author: PRESIDING JUSTICE BUCKLEY

text:
    HILL BEHAN LUMBER COMPANY, Counterplaintiff-Appellant, v. IRVING FEDERAL SAVINGS & LOAN ASSOCIATION et al., Counterdefendants-Appellees.
    First District (1st Division)
    No. 82—2023
    Opinion filed January 23, 1984.

      Daidone & Daidone, of Chicago (Benjamin Daidone, of counsel), for appellant.
    Ned Langer, of Chicago, for appellee Irving Federal Savings & Loan Association.
    Susan E. Woods, of Chicago, for appellee Chicago Title Insurance Co.
   PRESIDING JUSTICE BUCKLEY

delivered the opinion of the court:

Counterplaintiff-appellant, Hill Behan Lumber Company (Hill Behan), appeals from the judgment of the circuit court of Cook County in favor of the counterdefendants-appellees, Irving Federal Savings & Loan Association (Irving) and Chicago Title Insurance Company (CTIC) in an action to foreclose a- mechanic’s lien. We affirm in part and reverse in part.

The relevant facts are as follows. In March 1981, Irving filed a complaint to foreclose a mortgage on certain property in a subdivision known as Roundtree Commons in Elk Grove Village, Illinois. In its foreclosure action, Irving named as defendants Louis S. Kulma, Inc. (Kulma), a junior lienholder under a recorded trust deed (Kulma trust deed) covering the subject premises, and Hill Behan, a sub-subcontractor who provided lumber and other building materials used for construction of improvements on said premises. Hill Behan subsequently counterclaimed to foreclose a mechanic’s lien against each of the three townhouse units constructed on the aforementioned property in the total amount of $38,567.59. Hill Behan named Irving and Kulma as defendants. CTIC, as assignee of a note from Kulma secured by the Kulma trust deed, filed a petition for and was granted leave to intervene.

Irving and CTIC subsequently filed motions to strike and dismiss Hill Behan’s counterclaim. They alleged that Hill Behan failed to notify them of its claim within 90 days after completion of its work as required under section 24 of the Mechanics’ Liens Act (Ill. Rev. Stat. 1981, ch. 82, par. 24). In September 1981, Hill Behan filed an amended answer and counterclaim against Irving and CTIC. Irving and CTIC subsequently moved to apply their motions to strike and dismiss to Hill Behan’s amended counterclaim.

On July 15, 1982, the trial court entered an order dismissing Hill Behan’s amended counterclaim as to Irving and CTIC. The dismissal was predicated on the court’s determination that Hill Behan failed to comply with the section 24 90-day notice requirement. On August 6, 1982, Hill Behan filed a motion seeking to vacate the trial court’s order of July 15, to add additional party defendants, and to file a second amended counterclaim. On August 9, 1982, the trial court entered an order denying the motion. Hill Behan appeals from the orders entered July 15 and August 9.

The question before us is whether the trial court correctly determined that Hill Behan had no right to a mechanic’s lien as against Irving and CTIC. In resolving this issue, we must look to the language of section 24 of the Mechanics’ Liens Act, which provides in pertinent part:

“Subcontractors, or party furnishing labor or materials, may at any time after making his contract with the contractor, and shall within 90 days after the completion thereof *** cause a written notice of his claim and the amount due or to become due thereunder, to be sent by *** mail *** to or personally served on the owner of record or his agent *** and to the lending agency, if known; ***.” (Emphasis added.) (Ill. Rev. Stat. 1981, ch. 82, par. 24.)

Service of the section 24 notice has been described as a precedent to the creation of a lien under the Act. (Suddarth v. Rosen (1967), 81 Ill. App. 2d 136, 140, 224 N.E.2d 602.) We note that in 1969 section 24 was amended to include the words “lending agency, if known.” Prior to 1969, a subcontractor was only required to serve the section 24 90-day notice on the owner; it was not necessary to serve such notice on the lender. Hill Behan failed to allege that it served the section 24 notice on Irving or CTIC, the lending agencies in this case.

I

On appeal, Hill Behan first challenges the constitutionality of section 24 of the Mechanics’ Liens Act, alleging that the words “lending agency, if known” are unconstitutionally vague and ambiguous. Hill Behan, however, concedes that it failed to raise this issue during the proceedings below. Consequently, this issue is waived for purposes of appeal. Department of Transportation v. Collins (1979), 69 Ill. App. 3d 269, 387 N.E.2d 6; Hah v. Stackler (1978), 66 Ill. App. 3d 947, 383 N.E.2d 1264.

II

We next turn to Hill Behan’s contention that it was not required to serve the 90-day notice under section 24 on Irving and CTIC because it had no actual knowledge of Irving’s or CTIC’s interest in the subject property. With regard to this argument, the trial court found that the Act’s requirement of service on the “lending agency, if known” is the equivalent of service on the lending agency if discoverable by the subcontractor through searching title recording records. Accordingly, the trial court ruled that Hill Behan was bound to search the public records for the recording of any interest by any person in the subject property and that it had constructive notice of any such recordings. We concur with this ruling, since a contrary interpretation would defeat the purpose of the recording act (Ill. Rev. Stat. 1981, ch. 30, par. 29). The recording act provides that “[a]ll deeds, mortgages and other instruments of writing which are authorized to be recorded, shall take effect and be in force from and after the time of filing the same for record *** as to all creditors and subsequent purchasers without notice; ***.” 111. Rev. Stat. 1981, ch. 30, par. 29.

We note that in the amended counterclaim to foreclose its mechanic’s lien, Hill Behan recites a completion date of February 29, 1980. Pursuant to section 24 of the Mechanics’ Liens Act, Hill Behan was therefore required to give notice of its claim within 90 days subsequent to this specified completion date not only to those actually known to have an interest in the subject property but also to those constructively known. By virtue of Irving’s recordation of its mortgage on August 23, 1977, Hill Behan had constructive notice of Irving’s interest in the subject property nearly three years prior to the expiration of the period for serving notice. The record also reveals that the Kulma trust deed was recorded on April 28, 1978. Thus, CTIC’s interest, as the holder of a note secured by the Kulma trust deed, was represented of record and, therefore, known for two. years prior to the expiration of the time Hill Behan had for service of the section 24 notice. Hence, both Irving and OTIC were known lending agencies and required to be served with notice pursuant to section 24.

Ill

Hill Behan next argues that section 24 excuses a subcontractor from serving the 90-day notice on the lending agency where the subcontractor is listed on a contractor’s sworn statement filed with the owner. As previously noted, section 24 requires that subcontractors or a party furnishing labor or materials shall, within 90 days after the completion of the work,

“cause a written notice of his claim and the amount due or to become due thereunder, to be sent by *** mail *** to or personally served on the owner of record or his agent *** and to the lending agency, if known: ***.” (Emphasis added.) (Ill. Rev. Stat. 1981, ch. 82, par. 24.)

Section 24 further provides that

“such notice shall not be necessary when the sworn statement of the contractor or subcontractor provided for herein shall serve to give the owner notice of the amount due and to whom due ***.” (Emphasis added.) (Ill. Rev. Stat. 1981, ch. 82, par. 24.)

Pursuant to the above-quoted language, this court has held that a subcontractor need not prove he served the 90-day notice on the owner if he proves that the owner had notice of his claim and of the amount due him in the contractor’s sworn statement to the owner. Krack Corp. v. Sky Valley Foods, Inc. (1971), 133 Ill. App. 2d 469, 471, 273 N.E.2d 202.

We have found no case law dispositive as to whether the contractor’s sworn statement to the owner listing the subcontractor satisfies the section 24 notice requirement as to the lender. Here, the trial court in its order of July 15, 1982, found that the statutory language excusing the service of the 90-day notice did not extend to the lender.

After carefully reviewing section 24, we are compelled to disagree with the trial court. The words excusing “such notice,” when construed within the entire context of section 24, refer to the 90-day notice required for both the owner and lender — not merely the owner. In making this determination, we note that the sworn statement was available as an alternative to the 90-day notice prior to the 1969 amendment, when no notice of any kind was required to be sent to the lender. This alternative places the burden on the owner to convey information to the lender if either the owner or lender so desire the information or require it in their own agreement. The 1969 amendment did not affect that alternative, nor require the lender be served with the sworn statement. Absent such a statutory requirement, the burden of notice to the lender, when the contractor’s sworn statement is properly submitted, is not on the subcontractor. If the legislature intended the contractor’s sworn statement to excuse the 90-day notice requirement only as to the owner, it would have expressly so provided. This court cannot add words to a statute to change its meaning. People ex rel. Petty v. Community High School District No. 128 (1964), 50 Ill. App. 2d 445, 200 N.E.2d 609.

In the case at bar, the record reveals that Hill Behan was listed on a sworn statement dated December 5, 1978, which was submitted by S.S. & E. Builders, Inc., the subcontractor for the project who, in turn, subcontracted with Hill Behan for building materials. The sworn statement indicates that Hill Behan had a contract for $25,000, had received payment of $10,204.65, and had a balance due of $14,795.35. The record discloses that this sworn statement was submitted to Chicago Title & Trust Company (CT&T), as the escrow trustee under a construction loan .escrow agreement dated February 16, 1979, between Irving and the owners. Hill Behan contends that CT&T, as escrowee under this escrow agreement, served as the dual agent of the owner and Irving for serving the statutory notice and, therefore, the filing of the sworn statement with CT&T excused the requirement of service of the section 24 90-day notice as to Irving. Consequently, Hill Behan argues that the trial court erred in denying it leave to file a second amended complaint to add CT&T as a party defendant as the escrow trustee under the escrow agreement and to allege the existence of an agency relationship.

