author: PRESIDING JUSTICE DOWNING

text:
    CENTRAL STATES JOINT BOARD et al., Plaintiffs-Appellees, v. CONTINENTAL ASSURANCE COMPANY, Defendant-Appellant.
    First District (2nd Division)
    No. 82 — 1485
    Opinion filed August 30, 1983.

      Ronald A. Jacks and Donald C. Clark, Jr., both of Isham, Lincoln & Beale, of Chicago, for appellant.
    Donald R. Harris, Susan M. Carlson, and Elizabeth M. Landes, all of Jenner & Block, of Chicago, for appellees.
   PRESIDING JUSTICE DOWNING

delivered the opinion of the court:

Defendant, Continental Assurance Company, appeals from the trial court’s judgment which rescinded a pension funding insurance contract, GP-9331, defendant issued to plaintiff, Central States Joint Board and Allied Organizations Staff Pension Plan and Trust. Defendant was also ordered to pay to plaintiffs the sum of $1,651,973.61 which represents the book value, as of May 21, 1982, of plaintiff’s pension plan held under the policy. Two issues are presented for review: (1) whether the trial court’s decision was against the manifest weight of the evidence and contrary to the law; and (2) whether the trial court erroneously excluded testimony at trial based upon the attorney-client privilege.

The following facts are pertinent to this appeal. In 1958, defendant issued plaintiff a group insurance policy, GP-1013, which provided for life insurance and retirement benefits for plaintiff’s employees. The policy permitted retiring participants to receive their benefits in the form of lump-sum cash payments, or in the form of a monthly annuity purchased out of the pension fund. The cost for the program was based solely on advance funding payouts by plaintiff to defendant. Whenever the amount of monthly payments made by plaintiff was not sufficient to maintain adequate funding of the plan, plaintiff was required to deposit additional large amounts of money. Defendant and plaintiff participated in several meetings during 1971 to discuss the rising cost of the plan due to plaintiff’s amendments to the plan to increase participants’ benefits. Several participants, upon retirement, elected the lump-sum cash payment in early 1973 requiring plaintiff to pay approximately $750,000 into the plan between May 1972 and April 1973. In June 1972, defendant expressed concern over the depletion of the fund and suggested to plaintiff some ways in which the plan could be changed, including altering the cash payment option. Plaintiff did not at that time, however, agree to change the plan.

On January 28, 1974, Leroy Gebhart (defendant’s account representative) met with John Serpico (plaintiff’s president), Millard Grauer (an insurance consultant and advisor employed by plaintiff) and Dan Terlap (plaintiff’s secretary-treasurer). Joseph B. Cicero, plaintiff’s in-house counsel at that time, testified that he was also present at the meeting; however, none of the others verified his attendance. The topic of the meeting was the revision of the pension plan. Serpico testified at trial that there were five changes which he wanted Gebhart to make in the plan, one being that he wanted the cash payment elim-. mated “because anything that would put a drain on the fund, I wanted to eliminate.” The other changes were: eliminating the 2% employee contribution; allowing a widow’s pension; making early retirement less attractive; and changing the benefit formula. At trial, Serpico testified that all five changes were effected and that he had not asked Gebhart to draft the new plan so as to eliminate provisions providing for the withdrawal of sums to fully purchase annuities.

On March 12, 1974, plaintiff submitted to defendant a signed application to revise GP-1013 to provide retirement benefits from a plan of group ordinary life insurance with a side fund to a plan of group single premium annuities with a group annuity fund. As the result of this application, defendant issued GP-9331 effective April 1, 1974. The provision for a cash lump-sum retirement payment was deleted. Serpico testified that he read only the first part of the proposed revision to check for changes and skipped Part II entitled “Provisions & Administration of the Contract.” Paragraph 13 in that section provided that “[a]s of a Participant’s Effective Annuity Date, a sum shall be withdrawn from the Fund and shall be applied to purchase the amount of annuity to which such Participant is entitled under the provisions of Part I of this Contract.” The former policy also contained this option; however, testimony at trial indicated that no annuities had ever been purchased under it.

Plaintiff contends in its brief, and Serpico testified at trial, that it was not until September 1978 when it received a letter from defendant’s account manager regarding a participant’s benefits, that it became aware of the annuity purchase provision. However, exhibits included in the record indicate that in August of 1977, Serpico had conveyed to Grauer, the insurance consultant, that he did not want to have annuities purchased,. and that Serpico had requested a change of policies to one that did not provide for full purchase of benefits at retirement. Plaintiff likens defendant’s ability to withdraw a sum of money out of the fund to purchase annuities to the objectionable cash payment portion of the previous contract, the only difference being that instead of plaintiff’s employee getting the lump-sum cash payment, defendant would receive it. After plaintiff inquired as to whether it could sever its relationship with defendant and was told that it could only do so at the penalty provided for in the contract, plaintiff filed this suit in equity for rescission.

After hearing all the evidence and reviewing the numerous exhibits during a bench trial, the trial court found that:

“*** the plaintiff has established by clear and convincing evidence that the defendant did not comply with the instructions of the plaintiff in connection with the formation of the contract; that the defendant had a fiduciary duty to disclose the material facts, not merely eliminating the lump sum cash payout and inserting a provision to purchase an annuity instead would not resolve the basic problem the plaintiff was concerned with; and that the failure to disclose this information was a fraudulent misrepresentation of material facts known to the defendant at the time they were made and concealed, not disclosed for the purpose of inducing plaintiff to enter into the contract and who, after having done so, was harmed.”

The court thereupon entered judgment on behalf of plaintiff rescinding the contract and ordering defendant to transfer the amount of monies ($1,651,973.61) held under the contract without reduction of adjustment for any investment loss, the penalty provided for in the contract.

I

Defendant proffers several arguments in support of its contention that the trial court erred in granting the rescission of the insurance contract. It is well settled that a court of review will reverse the judgment of a trial court, which was in a superior position to evaluate the credibility of witnesses and the weight of their testimony, only where the findings are against the manifest weight of the evidence. (Schranz v. I. L. Grossman, Inc. (1980), 90 Ill. App. 3d 507, 521, 412 N.E;2d 1378.) After reviewing the record in this case and the applicable law, we conclude that the trial court’s findings are against the manifest weight of the evidence and must be reversed.

A

Plaintiff successfully argued to the trial court that defendant’s alleged nondisclosure of the annuity purchase provision resulted in fraudulent nondisclosure of a material term of the contract. Plaintiff claimed that if it had known that this provision was there, it would not have entered into the contract. After defendant was instructed by plaintiff that it wanted to eliminate the cash drain problem, plaintiff claims that defendant should not have included a provision in the new contract which would allow for a lump-sum cash withdrawal to purchase annuities in full. Of course, the cash lump-sum payment direct to retirees was eliminated.

