Stat. 1979, ch. 23, par. 5104); that Community had used an allegedly restricted gift of $500,000 to its Endowment Fund to reduce its general obligations, and that an audit conducted by the Department of Public Aid disallowed $102,000 of $800,000 in claimed expenses; that in the same audit $4,000 in credit card expenses were disallowed because Community could not substantiate those charges as made for hospital business. This evidence was sufficient to show the likelihood of plaintiffs success on the merits.

Community further points out that injunctive relief is prohibited if the plaintiff has an adequate remedy at law. (La Salle National Bank v. County of Cook (1974), 57 Ill. 2d 318, 312 N.E.2d 252.) For there to be an adequate remedy at law which will deprive equity of its power to grant injuctive relief, the remedy, “ ‘must be clear, complete, and as practical and efficient to the ends of justice and its prompt administration as the equitable remedy.’ [Citation.]” (BioMedical Laboratories, Inc. v. Trainor (1977), 68 Ill. 2d 540, 549, 370 N.E.2d 223, 227.) The main thrust of plaintiff’s suit is to dissolve and liquidate Community. Millions of dollars in assets are involved. Should plaintiff prevail, Community will be dissolved and its assets liquidated and distributed according to the procedure set forth in the Not for Profit Corporation Act. (Ill. Rev. Stat. 1979, ch. 32, par. 163a54.) That procedure would allow distribution of these assets to other corporations, societies or organizations engaged in activities substantially similar to those of Community and thus benefit the public at large. (Ill. Rev. Stat. 1979, ch. 32, par. 163a54(c).) The injunctive relief afforded here preserves the status quo. Without it Community or the escrowee could transfer these assets, thus reducing the assets ultimately available for distribution according to statute. Plaintiff’s entitlement to damages or recovery of any transferred assets would be uncertain at best and would certainly not be as practical and efficient to the ends of justice as the injunctive relief granted. (See Bio-1Medical Laboratories, Inc.) The right of the State acting through the Attorney General to interfere in the handling of a public charitable use to prevent or correct abuses cannot be denied. (Kerner v. Thompson (1936), 365 Ill. 149, 6 N.E.2d 131.) Consequently we find no abuse of discretion in the entry of the preliminary injunction.

Community further complains that the appointment of the receiver pendente dite was unnecessary as the injunctive relief sufficiently protected Community’s assets. Section 55 of the Not for Profit Corporation Act (Ill. Rev. Stat. 1979, ch. 32, par. 163a54) also provides that in proceedings to liquidate the assets and affairs of a not-for-profit corporation the court shall have all ordinary powers of a court of equity to appoint a receiver pendente lite and to take such other proceedings necessary to preserve the corporate assets and carry on the affairs of the corporation until a full hearing can be had. The appointment of a receiver rests largely within the discretion of the appointing court, the object being to secure and preserve the property for the benefit of all concerned, so that it might be subjected to such order as a court might render. (People ex rel. Scott v. Pintozzi (1971), 50 Ill. 2d 115, 277 N.E.2d 844.) The appointment of a receiver is justified where the directors are so managing or disposing of the corporate business or assets in their own interest that such assets will probably be lost or destroyed before a judgment can be rendered or where fraud or mismanagement exists which make it impossible for the corporation to carry on its business or preserve it assets until a settlement is reached. (Firehaugh v. McGovern (1949), 404 Ill. 143, 88 N.E.2d 473; Liddell v. Smith (1963), 43 Ill. App. 2d 57, 193 N.E.2d 45.) Whether or not the appointment of a receiver is reasonable and not arbitrary, capricious and an abuse of discretion depends on the particular circumstances surrounding the case. (Hurst v. Papierz (1973), 16 Ill. App. 3d 574, 306 N.E.2d 532, cert, denied (1974), 419 U.S. 835, 42 L. Ed. 2d 62, 95 S. Ct. 62.) Considering the showing made at the hearing that corporate directors of Community had possibly engaged in waste, mismanagement and self-dealing, appointment of a receiver to manage it affairs and operations would have been appropriate had it retained its hospital facility. It is no less appropriate because Community converted its physical plant into cash subsequent to the filing of plaintiff’s suit, as the sale of the physical plant did not terminate Community’s corporate existence. Those monies are still subject to the debts incurred by Community and the various claims against it. A receivership is properly granted where the subject matter of the litigation is liable to be dissipated because subject to other claims. (Hurst; Hancock v. American Bonding & Trust Co. (1899), 86 Ill. App. 630.) The injunctive relief afforded here may have appropriately brought those monies within the control of the court, but the appointment of the receiver was reasonably necessary to carry on the affairs of the corporation until a full hearing on the merits could be held. As such, we find no abuse of discretion in the appointment of the receiver.

Community further asserts that because the bond required by statute of an applicant petitioning for a receivership was waived, the payment of the receiver’s fee and fees of the receiver’s attorney deprived it of due process of law, as it might not be able to recover its funds should it prevail. Community cites no authority in support of its contention. Section 1 of “An Act concerning the appointment and discharge of receivers” (Ill. Rev. Stat. 1979, ch. 110, par. 407) requires that before the appointment of a receiver, the party making the application give bond to the adverse party unless the bond is waived by the court for good cause shown.

We reject Community’s argument that the waiver of the bond and the payment of the receiver’s fees and those of his attorney deprived it of its property without due process of law. This argument is conjectural in nature, based on Community’s possible inability to recover damages in the event the receivership is vacated. Furthermore, while the bond is given as security for any damages sustained by the adverse party in the event the appointment of the receiver is revoked or set aside (Steinwart v. Susman (1968), 94 Ill. App. 2d 471, 238 N.E.2d 200), the waiver of the bond would not preclude Community from pursuing its legal remedies for any damages sustained should the receivership be revoked or vacated. Therefore, we find no merit to Community’s claim that it has been deprived of due process of law by the waiver of the bond and the payment of these fees.

Community further argues that it was error for the trial court to deny its July 23, 1981, amended petition to vacate the receivership and to modify the preliminary injunction imposed. Community sought the return of its books and records and the release of sufficient funds to pay attorney fees and expenses. The granting, denial or modification of a preliminary injunction is addressed to the sound discretion of the trial court and absent abuse of discretion will not be disturbed by a reviewing court. People ex rel. Scott v. Silverstein (1981), 94 Ill. App. 3d 431, 418 N.E.2d 1087.

Community’s petition sought vacation of the receivership and return of its books and records, asserting their possession by the receiver deprived it of due process of law. A similar question was presented in St. Louis, Cape Girardeau & Fort Smith Ry. Co. v. Missouri ex rel. Merriam (1895), 156 U.S. 478, 39 L. Ed. 502, 15 S. Ct. 443. Defendant corporation there had contended that the transfer of properties from one receiver to another in a foreclosure suit deprived it of its property without due process of law. The court held that the proposition did not even present a Federal question, commenting that placing defendant’s property in the hands of the receiver did not operate to deprive defendant of its property as title to its property continued in the defendant corporation as before. The corporation’s title to its property was no more disturbed by establishing custody in one of two contending receivers than it was by the original order appointing a receiver. (See also Remington Paper Co. v. Watson (1899), 173 U.S. 443, 43 L. Ed. 762, 19 S. Ct. 456.) In the instant case the record shows that the receiver, as well as the court, afforded Community access to review its corporate books and records as needed in the receiver’s office, but that Community’s counsel objected because he could not review the records in his own office at his own convenience. We do not think inconvenience can be equated with deprivation and, thus, find no merit in defendant’s contention. See also Hartman v. Hartman (1971), 2 Ill. App. 3d 163, 276 N.E.2d 56.