The escrow agreement, a copy of which is incorporated as part of the record, authorizes CT&T to disburse funds to pay costs of construction of improvements erected on the subject premises and to obtain releases and satisfaction of liens and any other encumbrances, if any, pursuant to statements of amount due. Significantly, the agreement specifically states that prior to each disbursement of funds, CT&T was to be furnished a sworn general contractor’s statement setting forth in detail all contractors and material suppliers, their addresses, amounts of current payment, and balance due, if any. The agreement further stipulates, among other things, that CT&T was to furnish title insurance to cover the liens of mechanics, obtain from the owners prior to disbursement a statement that no additional contracts had been let since submission of the last owner’s statement, and obtain a report or certificate from Irving that it had inspected the work completed as requested in the payout.

We note that Hill Behan’s first amended complaint failed to allege that the sworn statement was submitted to CT&T as agent for Irving and the owner, thereby excusing the 90-day notice requirement as to Irving. Since the first amended complaint failed to allege service of the 90-day notice, the trial court properly determined that it failed to state a cause of action as against Irving. (Vanderlaan v. Berry Construction Co. (1970), 119 Ill. App. 2d 142, 255 N.E.2d 615.) However, it is well established that a cause of action should not be dismissed on the pleadings unless it appears that no set of facts can be proved which will entitle the pleader to relief, and then only if it is apparent that even after amendment, if leave to amend is sought, no cause of action can be stated. (Dinn Oil Co. v. Hanover Insurance Co. (1967), 87 Ill. App. 2d 206, 230 N.E.2d 702.) Here, in view of the terms of the escrow agreement, it is not apparent that even after amendment no cause of action can be stated as against Irving. Accordingly, we find the trial court erred in denying Hill Behan leave to file a second amended complaint to add CT&T, as escrow trustee, as a party defendant and to set forth facts alleging the existence of an agency relationship between CT&T, Irving and the owners. We wish to make it clear, however, that in the event the trial court determines from Hill Behan’s second amended complaint that an agency relationship existed between CT&T, Irving and the owners, the maximum amount Hill Behan would be entitled to on its mechanic’s lien would be $14,795.35, the amount listed on the sworn statement of December 5, 1978. Sanaghan v. Lawndale National Bank (1967), 90 Ill. App. 2d 254, 263, 232 N.E.2d 546; Ill. Rev. Stat. 1981, ch. 82, par. 24.

We also briefly note that Hill Behan alleges it sent a letter by certified mail to CT&T, notifying the escrowee that as of June 1980 a balance of $38,754.47 was due Hill Behan for delivery of material to the subject premises. Section 24, however, sets forth specific requirements as to the form and substance of notice. The letter in question failed to comply with these requirements and therefore was a nullity as far as section 24 is concerned. See LaCrosse Lumber Co. v. Grace Methodist Episcopal Church (1913), 180 Ill. App. 584, 589-90.

IV

Hill Behan next contends that the trial court erred in granting CTIC’s motion to dismiss its counterclaim because it made findings, without affidavit or evidence, that the legal description in the assignment of the trust deed to CTIC and the legal description in the amended counterclaim and claims for lien of Hill Behan pertain to the same property.

In addressing this argument, we first note that the trial court’s orders of July 15, 1982, and August 9, 1982, fail to contain the findings referred to by Hill Behan. These are the only two orders from which Hill Behan now appeals. In granting CTIC’s motion to dismiss, what the trial court did determine was that, regardless of the legal descriptions used in the amended counterclaim and liens, Hill Behan failed to state a cause of action against CTIC because it did not allege compliance with the notice requirements set forth in section 24.

Second, contrary to Hill Behan’s assertion, a motion to dismiss pursuant to section 48 of the Civil Practice Act (now codified as section 2 — 619 of the Code of Civil Procedure (Ill. Rev. Stat. 1981, ch. 110, par. 2 — 619)) is not required to be supported by affidavit, nor must evidence be presented where the defect appears on the face of the pleadings. (Kessler, Merci, & Lochner, Inc. v. Pioneer Bank & Trust Co. (1981), 101 Ill. App. 3d 502, 508, 428 N.E.2d 608.) Here, the basis of CTIC’s motion to dismiss, which was brought pursuant to section 48, appears on the face of the pleadings. The motion asserted that Hill Behan’s amended counterclaim failed to allege service of a subcontractor’s 90-day notice on Kulma, the trustee under the recorded trust deed, or on the holder of the note secured by that trust deed. A party seeking to foreclose a mechanic’s lien is required to allege facts showing that he has performed all steps prescribed by statute in order to perfect the lien he seeks to enforce; service of the section 24 90-day notice is one of those steps and is a condition precedent to the cause of action. (Suddarth v. Rosen (1967), 81 Ill. App. 2d 136, 140, 224 N.E.2d 602.) When a complaint seeking to enforce a mechanic’s lien fails to contain the necessary allegation of service of a section 24 90-day notice, it does not state a cause of action and it is not error to grant a defendant’s motion to dismiss. (Vanderlaan v. Berry Construction Co. (1970), 119 Ill. App. 2d 142, 255 N.E.2d 615.) Here, Hill Behan, in failing to allege service of a subcontractor’s 90-day notice, did not state a cause of action as against CTIC in its counterclaim. Accordingly, the trial court did not err in granting CTIC's motion to dismiss. However, as established above, a sworn statement dated December 5, 1983, was served on CT&T, as escrow trustee, the alleged agent of the owners. Consequently, it is not apparent that even after amending the counterclaim no cause of action can be stated against CTIC. (See Dinn Oil Co. v. Hanover Insurance Co. (1967), 87 Ill. App. 2d 206, 230 N.E.2d 702.) Accordingly, we find that the trial court erred in denying Hill Behan leave to file a second amended counterclaim against CTIC to allege the existence of such an agency relationship, thereby excusing the service of the 90-day notice. As with Irving, however, Hill Behan would not be excused from serving the 90-day notice as to any amount over the $14,795.35 shown on the sworn statement.

V

Lastly, we address Hill Behan’s contention that the trial court erred in denying it leave to amend its counterclaim to add CTIC as a party defendant as assignee of the Kulma trust deed and note. In view of the preceding discussion, we believe that Hill Behan should be permitted to so amend its counterclaim.

For the foregoing reasons, the judgment of the circuit court of Cook County is affirmed in part and reversed in part, with instructions to remand for further proceedings consistent with this opinion.

Affirmed in part; reversed in part; and remanded.

McGLOON and GOLDBERG, JJ., concur.


source: Caselaw Access Project

author: JUSTICE WILSON

license: Public Domain

text:
    WALTER J. KULINS et al., Plaintiffs-Appellees, v. MALCO, A MICRODOT COMPANY, INC., Defendant-Appellant.
    First District (5th Division)
    No. 82—2258
    Opinion filed January 20, 1984.

      Robert H. Joyce and Peter C. Woodford, both of Seyfarth, Shaw, Fair-weather & Geraldson, of Chicago, for appellant.
    Despres, Schwartz & Geoghegan and Marshall Patner, both of Chicago, for appellees.
   JUSTICE WILSON

delivered the opinion of the court:

In a class action suit seeking adjudication of employee termination allowances, plaintiffs, ex-employees of defendant corporation (Maleo), moved for a summary judgment as to their right to recover severance pay under Malco’s original severance pay policy (1967 policy) rather than under its modified policy (1975 policy) which acted to substantially decrease severance pay benefits. After numerous hearings, the trial court certified the class and held, as a matter of law, that the terms of the 1975 policy were to be applied prospectively only, commencing February 1, 1975, and the plaintiffs were entitled to severance pay benefits earned under the 1967 policy prior to that date.

On appeal, Maleo contends that: (1) the trial court erred in granting plaintiffs’ motion for summary judgment on the ground that plaintiffs did not have a vested right to severance pay under the 1967 policy; (2) the trial court erroneously certified the class; and (3) in the alternative, the trial court erred in granting summary judgment as to class members, George Walter and Fred Faje on the ground that genuine issues as to material facts exist regarding their claims for severance pay. For the reasons that follow, we affirm the judgment of the trial court as to plaintiffs’ right to severance pay governed by the terms of the 1967 policy and as to class certification, and reverse its judgment to George Walter and Fred Faje.

On March 14, 1967, Malco’s predecessor corporation, Maleo Manufacturing Company, Inc., instituted a severance pay policy covering all salaried-exempt employees who had completed 90 days of service. This policy provided, inter alia, that upon termination of employment for the reasons therein stated, an eligible employee would receive one regular week’s pay (40 hours) for each complete year of service. On January 28, 1981, Microdot purchased the assets and assumed all the liabilities of Maleo Manufacturing Company, Inc., which formally dissolved in April 1971. Five months later, the company’s name was changed to Maleo, a Microdot Company, Inc. On October 1, 1972, Maleo issued a modified severance pay policy which decreased severance pay benefits to one week’s pay for up to 12 months’ service and two weeks’ pay for over 12 months’ service. However, as the following illustrates, the modified benefits did not act to decrease benefits earned under the 1967 policy:

“The current severance pay policy (effective October 1, 1972) will not apply to employees retaining two weeks or more of severance pay eligibility under the old policy.
Maintenance of the previous Malco/Mandex severance policy is intended as recognition of the benefits accumulated by long service employees.
* * *
Should new Malco/Mandex benefits be provided which will supersede this former policy (policy prior to October 1, 1972), it may be terminated at the discretion of management.”

Effective February 1, 1975, Maleo’s severance pay benefits were further modified so as to provide:

“From six months to one year of service - one week
At least one year but less than five - two weeks
At least five years but less than ten - three weeks
At least ten years but less than twenty - four weeks
More than twenty years - five weeks”

In addition, the 1975 modification contained the following provision:

“Previous severance policy and all amendments relating thereto for Maleo Chicago and Mandex are hereby rescinded.”

Proper notification of the modifications was sent to all eligible salaried-exempt employees, including plaintiffs.