In order to constitute fraud which would invalidate a contract, a misrepresentation must be one of a material fact, made for the purpose of inducing the other party to act, must be known by the maker to be false, but must be reasonably believed and must be relied upon by the other party. (Shanahan v. Schindler (1978), 63 Ill. App. 3d 82, 93, 379 N.E.2d 1307, appeal denied (1978), 71 Ill. 2d 621.) Illinois courts have recognized a cause of action for fraud which consists of concealment of an existing material fact when accompanied by scienter, deception and injury. (Perlman v. Time, Inc. (1978), 64 Ill. App. 3d 190, 195, 380 N.E.2d 1040; Skidmore v. Johnson (1948), 334 Ill. App. 347, 360, 79 N.E.2d 762, appeal denied (1948), 400 Ill. 628.) To establish fraud, the concealment must have been done with an intention to deceive and under circumstances creating a duty to speak. (Allensworth v. Ben Franklin Savings & Loan Association (1979), 71 Ill. App. 3d 1041, 1044, 389 N.E.2d 684.) We find nothing in this record to support the trial court’s finding of “fraudulent misrepresentation.”

The large record in this case does not suggest concealment with intent to deceive. The original policy contained an option to purchase annuities. Although it is true no retirements took place under this alternative, that was because the cash lump-sum payment provided in the first plan was too attractive. Furthermore, Serpico admitted in his testimony that this was not discussed with Gebhart at the January 28, 1974, meeting and that all requested changes were, in fact, accomplished.

It should also be noted that the record is clear that Millard Grauer, plaintiff’s insurance consultant, not only participated in the January 28, 1974, meeting, at which Serpico was present, but also clearly demonstrated his knowledge and understanding of both policies. We believe the record does not establish fraud and that the suggestion of fraud is specious.

B

Plaintiff claims that defendant had a duty in this case to issue a policy of insurance that comported with the type of coverage requested by it and cites Swan v. Allstate Insurance Co. (1967), 89 Ill. App. 2d 205, 232 N.E.2d 491, and New York Life Insurance Co. v. Rak (1961), 30 Ill. App. 2d 86, 173 N.E.2d 603, aff’d (1962), 24 Ill. 2d 128, 180 N.E.2d 470. These cases are distinguishable, however, because they deal with laymen who had given explicit instructions to the insurers about the type of coverage they desired which the insurers had clearly not complied with. In this case, plaintiff, with the active aid of an insurance consultant and its own in-house counsel, gave explicit directions to defendant in regard to five changes to be made in the pension plan. As we have previously noted, these five changes were admittedly complied with, as plaintiff’s own president acknowledged during his testimony; however, plaintiff’s theory is that defendant had a duty beyond this to inform it of the annuity purchase provision. Apparently plaintiff, even with its own retained insurance consultant, accepts no responsibility for the contents of the policies.

We recognize that an insurance company bears the duty to exercise good faith and reasonable skill, care and diligence in writing and issuing policies for its insureds. (Cleary v. Country Mutual Insurance Co. (1978), 63 Ill. App. 3d 637, 638, 380 N.E.2d 525, appeal denied (1979), 72 Ill. 2d 581.) However, we do not conclude in this case that the record supports a ruling that defendant breached this duty or that it fraudulently concealed the contents of paragraph 13, the annuity purchase provision.

The previous contract, which had been in effect from 1958 until the issuance of the disputed policy in 1974, included this identical option. Cicero, plaintiff’s in-house counsel, testified without giving spetifies of his advice to his client because of the attorney-client privilege, that he had discussed paragraph 13 with his client; and, that in his conversations with Serpico and others, he gave advice to them concerning the provision for withdrawal of funds to purchase annuities. Grauer, the insurance consultant employed by plaintiff to oversee its pension plans, but whom plaintiff alleged “lacked knowledge regarding the pension policy and had no special expertise in the pension area,” was involved in reviewing and discussing the new contract with Cicero and other employees of plaintiff’s. The paragraph was in the same type as the other provisions and was one of 17 paragraphs in part II of the contract spelling out the general provisions and administration of the contract.

Plaintiff’s application to defendant signed by Serpico on March 12, 1974, indicates that it was plaintiff’s desire to revise its retirement benefits “to a plan of Group Single Premium Annuities with a Group Annuity Fund” and that plaintiff shall make deposits to the “Group Annuity Fund” (emphasis added). Part II of the policy issued provides for “Deposits by Owner” in paragraph 11, a “Group Annuity Fund” in paragraph 12, then the questioned paragraph 13, “Purchase of Annuities,” follows. Each of these paragraphs is clear and unambiguous. It is difficult to believe that in considering the references to “Group Annuity Fund” in plaintiff’s application, no one on behalf of plaintiff ever concerned themselves with the above-mentioned applicable provisions.

A review of case law involving misrepresentation and concealment, which constitutes fraud, shows that the court must be convinced that the injured party had justifiably relied on defendant’s words or silence, and that the right to rely depends upon all of the surrounding circumstances. (Perlman v. Time, Inc. (1978), 64 Ill. App. 3d 190, 196, 380 N.E.2d 1040; Broberg v. Mann (1965), 66 Ill. App. 2d 134, 141, 213 N.E.2d 89.) Generally, it is only where parties do not have equal knowledge or means of obtaining knowledge of the facts which are misrepresented that a person may justifiably rely on them. (Kuska v. Folkes (1979), 73 Ill. App. 3d 540, 544, 391 N.E.2d 1082; Costello v. Liberty Mutual Insurance Co. (1976), 38 Ill. App. 3d 503, 508, 348 N.E.2d 254.) A person may not enter into a transaction with his eyes closed to available information and then charge that he has been deceived by another. (Hamming v. Murphy (1980), 83 Ill. App. 3d 1130, 1134, 404 N.E.2d 1026, appeal denied (1980), 81 Ill. 2d 592, quoting Broberg v. Mann (1965), 66 Ill. App. 2d 134, 141, 213 N.E.2d 89.) In this case, the contract was reviewed by plaintiff’s insurance consultant and counsel; in addition, plaintiff’s representative Grauer testified that he contacted another insurance company to examine defendant’s policy to determine if it was competitive. Plaintiff, with an insurance expert and attorney reviewing the proposed revision, had an ample opportunity to determine the contents of the proposed contract.

Plaintiff places much weight on the fact that its president, Serpico, testified that he had not read either the former contract or the instant contract in full to discover the annuity provision. Although we are mindful that plaintiff’s negligence is not generally a defense for an action for fraud, there are situations where, as here, plaintiff has an obligation to inquire. (National Republic Bank v. National Homes Construction Corp. (1978), 63 Ill. App. 3d 920, 924, 381 N.E.2d 15, appeal denied (1978), 71 Ill. 2d 618.) In determining whether reliance was reasonable, all of the facts which plaintiff had actual knowledge of, as well as all of those it might have learned if it had used ordinary prudence, must be taken into account; if ample opportunity existed to discover the truth, then reliance is not justified. (National Republic Bank v. National Homes Construction Corp. (1978), 63 Ill. App. 3d 920, 925, 381 N.E.2d 15.) In this case, the record clearly established that plaintiff was given ample opportunity to learn the content of its policy.

After reading the record and reviewing the exhibits, e.g., actuarial reports; Grauer’s notes of the provisions of GP-1013; his discussion January 4, 1974, about GP-1013 with plaintiff’s representative Serpico and Terlap; copies of Schedule A (Form 5500) Insurance Information required pursuant to ERISA (Employee Retirement Income Security Act of 1974, 29 U.S.C.A. sec. 1024 (1975)), it is difficult to place much weight upon plaintiff’s contention that it did not know the detailed provisions of either GP-9331 or its predecessor, GP-1013.