As to the propriety of the court’s denial of Community’s request to release funds for the preparation of its defense, plaintiff counters that Community’s counsel never filed a claim with the receiver for payment of any fees, and thus cannot be heard to complain. The filing of such a claim with the receiver would appear to have been futile, however, as the court had previously entered an order on February 17, 1981, which stated that “ *** Defendant Community Hospital of Evanston’s petition for fees is denied and Community shall receive no fees whatsoever either past due or future ***.” The order of August 12, 1981, in denying Community’s petition to modify the injunction also denied the renewed request for further funds, thereby reinforcing the February 17, 1981,prohibition of all fees.

We find such a blanket prohibition an abuse of discretion. If needed Community should have access to a reasonable amount of money to present a defense to its corporate existence. Community asserts it presently has no money available to it because of the injunction and receivership imposed by the court. That assertion cannot be conclusively determined on the state of the record before us. Therefore, the orders of the trial court must be modified to allow Community to petition for the award of funds for its defense herein. The need for and the amount of such allowance, if any, shall be determined upon further hearing in the trial court. Community will have to sufficiently demonstrate the need and reasonableness of its request.

Community next contends that Morgan’s fee awarded by the trial court for the services Morgan rendered in conjunction with the sale of Community’s assets was barred by section 7 of the Real Estate Brokers and Salesmen License Act (Ill. Rev. Stat. 1979, ch. 111, par. 5714). The trial court found that Morgan was entitled to payment for the services it rendered in finding a purchaser “for whatever it might be, but, as stated at best, the operating assets of Community Hospital of Evanston.” Section 7 provides in pertinent part that a person may not recover compensation in an Illinois court for services he rendered if “the doing or rendering of [such services] is prohibited under the provisions of [the] Act to other than registered real estate brokers or real estate salesmen ***” unless he was registered as a real estate broker or salesman.

Thus, an individual dealing in real estate transactions who is unregistered as a real estate broker or salesman and who does not qualify under the statutory classifications not pertinent here which would exempt him from the registration requirements is not entitled to compensation for his services as a matter of law. (Central National Bank v. Alexander Marketing, Inc. (1977), 47 Ill. App. 3d 58, 361 N.E.2d 766.) This prohibition is extended to those individuals categorizing themselves as “finders,” “originators” or “introducers” who merely introduce a buyer to a seller of real estate and who do not negotiate the terms of the transaction between the parties. Kilbane v. Collins (1978), 56 Ill. App. 3d 707, 372 N.E.2d 415; see also Kilbane v. Dyas (1975), 33 Ill. App. 3d 439, 441, 337 N.E.2d 217, 219.

Community takes the position that Morgan is barred from recovering compensation for its finder activities because neither Block, its president, nor any of its employees were licensed as real estate brokers or salesmen. Although not disputing the lack of brokers or salesmen licenses by Morgan’s employees, both plaintiff and Morgan contend that the court could properly award the fee because licensure was unnecessary as the transaction involved a “hospital” and only incidentally included real estate. Plaintiff and Morgan point out that other jurisdictions have held that where an individual negotiates the sale of a business which includes real estate as a part of its assets, but not its principal asset, he need not register as a real estate broker, citing cases from Arkansas (Frier v. Terry (1959), 230 Ark. 302, 323 S.W.2d 415), Colorado (Cary v. Borden Co. (1963), 153 Colo. 344, 386 P.2d 585), Florida (Schindler v. Florida Real Estate Com. (Fla. App. 1962), 144 So. 2d 862), New York (Weingast v. Rialto Pastry Shop, Inc. (1926), 243 N.Y. 113, 152 N.E. 693), North Carolina (Schlep v. DeMaras (D.D.C. 1976), 410 F. Supp. 1190 (applying North Carolina law)), and Wisconsin (Dubin v. Mohr (1945), 247 Wis. 520, 19 N.W.2d 880.) A review of the cases upon which plaintiff and Morgan rely shows that they are distinguishable from the case at bar because of the nature of the property sold. Frier (Arkansas), Cary (Colorado), and Dubin (Wisconsin) involved an exchange of corporate stock; Weingast (New York) involved the sale of a restaurant as a going concern, including the building, lease, good will and everything else associated with it. It is difficult to determine from the opinions in Schliep and Schindler specifically what was sold, but the Schindler court pointedly stated that the transaction related to the sale of businesses with the leases incidentally transferred in connection -with the sale. Notwithstanding the Weingast and Schindler decisions, later Florida and New York cases have held that licensure is required where the dominant element involved in the transaction is real estate (Willner v. Wilder (Fla. App. 1973), 280 So. 2d 1; Sorice v. DvBois (1966), 267 N.Y.S.2d 227, 25 App. Div. 2d 521), with Florida further holding that the issue of whether a sale should be considered a sale of a business or a sale of real estate turns on the intent of the parties. Putsch v. Smith (Fla. App. 1981), 397 So. 2d 337.

Further, the viewpoint taken in the cases relied on by plaintiff and Morgan is not universal. The courts of at least 11 other jurisdictions have held that a person who negotiates or consummates the sale of a business which includes real property must be licensed as a real estate broker to recover a commission on the sale. See Annot., 82 A.L.R.3d 1139 (1978), and cases collected therein.

Morgan has vigorously argued that this was not a sale of real estate because the essence of the transaction was a sale of a 54-bed hospital and in particular the sale of the license to operate that hospital. Of course, however, a license to operate a hospital is “ *** issued only for the premises and persons named in the application and [is] not *** transferable or assignable.” (Ill. Rev. Stat. 1979, ch. 1111/1, par. 147(b).) Thus, strictly speaking, Community’s hospital license was not an asset available for sale. That is not to minimize the importance of Evanston’s acquisition of a license to the completion of the transaction, however. The acquisition agreement did contain as a condition precedent to Evanston’s fulfilling its obligation under the contract that the Illinois Department of Public Health issue Evanston a provisional license to open, conduct, operate and maintain a hospital on the real estate. Clearly the license condition was included to place Evanston in the most favorable position possible to obtain it. Indeed subsequent to the execution of this agreement Community’s suspended license was revoked, apparently without objection from Community, and a license simultaneously issued to Evanston — but the inclusion of the condition did not guarantee that a license would be issued to Evanston, and could not transform this transaction into the sale of a license.

We believe that the evidence adduced at the hearing and the terms of the agreement itself demonstrate that this transaction was not the sale of a “hospital” entity but the sale of real and personal property.

By the terms of the acquisition agreement between them, Evan-ston agreed to purchase Community’s real estate and its leasehold interests (also interests in real estate (8980 South Harlem, Ltd. v. Moore (1979), 77 Ill. 2d 212, 396 N.E.2d 1)), all of its buildings, structures, improvements and fixtures located on the real and leased property, and all of Community’s personal property. The agreement provided that Evanston was not acquiring Community’s corporate name, goodwill, accounts receivable or other assets not specifically included in the agreement. An additional condition precedent to Evanston fulfilling its obligations under the agreement included the requirement that the Metropolitan Sanitary District of Greater Chicago consent to the assignment of its lease of real estate with Community to Evan-ston.

During the hearing held to determine the propriety of Morgan’s claim, Martin Drebin, the vice president of finance and treasurer of Evanston, testified that Evanston’s board of directors rejected the acquisition plan initially proposed by Lee Block of Morgan on Community’s behalf. That plan called for the replacement of a majority of Community’s board of directors with individuals selected by Evanston, contingent upon receipt of a $2,000,000 donation by Evanston, which would bring about the reopening of the hospital and liquidation of its liabilities. The new board of directors would assume control of all of Community’s property and equipment and operate Community without restriction, subject to Community’s corporate charter, bylaws and land lease. Drebin testified that Evanston rejected this proposal because it did not want to acquire Community’s corporate existence or its liabilities but wanted to only acquire its operating or operable hospital facilities. Evanston’s board then made an alternate proposal by which Evanston would acquire all of Community’s operating or operable facilities. Notwithstanding the importance of acquisition of the hospital license to Evanston, this testimony and the terms of the agreement itself demonstrate that this transaction as ultimately concluded by the parties essentially constituted a sale of real estate within the meaning of the Act. (Ill. Rev. Stat. 1979, ch. 111, par. 5705.) Thus, we agree with Community’s contention that Morgan is barred from enforcing its fee in conjunction with this transaction in the courts of this State. Therefore, the order granting judgment in Morgan’s favor for $100,000 must be reversed. Inasmuch as the foregoing is dispositive, it is unnecessary to address the remaining issues raised by Morgan.