Within two weeks after the 1975 policy was put into effect, Maleo began laying off large numbers of employees. With one exception, members of the plaintiff class were laid off during the eight-month period from February 1975 through October 1976. All were paid severance pay benefits pursuant to the provisions of the 1975 policy, i.e., a maximum of five weeks’ pay. Plaintiffs allege that they were improperly deprived of accrued severance pay benefits earned during the term of the 1967 policy, which was in effect as to them until shortly before their termination. Plaintiffs do not contend that the 1975 modification was ineffective. Rather, they assert that its provisions cannot be applied retroactively to divest them of their rights to severance pay accrued during the term of the 1967 policy.

In November 1975, plaintiffs filed their class action suit seeking adjudication of employees’ termination allowances. Thereafter, the trial court denied defendant’s motion to dismiss, certified the class, and found that its members were entitled to severance pay pursuant to the provisions of defendant’s 1967 policy. However, the trial court retained jurisdiction to consider and rule upon questions relating to notice to the class, computation of liability and related matters. Defendant’s ensuing appeal was dismissed for lack of jurisdiction, predicated on the fact that matters of substantial controversy remained to be resolved by the trial court. (Kulins v. Malco, Inc. (1979), 79 Ill. App. 3d 982, 398 N.E.2d 1144.) Plaintiffs then filed an amended motion for judgment on the pleadings, seeking: (1) a limited expansion of the class; (2) computation judgment pursuant to the previous findings; (3) prejudgment interest; and (4) costs and reasonable attorney fees. Defendant responded by filing its motion for rescission of orders previously entered and for summary judgment in its favor. The trial court denied plaintiffs’ motion to modify the class as well as defendants’ motions for rescission and for summary judgment. Plaintiffs then moved to amend the complaint so as to include a small number of additional employees. The motion was granted and the expanded class was certified on April 1,1981, as:

“Each and every salaried non-exempt employee *** employed by defendant on or about October 1, 1972 and subject to the terms of defendant’s 1967 severance pay plan (“plan”), and the modifications of the plan which were not held void or unenforceable by the Court, and who was severed by defendant from its payroll after that date, but not discharged for cause, and thereby has become eligible for the payments under the plan ***.”

On February 2, 1982, the trial court granted plaintiffs’ motion for summary judgment regarding the respective severance pay amounts earned by plaintiffs as of February 1, 1975, under the 1967 policy, less any payments previously made to them, but reserved its ruling as to class member Fred Faje who had had his weekly salary reduced from $402.92 to $288.46 six weeks prior to his termination, resulting in a reduced rate for computation of severance pay benefits. Faje claimed that his benefits should have been calculated upon his weekly salary prior to the decrease. Pending the court’s ruling as to Faje, defendant filed its motion to reconsider, requesting the court, inter alia, to deny summary judgment as to class member George Walter who had refused Malco’s offer of continued employment at its Pennsylvania plant. Pursuant to the 1967 policy, employees whose jobs had been eliminated and who subsequently rejected a transfer within the company to a similar position at a comparable salary were ineligible for severance pay. Following extensive arguments, the trial court granted plaintiffs motion for summary judgment as to Faje, holding that Faje’s severance allowance was to be computed on the higher weekly rate of pay, and denied defendant’s motion to reconsider. Defendant appealed.

Opinion

We shall first address the issue as to the validity and enforceability of the severance pay modifications to the 1967 policy. Defendant argues extensively in its brief that plaintiffs were employees at will of defendant and that they manifested their acceptance of the severance pay modifications by their continued employment. We acknowledge defendant’s well-researched argument, but find it superfluous for the simple reasons that there is no issue at bar regarding these two contentions. Plaintiffs concur that they were employees at "will and that their continued employment constituted acceptance of the modification. Instead, the issue before this court is whether plaintiffs’ right to severance pay benefits pursuant to the provisions of the 1967 policy were vested or accrued, thereby precluding retroactive application of the 1975 modification. We conclude that they were.

The issue of whether severance pay benefits accrue or vest during the term of an employment at will contract has not previously been presented to an appellate tribunal of this State. However, there are numerous decisions in other jurisdictions which, although not on point, are persuasive as to the relevant substantive and public policy considerations necessary to arrive at an equitable conclusion for all parties. Preliminarily, we note that although the terms of a collective bargaining agreement are not at issue in the present case, because termination pay provisions are to be identically construed whether contained in a formal written agreement or in a corporate personnel policy that becomes part of the understood employment agreement, we are not precluded from considering cases which construe collective bargaining agreements. (Chapin v. Fairchild Camera & Instrument Corp. (1973), 31 Cal. App. 3d 192, 197, 107 Cal. Rptr. 111, 114.) While the negotiation stage for each may differ, both have as their ultimate purpose the common understanding of the terms and conditions of employment. See Owens v. Press Publishing Co. (1956), 20 N.J. 537, 120 A.2d 442.

Defendant contends that if this court should read a vesting requirement into Maleo’s 1967 policy, it would be intruding into an area preempted by the Employee Retirement Income Security Act (29 U.S.C. sec. 1001 et seq. (1976)) (ERISA) and would be in direct conflict with ERISA’s provision which does not require vesting under severance plans. (29 U.S.C. sec. 1051(1) (1976).) In raising this point for the first time on appeal, defendant does not attempt to allege that the present cause of action is governed by ERISA, rather defendant merely “suggests” that ERISA’s preemption provision prohibit the announcement of a “new rule of law.” The fallacy in defendant’s suggestion” lies in its belief that this court must announce a “new rule of law” in order for the 1967 policy provisions to be held enforceable as to plaintiffs. To the contrary, our decision is grounded in well-established principles of contract law which in no way conflict with the provisions of ERISA. Moreover, contrary to defendant’s “suggestion,” the vesting provisions of ERISA do not preclude the vesting of severance pay plans; they merely state that vesting is not required.

Because of the benefit to the employees and the character of the inducement by the employer, severance pay has frequently been characterized as a form of deferred compensation, earned in part each week that the employee works during the term of the contract and payable on discharge from employment, provided such discharge is not induced by misconduct. (Lucas v. Seagrave Corp. (D. Minn. 1967), 277 F. Supp. 338, 343; UAW v. Defiance Industries, Inc. (N.D. Ohio 1966), 251 F. Supp, 650, 653-54. See Rose City Transit Co. v. City of Portland (1974), 18 Or. App. 369, 525 P.2d 1325, affd (1975), 271 Or. 588, 533 P.2d 339.) It is a benefit for which employees work as much as they work for any other benefit held out to them as compensation by the employer (Martin v. Mann Merchandising, Inc. (Tex. Civ. App. 1978), 570 S.W.2d 208, 210), and one which accrues during each work year that the agreement is in effect, not merely on the date that it becomes payable (Botany Mills, Inc. v. Textile Workers Union of America (1958), 50 N.J. Super. 18, 30, 141 A.2d 107, 113). When services are rendered, the right to secure the promised compensation is vested as much as the right to receive wages or any other form of compensation (Livestock Feeds, Inc. v. Local 1634, Congress of Industrial Workers (1954), 221 Miss. 492, 502-03, 73 So. 2d 128, 132), and the lack of a promise to vest does not revoke the employer’s obligation to pay. The employer must return those benefits derived from the continued employment conferred by the employee. Lucas v. Seagrave Corp. (D. Minn. 1967), 277 F. Supp. 338, 345.

Defendant argues that because the right to severance pay benefits is contingent upon satisfaction of the eligibility criteria, it cannot be vested. We disagree and draw the distinction between the right to accrue severance pay benefits which is contingent upon the condition precedent of length of service, and the right to receive payments which is contingent upon the condition of termination within the terms of the policy. Once the service condition is satisfied, the benefit derived from that term of service is vested and can be divested only by failure to satisfy the eligibility provisions. In other words, those provisions act only to divest a vested right; they do not prevent vesting from occurring initially. In the present case, pursuant to the 1967 policy, for every year of service, an employee’s right to one week’s severance pay is vested. These rights continue to accumulate in direct proportion to the length of the employee’s employment. Maleo’s severance pay policies are void of any provision which even suggests that discharge from employment during the term of the contract is a condition sine qua non to enforcement of the accrued right. If Maleo desired to include other conditions, it could have done so at the time of drafting. This court cannot read such conditions into the policy at this time. It is axiomatic that a court may not rewrite a contract to suit one of the parties, but must enforce the terms as written. See Schroud v. Van C. Argiris & Co. (1979), 78 Ill. App. 3d 1092, 1096, 398 N.E.2d 103.

Based upon the aforementioned, we conclude that the right to earn severance pay, a form of deferred compensation, arose and vested during the term of the 1967 policy and, consequently, survived the termination or modification of that policy. However, once the policy was modified on February 1, 1975, accrual under the 1967 policy terms ended. (See Gebhard v. Royce Aluminum Corp. (1st Cir. 1961), 296 F.2d 17, 19; Dangott v. ASG Industries, Inc. (Okla. 1976), 558 P.2d 379, 384.) To hold otherwise would relegate the promise of severance pay to the illusory status of an offer revocable at the pleasure of the corporation and result in a harsh forfeiture to loyal, long-term employees. (Fortune v. National Cash Register Co. (1977), 373 Mass. 96, 103-04, 364 N.E.2d 1251, 1257; Hercules Powder Co. v. Brookfield (1949), 189 Va. 531, 53 S.E.2d 804, 809. See Martindell v. Lake Shore National Bank (1958), 15 Ill. 2d 272, 154 N.E.2d 683.) While plaintiffs’ continued employment at Maleo may have manifested acceptance of the terms of the 1975 policy, it cannot reasonably be said that their continued employment manifested their agreement to relinquish benefits earned prior to the modification. In making this determination, we emphasize that our decision does not affect the right of employers at will to modify severance pay provisions. It merely confines application of such modifications to prospective use only. In our opinion, this holding is in line with both reason and justice.