In addition, it has been held that insureds have the burden of knowing the contents of their insurance policies and of bringing alleged discrepancies to the attention of the insurer. (See Foster v. Crum & Forster Insurance Co. (1976), 36 Ill. App. 3d 595, 598, 345 N.E.2d 49, where plaintiffs were laymen but were charged with knowing the contents of a provision on an endorsement to the insurance policy.) In this case, plaintiff cannot be excused from knowing that the disputed annuity provision was in their contract.

C

Nor do we believe that the evidence in this case supports the trial court’s ruling that a fiduciary relationship existed between plaintiff and defendant. Factors to be considered when determining whether a fiduciary relationship exists includes the extent to which the alleged servient party entrusts the handling of business and financial affairs and reposes faith and confidence in the dominant party. (Zeilenga v. Stelle Industries, Inc. (1977), 52 Ill. App. 3d 753, 757, 367 N.E.2d 1347, appeal denied (1978), 67 Ill. 2d 596.) The facts of this case establish that the parties were negotiating at arms length and that defendant did not gain influence or superiority over plaintiff so that plaintiff could be considered a servient party. No fiduciary relationship existed.

Because of our decision based upon the foregoing, we need not address defendant’s remaining issue.

For the reasons stated above, we reverse the decision of the circuit court of Cook County.

Reversed.

STAMOS and HARTMAN, JJ., concur.


source: Caselaw Access Project

author: JUSTICE SULLIVAN

license: Public Domain

text:
    EDET INWANG, Plaintiff-Appellee and Cross-Appellant, v. COMMUNITY COLLEGE DISTRICT NO. 508, COUNTY OF COOK, Defendant-Appellant and Cross-Appellee.
    First District (5th Division)
    No. 82 — 2660
    Opinion filed August 26, 1983.

      Murray and Girard, Ltd., of Chicago (Michael J. Murray and Richard E. Girard, of counsel), for appellant.
    Gilbert Feldman, of Chicago, for appellee.'
   JUSTICE SULLIVAN

delivered the opinion of the court:

This appeal is from a summary judgment in a mandamus action ordering defendant to reinstate plaintiff to his position as a faculty member at Malcolm X College upon termination of a 30-day suspension with the right to salary and benefits commencing after that period. Defendant contends that the trial court erred in ruling (a) that rules adopted by the board of trustees of Community College District No. 508 (the Board) did not authorize a suspension in excess of 30 days, and (b) that plaintiff did not waive any objection to the sanction imposed by failure to raise his claim at the hearing before a Board-appointed committee. In his cross-appeal, plaintiff maintains that the trial court erred in sustaining a 30-day disciplinary suspension.

On May 17, 1982, plaintiff, a tenured fáculty member at Malcolm X College, was notified by the chancellor of the city colleges that the president of Malcolm X College had recommended his suspension for cause, alleging that he signed two certificates of attendance attesting that faculty member Michael Moduthgam was present and working when he knew or should have known that Moduthgam in fact was absent without leave for three weeks. On May 25, the Board appointed a three-member special committee to conduct a hearing on those charges and plaintiff was notified of his right to be heard and to be represented by legal counsel or any representative of his choice. At that hearing, witnesses for the administration testified that Moduthgam, a tenured faculty member of the department of natural sciences at Malcolm X College, was to begin his teaching duties for the 1981 fall semester on August 20, 1981, but did not report for work until September 14, 1981. Nevertheless, certificates of attendance submitted for the periods August 24 through September 4 and September 7 through September 18 indicated that Moduthgam was present, and he was paid based on those certificates. The witnesses testified further that each certificate was signed by plaintiff as acting department chairman and verified that Moduthgam was present, although plaintiff learned as early as the week of August 27 that Moduthgam was out of the country. On September 16, 1981, plaintiff was notified that no changes were to be made in the certificates pending an investigation of the incident, but he thereafter submitted corrected certificates. Witnesses for plaintiff supported his testimony that he did not learn of Moduthgam’s absence until the week of September 7 and was never told that corrected certificates should not be submitted. On July 27, 1982, the Board adopted the committee’s recommendation that plaintiff be suspended without pay for one semester effective August 20, 1982. The Board subsequently denied plaintiff’s written demand, made within 10 days of its decision, that a hearing be held before an independent hearing officer pursuant to section 3B — 4 of the Public Community College Act (Ill. Rev. Stat. 1981, ch. 122, par. 103B — 4) and Board Rule 2 — 21(b)(1) or before an arbitrator pursuant to the terms of the collective bargaining agreement between defendant and the Cook County College Teachers Union.

Plaintiff thereafter brought the present action for a writ of mandamus, alleging that the Board had not promulgated rules authorizing the sanction imposed; that a Community College District is not empowered to promulgate rules for the imposition of disciplinary suspensions; and that, even if such rules may be adopted pursuant to the powers vested in the Board by the Public Community College Act, they must provide for a hearing before an independent hearing officer. Defendant moved for summary judgment, maintaining that its properly adopted rules, as interpreted by the Board, authorized the disciplinary sanction imposed and denying that plaintiff had a right to a hearing before an independent hearing officer or an arbitrator. The trial court ruled that the Board had authority, pursuant to the Public Community College Act, to promulgate rules for the suspension of employees, but that the rules adopted did not authorize a suspension in excess of 30 days. It ordered plaintiff reinstated after a 30-day suspension, and this appeal followed.

Opinion

Defendant first contends that the trial court erred in ruling that it had no power to suspend plaintiff for a period exceeding 30 days. It admits that under Craddock v. Board of Education (1980), 81 Ill. 2d 28, 405 N.E.2d 794, no disciplinary suspension may be imposed in the absence of a rule authorizing that action, but maintains that the trial court should have deferred, to its interpretation of sections 2— 1(a) and 2 — 21(a) of the Board’s Rules for the Management and Government of the City Colleges (hereinafter Rules 2 — 1(a) and 2 — 21(a)). It argues that the Board has continuously read these rules to mean that it reserves to itself the right to suspend an employee in excess of 30 days, while empowering the chancellor to impose suspensions of 30 days or less.

Administrative rules and regulations are to be construed under the same standards which govern the construction of statutes (Northern Illinois Automobile Wreckers & Rebuilders Association v. Dickson (1979), 75 Ill. 2d 53, 387 N.E.2d 320, cert. denied (1979), 444 U.S. 844, 62 L. Ed. 2d 57, 100 S. Ct. 87), and an agency’s interpretation of a rule, as distinguished from the rule itself, is considered persuasive rather than binding on a reviewing court (LaThrop v. Bell Federal Savings & Loan Association (1977), 68 Ill. 2d 375, 370 N.E.2d 188, cert. denied (1978), 436 U.S. 925, 56 L. Ed. 2d 768, 98 S. Ct. 2818; Howard v. Miller (1982), 108 Ill. App. 3d 1, 438 N.E.2d 680); however, an agency’s interpretation of its rules will be accorded deference unless it is clearly erroneous, arbitrary or unreasonable (Winnetkans Interested in Protecting the Environment (WIPE) v. Pollution Control Board (1977), 55 Ill. App. 3d 475, 370 N.E.2d 1176).