For the reasons stated, the injunction orders entered are modified to allow Community to petition for the allowance of funds for its defense herein; the judgment awarded Morgan for $100,000 is reversed; and except for the foregoing, the orders appealed from are affirmed.

Order modified in part; judgment reversed; remainder affirmed.

LORENZ and WILSON, JJ., concur.

      Contra Payne v. Volkman (1924), 183 Wis. 412, 198 N.W. 438; George Nangen & Co. v. Kenosha Auto Transport Corp (E.D. Wis. 1965), 238 F. Supp. 157, applying Wisconsin law.


source: Caselaw Access Project

author: JUSTICE HOPF JUSTICE REINHARD,

license: Public Domain

text:
    LEONARD ELLISON, Plaintiff-Appellant, v. KANE COUNTY SHERIFF’S OFFICE MERIT COMMISSION et al., Defendants-Appellees.
    Second District
    No. 81 — 885
    Opinion filed September 14, 1982.
    REINHARD, J., dissenting.

      Stanley H. Jakala, of Berwyn, for appellant.
    Robert Morrow, State’s Attorney, and Linda Soreff Siegel, both of Geneva, and Thomas McGuire, of Long Grove (David R. Akemann, Assistant State’s Attorney, of counsel), for appellees.
   JUSTICE HOPF

delivered the opinion of the court:

The plaintiff, Leonard Ellison, appeals from an order of the trial court which denied his request for declaratory judgment (Ill. Rev. Stat. 1979, ch. 110, par. 57.1), and entered summary judgment for the defendants, the Kane County Sheriff’s Office Merit Commission and George Kramer, sheriff of Kane County. The plaintiff’s twofold contention on appeal is that section 24 — 3.1(a)(5) of the Criminal Code of 1961 (Ill. Rev. Stat. 1979, ch. 38, par. 24 — 3.1(a)(5)), violates the due process and equal protection clauses of the United States Constitution (U.S. Const., amends. V, XIV), and that the trial court erred in concluding otherwise.

Plaintiff, a deputy sheriff in Kane County, voluntarily committed himself to a mental hospital for two days in June 1980. After treatment as an outpatient, and an eight-week leave of absence, a psychiatric report concluded that plaintiff could return to duty.

Kane County Sheriff Kramer filed a complaint against plaintiff with the merit commission. After referring to his two-day hospitalization, the complaint quoted section 24 — 3.1(a)(5) of the Criminal Code of 1961, which provides:

“(a) A person commits the offense of unlawful possession of firearms or firearm ammunition when:
* * *
(5) He has been a patient in a mental hospital within the past 5 years and has any firearms or firearm ammunition in his possession ***.” (Ill. Rev. Stat. 1979, ch. 38, par. 24 — 3.1(a)(5).)

The complaint further alleged that because he was a patient in a mental institution within the past five years, the plaintiff violated two rules of the personal conduct standards of the sheriff’s department, viz: (1) Rule 7.32; “Engaging in conduct on or off duty which- adversely affects the *** efficiency of the Department ***”; and (2) Rule 7.39; “Lack of maintenance of good *** mental condition which interfered with the proper handling of Departmental business.” The sheriff prayed that the commission commence a hearing on the charges.

Plaintiff then instituted a declaratory judgment action alleging that section 24 — 3.1(a)(5) violated the due process and equal protection clauses of the United State Constitution. He also requested that the court grant a temporary restraining order as well as preliminary and permanent injunctions to enjoin defendants from conducting a disciplinary hearing relating to the violation of section 24 — 3.1(a)(5). The parties then filed cross-motions for summary judgment, including affidavits in support thereof, and trial briefs.

The parties agreed, in response to the trial court’s inquiry whether plaintiff had exhausted his administrative remedies, that they would seek a declaratory judgment prior to the hearing before the merit commission.

The court, in ruling on the cross-motions for summary judgment and complaint for declaratory judgment, found (1)that section 24— 3.1(a)(5), of the Criminal Code of 1961 did apply to the plaintiff, and (2) that the statutory provision in question was a rational exercise of the police power and hence constitutional. Plaintiff appeals.

Prior to addressing the contentions raised by the plaintiff a threshold question must be considered: could the trial court have dismissed plaintiff’s complaint where plaintiff had yet to exhaust his administrative remedies?

Although the parties to this declaratory judgment action agreed that their claims should be brought before the circuit court prior to proceeding with the statutorily required administrative hearing before the Kane County merit commission (Ill. Rev. Stat., 1980 Supp., ch. 125, par. 164), we are of the opinion that plaintiff failed to exhaust his administrative remedies and that they cannot stipulate this requirement away.

The general, well-settled law in this State is that where administrative remedies are available, they must be exhausted before resort may be had to judicial review in the circuit court. (Illinois Bell Telephone Co. v. Allphin (1975), 60 Ill. 2d 350, 358, 326 N.E.2d 737; Dock Club, Inc. v. Illinois Liquor Control Com. (1980), 83 Ill. App. 3d 1034, 1037, 404 N.E.2d 1050.) However, the doctrine of exhaustion of remedies does not apply in situations where it would be futile to proceed initially via administrative channels. The fact that there are clear indications that the administrative agency will rule adversely is generally insufficient to abort the administrative process. (83 Ill. App. 3d 1034, 1037.) A possibility exists that upon remand the determination of the commission would be largely perfunctory and not based upon any particular expertise. (Saldana v. American Mutual Corp. (1981), 97 Ill. App. 3d 334, 337, 422 N.E.2d 860.) Nonetheless we choosé not to anticipate the actions the commission may take. Further, orderly procedure dictates resort to the administrative agency first. Bank of Lyons v. County of Cook (1958), 13 Ill. 2d 493, 497,150 N.E.2d 97.

While there are broad statements in the cases that a declaratory judgment action can be maintained without first seeking prior relief before the administrative agency when the validity of a statute or municipal ordinance is challenged on its face (see, e.g., Illinois Bell Telephone Co.; Cushing v. Pitman (1978), 56 Ill. App. 3d 930, 932, 372 N.E.2d 714; Broccolo v. Village of Skokie (1972), 14 Ill. App. 3d 27, 31, 302 N.E.2d 74), that rule does not apply in circumstances where charges are already pending against the plaintiff in an administrative disciplinary proceeding (see Buege v. Lee (1978), 56 Ill. App. 3d 793, 798, 372 N.E.2d 427; Eekells v. City Council (1959), 23 Ill. App. 2d 360, 363, 163 N.E.2d 107), or where the issue of the validity of the ordinance sought to be determined in the action for declaratory judgment is currently pending before the administrative agency. (Coles-Moultrie Electric Cooperative v. City of Charleston (1972), 8 Ill. App. 3d 441, 444, 289 N.E.2d 491.) Nor is the exception applicable where the statute is challenged for its unconstitutionality, not on its face, but as it is applied. People ex rel. Kreda v. Fitzgerald (1975), 33 Ill. App. 3d 209, 213, 338 N.E.2d 76.