The doctrine of promissory estoppel offers further support to our conclusion that severance pay, as a form of deferred compensation, is an accrued or vested right, incapable of retroactive modification. Promissory estoppel, an equitable device invoked to prevent a person from being injured by a change in position made in reasonable reliance on another’s conduct, is comprised of the following elements: (1) a promise (2) which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promissee, (3) which induces such action or forbearance, and (4) which must be enforced in order to avoid injustice. (Feinberg v. Pfeiffer Co. (Mo. App. 1959), 322 S.W.2d 163, 167-68; Hilton v. Alexander & Baldwin, Inc. (1965), 66 Wash. 2d 30, 31-32, 400 P.2d 772, 773-74.) In the present case, pursuant to the terms of the 1967 policy, Maleo promised to pay severance benefits to plaintiffs in return for their continued employment. This promise induced plaintiffs to forego their right to seek and accept other employment which resulted in the benefit to Maleo of industrial peace and avoidance of unrest on the part of its employees during a time of financial difficulty. Plaintiffs’ reliance is presumed from both the contractual nature of their employment and from the continuation of their employment. (See Anthony v. Jersey Central Power & Light Co. (1958), 51 N.J. Super. 139, 143 A.2d 762; Martin v. Mann Merchandising, Inc. (Tex. Civ. App. 1978), 570 S.W.2d 208.) To allow Maleo to retract its promise on the eve of termination, after years of reliance by plaintiffs would run counter to the fundamental principles of equity and justice, and raise a serious question as to Maleo’s compliance with the implied covenant of good faith, central to every contract. (See Rao v. Rao (7th Cir. 1983), 718 F.2d 219.) In reaching this determination, we recognize that an employer is entitled to be motivated by and to serve its own legitimate business interests; that an employer must have wide latitude in deciding corporate policy; and that an employer needs flexibility in the face of changing circumstances. However, we do not believe that Maleo’s right to make prospective decisions in its own interest is unduly hampered by a denial of retroactive application.

Finally we shall address the Illinois decision, Pinto v. Zenith Radio Corp. (N.D. Ill. 1979), 480 F. Supp. 361, affd (7th Cir. 1980), 618 F.2d 110, upon which defendant relies as support for its position that plaintiffs’ rights to severance pay benefits under the 1967 policy did not vest. Our review of Pinto finds it to be distinguishable on points which were central to that court’s determination. In Pinto, approximately two months before defendant sold the division for which plaintiff worked, defendant amended its severance pay policy to specifically exclude severance pay to employees who were terminated due to divestiture. Although plaintiff was immediately hired by the successor corporation, he brought suit against defendant under the benefit plan enforcement provisions of ERISA, claiming that he had a vested right to severance pay under the original policy which could not be divested by amendment. In holding that plaintiff’s rights to severance pay under the original policy had not vested, the court looked to the policy provisions before it and found that: (1) the policy expressly stated that “[severance pay is not automatic,” and was to be determined on a “case-by-case” basis; (2) the policy’s express purpose for severance pay, i.e., “[t]o assist salaried employees through a period of readjustment while seeking another position” was not applicable to plaintiff; and (3) the policy provided that severance pay may terminate if the employee was re-employed during the severance period, which, obviously, the plaintiff was. On plaintiff’s motion for reconsideration, the Pinto court recognized that other courts have held that severance pay is a vested benefit, but found that the terms of the specific policy before it precluded that conclusion.

The present case is clearly distinguishable. First, Maleo’s 1967 policy contained no express language as to the discretionary accrual of severance pay benefits. Rather, the language affirmatively expressed a right to earn the benefits and conditioned payment on involuntary termination without cause. Second, the stated purpose of Malco’s policy, i.e., “[t]o provide for a method of payment for those employees who are severed from the company’s payroll,” was directly applicable to plaintiffs. Third, plaintiffs were not immediately re-employed by a successor corporation, a fact which directly impacts on the equities of the situation. Accordingly, because the Pinto court’s decision was predicated upon the terms of a specific severance pay policy which contained terms substantially dissimilar to those before this court, we find in the Pinto decision unpersuasive. For the aforementioned reasons, we affirm the judgment of the trial court as to plaintiffs’ right to severance pay pursuant to the provisions of the 1967 policy.

We shall next address the issue as to whether class certification was properly granted. Defendant claims that plaintiffs have never even attempted to make a show of impracticability of joinder, one of the statutory requisites to class certification. Ill. Rev. Stat. 1981, ch. 110, par. 2 — 801.

Section 2 — 801 of the Code of Civil Procedure provides that an action may be maintained as a class action only if the court finds that the following requisites have been met:

(1) The class is so numerous that joinder of all members is impracticable.

(2) There are questions of fact or law common to the class, which common questions predominate over any questions affecting only individual members.

(3) The representative parties will fairly and adequately protect the interest of the class.

(4) the class action is an appropriate method for the fair and efficient adjudication of the controversy.

Further, the proponent of a class action has the burden of establishing the requisites of section 2 — 801 (Dobbs v. Chase (1981), 94 Ill. App. 3d 177, 181, 418 N.E.2d 919), and the determination of whether those requisites have been met rests within the discretion of the trial court whose determination will not be disturbed absent a clear abuse of that discretion. Hayna v. Arby’s, Inc. (1981), 99 Ill. App. 3d 700, 711, 415 N.E.2d 1174.

The record reveals that in the present case a group of eight named plaintiffs originally sought to represent the interests of approximately 35 class members, all of whom were readily discernible from company records. Subsequently, plaintiffs amended their complaint to add approximately 12 more members. After notification to the class members, the final class consisted of 19 members. Regarding the requisite of impracticability of joinder, plaintiffs’ original and amended (by adoption) complaints alleged that “the class is so numerous that joinder is impractical.” Following oral argument, the trial court certified the class, finding that “[o]ne of the basic elements of a class action is the avoidance of multiplicity of suits. The number of persons justifying a class action is dependent on many factors. In Cook County, reducing the backlog of cases is a factor to be considered. Individual suits by approximately thirty (30) employees would unnecessarily add to the backlog of cases. All the other elements necessary for a class action are properly pleaded.” Subsequently, the expanded class was certified, although no express findings of fact were enunciated. Because the trial court is not required to state all findings of fact relevant to its decision, we cannot assume that those statements which appear in the record comprise the trial court’s full and complete rationale. Moreover, we are not aided in this respect by the record which is void of a transcript of any of the numerous hearings held on the issue of class certification. The resulting informational gap renders it impossible for this court to review the totality of the argument presented to the trial court, which is absolutely central to a determination of abuse of discretion. It is well established that in the absence of a full and complete record, a reviewing court must presume that the trial court acted properly and defer its decision. (Rosenblatt v. Michigan Avenue National Bank (1979), 70 Ill. App. 3d 1039, 1042, 389 N.E.2d 182.) Accordingly, we do not find that the trial court abused its discretion and, therefore, affirm its grant of "class certification.

In the alternative, defendant argues that notwithstanding the correctness of the trial court’s finding that Maleo’s 1967 policy governed payment of severance benefits to plaintiffs, the trial court erred in entering summary judgment as to individual class members George Walter and Fred Faje on the ground that material issues of fact remain regarding their entitlement claims.

a. George Walter

The central issue regarding Walter is the impact of his refusal to transfer to an out-of-State location on his eligibility to receive severance pay benefits under the 1967 policy which states, in pertinent part:

“C. The following employees are not eligible for termination allowance beyond what is provided for in the Vacation Pay policy provisions:
* * *
4. Employees whose jobs have been eliminated and who have been offered another position within the company at a comparable salary level and do not elect to accept the offer.”

In his affidavit, Walter admits that Al Menella, president of the Connector Group of Microdot, Inc., asked him if he would like to move to Pennsylvania and informed him that if he did not make the move, he would be laid off. However, Walter denies that he was ever made “a specific offer, at a specific salary for any other job, in Pennsylvania, or anywhere else,” denial of which would trigger his ineligibility under the 1967 policy. In addition, Walter argues that when the 1967 policy was enacted, Maleo was strictly a local business and Walter had never anticipated that it would become a national corporation with the concomitant possibility of transfer out of the State. Walter further contends that when Maleo became a national corporation, the transfer eligibility provision had the effect of a forfeiture clause because of the hardship it imposed. We find this argument attenuated and legally naive. Consequently, we accord it no persuasive value.

In summary, because the pleadings reveal a material question of fact as to whether the circumstances set forth in the transfer eligibility provision actually occurred, we hold that the trial court erred in granting summary judgment in favor of George Walter and remand the cause for a trial on the merits as to Walter’s eligibility.

b. Fred Faje

The central issue regarding Faje is whether his severance benefits should be computed on his weekly rate of pay at the time of termination or on his highest weekly rate of pay in the year prior to termination. The pertinent provision in the 1967 policy appears under the section entitled “Termination Allowance Computation” and states:

“A. Employees who are eligible for this allowance will receive one (1) regular weeks pay (40 hours) for each complete year of service.”

It is undisputed that, with the exception of Faje, all severance pay benefits were computed on each plaintiff’s rate of pay at the time of termination.

Faje argues that the reduction in weekly salary from $402.92 to $288.46 six weeks prior to his termination “was intended to deny him the fruits of the contract set out in the 1967 severance pay plan,” and that “[t]he action was a clear breach of Maleo’s duty to perform the contract in good faith.” In his affidavit, dated April 23, 1982, Faje stated that in July 1975, Tom Kissinger, Maleo’s personnel manager, told him that he would have to take a reduction in salary in order to be kept on the payroll. In accord, the affidavit of Stanbury Pearce, vice-president and general manager of Maleo, stated that as a cost-cutting measure during the period of Maleo’s serious financial difficulties in 1975, Maleo offered the senior employees a salary reduction rather than terminate their employment. Faje claims that he accepted the salary reduction “under protest” because the only alternative was unemployment. Yet the record is void of any explanation as to how Faje manifested his alleged protest. While this court recognizes that no employee enjoys having his salary reduced, we also are aware that during times of economic distress, circumstances sometimes conspire to force corporations to institute seemingly harsh policies in an effort to avoid even harsher ones at a later date. This appears to be the situation in the present case. Contrary to Faje’s allegation, we find no evidence in the record to suggest that Faje’s salary reduction was an act of bad faith. To the contrary, there is evidence that Maleo instituted cost-cutting measures to conserve financial sources while preserving Faje’s employment. Unfortunately, those measures did not yield the necessary financial results.