Defendant initially contended in its answer filed before the trial court and in its brief in support of the motion for summary judgment that Rule 2 — 21(a) alone “has been continuously and repeatedly interpreted *** to mean that the Board of Trustees reserves to itself the right to determine, after notice and hearing, whether an employee should be suspended for a period exceeding thirty days.” Rule 2— 21(a) provides:

“The Chancellor may suspend any employee without pay not to exceed thirty (30) days as a disciplinary measure. Where reasonably possible prior to the suspension, the employee shall be notified of the charge and be afforded the opportunity to be heard before a committee or designee appointed by the Chancellor. The committee or designee shall make a finding and a recommendation to the Chancellor as to any appropriate disciplinary measure to be taken. In the event suspension occurs before said hearing, the employee must be afforded the opportunity to have such a hearing as soon as reasonably possible after the effective date of the suspension.”

We note that this rule makes no mention of the reservation of powers to impose sanctions in excess of those specifically set forth. We find this language clear and unambiguous, and therefore not open to interpretation, whether judicial or administrative. An agency has no power to misapply or extend an unambiguous rule through strained interpretation. (See Hetzer v. State Police Merit Board (1977), 49 Ill. App. 3d 1045, 365 N.E.2d 261.) If the Board thought more stringent disciplinary measures should be authorized, it could have added them by the simple expedient of amending the rule; instead, it asks us, in effect, to amend the rule by adopting its interpretation.

Defendant further asserts, however, that its interpretation is supported by the above rule when considered in conjunction with Rule 2 — 1(a), providing that “[t]he Chancellor has the responsibility of recommending to the Board the appointment, retention, tenure, promotion, transfer, suspension and dismissal of all personnel.” We are somewhat puzzled by defendant’s belated reliance on Rule 2 — 1(a), first raised by it in its reply to plaintiff’s brief in opposition to the motion for summary judgment, in the light of its assertion here that the rule is an integral part of its “long-standing interpretation.” Nev: ertheless, we have considered its argument that the trial court’s interpretation of its rules renders meaningless Rule 2 — 1(a), requiring the chancellor to recommend suspensions to the Board, because Rule 2— 21(a) authorizes him to act without consulting the Board. In essence, defendant asks us to do what Craddock prohibits, namely, imply from Rule 2 — 1(a) a power which its plain language does not grant. This rule is contained in an article entitled “Administrative Organization and Personnel” and describes the duties of the office of chancellor. It makes no mention of the powers of the Board, nor does it set forth any procedures which the Board must follow in acting upon a recommendation for suspension. We also note that Rule 2 — 1(a) further states that the chancellor shall have the duty to recommend the dismissal of employees, yet Rule 2 — 21(b) sets forth in great detail the procedures to be followed in dismissing various categories of employees, and specifically provides that the Board has the authority to dismiss. It appears, then, that the Board has not otherwise interpreted Rule 2 — l(a)’s description of the duties of the chancellor as also containing authorization for its actions. For these reasons, we believe that the Board’s alleged interpretation of Rules 2 — 1(a) and 2 — 21(a) is both erroneous and arbitrary, and the trial court did not err in failing to defer to it in interpreting Rule 2 — 21(a) according to its plain language.

Defendant next maintains that plaintiff has waived any objection to the sanction imposed by failing to raise the issue at the hearing. While we agree that an objection to the failure to follow procedural requirements may be waived by a failure to raise it before the Board (see Grissom v. Board of Education (1979), 75 Ill. 2d 314, 388 N.E.2d 398), we believe that, in the instant case, no such waiver occurred. Initially, we note that, while a 60-day suspension was recommended, no sanction was actually imposed until the Board acted on the committee recommendation over one month after the hearing. Once an agency promulgates rules and regulations implementing a statute, it is bound to adhere to them as long as they remain in effect. (Illinois Bell Telephone Co. v. Allphin (1981), 95 Ill. App. 3d 115, 419 N.E.2d 1188; Holland v. Quinn (1978), 67 Ill. App. 3d 571, 385 N.E.2d 92.) In order to object at the hearing, plaintiff would have had to anticipate that the Board would fail to follow its own rules at some future date.

Furthermore, the issue here involves not just a procedural requirement, but the Board’s authority to impose the sanction in question in the absence of a rule specifically authorizing its action. In Craddock, the plaintiff contended, not that the school board had failed to adopt a rule authorizing suspensions, but that such rules were not permitted by the Illinois School Code (Ill. Rev. Stat. 1981, ch. 122, par. 1 — 1 et seq.). (Craddock v. Board of Education (1979), 76 Ill. App. 3d 43, 391 N.E.2d 1059.) Nevertheless, despite the plaintiff’s failure to raise the issue in his appeal, let alone in the hearing before the Board, the supreme court held that the school board had no power to impose a disciplinary suspension in the absence of a rule authorizing that action. (81 Ill. 2d 28, 31, 405 N.E.2d 794, 796.) It appears, then, that the absence of a rule is not a procedural matter subject to waiver, but a question of the power of the Board to act, a jurisdictional matter which cannot be waived. Cf. Shapiro v. Regional Board of School Trustees (1983), 116 Ill. App. 3d 397, 451 N.E.2d 1282.

In his cross-appeal, plaintiff contends that the trial court erred in sustaining a 30-day disciplinary suspension, arguing first that the Board is not empowered to promulgate rules for the imposition of suspensions in the absence of express authorization thereof in the Public Community College Act. (Ill. Rev. Stat. 1981, ch. 122, par. 101 — 1 et seq.) However, plaintiff abandoned this argument in his reply brief, stating that he “does not challenge the right of a Board to adopt rules providing for suspension short of dismissal.” Therefore, we need not address this issue, but note that Kearns v. Board of Education (1979), 73 Ill. App. 3d 907, 392 N.E.2d 148, is dispositive thereof. There, we held that, although the Illinois School Code does not specifically grant school boards the power to impose disciplinary suspensions, the authority to do so was necessarily included in the duty of school boards “[t]o adopt and enforce all necessary rules for the management and government of the public schools of their district.” (Ill. Rev. Stat. 1975, ch. 122, par. 10 — 20.5.) The identical duty is imposed upon Boards of Trustees by section 3 — 25 of the Public Community College Act, i.e., “[t]o adopt and enforce all necessary rules for the management and government of the colleges of its district.” (Ill. Rev. Stat. 1981, ch. 122, par. 103 — 25.) In the absence of any indication of a contrary intention on the part of the legislature, we believe that section 3 — 25 of the Public Community College Act should be interpreted in the same manner as section 10 — 20.5 of the Illinois School Code, and that it similarly empowers the Board to promulgate rules for the imposition of disciplinary suspensions.