In the present case, the sheriff initiated or filed charges against Deputy Ellison with the merit commission, although there is no evidence in the record that a date for a hearing was set. It should be noted, however, that counsel for the sheriff stated during oral argument before the trial court that he had been ready to proceed before the commission when he agreed to postpone the administrative proceedings to allow the plaintiff to bring the current action. It is also undisputed that the parties, by agreement, decided that the hearing before the merit commission should be held in abeyance until the trial court had entered an order declaring whether section 24 — 3.1(a)(5) was constitutional or unconstitutional. The fair inference to be drawn from the statements which the parties articulated at the hearing before the court below is that the administrative hearing would be commenced before the commission after the court’s ruling and that the court’s interpretation of the statute would be used to guide the commission.

An analogous situation was presented to the court in Eekells. In that case charges were filed against the plaintiffs, and the hearings on those charges were set but not commenced. There the court of review reversed the trial court’s granting of the declaratory judgment construing certain statutes and ordinances and directed that the plaintiffs’ cause of action be dismissed for failure to exhaust their administrative remedies. On that occasion the court stated:

“When a matter is pending before an administrative body which is properly acting under a statutory grant of power, declaratory judgment proceedings cannot be commenced subsequently in the circuit court to obtain findings and opinions to affect, control or guide the outcome of the proceeding before the administrative body.” Eckells v. City Council (1959), 23 Ill. App. 2d 360, 363.

In Coles-Moultrie Electric Cooperative v. City of Charleston (1972), 8 Ill. App. 3d 441, 289 N.E.2d 491, the plaintiff sought a declaratory judgment construing a municipal ordinance. The question of the validity of that ordinance was then pending before an administrative body. In upholding the trial court’s decision to dismiss the complaint for declaratory judgment, the appellate court pointed out that even if the administrative body did not have authority to pass upon the validity of the ordinance, the plaintiff could later seek a determination of the ordinance’s validity upon administrative review of the agency’s decision. Thus, under the authority of Coles-Moultrie, the merit commission’s contention below, that the trial court was the only forum available to determine the constitutionality of the statute and thus the declaratory judgment action should proceed first, lacks merit.

In light of the holdings and rationale of Coles-Moultrie and Eckells, we believe that the trial court’s order awarding judgment against the plaintiff and for the defendants must be vacated and the cause remanded with directions that the complaint be dismissed, because the plaintiff has not exhausted his administrative remedies.

The parties may then proceed before the merit commission. After the commission has rendered its decision, the circuit court can, if requested, review that decision.

Because of our finding that the plaintiff must exhaust his administrative remedies, we do not reach the merits of the plaintiff’s claims. Accordingly, the judgment of the trial court is vacated and this cause is remanded with instructions that an order be entered dismissing the plaintiff’s complaint for declaratory judgment and injunctive relief.

Vacated and remanded, with instructions.

NASH, J., concurs.

JUSTICE REINHARD,

dissenting:

The doctrine of exhaustion of administrative remedies is a rule which requires that a party aggrieved by administrative action ordinarily cannot seek judicial review in the courts without pursuing all administrative remedies available to him. (Illinois Bell Telephone Co. v. Allphin (1975), 60 Ill. 2d 350, 357-58, 326 N.E.2d 737.) An exception to this general rule is that a party need not exhaust administrative remedies if the alleged constitutional infirmity is found in the terms of a statute. (Walker v. State Board of Elections (1976), 65 Ill. 2d 543, 552, 359 N.E.2d 113.) However, if the statute is valid on its face but is applied in a discriminatory or arbitrary manner, the challenging party must pursue administrative remedies before seeking judicial relief. (65 Ill. 2d 543, 552.) Also, in order to come within this exception, a plaintiff must point to language in the statute which, without more, reasonably can be said to violate a specific constitutional guarantee. Northwestern University v. City of Evanston (1978), 74 Ill. 2d 80, 87, 383 N.E.2d 964.

In the instant case, plaintiff’s complaint for declaratory judgment alleged that section 24 — 3.1(a)(5) (Ill. Rev. Stat. 1979, ch. 38, par. 24— 3.1(a)(5)) violated his rights both under the equal protection and due process clauses of the fifth and fourteenth amendments of the United States Constitution. An attack on equal protection grounds may be a facial attack and as such fall within the above exception. (See, e.g., Director of the Department of Agriculture v. Carroll Feed Service, Inc. (1980), 83 Ill. App. 3d 164, 403 N.E.2d 762.) Plaintiff has raised the argument that the statute unconstitutionally differentiates between police officers confined in a mental hospital within the past five years and other police officers who have been a patient in a mental hospital beyond the five-year period or who have been treated on an out-patient basis. Thus, there is a sufficient attack facially as to the constitutionality of the statute to warrant judicial review without requiring exhaustion of administrative remedies.

The substance of plaintiff’s due process argument is that the statute making it a criminal offense to possess a firearm if the person has been a patient in a mental hospital within the past five years does not provide for a discretionary administrative hearing to rebut the presumption of unfitness which the appellate court in Rawlings v. Department of Law Enforcement (1979), 73 Ill. App. 3d 267, 391 N.E.2d 758, held was present under sections of “An Act relating to acquisition, possession and transfer of firearms ***” (Ill. Rev. Stat. 1979, ch. 38, par. 83 — 1 et seq.) for persons making application for a firearm owner’s identification card. In my opinion, the challenge here brings into question the constitutionality of the statute beyond its application to the specific facts of this case but as applied to all law enforcement officers. There is no question of fact which requires the administrative agency’s expertise for determination, nor does the majority opinion indicate what factual question requires the administrative agency’s review. The issue presented is one of statutory interpretation.

The majority opinion relies on Eckells v. City Council (1960), 23 Ill. App. 2d 360, 163 N.E.2d 107, for the proposition that where charges are already pending against the plaintiff in an administrative disciplinary hearing one cannot proceed into court to challenge even facially the validity of a statute or ordinance. I think that the holding in Eckells has long since ceased to be the law. (See, e.g., Walker v. State Board of Elections (1976), 65 Ill. 2d 543, 359 N.E.2d 113; City of Chicago v. Pollution Control Board (1975), 59 Ill. 2d 484, 322 N.E.2d 11; Board of Education v. Eckmann (1982), 103 Ill. App. 3d 1127, 432 N.E.2d 298.) Moreover, Coles-Moultrie Electric Cooperative v. City of Charleston (1972), 8 Ill. App. 3d 441, 289 N.E.2d 491, also relied upon by the majority is not pertinent authority on the issue raised here. In Coles-Moultrie, the appellate court found no abuse of discretion in the trial court’s dismissal of a complaint seeking a declaratory judgment where the issue sought to be decided was pending before the Hlinois Commerce Commission. The decision was not based upon exhaustion of administrative remedies doctrine, but upon the trial court’s exercise of discretion in declining to grant declaratory relief. For these reasons I would review the constitutional issues raised before this court by the plaintiff.


author: JUSTICE LINN

text:
    THE PEOPLE OF THE STATE OF ILLINOIS, Plaintiff-Appellee, v. GREGORY CLARK, Defendant-Appellant.
    First District (4th Division)
    No. 80 — 3108
    Opinion filed September 16, 1982.

      Steven Clark and Richard E Faust, both of State' Appellate Defender’s Office, of Chicago, for appellant.

      Richard M. Daley, State’s Attorney, of Chicago (Michael E. Shabat, Ca-simir J. Bartnik, and Stephen R. Botti, Assistant State’s Attorneys, of counsel), for the People.
   JUSTICE LINN

delivered the opinion of the court:

Defendant, Gregory Clark, was charged by information with three counts of theft (Ill. Rev. Stat. 1979, ch. 38, par. 16 — 1(a)(1)) and three counts of knowing possession of a stolen vehicle (Ill. Rev. Stat. 1979, ch. 952/2, par. 4 — 103(a)). Following a bench trial in the circuit court of Cook County, he was convicted of three counts of knowing possession of a stolen vehicle and found not guilty of theft. He was sentenced to the Illinois Department of Corrections to serve three concurrent terms of five years each.