Accordingly, because it has been Maleo’s established practice to compute severance pay benefits on the employee’s salary at the time of his termination and because there is no evidence that Maleo acted in bad faith when it reduced Faje’s weekly salary six weeks prior to his termination, we find that the trial court erred in granting summary judgment in Faje’s favor and reverse the trial court’s judgment as to Faje and remand the cause for computation of Faje’s benefits based upon his salary at time of termination.

For the aforementioned reasons, we affirm the judgment of the trial court as to plaintiffs’ right to severance pay under the 1967 policy and as to class certification, reverse the trial court’s summary judgments as to George Walter and Fred Faje, and remand the cause for further proceedings regarding the eligibility of George Walter and the computation of benefits due Fred Faje.

Affirmed in part; reversed and remanded in part.

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

      The interchangeability of these terms is evidenced by the following definitions found in Black’s Law Dictionary 37,1734 (rev. 4th ed. 1968):
      (1) Accrue - “In past tense, in sense of due and payable; vested.”
      (2) Vested - “Fixed; accrued; settled; absolute.”

      Although defendant’s failure to raise this argument at trial has waived this issue for review (Moehle v. Chrysler Motors Corp. (1982), 93 Ill. 2d 299, 303, 443 N.E.2d 575), in the interests of a comprehensive discussion, we shall briefly address the compatibility of our decision with the cited provisions of ERISA.

      The cause of action at bar arose at the time of the first policy modification in 1972, thereby rendering inapplicable the provisions of ERISA which apply only to those causes of action which arose subsequent to January 1,1975.

      A condition precedent is “one which *** is to be performed before some right dependent thereon accrues, or some act dependent thereon is performed.” Black’s Law Dictionary 366 (rev. 4th ed. 1968).

      A condition subsequent is “one annexed to an estate already vested, by the performance of which such estate is kept and continued, and by the failure of non-performance of which it is defeated; or it is a condition referring to a future event, upon the happening of which the obligation becomes no longer binding upon the other party, if he chooses to avail himself of the condition.” Black’s Law Dictionary 366 (rev. 4th ed. 1968).

      The Pinto court’s holding obviated the need to discuss the effectiveness of the modification. Had that point been discussed, the case would clearly have been applicable to the present facts.


author: PRESIDING JUSTICE SEIDENFELD

text:
    CITIZENS UTILITIES COMPANY OF ILLINOIS, Plaintiff-Appellant, v. PHILIP R. O’CONNOR et al., Defendants-Appellees.
    Second District
    No. 83—679
    Opinion filed February 1, 1984.

      Daniel J. Kucera, of Chapman & Cutler, of Chicago, for appellant.
    Neil F. Hartigan, Attorney General, of Springfield, pro se, and George A. Marchetti, of Moss & Bloomberg, of Bolingbrook (Hercules F. Bolos, Special Assistant Attorney General, and Edward P. O’Brien and Steven G. Revethis, Assistant Attorneys General, of counsel), for appellees.
   PRESIDING JUSTICE SEIDENFELD

delivered the opinion of the court:

Citizens Utilities Company of Illinois (Citizens) appeals from an interlocutory order denying its second motion for a temporary restraining order (TRO), which was entered on remand after this court found that the first appeal was premature. Citizens Utilities Co. v. O’Connor (1983), 116 Ill. App. 3d 369.

Citizens’ complaint, filed with notice, seeks to enjoin the defendants, the members of the Illinois Commerce Commission (Commission) and the Attorney General, from enforcing an order entered on April 6, 1983, and from interfering with Citizens’ charging and collecting the proposed increased rates. The order cancelled the suspended proposed rates, thereby denying any rate increase and leaving the existing rates in force. The village of Bolingbrook, defendant, was permitted to intervene in the trial court.

No pleadings were filed by the defendants in response to the complaint or the second motion for a temporary restraining order. No evidence was taken. After hearing arguments the circuit court denied the motion, finding that Citizens would suffer irreparable harm “if the injunction is not granted, provided that plaintiff is otherwise entitled.” The court, however, also found that Citizens had an adequate remedy at law, it had not shown a clear right requiring protection by pendente lite relief, it had not shown a reasonable likelihood of success on the merits, and the TRO would change the status quo.

Citizens contends that all of the criteria for the granting of a TRO have been satisfied and that it is entitled to relief on its showing that the Commission’s order is confiscatory and unauthorized by law.

The standards for the granting of a TRO filed with notice are well established and will not be repeated here. (See Citizens Utilities Co. v. O’Connor (1983), 116 Ill. App. 3d 369, 378-79.) It has also been established in particular that injunctive relief against Commission rate orders is proper when the rate in force is confiscatory and unauthorized by law and that because of the delay in the administrative review process it is inadequate to prevent irreparable harm. See Peoples Gas Light & Coke Co. v. Slattery (1939), 373 Ill. 31, 44; Sprague v. Biggs (1945), 390 Ill. 537, 546; Iowa-Illinois Gas & Electric Co. v. Fisher (1953), 351 Ill. App. 215, 223-24.

The generally stated purpose of a TRO is to allow the trial court to preserve the status quo until it can hold a hearing to determine whether it should grant a preliminary injunction or until the cause can be decided on the merits. (Stocker Hinge Manufacturing Co. v. Darnel Industries Inc. (1983), 94 Ill. 2d 535, 541-42; Citizens Utilities Co. v. O’Connor (1983), 116 Ill. App. 3d 369, 378.) The status quo to be preserved is the last, actual, peaceable and uncontested status which preceded the pending controversy. (People ex rel. Edgar v. Miller (1982), 110 Ill. App. 3d 264, 270.) Since the new rates proposed by Citizens did not go into effect, the status quo is the rate schedule previously in effect. The issuance of the TRO would, in effect, change the status quo by allowing Citizens’ proposed rates to go into effect immediately. As such, Citizens must first establish the probability of its ultimate success on the merits. See Keystone Chevrolet Co. v. Kirk (1978), 69 Ill. 2d 483, 486.

The case which must be made by the party who seeks a TRO, insofar as it relates to the probability of ultimate success on the merits, is not the same as the issue before the Commission or on judicial review in a rate proceeding. On judicial review of a rate order the issue is whether the rate allowed is just and reasonable. In the injunction case the issue is solely whether the rate sought to be enjoined is confiscatory. (Peoples Gas Light & Coke Co. v. Slattery (1939), 373 Ill. 31, 68.) The question of confiscation is a judicial one. 373 Ill. 31, 46.

Thus, this appeal essentially turns on whether a showing has been made that the present rate of return, acknowledged to be 6.5% for the purposes of this appeal, is confiscatory and whether the Commission refused the rate increase, not because of any finding that the existing rate was fair and reasonable, but as a penalty for alleged lack of compliance with previous orders of the Commission and thus unauthorized by law.

I

Citizens contends that the Commission order shows clearly on its face that the present rate of return is confiscatory. Since, on the present posture of the case, there has been no evidentiary hearing we must resolve this question purely under the complaint, which includes the Commission’s order. As relevant, the findings in the order include:

“(8) the net original cost of Respondent’s utility plant in service, used and useful in providing water and sewage service to the public as of December 31, 1982, is $25,449,400; to this should be added $119,500 for cash working capital, $79,800 for common plant, and $179,300 for materials and supplies; and as best as can be determined from the evidence in this record, $6,739,000 should be subtracted for accumulated deferred taxes resulting in an original cost rate base of $19,089,000;
(9) for the reasons set forth in the prefatory portion of this order, for purposes of this proceeding, Respondent’s original cost rate base is the best available evidence of the fair value of its plant in service;
(10) Respondent’s net operating income for the [1982] test year as adjusted for changes described above, is $1,243,800, which is the amount available to Respondent for return under its present rates; as best as can be determined from the evidence in this record, this operating income provides Respondent a return of 6.5% under its present rates;
(11) the management of Respondent has failed to improve Respondent’s service in matters that are clearly within its control, such as, ensuring that meter readers have proper identification, that meters are read regularly, that excavations are properly repaired, that customer complaints are handled in a timely manner, and that adequate water pressure is maintained in its system;
(12) severe sewage backup problems exist and have existed for up to ten years in certain of Respondent’s service areas; the provision of such service presents a danger to its customers’ health and safety in violation of Section 32 of the Public Utilities Act; the management of Respondent has failed to aggressively pursue eliminating these severe sewage backup problems;
(13) the management of Respondent has failed to comply with repeated directions from this Commission to record all its deferred income taxes on its books and records; as a result, ambiguity continues to exist as to Respondent’s proper rate base, and proper amortization amounts of deferred taxes, thereby making calculation of expense and income imprecise;
(14) the failures of Respondent’s management, as found in Findings (11), (12) and (13) herein, should not be rewarded with an increase in its authorized rate of return and an increase in rates; ***.”

The Commission’s order reflects that it considered operating revenue, expenses and income. Operating revenue as found by the Commission amounted to $8,684,700. Operating revenue deductions included salaries, material supplies, rents, insurance, utility expenses, legal and regulatory expenses, depreciation and taxes, including Federal income taxes, totaling $7,440,900. This resulted in a net operating revenue of $1,243,800. Citizens argues that these figures reflect that the Commission took the worst possible view of their evidence. However, we do not have a sufficient record before us to determine whether in fact this is true, and we are not required to determine in this proceeding whether the computations of the Commission are against the manifest weight of the evidence. We conclude from the record before us that Citizens has not proved confiscation as a matter of law for the purpose of supporting its motion for a TRO.