Plaintiff further contends that the trial court erred in failing to remand the action to the Board with directions that it grant his request for a hearing before an independent hearing officer, relying on Craddock v. Board of Education (1979), 76 Ill. App. 3d 43, 391 N.E.2d 1059. In Craddock, it was held that a school board’s power to impose disciplinary suspensions derived from its power to dismiss, and therefore required that the same statutorily prescribed procedures be followed in suspensions as in dismissals, including the appointment of an independent hearing officer. Plaintiff acknowledges that this court expressly rejected the rationale of Craddock in Kearns v. Board of Education (1979), 73 Ill. App. 3d 907, 392 N.E.2d 148, holding that a temporarily suspended teacher was not entitled to procedures applicable to dismissal, and that a hearing before the school board satisfied due process requirements. Nevertheless, he asks that we reconsider that ruling and adopt the rationale in Craddock, at least where a suspension in excess of seven days is involved.

Defendant maintains that plaintiff waived this question by his participation, without objection, in the hearing before the committee appointed by the Board. We agree. Unlike jurisdictional defects, procedural requirements may be waived by a failure to object. (See Grissom v. Board of Education (1979), 75 Ill. 2d 314, 388 N.E.2d 398; Feldman v. Board of Trustees (1982), 108 Ill. App. 3d 1127, 440 N.E.2d 147.) Furthermore, it is our view that the failure to appoint an independent hearing officer in cases involving suspensions for an extended period of time does not violate due process rights in the absence of an allegation that the Board hearing the evidence is biased. In Gilliland v. Board of Education (1977), 67 Ill. 2d 143, 365 N.E.2d 322, the supreme court held that due process requirements did not disqualify a school board from deciding the dismissal of a teacher, a sanction even more serious than suspension. (See also Hortonville Joint School District No. 1 v. Hortonville Education Association (1976), 426 U.S. 482, 49 L. Ed. 2d 1, 96 S. Ct. 2308; Barszcz v. Board of Trustees (N.D. Ill. 1975), 400 F. Supp. 675, affirmed (1976), 539 F.2d 715, cert. denied (1977), 429 U.S. 1080, 50 L. Ed. 2d 801, 97 S. Ct. 827.) Similarly, the supreme court held in Grissom v. Board of Education (1979), 75 Ill. 2d 314, 388 N.E.2d 398, another case involving dismissal of a teacher after a hearing before the school board, that administrators are presumed to be fair and unbiased in the absence of a showing to the contrary. Here, plaintiff has not alleged any bias on the part of the committee which heard the evidence or the Board which adopted its recommendation. In the absence thereof, we do not believe the plaintiff’s right to a fair hearing was violated in the light of the record before us. He was given adequate notice of the charges against him, was represented by legal counsel, and had the opportunity to cross-examine administration witnesses and to present evidence and witnesses in his own behalf.

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

Affirmed.

WILSON, P.J., and LORENZ, J., concur.

      It is undisputed that the Board’s action is not subject to review under the Administrative Review Act (Ill. Rev. Stat. 1981, ch. 110, par. 264 et seq.) but may be reviewed through an action for writ of mandamus. See Maas v. Board of Trustees (1981), 94 Ill. App. 3d 562, 418 N.E.2d 1029.

      Plaintiff also argued that, if the trial court found that he was not entitled to a writ of mandamus, he would be entitled to amend his complaint and seek a review of the Board’s action under a common law writ of certiorari; however, he never sought leave to amend his complaint.

      The chancellor originally recommended that plaintiff be suspended for 60 days, but the resolution adopted by the Board imposes a suspension without pay for one semester. Although there is nothing in the record before us to indicate the length of a semester, we assume that it is in excess of 30 days, since neither party has contended otherwise and it appears that the order of the trial court constituted a reduction in the penalty originally imposed.


author: JUSTICE VAN DEUSEN

text:
    THE PEOPLE OF THE STATE OF ILLINOIS, Plaintiff-Appellant, v. ONE 1974 CHEVROLET CORVETTE NO. 1Z37J4S400951, Defendant-Appellee.
    Second District
    No. 82 — 456
    Opinion filed August 26, 1983.

      J. Michael Fitzsimmons, State’s Attorney, of Wheaton (Barbara A. Preiner, Assistant State’s Attorney, and Phyllis J. Perko and Cheri A. Novak, both of State’s Attorneys Appellate Service Commission, of counsel), for the People.
    Jay R. Grodner, of Aurora, for appellee.
   JUSTICE VAN DEUSEN

delivered the opinion of the court:

The State appeals from a Du Page County circuit court order granting Hugh W. Ferrell’s motion to dismiss the State’s complaint seeking the forfeiture of his 1974 Chevrolet Corvette. That motion alleged that a prior Kane County circuit court order releasing the car constituted collateral estoppel to the State’s action. The State argues on appeal that Mr. Ferrell failed to meet his burden of proof that the prior order constituted collateral estoppel because he did not tender a transcript of the Kane County proceedings to the Du Page County circuit court and thus did not establish the Kane County circuit court’s findings on the issues raised in the State’s complaint. Mr. Ferrell responds that the State waived this issue on appeal by not arguing it at trial and that his tendering of the Kane County circuit court order sufficed to meet his burden of proof. We disagree.

While it is true that a theory not raised at trial cannot be raised for the first time on appeal (Kravis v. Smith Marine, Inc. (1975), 60 Ill. 2d 141, 147), the State is not raising a new theory. Rather, the State is asserting that the evidence was not sufficient to support the theory upon which defendant successfully secured the dismissal of plaintiff’s cause of action and that the trial court thereby erred.

Here, the applicability of collateral estoppel was the issue raised by defendant as a basis for its motion to dismiss. That issue was considered and decided by the trial court adversely to the State. Moreover, the dismissal order constituted a decision on the merits and was a final order. Finally, a forfeiture action is civil in nature (People ex rel. Power v. One 1979 Chevrolet Camaro (1981), 96 Ill. App. 3d 109, 112), and as this was a nonjury matter, the State was not required to file a post-trial motion in order to preserve errors for review. Eckerty v. Lowman (1974), 16 Ill. App. 3d 373, 375; City of Chicago v. Mid-City Laundry Co. (1972), 8 Ill. App. 3d 88, 90.

In support of its waiver position, the defense cites cases concerning the legal sufficiency of motions, not whether the evidence is sufficient to support the trial court’s orders. These cases are inapposite. For this reason, as well as the reasons stated above, the State has not waived its right to question the sufficiency of the evidence to support the trial court’s decision.

While the parties generally agree as to the elements of the doctrine of collateral estoppel and its legal effect, they disagree on whether the Kane County circuit court order constitutes collateral estoppel in the instant case. The doctrine applies where some controlling fact or question, material to the determination of both causes, has been adjudicated in the former suit by a court of competent jurisdiction and the same fact or question is again at issue between the same parties. (Coulter v. Renshaw (1981), 94 Ill. App. 3d 93, 96.) The relevant inquiry here is whether the record before the Du Page County circuit court established by clear and convincing evidence that the Kane County circuit court made specific findings of fact which control the present proceeding. (See City of Chicago v. Westphalen (1981), 93 Ill. App. 3d 1110, 1120.) In ascertaining which issues have been adjudicated in the prior proceeding, a court may examine the judgment actually entered in reference to the issue presented for decision. See Adams v. Pearson (1952), 411 Ill. 431, 437.