Defendant raises three issues on appeal: (1) whether the trial judge erred in denying defendant’s request for an appointed attorney other than the public defender; (2) whether the convictions for knowing possession of a stolen vehicle should be reversed because the only testimony presented by the State to prove an essential element of the crimes charged was inadmissible hearsay; and (3) whether the trial court erred in entering three judgments of conviction and imposing separate, concurrent sentences for the three counts of knowing possession of a stolen vehicle.

We reverse the judgment of the trial court.

Facts

The rather unusual course taken by the proceedings in this case began on November 5, 1979, when Clark appeared in court to ask for appointment of counsel other than the public defender. The trial judge denied his request for a “bar association attorney,” explaining that he could not appoint counsel other than the public defender unless, for example, multiple defendants presented antagonistic defenses and one defendant was represented by the public defender. At this point Clark accepted the appointment of the public defender,, pleaded not guilty to the charges of theft and knowing possession of a stolen vehicle, requested copies of all documents filed in response to discovery motions, and stated that he wished to conduct his own defense with the help of the public defender. The trial judge carefully explained the risk of appearing pro se, but Clark insisted that he wanted to defend himself with the assistance of the public defender. The proceedings were then recessed for two weeks.

At his next appearance, on November 21, 1979, Clark told the trial court that the public defender would be his attorney of record and would conduct Clark’s defense with the defendant’s assistance. However, by the time the trial date arrived, August 5, 1980, the public defender, Donald Jurewicz, requested a clarification of his position because Clark had continued to request appointment of outside counsel. Jurewicz asked to withdraw, whereupon the judge, after stating that he had no real grounds for appointing counsel other than the public defender, gave Clark all the admonishments necessary when a defendant desires to represent himself. Clark responded that he needed some help but didn’t want Jurewicz as his attorney. The judge explained that Clark could not choose a particular appointed attorney, and Jurewicz would not be removed from the case unless his representation was totally inadequate. Clark replied that Jurewicz was a sham because “he told me we couldn’t win the case.” The judge, after questioning the attorney, told Clark that Jurewicz would represent him competently, whereupon Clark asked to be excused from the courtroom.

The judge then told Clark he could represent himself with Jure-wicz’ assistance, but Clark rejected any connection with the attorney. Further admonishments were given about the risks of Clark’s appearing pro se, and Clark stated again that he wanted an attorney but not Jurewicz. When the judge repeated that he had no reason to replace Jurewicz and that trial was about to commence, Clark again asked to be released from the courtroom. The judge, agreeing to excuse him, arranged for a speaker to be set up so Clark could hear the proceedings from another room; he then informed Clark that the trial would not go on in Clark’s absence unless his interests were represented.

Clark then asked for a continuance to find some witnesses and to prepare to conduct his own defense completely pro se. However, because the State’s witnesses were present and ready, and the case now had been set for trial after being continued six times, the trial judge directed that the State present its case immediately, and then Clark would be allowed some time to prepare his own defense. Jurewicz informed the court that the public defender’s office, unknown to Clark, had already attempted to locate Clark’s witnesses but had been unsuccessful. When the judge repeated that trial was about to begin, Jure-wicz, after asking for a clarification of his position, turned over his entire file to Clark, whereupon Clark left the courtroom. The judge’s final decision on Clark’s representation was that Jurewicz was allowed to withdraw as attorney of record but would be present in the courtroom in an advisory capacity.

After the speaker had been installed in a nearby conference room, the judge began the proceedings by noting for the record that Jure-wicz was sitting in the jury box rather than at counsel table, and by instructing the defense attorney to go back to Clark at the conclusion of each witness’ direct testimony to inquire if he had any questions for the witness. Jurewicz was to make appropriate objections during the course of the testimony and then ask Clark if he wished to cross-examine the witness or have testimony stricken. This procedure was then followed throughout the trial.

The events leading up to Clark’s arrest were established by Daniel McDevitt, an investigator for the Illinois Department of Law Enforcement. He testified that on August 25, 1979 at about 6:30 p.m., he received a telephone call at home from Gregory Clark, during which Clark offered to sell him two 1979 Mercury Cougar automobiles for $500 apiece. McDevitt responded that he was interested in purchasing the vehicles but could not do so until the following Monday, August 27, 1979. Later that evening Clark again called McDevitt to ask if Mc-Devitt could purchase one vehicle that evening because the person holding the cars needed money quickly. McDevitt repeated that he would not take the cars until Monday.

At 9:30 a.m. on Monday, August 27, McDevitt received a third call from Clark, this time at his office. Clark told McDevitt that an additional car was now available for sale, a 1979 Mercury Zephyr, at a price of $400 to $500. McDevitt then arranged to meet Clark at 2:30 p.m. that day at a Burger King Restaurant in Calumet Park.

Shortly after 2 p.m. on August 27, 1979, McDevitt, accompanied by another investigator, Dale Sayset, drove into the restaurant parking lot. Clark came out of the restaurant, and after pointing out the three cars, he led the investigators to meet three other men seated in one of the cars. McDevitt then asked if they all could move to another location, so Clark instructed each of his three companions to drive one of the cars and follow him and the two agents in McDevitt’s car.

The four cars then were driven to the packing lot of the Blue Island Plastics Company, whereupon McDevitt directed, the other three drivers to park their cars at the far end of the lot. He then showed his badge to Clark and placed him under arrest. Clark’s three companions were also arrested. McDevitt obtained the vehicle registration numbers from each of the three Mercury vehicles, entered the numbers into the Secretary of State’s computer file, and in response to a teletype reply, called the office of Budget Rent-A-Car company. On the following day, August 28, 1979, Porter Hopps, a security manager for Budget, met McDevitt, and the two men went to J & R Towing Company, where Hopps inspected the cars and matched the vehicle registration numbers with his own records. McDevitt then released the cars to Hopps.

Following the conclusion of McDevitt’s testimony, Jurewicz went back to ask Clark if he had any questions for the witness. Clark replied that he could not hear over the speaker and that he did not want to participate or have the attorney participate in any manner during the course of the trial. After the judge, the deputy sheriff, and the attorney for the State confirmed that the speaker was working properly and Clark could hear if he chose to, the trial continued, Jure-wicz continuing to make objections and conduct cross-examination.

The only other State’s witness was Porter Hopps, security manager for Budget Rent-A-Car. He testified that the vehicles were registered in the name of Budget and that he had marked them with his own control number. Despite repeated objections by Jurewicz, Hopps also was allowed to testify that Gregory Clark was not authorized to possess or sell any of the automobiles in question. On cross-examination, however, Hopps admitted that he did not know where the rental vehicles were supposed to be located at the time Clark was exercising authority over them, he did not supervise the rental of any of the vehicles, and he had no personal knowledge of the location of the vehicles from the date of their purchase by Budget until the day of Clark’s arrest. When the prosecution attempted to have the leasing agreements covering the vehicles entered into evidence through the testimony of Hopps, the judge ruled against their admission on the ground that no proper foundation had been laid. Hopps also admitted that his statement that Clark was not authorized to possess or sell the automobiles was based “to a certain extent7’ on information he had learned from reading the leasing agreements for the three cars.

At the close of the State’s case, Jurewicz moved for a mistrial, but the motion was denied. Clark requested and was granted a transcript of the trial and a 30-day continuance to prepare further for trial. The proceedings were adjourned to October 7, 1980. Although Jurewicz attempted to assist Clark to prepare his case during the recess, when court reconvened on October 7, Clark objected to Jurewicz having participated in the earlier proceedings and then discharged him. The trial was continued again until October 15, 1980. At that time, Clark presented no witnesses but instead conducted a rebuttal argument, pointing out discrepancies in Porter Hopps’ testimony and noting that the State had never established that the vehicles had been reported stolen.