Citizens argues that there is not any difference between a rate that is confiscatory and one that is “unreasonably low” so as to result in an unfair rate of return for the utility. We cannot agree. Our supreme court recognized the distinction in Peoples Gas Light & Coke Co. v. Slattery (1939), 373 Ill. 31, 68.

“It has been held that a reasonable rate is something other or higher than one not strictly confiscatory, the difference, if any, being determined with finality by the appointed officers of the State. *** '*** [T]here is a difference between a rate which is merely nonconfiscatory and one which is just and reasonable
*** > M

While a rate of return that is unreasonably low may in some instances be the same as a rate which is confiscatory, it does not necessarily follow that a failure to return an amount consistent with other investments proves confiscation as a matter of law. Contrary to the argument of Citizens, this court has not held that an order is per se confiscatory because it imposes a rate of return below the yields of highest grade bonds. (See Island Lake Water Co. v. Illinois Commerce Com. (1978), 65 Ill. App. 3d 853, 857.) In Island Lake we were concerned with an appeal of a rate case under section 68 of the Public Utilities Act (Ill. Rev. Stat. 1981, ch. 1112/3, par. 72). We decided that the findings of the Commission did not support the order which it entered. In returning the case to the Commission we noted that a comparison of the 4.72% rate of return in 1976, a legal interest rate of 5%, and the yields of highest grade public utility and industrial bonds of approximately 8%, indicated an “unreasonably low, if not confiscatory” rate. (Island Lake Water Co. v. Illinois-Commerce Com. (1978), 65 Ill. App. 3d 853, 858.) On remand we directed the Commission to properly support its order by considering comparable yields in determining a fair and reasonable rate, but we also directed that it support its finding that the proposed rates would exceed the value of service to the customer.

We also do not agree that Chicago, Milwaukee & St. Paul Ry. Co. v. State Public Utilities Com. (1915), 268 Ill. 49, 57, and State Public Utilities Com. ex rel. Mitchell v. Chicago & West Towns Ry. Co. (1916), 275 Ill. 555, 568, support Citizens’ argument that the existing rate is confiscatory. Both cases stand for the proposition that in a review of a rate case a rate found to be insufficient to pay the proper operating expenses and to return a reasonable profit on investment deprives a utility of property without due process of law. Additionally, we have held, “Admittedly, a return which does not produce income sufficient to meet operating expenses is confiscatory, and rates yielding a very narrow margin above operating expenses may be confiscatory.” (Iowa-Illinois Gas & Electric Co. v. Perrine (1953), 351 Ill. App. 195, 212.) This is not support for the position that the 6.5% rate of return is per se confiscatory.

We note that in cases relied upon by Citizens to justify injunctive relief against a rate order, none has proceeded upon the meager record which is before us here. In the leading case of Peoples Gas Light & Coke Co. v. Slattery (1939), 373 Ill. 31, 47, the supreme court in upholding the order of the Commission noted that it had a “large” record before it, consisting of the abstract, final order of the Commission, an extensive master’s report and detailed evidence bearing on the ultimate issues. In Iowa-Illinois Gas & Electric Co. v. Fisher (1953), 351 Ill. App. 215, 224-25, no evidence was heard, but in deciding the case on the pleadings the court had before it a verified complaint and answer as well as nine affidavits supporting the complaint. In Iowa-Illinois Gas & Electric Co. v. Perrine (1953), 351 Ill. App. 195, 205-06, 209, the record before the court consisted of over 1,500 pages, including approximately 1,000 pages of statistical data, as well as a verified complaint and answer, accompanying affidavits, and the record of the Fisher case of which the court took judicial notice.

In the case before us, however, we have no proof of the actual return on the fair value of Citizens’ property as reflected in the previously authorized rate of return. The Commission merely found that “as best as can be determined” the operating income provides a 6.5% return under its present rates. Citizens had indicated in its brief that it is willing to assume the 6.5% figure for purposes of this appeal, but that in a hearing on a permanent injunction it will be able to show that it is receiving only a .8% return. If so, we would have little doubt that the rate which produces so little a return would be confiscatory. However what the proof will be on a full hearing is irrelevant to a determination of whether the TRO was properly denied on the facts before the trial court. In sum, we conclude that the record before us is not sufficient to support Citizens’ claim that it has shown confiscation as a matter of law.

II

Citizens also argues that the Commission’s order is unauthorized by law and should be enjoined because it denied rate relief solely as a penalty for alleged noncompliance with prior orders relating to the quality of service and the treatment of deferred taxes. The conclusions in the Commission’s findings 11-14 are that the failure of Citizens to improve service and the failure to comply with repeated directions to record its deferred income taxes on its books “should not be rewarded with an increase in its authorized rate of return and an increase in rates.” In the context of the entire order of the Commission we do not view this as a refusal to consider Citizens’ proposed rate schedule or any intervening rate over the rate in effect purely because of the claimed noncompliance with prior orders.

We would agree that the Commission is not authorized by law to force compliance with prior orders by penalizing the utility “with a rate which will not return even the operating expenses, and might, in fact, prevent them from rendering any service at all.” (Chicago Rys. Co. v. Illinois Commerce Com. (N.D. Ill. 1922), 277 F. 970, 977.) Citizens has not shown, however, for the purposes of this proceeding that the present rate renders it incapable of performing any service or . that the present rate will not return even the operating expenses.

Premised on our conclusion that the rate which the Commission left in effect has not been shown to be confiscatory as a matter of law, we do not agree with the argument of Citizens that in determining whether the proposed rate schedule is fair and reasonable it must ignore quality of service and is limited to enforcing quality control by exercising its disciplinary powers under sections 75 and 78 of the Public Utilities Act. (Ill. Rev. Stat. 1981, ch. lll2/3, pars. 79, 82.) Quality of service may be a relevant consideration in determining whether a proposed rate schedule is fair and reasonable, although it is not relevant to the question of whether a confiscatory rate has been established.

While the trial judge in his memorandum opinion indicated that, as a rule of law, quality of service cannot be considered in a rate-making case, we do not agree nor are we bound to. A reviewing court is not bound to accept the reasons given by the trial court for its judgment. (Material Service Corp. v. Department of Revenue (1983), 98 Ill. 2d 382, 387.) While we agree that the Commission “need not” deny a reasonable rate increase pending service improvement (Village of Apple River v. Illinois Commerce Com. (1960), 18 Ill. 2d 518, 525), we find nothing in the Illinois authorities that prevents the consideration of that matter in order to determine whether a proposed rate increase results in a fair and reasonable return. In Apple River, the court noted that compliance with a prior order relating to quality of service was material to the extent that it “relates to the existing valuation of the company’s property in order to determine whether or not the proposed rate increase results in a fair return ***.” 18 Ill. 2d 518, 525.

We also do not agree with Citizens that Apple River calls for a different conclusion. The fact that the supreme court stated that the Commission need not deny a reasonable rate increase pending the service improvement does not mean that the quality of service cannot be considered in setting a reasonable rate of return. In fact, the Apple River court recognized that “the approval of proposed rate increases is necessarily related to the services offered ***” (18 Ill. 2d 518, 524-25) and that a balance must be maintained “between the rates charged by utilities and the services performed” (18 Ill. 2d 518, 523). We also indicated in Island Lake Water Co. v. Illinois Commerce Com. (1978), 65 Ill. App. 3d 853, 857, “that the public should not be required to pay more than the services rendered are reasonably worth.”

We find persuasive the distinction made in General Telephone Co. v. Corporation Com. (1982), 98 N.M. 749, 652 P.2d 1200. In that case, the Commission determined that an 11.91% rate of return was just and reasonable. Rather than instituting rates based on that figure, it imposed a penalty for inadequate service resulting in an 11.5% rate of return. The Supreme Court of New Mexico found this to be improper, concluding that once the Commission determined a fair and reasonable rate of return, it could not subsequently penalize a utility for reasons relating to the quality of service. Although the court held that “a regulatory commission has no authority to deny an increase in rates in an amount which it has first found to be just, fair and reasonable, by means of imposing a subsequent penalty for poor or inadequate service,” it continued, “[h]owever, this does not preclude the [Commission] from properly considering in a rate proceeding, quality or inadequacy of service in determining, under the facts and circumstances in each particular case, what is a fair, just and reasonable rate of return to the utility.” (98 N.M. 749, _, 652 P.2d 1200, 1209.) The range of reasonableness in a case where quality of service is a factor requires a rate no more than the reasonable worth of the service supplied but not so low as to be confiscatory. Arkansas Public Service Com. v. Continental Telephone Co. (1978), 262 Ark. 821, 834-35, 561 S.W.2d 645, 652-53.

Thus we conclude that the Commission in considering the factor of quality of service as a basis for denying a rate increase in accordance with the proposed schedule was not acting in a way unauthorized by law.

Citizens also challenges the Commission’s finding (13) that it had failed to comply with directions from the Commission to record all of its deferred income taxes on its books and records and that as a result “ambiguity continues to exist as to Respondent’s proper rate base, and proper amortization amounts of deferred taxes, thereby making calculation of expense and income imprecise.” Citizens first charges that the refusal to grant an increase based on this finding is a penalty which the Commission is unauthorized to inflict in a rate case. As we have previously noted, we do not view the finding as an assessment of a penalty but as a conclusion by the Commission that because Citizens had not so recorded its deferred income taxes the rate base was ambiguous and that in these circumstances the management should not be rewarded with an increase. Citizens disputes the fact that it did not either record or furnish to the Commission all the information necessary with regard to deferred taxes. On the limited record before us we cannot resolve this dispute. A utility, however, has the burden of showing that its proposed rates are reasonable and must produce sufficient evidence to meet that burden. (See Central Il linois Public Service Co. v. Illinois Commerce Com. (1955), 5 Ill. 2d 195, 211.) Moreover, a utility’s rate base is reduced by the amount of income tax deferrals. (See City of Alton v. Commerce Com. (1960), 19 Ill. 2d 76, 91-92.) It follows that, absent sufficient evidence to establish the rate base, the Commission cannot determine whether a particular rate is reasonable.