Contrary to the defense argument that the Kane County circuit court necessarily had to determine factual issues which control the instant case when it issued its release order, that release order may have been based on determinations of fact not relevant in the instant forfeiture proceeding. At least two statutory provisions subject vehicles to seizure where such vehicles are used in any manner to facilitate a violation of the Illinois Controlled Substance Act (Ill. Rev. Stat. 1981, ch. 56½, par. 1100 et seq.). Section 505 of the Act provides that vehicles used in violating the Act are subject to forfeiture. (Ill. Rev. Stat. 1981, ch. 56½, par. 1505(a)(3).) The Act further provides that this seizure may be made upon process issued by any court having jurisdiction over the property or without process under specified circumstances. Ill. Rev. Stat. 1981, ch. 56%, par. 1505(b).

Section 36 — 1 of the Criminal Code of 1961, the basis of the instant forfeiture action, also provides for the seizure and forfeiture of vehicles used in violation of the Illinois Controlled Substance Act (Ill. Rev. Stat. 1981, ch. 38, par. 36 — 1 et seq.). This statute does not require process prior to seizure. It does provide, however, that within a specified time, the sheriff must notify all parties with a recorded interest in the vehicle of the seizure. Ill. Rev. Stat. 1981, ch. 38, par. 36-1.

The petition for the release of the seized vehicle filed in the Kane County circuit court and the subsequent order of that court, on their face, indicate that the relevant issues in that proceeding pertained to section 505 of the Illinois Controlled Substance Act. The motion for the release of the car alleged that the car was seized without process and that provisions permitting seizure without process had not been met. The trial court’s order stated that the car, “seized without process” must be returned. These references to process, or lack thereof, thus appear to concentrate on section 505(b) of the Act. Consequently, the Kane County circuit court could have merely found that since the car had been seized without process, and since none of the exceptions to the process requirement of that section had been met, the car should be released. See People v. Apartment No. 16 (1977), 52 Ill. App. 3d 912.

Since the Kane County circuit court order may have been based on a finding not controlling in a forfeiture proceeding brought pursuant to section 36 — 1 of the Criminal Code of 1961, the order does not act as collateral estoppel in the instant cause of action. Furthermore, even though the Kane County circuit court order may have been based on that court’s finding of specific facts controlling in the instant cause, the defense failed to establish such findings in this cause and thus the present record does not support the Du Page County circuit court’s order dismissing the State’s forfeiture petition. The order of the circuit court of Du Page County dismissing the State’s complaint for forfeiture is reversed and the cause is remanded for further proceedings.

Reversed and remanded.

HOPF and NASH, JJ., concur.


author: JUSTICE LINDBERG

text:
      In re MARRIAGE OF PAULA N. DERNING, Respondent-Appellant, and JOHN P. DERNING, Petitioner-Appellee.
    Second District
    No. 82 — 466
    Opinion filed August 23, 1983.
    William G. Rosing and Stephen G. Applehans, both of Rosing, Carlson & Magee, Ltd., of Waukegan, for appellant.
    Roger A. White, of Roger A. White & Associates, Ltd., of Lake Bluff, and Gary E. Dienstag, of Springer, Casey, Haas, Dienstag & Silverman, of Chicago, for appellee.
   JUSTICE LINDBERG

delivered the opinion of the court:

Respondent, Paula N. Derning, appeals from an order of the circuit court of Lake County which dissolved her marriage of 23 years to petitioner, John P. Derning, apportioned the marital and nonmarital property of the parties, granted respondent unallocated child support and maintenance, and awarded each parent custody of one of the parties’ two minor children. On appeal, respondent raises three assignments of error before this court: (1) the trial court’s award of unallocated maintenance and child support was insufficient considering her limited employment income and lack of income from the marital assets she was awarded; (2) the court below failed to place a value on the business known as Mother’s Blues, thereby committing reversible error; and (3) the trial court, in allocating the marital property, failed to value and apportion petitioner’s pension benefits. Petitioner has filed a motion to dismiss this appeal, and this court has ordered that the motion and respondent’s response to it be considered with this case.

We first address petitioner’s contention that we are without jurisdiction to hear this appeal. To facilitate our discussion of the jurisdictional question presented, we recite chronologically certain procedural events in this case. On April 16, 1981, the trial court granted the motion of respondent’s counsel, Lois B. Ryan, to withdraw and entered an order valuing her services at $1,863.90 and reducing this amount to judgment, but reserved for a later date the apportioning of the attorney fees liability between the parties. Respondent’s second attorney, Stephen Katz, was granted leave to withdraw on August 28, 1981. On September 14, 1981, the court continued Ryan’s hearing on attorney fees until the property matters between the parties were resolved. On motion of Katz the court on January 19, 1982, entered judgment for his attorney fees against respondent in the amount of $5,130. At a hearing on April 28, 1982, the court vacated its January 19, 1982, order in which respondent had been assessed the $5,130 for Katz’ attorney fees, but confirmed its entry of judgment on the amount of those fees and ordered that on June 10, 1982, it would apportion liability for that judgment between the parties. In that same April 28, 1982, order the court directed that attorney fees in the amount of $2,087.87 be awarded to Ryan, reduced that amount to judgment and ordered that liability for those fees also be apportioned on June 10, 1982.

Thereafter, on May 7, 1982, the court entered an order dissolving the marriage, apportioning the parties’ property, granting respondent unallocated child support and maintenance, and awarding each parent custody of one of the children. Respondent filed her notice of appeal from this order on June 3, 1982. On June 10, 1982, the court ordered that petitioner pay $1,565.77 and respondent pay $522 of Ryan’s attorney fees. Petitioner filed a notice of cross-appeal on June 25, 1982, from that portion of the court’s order assessing Ryan’s fees against him. The court on June 23, 1982, apportioned $3,675 of the judgment for Katz’ attorney fees to petitioner and $1,225 to respondent. Petitioner filed a supplemental notice of appeal on July 6, 1982, from that portion of the court’s order assessing Katz’ fees against him. In his brief to this court, petitioner has abandoned his cross-appeal and supplemental appeal and thus, we dismiss them.

In his motion to dismiss and brief to this court, petitioner argues that the May 7, 1982, order was not final because no judgment had then been entered on the fee petitions, the court did not make a written finding of appealability required by Supreme Court Rule 304(a) (73 Ill. 2d R. 304(a)), respondent did not file a notice of appeal after judgment was entered on the petitions, and therefore, this court is without jurisdiction to hear this appeal. Petitioner challenges the reasoning of the cases relied upon by respondent and argues that attorney fees are an integral part of the dissolution proceeding and therefore must be apportioned before the court’s order can be final and appealable. In response, respondent asserts that the May 7, 1982, divorce decree determining the rights of the parties to this lawsuit was a final and appealable order, and the apportioning of fees between the parties was collateral and incidental to the final divorce decree.