At the conclusion of Clark’s argument, the trial court found him guilty on the three counts of knowing possession of a stolen vehicle. Following a post-trial hearing during which arguments in aggravation and mitigation were presented, the judge imposed three extended term sentences of five years each, to be served concurrently.

Opinion

I

The threshold question, raised by the State, is whether the defendant has waived his right to appeal the first two issues because he failed to file a written post-trial motion preserving those issues for review. Supreme Court Rule 615(a) (73 Ill. 2d R. 615(a)) states that only plain errors affecting substantial rights may be noticed on appeal where the issues were not brought to the attention of the trial court. In the instant case, the key phrase countering the State’s waiver argument is, of course, “brought to the attention of the trial court.” Because the purpose of the waiver doctrine is to enable the reviewing court to have the benefit of the trial court’s judgment on an issue, the reviewing court may consider the issue when it has in some manner been brought to the attention of the trial court. (People v. Whitley (1977), 49 Ill. App. 3d 493, 364 N.E.2d 511.) Preservation of issues for review, therefore, may be accomplished by proper objection during trial or by argument in a post-trial motion. (People v. Fleming (1964), 54 Ill. App. 2d 457, 203 N.E.2d 716.) It is clear from the record that all the issues noted herein were vigorously and repeatedly preserved for review by both Clark and Jurewicz, and therefore none of defendant’s issues shall be deemed waived.

II

The defendant’s first contention on appeal is that at the pretrial hearing, the judge erred when he denied defendant’s motion for appointed counsel other than the public defender. Defendant claims the trial judge mistakenly thought that he had no discretion to appoint private counsel unless multiple indigent defendants had antagonistic defenses. Defendant cites People v. Queen (1974), 56 Ill. 2d 560, 310 N.E.2d 166, for the proposition that “[tjhere is error when a trial court refuses to exercise discretion in the erroneous belief that it has no discretion as to the question presented.” (56 Ill. 2d 560, 565, 310 N.E.2d 166, 169.) However, on the basis of our analysis of the trial judge’s language and its statutory foundation, we conclude that defendant’s claim of error is without merit.

The record discloses that at the pretrial hearing, defendant, who had previously stated that he did not want to be represented by the public defender, was addressed by the judge as follows:

“Well, under the Statute, it is not just the fact that you don’t want the P D, because I do not have the authority to appoint [anyone other than] the P D unless the P D is representing someone whose defenses are antagonistic to yours.
For example, if there was a co-defendant that made a statement implicating you, and the P D represented that man, then there would be a reason to appoint another attorney, but the law says it isn’t quite that cut and dry.
Now I can [appoint] the P D. If you don’t want the P D you can get your own attorney, but that is the Statute as amended, Section 113 — 3, as was amended within the last two years.
* * *
So, under the law I have no choice except to deny that motion.”

The statute in question, which guarantees the right to counsel and authorizes the trial court to appoint counsel (Ill. Rev. Stat. 1979, ch. 38, par. 113 — 3(b)) states,

“In all cases, except where the penalty is a fine only, if the court determines that the defendant is indigent and desires counsel, the Public Defender shall be appointed as counsel. *** [I]f the defendant requests counsel other than the Public Defender and the court finds that the rights of the defendant will be prejudiced by the appointment of the public defender, the court shall appoint as counsel a licensed attorney at law of this State, except that in a county having a population of 1,000,000 or more the Public Defender shall be appointed as counsel in all misdemeanor cases where the defendant is indigent and desires counsel unless the case involves multiple defendants, in which case the court may appoint counsel other than the Public Defender for the additional defendants.”

The statute clearly states that the public defender shall be appointed as counsel for an indigent defendant unless such an appointment will prejudice the rights of the defendant. Contrary to defendant’s assertion, unless there is a determination that such prejudice will result, the court does not have discretion to appoint counsel other than the public defender. It is clear that the example of multiple indigent defendants given by the judge was taken from the second part of the statute dealing with misdemeanors, in which case the trial judge does have such discretion without a finding that the rights of the defendant will be prejudiced by the appointment of the public defender.

The defendant’s erroneous claim of judicial error has resulted from his placing reliance on precedent cases decided before 1977, the year the statute in question was amended. Prior to 1977, the statute read, “*** [I]f the defendant requests counsel other than the Public Defender, the court may appoint as counsel a licensed attorney.” (Ill. Rev. Stat. 1975, ch. 38, par. 113 — 3(b).) Cases decided under the earlier version properly used the language “within the trial court’s discretion,” such discretion being judicially limited to a showing of good cause. (People v. Drew (1976), 36 Ill. App. 3d 807, 810, 345 N.E.2d 45, 48; see People v. Johnson (1974), 24 Ill. App. 3d 152, 159, 320 N.E.2d 69, 75.) In 1977, by Public Act 80-846 (1977 Ill. Laws 2494) the legislature amended the statute to include the language directing the appointment of the public defender unless prejudice to the defendant was shown. People v. Woods (1980), 84 Ill. App. 3d 938, 405 N.E.2d 1238, correctly reflects the statutory amendment in that it limited the right of an indigent defendant to appointed counsel other than the public defender not to the discretion of the court but rather to a showing of prejudice to the rights of the defendant.

In the instant case, the only possible prejudice to defendant’s rights was revealed in his statement to the court that the public defender assigned to him that day had said, in defendant’s words, that “we couldn’t win the case.” The appointed counsel, Donald Jurewicz, affirmed that he would provide defendant with the best defense he could, whereupon the court stated that unless defendant wished to represent himself, the public defender would remain as his appointed counsel. An examination of the record and the rather unusual trial procedure that ensued shows that despite the attorney’s difficulty in complying with both defendant’s request that he withdraw as counsel and the judge’s determination that he remain, the attorney effectively protected his client’s interests even though defendant refused to participate or to allow his attorney to use his own judgment effectively in conducting the defense. Finding no prejudice to defendant’s rights, we accordingly find no error in the-trial court’s denial of defendant’s motion for appointment of private counsel.

Ill

Defendant next contends that because inadmissible hearsay was the only evidence offered by the State to prove an essential element of the crime charged, his convictions must be overturned. The challenged testimony was that of Porter Hopps, security manager for .Budget Rent-A-Car. Hopps testified to his participation in the recovery of the three automobiles from J & R Towing Company and that Budget last had had possession of the cars “on or about August 24, 1979.” Hopps repeatedly testified to the existence of various business records, but each time the prosecution attempted to have him testify to the contents of the records, defendant’s attorney would object. The first several times this happened, the judge sustained the objections. However, after repeated attempts by the State to elicit testimony from Hopps concerning the contents of the leasing agreements, the judge began saying “If he knows” and allowing the witness to answer despite defense attorney’s strenuous objections to each question asking for information contained in the leases. In this manner the State allegedly established that Budget did not authorize defendant’s possession or sale of any of the three cars in question. But when the State requested that the leasing agreements be admitted into evidence as proof of defendant’s wrongful possession, the court sustained defendant’s objection to their admission on the ground that insufficient foundation had been laid. Hopps’ testimony was not stricken, however, even though he admitted on cross-examination that his knowledge was based “to a certain extent” on company records he did not make and over which he exercised no control or supervision. Indeed, Hopps never testified that he had any personal knowledge of the process by which the information on the leasing agreements was obtained or verified.