On the record before us we conclude that the preservation of the status quo is served by the trial court’s exercise of discretion in favor of the denial of temporary relief. In our view, Citizens, as a prerequisite to affirmative mandatory injunctive relief which would change the status quo, has failed to establish the probability of its ultimate success on the merits. (Keystone Chevrolet Co. v. Kirk (1978), 69 Ill. 2d 483, 486.) While a fair question is presented that the present rate of return is or may on further proof be less than fair and reasonable, Citizens has not shown, as it must, that it is confiscatory. (Peoples Gas Light & Coke Co. v. Slattery (1939), 373 Ill. 31, 68.) Nor has it been shown that the Commission acted in a manner unauthorized by law. The judgment of the trial court is within the limits of its sound discretion, and since we find no abuse of discretion, we will not overturn it. Stocker Hinge Manufacturing Co. v. Darnel Industries, Inc. (1983), 94 Ill. 2d 535, 541.

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

Affirmed.

NASH and HOPF, JJ., concur.


author: JUSTICE ALLOY JUSTICE HEIPLE,

text:
    THE PEOPLE OF THE STATE OF ILLINOIS, Plaintiff-Appellee, v. JOHN K. SMITH, Defendant-Appellant.
    Third District
    No. 3-83-0324
    Opinion filed February 2, 1984.

      HEIPLE, J., dissenting.
    Robert Agostinelli and Jean Herigodt, both of State Appellate Defender’s Office, of Ottawa, for appellant.
    Gary L. Peterlin, State’s Attorney, of Ottawa (John X. Breslin and Kenneth A. Wilhelm, both of State’s Attorneys Appellate Service Commission, of counsel), for the People.
   JUSTICE ALLOY

delivered the opinion of the court:

John K. Smith appeals from his conviction for reckless conduct (Ill. Rev. Stat. 1981, ch. 38, par. 12 — 5(a)), following a bench trial in the circuit court of La Salle County. We reverse the conviction and remand for a new trial, based upon the failure of the record to indicate that the defendant knowingly and understandingly waived his right to a jury.

The record indicates that the defendant was charged by information on December 3, 1982, and his attorney entered an appearance on December 7, 1982. A notice to appear for bench trial was mailed to the defendant and his counsel in December 1982. A bench trial was held on February 2, 1983, and at the conclusion of the trial, the court found the defendant guilty of reckless conduct. The court imposed a sentence of 10 months’ imprisonment upon the defendant. The record is silent as to any waiver of defendant’s right to a jury.

This court decided a similar case in People v. Banks (1979), 71 Ill. App. 3d 15, 389 N.E.2d 180. As in the instant case, the record in Banks was silent as to any jury waiver by the defendant. We there stated:

“As Justice Moran said in People v. Rondeau (2d Dist. 1971), 8 Ill. App. 3d 286, 289, 291 N.E.2d 666, 668:
‘A trial court has a duty to see that defendant’s waiver of the right to trial by jury “is not "only expressly but also understandingly made,” (People v. Fisher, 340 Ill. 250, 265 (1930). See also, People v. Surgeon, 15 Ill. 2d 236, 238 (1958); People v. Sailor, 43 Ill. 2d 256, 260 (1969); Cty. of McLean v. Kickapoo Creek, Inc., 51 Ill. 2d 353, 355-356 (1972).) Pertinent to the admonition of the offenses of burglary and theft, no inquiry was made of defendant regarding his willingness to forego a trial by jury. There could, therefore, have been no understanding waiver of that right evidenced in the record.’

Our supreme court said in County of McLean v. Kickapoo Creek, Inc. (1972), 51 Ill. 2d 353, 355-356, 282 N.E.2d 720, 722:

'A defendant who is informed and who expresses his desire may waive his right to a jury trial. (People ex rel. Swanson v. Fisher, 340 Ill. 250.) This waiver must be understanding^ accomplished in open court (Ill. Rev. Stat. 1971, ch. 38, par. 103 — 6; People v. Williams, 36 Ill. 2d 194, 202), and it is the court’s duty to establish that the waiver is properly made. (People v. Clark, 30 Ill. 2d 216; People v. Wesley, 30 Ill. 2d 131.) ***
The facts presented in this case do not establish that quantum of proof from which we can say that Lewis, individually or as the corporation president, knowingly and expressly waived the right to a jury trial by remaining silent during the proceedings. Nor did defense counsels’ actions affirmatively establish a sufficient basis under decisions of this court to constitute a waiver of the right to a jury trial which might be imputed to defendants.’ ” (People v. Banks (1979), 71 Ill. App. 3d 15, 17-18, 389 N.E.2d 180.)

In Banks, where the record was silent as to any jury waiver by the defendant, we reversed and remanded for a new trial. (See also People v. Walton (1979), 77 Ill. App. 3d 905, 396 N.E.2d 841; People v. Losacano (1975), 29 Ill. App. 3d 103, 329 N.E.2d 835; People v. Clay (1974), 19 Ill. App. 3d 296, 298, 311 N.E.2d 384.) Additionally, in Banks, although the defendant had not raised the issue at trial or by way of post-trial motion, the court found that the error was cognizable under the plain error rule. (People v. Banks (1979), 71 Ill. App. 3d 15, 18; see also People v. Walton (1979), 77 Ill. App. 3d 905, 906.) These cases are controlling in the instant case. Here, there is no-docket entry showing “jury waived” nor any signed jury waiver document. The record is devoid of any evidence that the defendant understandingly waived his right to trial by jury in open court.

The State, in seeking to avoid this result, argues that the common law record does, in fact, indicate a jury waiver. Reliance for the argument is placed upon the fact that the defendant was notified by the court of the date for his bench trial. That is simply not enough, nor do we perceive how it demonstrates an understanding waiver of the jury trial by the defendant. Similar circumstances were held insufficient by the court in People v. Walton (1979), 77 Ill. App. 3d 905, and insufficiency was found, on even better evidence of a waiver, in Losa cano, over some dissent. The State relies upon People v. Young (1980), 86 Ill. App. 3d 306, 408 N.E.2d 104, which upheld a waiver of jury trial based upon some evidence in the common law record. However, in that case, unlike the case at bar, there was a docket entry expressly noting “jury waived” and a document signed by the defendant waiving the jury. Furthermore, in that case the court noted, with express approval, the prior decision in Banks, stating:

“Certainly where the record is silent as to jury waiver (see People v. Banks (1979), 71 Ill. App. 3d 15, 389 N.E.2d 180), or where the report of proceedings does not demonstrate an understanding waiver even though there is a docket entry to that effect (see People v. Coleman (1978), 59 Ill. App. 3d 1050, 376 N.E.2d 277), a reviewing court will find that the defendant has demonstrated an absence of an effective jury waiver.” (86 Ill. App. 3d 306, 308.)

In Young, however, there were the affirmative indications of jury waiver, which, coupled with the presumption that the court acted correctly, was found to be sufficient. As noted, no such affirmative indications are present in the record in this case.

We also reject the State’s argument that the failure of the defendant to argue or assert that there was no understanding waiver is itself sufficient evidence of a jury waiver by the defendant. No such rule or requirement is imposed upon the defendant by the cases previously cited and discussed. The record must be examined, when the issue is raised, and if the record is silent, as it is here, then the defendant has effectively demonstrated the absence of a jury waiver for appeal purposes. People v. Banks (1979), 71 Ill. App. 3d 15; People v. Young (1980), 86 Ill. App. 3d 306, 308. Cf. People v. McCarty (1981), 101 Ill. App. 3d 355, 427 N.E.2d 1382.

The State, perhaps understandingly, contends that this result is an elevation of form over substance, and others may suggest that here again a minor technicality lets the guilty go free. Yet, the right to a jury trial is most fundamental to our system of criminal justice, and the requirement of a clear waiver of that right, shown in the record, is an important and essential safeguard for the precious right to a jury trial. That is why the failure to include such evidence in the record is held to constitute plain error. If we were to conclude that the absence of a jury waiver in the record is only a technicality, not requiring reversal, then we would be approaching a conclusion that the right to jury trial itself is also, under some circumstances, only a mere technicality.

Unfortunate, and sometimes unpalatable, results are inevitable if our legal system, and respect for the law and the legal system, as a system of laws, is to be maintained. If we are willing to obtain the result we want, regardless of the established law, merely by waiving the red flag of “mere technicality,” without serious inquiry and assessment of the rights and stakes involved, then we will have given up our system of law, and replaced it with a system disconcerting and dangerous, with results and decisions based not upon the law, but upon the transient whim of society or the caprice of the individual judge. It is easy to say that the lack of clear evidence of waiver in this case is a “mere technicality,” without analysis of the rights involved. It would be easier, however, should we choose that path, for future decisions to further erode, as technicalities, the safeguards and protections designed to protect and defend any defendant’s constitutional right to a jury trial. When we uphold the law on an issue such as before us in this case, despite factual pressure to go with a more palatable result, we are not, contrary to popular belief or suggestion, standing up for the rights of the criminal. We are doing our sworn duty as judges, in upholding the law, and in so doing affirming the rights of all citizens, guaranteed by the Constitution. We must not, in our justified concern and anger over the spectre of increasing crime and violence in our society, do damage to those fundamental protections set forth for all citizens, and for,this democracy, by our constitution. Ours is a system of laws, not of men, and only our vigilance in ensuring the protections of the law for all citizens can safeguard that system.

The decision of the circuit court of La Salle County is reversed, and the cause remanded for retrial on the charges.

Reversed and remanded.

SCOTT, J., concurs.

JUSTICE HEIPLE,

dissenting:

I cannot agree with my colleagues’ position on the waiver of trial by jury issue. Since the issue is the basis of the reversal, I dissent. Nowhere in the record or the briefs does the defendant make an affirmative allegation that the trial judge failed to admonish him of his right to a trial by jury or that he did not knowingly and understandably waive his right to a jury trial. The defendant merely claims the record does not reflect that he waived a jury trial.