Central to respondent’s argument that attorney fees are incidental is Pettit v. Pettit (1978), 60 Ill. App. 3d 375, 376 N.E.2d 782. In Pettit, the trial court entered an order which dissolved the marriage, divided the property, and awarded alimony. While the court reserved jurisdiction to enforce the decree and to determine attorney fees, it did not make the express finding required by Supreme Court Rule 304(a) (73 Ill. 2d R. 304(a)) that there was no just reason to delay enforcement or appeal of its order. Rejecting the petitioner’s contention that the trial court’s reservation deprived the reviewing court of jurisdiction, the Pettit court stated:

“A divorce decree reserving the question of attorney’s fees, although final in other respects, is not final as to incidental questions expressly reserved. (Hokin v. Hokin (1968), 102 Ill. App. 2d 205, 215-16, 243 N.E.2d 579.) The test of finality lies in the substance, not the form of the order, and a divorce decree which terminates the litigation on the merits is final so long as all that remains is the execution of the order. (Myers v. Myers (1977), 51 Ill. App. 3d 830, 837, 366 N.E.2d 1114, 1121.) The trial court reserves jurisdiction to later rule on the question of attorney’s fees, that ruling may be made in a ‘supplemental decree’ subsequent to entry of a final, appealable decree. Bremer v. Bremer (1954), 4 Ill. 2d 190, 191-92, 122 N.E.2d 794.” Pettit v. Pettit (1978), 60 Ill. App. 3d 375, 378, 376 N.E.2d 782, 785.

We believe that the result reached in Pettit is unsound. A careful analysis of the cases cited by the Pettit court reveals that they do not support the Pettit court’s conclusion that a reservation of attorney fees does not impair the finality and appealability of the court’s order. The Pettit court cited Bremer v. Bremer (1954), 4 Ill. 2d 190, for the proposition that a trial court can reserve determination on the question of attorney fees until after entry of a final and appealable decree. In Bremer, the trial court entered a decree of divorce, and retained jurisdiction to rule on alimony, attorney fees and property distribution. Thereafter, the court entered a supplemental decree “awarding permanent alimony, fixing attorney’s fees and ordering the conveyance of certain real estate by and between the parties.” (Bremer v. Bremer (1954), 4 Ill. 2d 190, 191.) A direct appeal was taken to the supreme court after the trial court had entered the supplemental decree. There, the supreme court held that the trial court did have the power to rule on matters expressly reserved by the terms of its divorce decree.

Bremer v. Bremer (1954), 4 Ill. 2d 190, does not support the holding in Pettit v. Pettit (1978), 60 Ill. App. 3d 375, 376 N.E.2d 782, for three reasons. First, Bremer was concerned solely with trial court and not appellate jurisdiction. Second and more important, in Bremer the trial court had ruled on attorney fees and all other issues prior to the filing of the notice of appeal. Since no issue remained unresolved, the supplemental decree was unquestionably a final and appealable order. Here, in contrast, attorney fees had not yet been apportioned when the appeal was taken. Third, the supreme court’s decision in In re Marriage of Cohn (1982), 93 Ill. 2d 190, seriously weakens the validity of Bremer. In Cohn, the court held that only under appropriate circumstances can a trial court bifurcate a judgment of dissolution pursuant to section 401(3) of the Illinois Marriage and Dissolution of Marriage Act (Ill. Rev. Stat. 1977, ch. 40, par. 401(3)). While the Cohn court did not expressly overrule Bremer but instead distinguished it in part on the basis that section 401(3) had no counterpart in the divorce act applicable when Bremer was decided, Bremer’s continued viability is questionable.

While relying principally on Bremer v. Bremer (1954), 4 Ill. 2d 190, the Pettit court (Pettit v. Pettit (1978), 60 Ill. App. 3d 375, 376 N.E.2d 782), also cited Hokin v. Hokin (1968), 102 Ill. App. 2d 205, 215-16, 243 N.E.2d 579, for the proposition that a divorce decree which reserves attorney fees “although final in other respects, is not final as to incidental questions expressly reserved.” (Pettit v. Pettit (1978), 60 Ill. App. 3d 375, 378, 376 N.E.2d 782, 785, citing Hokin.) Just as in Bremer, however, the question in Hokin was trial court and not appellate jurisdiction. The trial court in Hokin had reserved the question of attorney fees only until entry of the divorce decree. The reviewing court in Hokin distinguished its facts from those in Bremer in that no written fee petition was filed by the parties in Hokin prior to the divorce decree. The specific holding in Hokin was that the trial court did not have jurisdiction to vacate the divorce decree 76 days after the decree was entered and 50 days after the notice of appeal was filed in order to include in the decree attorney fees for past services rendered. (Hokin v. Hokin (1968), 102 Ill. App. 2d 205, 216, 243 N.E.2d 579, 585.) Thus, Hokin is not supportive of the Pettit court’s holding that an unresolved attorney fees petition is incidental to a divorce decree and therefore does not impair its finality and appealability.

The Pettit court’s reliance on Myers v. Myers (1977), 51 Ill. App. 3d 830, 366 N.E.2d 1114, also does not support its holding. In Myers, the trial court entered an order distributing property and awarding child support and the petitioner appealed from that order. Thereafter, the trial court entered a nunc pro tunc order which added more specific provisions to the earlier order. On appeal, the reviewing court rejected the petitioner’s contention that his notice of appeal divested the trial court of jurisdiction to enter the nunc pro tunc order. Since the trial court’s property distribution and child support order was not a final judgment, the Myers court held, the trial court maintained jurisdiction until after the entry of the nunc pro tunc order.

While the Myers court did conclude that the trial court’s initial order was not appealable, Myers principally was concerned with trial court and not appellate court jurisdiction. Myers does not support the result reached in Pettit v. Pettit (1978), 60 Ill. App. 3d 375, 376 N.E.2d 782, because Pettit held that an order which reserved determination of attorney fees was final and appealable, while Myers v. Myers (1977), 51 Ill. App. 3d 830, 376 N.E.2d 1114, held that an order which did not specifically grant the divorce was not á final and appealable order. The trial court in Myers only maintained jurisdiction to amend its order at a later date because its initial order was not final and appealable. Therefore, apart from the general language extracted from Myers by the Pettit court, Myers does not provide support for the Pettit holding. Since the three cases relied upon by the Pettit court do not uphold its result, we believe Pettit was decided incorrectly.

No case has been cited to us nor can we find one which follows the holding in Pettit v. Pettit (1978), 60 Ill. App. 3d 375, 376 N.E.2d 782, that a reservation of attorney fees does not impair the finality and appealability of the divorce decree. In fact, one reviewing court has expressly disapproved of Pettit. (In re Marriage of Janetzke (1981), 97 Ill. App. 3d 418, 421, 422 N.E.2d 914, 917.) In addition, one recent decision while not citing Pettit concluded that attorney fees are not an incidental matter. In Wilson-Jump Co. v. McCarthy-Hundrieser & Associates (1980), 85 Ill. App. 3d 179, 405 N.E.2d 1322, the reviewing court rejecting the appellant-indemnitee’s argument that the trial court’s summary judgment order was final because the only matter left unresolved was the ministerial task of determining the reasonableness of the indemnitee’s attorney fees. Instead, the court held that since the indemnitor was entitled to have the amount of the indemnitee’s costs and attorney fees established under oath in court, the summary judgment order was not final. (Wilson-Jump Co. v. McCarthy-Hundrieser & Associates (1980), 85 Ill. App. 3d 179, 182, 405 N.E.2d 1322, 1325.) Just as in the case at bar, the trial court in Wilson-Jump did not include the Rule 304(a) (73 Ill. 2d R. 304(a)) finding in its order.