It is clear that the trial court properly excluded the lease agreements as evidence. Under the statute governing admissibility of business records as evidence in a criminal proceeding (Ill. Rev. Stat. 1979, ch. 38, par. 115 — 5(a)), a writing (1) made as a memorandum of a business transaction or event, (2) recorded contemporaneously with the event, and (3) kept in the ordinary course of business as part of the business, is admissible as evidence of that transaction or event. While it is true that in Illinois the proper witness to authenticate the business record need not be the person who actually made or supervised the making of the entries, he must have personal knowledge of the business and of the records themselves. For example, in Central Steel & Wire Co. v. Coating Research Corp. (1977), 53 Ill. App. 3d 943, 369 N.E.2d 140, the salesman who had taken a telephone order for his company’s product was allowed to authenticate the billing statement for the order on the ground that he had personal knowledge of both his company’s billing procedure and the accuracy of the names of the parties and material ordered. Similarly, in 612 North Michigan Avenue Building Corp. v. Factsystem, Inc. (1977), 54 Ill. App. 3d 749, 370 N.E.2d 236, a building manager of 20 years’ tenure was allowed to testify about rent due from one tenant because he supervised the maintenance of the building’s records.

In contrast, an examination of the records in the instant case reveals that Hopps had no independent knowledge of the contents of the lease agreements. The only type of information he provided for the lease agreements was a record of the various vehicle identification and control numbers of the cars themselves. Hopps could not vouch for the records’ accuracy concerning the rental status or the lessees of the cars in question, and therefore the records were inadmissible hearsay, out-of-court statements offered to prove the truth of the matter asserted. “[Such statements depend] completely for [their] value upon the credibility of the out-of-court declarant. Such statements are] inadmissible because the party against whom [they are] offered lacks the opportunity to test the value of the statements] by cross-examining [their] source.” People v. Parrott (1976), 40 Ill. App. 3d 328, 330, 352 N.E.2d 299, 302.

If the original business records themselves are available, testimony consisting of an oral summation of their contents is not an acceptable alternative, even if the summary is given by the records’ custodian. (Smith v. Williams (1975), 34 Ill. App. 3d 677, 339 N.E.2d 10.) In the instant case, since the original records were found inadmissible because the witness had insufficient personal knowledge to provide an adequate foundation, it is obvious to us that the oral testimony about the contents and interpretation of the same records by the same incompetent witness is inadmissible hearsay and cannot be allowed to stand. LeRoy State Bank v. J. Keenan’s Bank (1929), 337 Ill. 173,169 N.E. 1.

When we examine the entire case presented by the State, we can see clearly that without Hopps’ testimony based on the inadmissible records, all that the State has proven is that defendant was arrested while trying to sell three automobiles with vehicle registration numbers which had previously been recorded by Hopps as identifying new cars purchased by Budget Rent-A-Car. We necessarily conclude that the State did not prove beyond a reasonable doubt that defendant knowingly possessed stolen vehicles because no competent evidence was presented to prove defendant’s unauthorized control of the automobiles. “[W]here the hearsay evidence, as here, is the only evidence as to an essential element of the State’s case, we think that its admission cannot fail to constitute reversible error ***.” (People v. Hines (1973), 12 Ill. App. 3d 582, 587, 299 N.E.2d 581, 584.) Despite the presumption that in a bench trial the court has considered only proper and competent evidence (People v. Pelegri (1968), 39 Ill. 2d 568, 237 N.E.2d 453), that presumption is completely rebutted where, as here, the trial court’s decision obviously was based on incompetent evidence.

In light of the above, we reverse defendant’s convictions. Inasmuch as the third issue raised by defendant on appeal concerned the propriety of designating his actions as three separate offenses of knowing possession of a stolen vehicle, we find that our decision on the second issue disposes of the third as well.

Reversed.

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

      One case decided after 1977, People v. Slaughter (1980), 84 Ill. App. 3d 88, 93, 404 N.E.2d 1058, 1062-63, also uses the earlier language and reasoning, mistakenly using only pre-1977 authority.


author: JUSTICE MEJDA

text:
    MELVIN ISENSTEIN et al., Plaintiffs-Appellees, v. EDWARD J. ROSEWELL, Cook County Treasurer and Ex-Officio County Collector, Defendant-Appellant.—ADA BOLEY et al., Plaintiffs-Appellants, v. THOMAS C. HYNES, Cook County Assessor, et al., Defendants-Appellees.
    First District (5th Division)
    Nos. 81 — 2551, 81 — 2639 cons.
    Opinion filed August 6, 1982.
    Modified on denial of rehearing October 8, 1982.

      Richard M. Daley, State’s Attorney, of Chicago (Jane Clark Casey and Thomas J. McNulty, Assistant State’s Attorneys, of counsel), for appellant Edward J. Rosewell.
    Klein, Thorpe & Jenkins, Ltd., of Chicago (Gerard E. Dempsey and Bruce A. Zolna, of counsel), for appellants Ada Boley et al.

    William J. Harte, Ltd., Kevin M. Forde, Ltd., and Ash, Anos, Harris & Freedman, all of Chicago (William J. Harte, Kevin M. Forde, Richard J. Prendergast, Katrina Veerhusen, and Lawrence M. Freedman, of counsel), for appellees Melvin Isenstein et al.

    Richard M. Daley, State’s Attorney, of Chicago (Jane Clark Casey and Thomas J. McNulty, Assistant State’s Attorneys, of counsel), for appellees Thomas C. Hynes et al.

   JUSTICE MEJDA

delivered the opinion of the court:

Plaintiffs, Melvin Isenstein and Ada Boley, each with other named owners of real property in Cook County, filed separate complaints for injunctive relief in the circuit court of Cook County as class actions against the Cook County assessor and Cook County treasurer, ex-offi-cio collector. The complaints generally challenged the procedures used by defendants in the valuation and taxation of real estate used for farming or agricultural purposes. At separate instances the trial court issued orders (1) sustaining defendants’ motion to dismiss counts I, III, IV and V of the Boley complaint, (2) sustaining defendants’ motion to consolidate the two actions for trial, and (3) granting plaintiffs’ joint motion for a preliminary injunction enjoining the defendants from distributing any farmland “rollback” moneys collected pursuant to sections 20a — 1 through 20a — 3 of the Revenue Act of 1939 (Ill. Rev. Stat. 1981, ch. 120, pars. 501a — 1 through 501a — 3). Defendants appeal from the preliminary injunction order (appellate No. 81 — 2551) and Boley plaintiffs appeal from the order of dismissal (appellate No. 81 — 2639). The appeals have been consolidated for review. The issues before this court are (1) whether the trial court erred in granting a preliminary injunction enjoining the defendants from distributing tax moneys collected, and (2) whether the trial court erred in dismissing counts I, III, IV and V of the Boley complaint.

The instant controversy essentially stems from the existence of two statutory methods of assessment and taxation of farmlands. The first, effective since 1971, is the dual valuation method which permits the “rollback” or recapture of taxes for prior years in the event of a change in the agricultural use of the property. (Ill. Rev. Stat. 1981, ch. 120, pars. 501a — 1 through 501a — 3.) The second method, approved by the General Assembly on August 16, 1977, establishes a different procedure for fixing the assessed valuation of farmland but does not provide for a rollback of the taxes for prior years in the event of a change in the agricultural use of the property. (Ill. Rev. Stat. 1981, ch. 120, par. 501e.) According to the plaintiffs’ complaints, their properties were converted to nonfarm use after August 16, 1977, and subsequently defendants issued rollback tax bills for such properties for the tax years 1977 and 1978. Plaintiffs allege in substance that the issuance of such rollback tax bills was unauthorized by law, since the 1977 provision, by its terms, has been the only legal method for assessment and taxation of farmland since August 16, 1977. Accordingly, the complaints prayed for injunctive relief restraining the collection of rollback taxes after 1977. Plaintiffs also filed a motion for a preliminary injunction enjoining the defendant from distributing all rollback tax moneys collected for 1977 and subsequent years. The trial court granted the motion and entered a preliminary injunction ordering that all funds on said taxes “shall be sequestered and held in an interest bearing account pending further order of the Court.”