In People v. McCarty (1981), 101 Ill. App. 3d 355, this court was faced with a similar argument concerning a record silent on the defendant’s waiver of counsel. I noted in my dissent that lacking an affirmative allegation of error by the defendant, the inference that the trial judge discharged his duties in a constitutional fashion should remain intact. 101 Ill. App. 3d 355, 361.

The presiding judge in the instant case, Judge Wimbiscus, is an experienced trial judge of many years and is undoubtedly well aware of a defendant’s right to a jury trial. It is difficult to believe that Judge Wimbiscus would proceed to a bench trial in the absence of a jury trial waiver.

In the instant case, the record does not contain any docket entries. Also, the record of proceedings consists only of a clerk’s summaries and a transcript of the trial. Consequently, the report of the proceedings is incomplete and does not purport to cover any proceedings prior to trial. The common law record does contain, however, a “notice to appear for a bench trial.” This notice is evidence that the defendant waived his right to a jury trial.

In People v. Oatis (1977), 47 Ill. App. 3d 229, the court was faced with operative facts identical to the instant case: the defendant was tried for a misdemeanor (there is no statutory or constitutional requirement that such proceedings be transcribed (People v. Hopping (1975), 60 Ill. 2d 246, appeal dismissed (1975), 423 U.S. 907, 46 L. Ed. 2d 136, 98 S. Ct. 209; People v. Malley (1982), 103 Ill. App. 3d 534)); the defendant chose to argue the record was insufficient to show waiver of a jury trial, rather than affirmatively allege he did not waive his right to a jury; the report of proceedings was incomplete; and, the common law record evidenced a waiver of jury by the defendant (the record contained a written jury waiver signed by the defendant). The Oatis court determined that “in a criminal case when the common law record shows that the defendant has waived a jury trial, on appeal after a bench trial, a defendant claiming error in the jury waiver must cite the specific error that occurred and substantiate that claim by the presentation of a sufficient record.” People v. Oatis (1977), 47 Ill. App. 3d 229, 232; see also People v. Hamilton (1978), 64 Ill. App. 3d 276, 278; compare People v. Banks (1979), 71 Ill. App. 3d 15, 17 (record was complete).

In the instant case, we have a common law record, in the form of a notice to appear for a bench trial, which suggests the defendant waived the jury. Although this notice is not as conclusive as a written jury waiver, I believe it is sufficient to place the burden upon the defendant to cite specific error and substantiate that claim by the presentation of a sufficient record. Otherwise, this court is placing form over substance. By relying upon an incomplete record to prove the absence of a waiver, the majority would reverse even if the defendant did in fact waive his right to a jury trial.

Again, in light of the common law record evidencing a jury waiver, the absence of a specific affirmative allegation that the defendant did not waive his right to a jury trial, and the defendant’s failure to present a record sufficient to show whether error did in fact occur, I would affirm the conviction. Therefore, I respectfully dissent.


author: JUSTICE SCOTT

text:
    THE PEOPLE OF THE STATE OF ILLINOIS, Plaintiff-Appellee, v. JAMES RATH, Defendant-Appellant.
    Third District
    No. 3—83—0433
    Opinion filed January 31, 1984.
    Robert Agostinelli and Peter A. Carusona, both of State Appellate Defender’s Office, of Ottawa, for appellant.
    Gary L. Peterlin, State’s Attorney, of Ottawa (John X. Breslin and Vicki R. Wright, both of State’s Attorneys Appellate Service Commission, of counsel), for the People.
   JUSTICE SCOTT

delivered the opinion of the court:

The defendant, James Rath, appeals a declaration of his unfitness to stand trial following a jury trial in the circuit court of La Salle County. The defendant had been charged with four counts of forgery.

At various times during the pretrial proceedings the defendant claimed to be the royal son of the Sultan of Turkey and Ethel Barrymore, a diplomat with immunity from prosecution, a doctor and an attorney.

The court believed that on the basis of these initial allegations, a bona fide doubt existed as to the defendant’s fitness to stand trial and ordered, over defendant’s objection, that he be examined pursuant to section 104 — 13 of the Code of Criminal Procedure of 1963 (Ill. Rev. Stat. 1981, ch. 38, par. 104 — 13).

Despite the fact that the defendant insisted on representing himself without additional counsel; the public defender’s office was appointed “to assist the defendant on a standby basis” should he wish to consult with an attorney.

The matter proceeded to a fitness hearing before a jury and two psychiatrists testified.

Dr. Chuprevich testified that the defendant was suffering from a mental disorder despite the defendant’s belief that he was sane. The doctor believed that the defendant was a paranoid schizophrenic who experienced delusions and hallucinations, had no sense of external reality and the mental disorder involved the aberration of the defendant’s thought processes.

The doctor “doubted” whether the defendant understood the nature of the charges against him or whether he could assist in his own defense as required by section 104 — 10 of the Code of Criminal Procedure of 1963 (Ill. Rev. Stat. 1981, ch. 38, par. 104 — 10). He felt, however, that if provided with a course of treatment, the defendant might attain fitness within one year.

The State rested, and the defendant called Dr. Kruglik to testify in his behalf. The doctor had been previously appointed by the court to examine the defendant, but the defendant had not cooperated.

Dr. Kruglik believed that although he felt the defendant understood the nature of the charges against him, he had “some question” whether the defendant was mentally capable to cooperate with counsel in his own defense.

Dr. Kruglik agreed with Dr. Chuprevich that there was a “good likelihood” that the defendant would attain fitness within one year if he were provided with a course of treatment. The doctor also noted, however, that it was possible that defendant was a con man feigning his mental illness.

During the proceedings, the defendant totally refused to let the public defender assigned to his case assist him in any way. He specifically complained of appointed counsel looking over his shoulder at his briefs. The defendant attempted to subpoena various judges from the Federal court in Chicago as defense witnesses but without success. The defendant ordered the public defender not to say anything during the instruction conference. The defendant made his own closing argument which consisted of a pathetic attempt to prove his regal lineage, that he was only a poor baron who had been the victim of perjured psychiatric testimony and racial prejudice, and despite everything he was “a gentleman and a genius” who had “beat the Hell out of the best legal minds in Ottawa.”

Both the defendant and the State contended that the defendant was fit to stand trial. The jury disagreed. The defendant was appointed counsel, over his objection, and the issue on appeal is whether the case must be reversed because the trial court permitted the defendant to proceed at the hearing on fitness without availing himself of his court-appointed attorney who was present but not permitted to intervene by the defendant.

First of all it must be noted that defense counsel on appeal contends that it was error under the facts of this case to permit the defendant to waive counsel when it was apparent that there was a bona fide doubt of the defendant’s mental ability to make a valid waiver.

The State correctly argues that the defendant was not actually allowed to waive counsel, since the public defender was present throughout the fitness hearing.

Both sides acknowledge that every defendant has the legal right to waive counsel (Faretta v. California (1975), 422 U.S. 806, 45 L. Ed. 2d 562, 95 S. Ct. 2525); however, defendant’s counsel on appeal maintains the issue here concerns the defendant’s mental ability to make a knowing and intelligent waiver of such a basic and important right.

In assessing the validity of defendant’s purported waiver of counsel, or his refusal to use appointed counsel present at his hearing, we are called upon to determine whether this particular defendant had the requisite capacity to either effectuate a waiver or, alternatively, to conduct his own defense in the presence of but without the assistance of appointed counsel. We believe it is necessary to make such a determination, and that merely appointing counsel without more was inadequate to meet the defendant’s right to effective assistance of counsel. Johnson v. Zerbst (1938), 304 U.S. 458, 82 L. Ed. 1461, 58 S. Ct. 1019; People v. Vanderwerff (1978), 57 Ill. App. 3d 44, 372 N.E.2d 1014; Evans v. United States (D.C. App. 1951), 83 A.2d 876.

“[W]e have no serious doubt that a person against whom a prima facie showing has been made of having an unsound mind of paranoid state could not properly be held to have waived counsel intelligently, understandingly, competently, or knowingly. If a person is insane at the time of the trial of a criminal case, he can not legally waive counsel for the reason that he is incapable of making a proper defense.” Evans v. United States (D.C. App. 1951), 83 A.2d 876, 879.

In the case at bar, the circuit court correctly believed that a bona fide doubt existed as to defendant’s fitness to stand trial. Having properly declared that such a doubt existed, the court then erred in allowing the defendant to represent himself. Until the shadow of defendant’s questioned ability to understand the nature of the charges against him and his ability to cooperate in his own defense was removed, he was not only entitled to be represented by competent counsel, it was required, even if against his will. People v. Heidelberg (1975), 33 Ill. App. 3d 574, 338 N.E.2d 56 (circuit court wisely deferred ruling on self-representation until after the question of defendant’s competency had been resolved).

We must acknowledge that the circuit court seriously and sincerely tried repeatedly to persuade the defendant to permit the public defender to assist him in his defense.

The State correctly argues that our case law recognizes that a defendant’s decision to represent himself often operates to his own detriment. (People v. Siler (1980), 85 Ill. App. 3d 304, 406 N.E.2d 891.) We have already acknowledged that the trial judge did a commendable job in attempting to persuade the defendant to use his attorney. Our system of justice does not require the trial judge “to shun his robes and assume an adversarial position.” People v. Siler (1980), 85 Ill. App. 3d 304, 309.

However, the foregoing is only applicable to the case at bar if we assume at the outset that the defendant had the requisite competency to make the decision not to be represented by counsel. From the evidence adduced here we cannot make such an assumption.

For the foregoing reasons, the judgment of the circuit court of La Salle County is reversed and the cause is remanded with directions that counsel be appointed to represent the defendant as an active adversary on the defendant’s behalf instead of as a passive bystander to the proceedings.

Reversed and remanded.

STOUDER, P.J., and HEIPLE, J., concur.