Opinion

I

Defendants initially claim that plaintiffs have an adequate remedy at law and that therefore the court of equity had no jurisdiction to enter the instant preliminary injunction order, or any injunctive relief. This legal remedy, defendants argue, is the payment of the tax under protest and the filing of a specific objection in the circuit court pursuant to sections 194 and 235 of the Revenue Act of 1939 (Ill. Rev. Stat. 1981, ch. 120, pars. 675, 716).

In Clarendon Associates v. Korzen (1973), 56 Ill. 2d 101, 306 N.E.2d 299, our supreme court held that there were two exceptions to the general rule that equity has no jurisdiction to grant relief in tax cases where an adequate remedy at law exists: (1) where the tax is “unauthorized by law,” or (2) where it is levied upon property exempt from taxation. (See Finn v. Tucker (1980), 81 Ill. App. 3d 1038, 402 N.E.2d 358; see also Gore & Emmerman, Real Estate Tax Assessments — A Study of Illinois Taxpayers’ Judicial Remedies, 24 De Paul L. Rev. 465 (1975).) The question of an “unauthorized” tax goes to the “power” of the assessor or treasurer to function and not to the “validity of the tax as levied.” (North Pier Terminal Co. v Tally (1976), 62 Ill. 2d 540, 548, 343 N.E.2d 507, 511.) In count II of each complaint at bar, plaintiffs have not merely attempted to correct an erroneous assessment or to question its amount, but rather they have challenged the “power” of the defendants to collect rollback taxes after the legislature enacted section 20e (Ill. Rev. Stat. 1981, ch. 120, par. 501e). Thus, assuming for purposes of appeal that the plaintiffs’ allegations are true, and that defendants are without a statutory basis for imposing rollback taxes, then defendants have assessed taxes which are “unauthorized by law.” Accordingly, under the circumstances presented here, we conclude that equity jurisdiction lies and the trial court was empowered to grant relief by way of injunction. See Rlinois Bell Telephone Co. v. Allphin (1975), 60 Ill. 2d 350, 326 N.E.2d 737.

II

Next, we consider the appeal of the Boley plaintiffs from the trial court’s order dismissing counts I, III, IV and V of their complaint.

The sufficiency of the complaint and the nature of the relief sought are of primary importance here. Since plaintiffs have sought injunctive relief, the instant complaint must be examined to determine whether plaintiffs have pleaded sufficient allegations to come within either of the two exceptions stated in Clarendon Associates v. Korzen (1973), 56 Ill. 2d 101, 306 N.E.2d 299, or whether they have sufficiently pleaded other special grounds for equitable relief, such as fraudulently excessive assessment (see, e.g., Hoyne Savings & Loan Association v. Hare (1974), 60 Ill. 2d 84, 322 N.E.2d 833), and also the lack of an adequate remedy at law. Hulse v. Kirk (1975), 28 Ill. App. 3d 839, 329 N.E.2d 286.

In count I of their complaint, the Boley plaintiffs allege, in substance, that defendants, purportedly acting pursuant to the rollback provisions of the Revenue Act of 1939 (Ill. Rev. Stat. 1979, ch. 120, pars. 501a — 1 through 501a — 3), had issued farm rollback tax bills for the very year in which plaintiffs’ real property ceased to be used for agricultural purposes, contrary to the statutory procedure requiring that such bills be computed for each of the three years “preceding” the year in which such a change occurs. (Ill. Rev. Stat. 1979, ch. 120, par. 501a — 3.) In count III plaintiffs allege in substance that defendants have issued rollback tax bills twice on the same real estate for the same year, describing the same real estate by two different permanent real estate index numbers. In count IV plaintiffs allege essentially that defendants, purportedly acting pursuant to the Revenue Act of 1939 (Ill. Rev. Stat. 1979, ch. 120, par. 501a — 3), have issued rollback tax bills on the “entirety” of the plaintiffs’ real estate when in fact plaintiffs have discontinued farm use on only a portion of the property, but continued to farm the balance of the property. Finally, count V, brought on behalf of plaintiffs Ada and Glenn Boley, alleges in substance that defendants for the years 1977 through 1980 have refused to assess the Boleys’ farm property under the provisions of section 20e of the Revenue Act of 1939 (Ill. Rev. Stat. 1979, ch. 120, par. 501e), and instead have continued to utilize the valuation procedures under section 20a — 1 (Ill. Rev. Stat. 1979, ch. 120, par. 501a— 1). In each of the above counts plaintiffs have sought a judicial declaration that the tax bills issued by defendants are void, and also an injunction preventing defendants from collecting the complained-of taxes.

The Boley complaint does not allege that the property at issue was exempt from taxation, thus the first question to be determined is whether the instant counts, fairly construed, contain sufficient allegations of an “unauthorized tax” so as to bring them within the Clarendon exception. As noted, the term “unauthorized by law” has been construed by our courts to mean that the assessing officials lack the “power” to act, and not merely that the tax is invalid as levied. (See, e.g., North Pier Terminal Co. v. Tully (1976), 62 Ill. 2d 540, 343 N.E.2d 507; R. D. Werner Co. v. Leyden Fire Protection District (1980), 91 Ill. App. 3d 587, 414 N.E.2d 1169.) Thus, if the tax is levied pursuant to statutory authority, mere procedural irregularities in the assessment of the tax do not form a basis for injunctive relief. North Pier Terminal Co.; Owens-Illinois Glass Co. v. McKibbin (1943), 385 Ill. 245, 52 N.E.2d 177.

In our opinion the allegations of counts I, III, IV and V of the Boley complaint stem not from the alleged lack of statutory authority of the assessor to act, but merely challenge the validity of the taxes as levied by the assessor. Specifically, count I in substance alleges that the assessor improperly levied the rollback tax for the wrong year; count III alleges that the assessor incorrectly assessed property twice; count IV complains of an excessive assessment against parcels of real estate which were still used for farming purposes; and count V alleges that the assessment method utilized by the defendants was erroneous. It has been long established that the equitable remedy will be denied where the suit is based on a taxing body’s alleged failure to follow the statute in making an assessment (Bistor v. Board of Assessors (1931), 346 Ill. 362, 179 N.E.2d 120; Finn v. Tucker (1980), 81 Ill. App. 3d 1038, 402 N.E.2d 358), and while the complained-of irregularities may make the instant tax assessments “invalid,” it does not follow that the levies in question are “unauthorized by law.” Accordingly, we hold that the Clarendon exception is not applicable to the four counts at bar.

Plaintiffs argue on appeal that “unusual circumstances” are pleaded in their complaint which warrant injunctive relief under Hoyne Savings & Loan Association v. Hare (1974), 60 Ill. 2d 84, 322 N.E.2d 833. Plaintiffs’ complaint, however, contains no allegations of “constructively fraudulent” assessments and is lacking in any such facts to support this theory. In examining these pleadings and the facts stated therein, including all reasonable inferences drawn which are favorable to the plaintiffs, we conclude that the necessary averments to sustain equitable jurisdiction are lacking with respect to counts I, III, IV and V of the Boley plaintiffs’ complaint, and we therefore hold that the trial court did not err in granting dismissal of these counts.

Ill

For the foregoing reasons, the orders of the circuit court granting the preliminary injunction and dismissing counts I, III, IV and V of the Boley complaint are affirmed.

Affirmed.

LORENZ and WILSON, JJ., concur.

      See Hoffmann v. Clark (1977), 69 Ill. 2d 402, 372 N.E.2d 74, which held that this statutory scheme was not unconstitutional.

      See O’Connor v. A & P Enterprises (1980), 81 Ill. 2d 260, 408 N.E.2d 204, which upheld the constitutionality of this statute and held that the owner of a farm is automatically eligible for assessment under its provisions.

      The propriety of the provisions of the order directing that the rollback taxes which had been collected be restrained from distribution and that such funds be held in an interest-bearing account pending further order of the court has not been raised as an issue for review and is not involved in this appeal.