While the judgment appealed from in Wilson-Jump Co. v. McCarthy-Hundrieser & Associates (1980), 85 Ill. App. 3d 179, 405 N.E.2d 1322, was not a dissolution order, we believe that attorney fees are directly related to the central dispute in a dissolution-of-marriage case and thus are not incidental. Section 508 of the Illinois Marriage and Dissolution of Marriage Act (Ill. Rev. Stat. 1981, ch. 40, par. 508) empowers the trial court to require one party to pay the other party’s attorney fees after consideration of the financial resources of the parties. Since this section requires a comparison of the parties’ respective financial resources, the apportionment of the final fee award is inextricably dependent upon the ultimate division of property. (See In re Marriage of Olsher (1979), 78 Ill. App. 3d 627, 636, 397 N.E.2d 488, 495.) A party seeking an award of attorney fees in a dissolution-of-marriage case must show financial inability to pay the fees and the financial ability of the other spouse to do so. (In re Marriage of Hopkins (1982), 106 Ill. App. 3d 135, 137-38, 435 N.E.2d 897, 899; Gasperini v. Gasperini (1978), 57 Ill. App. 3d 578, 581, 373 N.E.2d 576, 578.) Financial inability to pay does not mean destitution; it is sufficient to support an award of fees that disbursement of the individual’s funds would exhaust his own estate, or strip him of a means of support and undermine his economic stability. In re Marriage of Rossi (1983), 113 Ill. App. 3d 55, 62, 446 N.E.2d 1198, 1203; In re Marriage of Kolb (1981), 99 Ill. App. 3d 895, 903, 425 N.E.2d 1301, 1307; Gasperini v. Gasperini (1978), 57 Ill. App. 3d 578, 582, 373 N.E.2d 576, 579.

Thus, our statutory scheme requires the trial court to consider the property received by each party, their respective incomes and financial obligations before allocating responsibility for payment of attorney fees. Necessarily, attorney fees should be allocated before the reviewing court can properly assess the trial court’s division of property and decisions regarding maintenance and child support. Since the allocation of attorney fees judgment is dependent upon and integrally related to decisions regarding property, maintenance and child support, their allocation cannot fairly be characterized as collateral or incidental to the divorce decree.

Our conclusion is buttressed by the Illinois Supreme Court’s recent discussion of dissolution-of-marriage cases in In re Marriage of Cohn (1982), 93 Ill. 2d 190, 197-98. There, the court quoted from the historical and practice notes to section 401(3) (Ill. Ann. Stat., ch. 40, par. 401(3), Historical and Practice Notes, at 105 (Smith-Hurd 1980)), which governs dissolution-of-marriage judgments: “[Section 401(3)] encourages the court to decide all matters incident to the dissolution in a single judgment, to the fullest extent of its authority, in order to achieve finality, promote judicial economy, and avoid multiple litigations and complications which can result from the entry of partial judgments, particularly judgments which dissolve the marriage but ‘reserve’ remaining issues for later determination.” Given the policy articulated in Cohn and reaffirmed in In re Marriage of Leopando (1983), 96 Ill. 2d 114, 120, of deciding all the issues in a dissolution-of-marriage case in a single judgment, we believe attorney fees cannot be resolved in a supplemental hearing as an incidental matter to the divorce decree.

Since attorney fees are not an incidental matter, this court has jurisdiction of this case only if the divorce decree is a final judgment or if the fees are a separate claim pursuant to Rule 304(a) (73 Ill. 2d R. 304(a)). Here, we believe based upon the authority of the supreme court’s recent decision in In re Marriage of Leopando (1983), 96 Ill. 2d 114, that the May 7, 1982, order was not a final judgment. In Leopando, the trial court entered an order dissolving the parties’ marriage and determining permanent custody of their minor child. In his custody order, the trial judge recited the Rule 304(a) language and specifically reserved maintenance, property distribution and attorney fees for future consideration. On appeal, the supreme court held that a custody order in a dissolution-of-marriage case is not a separate claim and therefore is not appealable pursuant to Supreme Court Rule 304(a) (73 Ill. 2d R. 304(a)). In support of its holding, the court reasoned that a petition for dissolution advances only a single claim and that the “numerous other issues involved, such as custody, property disposition, and support are merely questions which are ancillary to the cause of action.” (In re Marriage of Leopando (1983), 96 Ill. 2d 114, 119.) Stressing the interrelatedness of custody awards and decisions regarding child support and maintenance, the Leopando court concluded that a petition for dissolution is not a final judgment until the remaining issues are resolved.

The policy considerations underlying Rule 304(a), the court continued, also support the conclusion that a custody order is not a final judgment. Quoting from its earlier discussion of Rule 304(a) in In re Marriage of Lentz (1980), 79 Ill. 2d 400, 407, the court said: “ ‘The provisions of our rule were aimed at discouraging piecemeal appeals in the absence of some compelling reason and at removing the uncertainty as to the appealability of a judgment which was entered on less than all of the matters in controversy.’ ” In re Marriage of Leopando (1983), 96 Ill. 2d 114, 119, quoting Lente.

We believe that the reasoning of the supreme court in In re Marriage of Leopando (1983), 96 Ill. 2d 114, leads to our conclusion that the May 7 order was not a final judgment. Like a custody order, an attorney fees judgment in a dissolution-of-marriage case is not a separate claim, but rather is integral to the order dissolving a parties’ marriage. As noted by the Leopando court, “it is difficult to conceive of a situation in which the issues are more interrelated than those involved in a dissolution proceeding.” (In re Marriage of Leopando (1983), 96 Ill. 2d 114, 119.) In a case such as the one at bar, where one party challenges the sufficiency of the trial court’s maintenance award in part because of the paucity of income-producing assets awarded to her, the allocation of an attorney fees judgment directly affects the reviewing court’s determination of the adequacy of the maintenance award and property distribution. The parties’ liability for attorney fees judgments is similar to their liability for debt incurred during the marriáge. Both “liabilities” must be allocated to the parties before a reviewing court can determine if the trial court’s decisions concerning property and maintenance comport with the statutory requirements. Respondent’s argument that the two attorney fees judgments are collateral to this dissolution proceeding because they were filed by counsel who had previously withdrawn from the case is unpersuasive. We see no reason to distinguish between attorney fees judgments in favor of prior counsel and counsel of record, both of which frequently amount to significant obligations of the parties affecting property and maintenance awards.

The policy considerations supporting the Leopando court’s conclusion that a custody order is not final similarly support our conclusion that an order which dissolves the marriage but which leaves for later resolution the apportioning of attorney fees judgments between the parties is also not final. Without such a rule, conceivably parties could appeal from a maintenance and distribution award, the reviewing court could render its decision, the trial court after the appeal could apportion .an attorney fees judgment between the parties, and another appeal could thereafter be taken challenging the trial court’s attorney fees ruling. Such piecemeal appeals are inconsistent with the policy expressed by the supreme court in In re Marriage of Cohn (1982), 93 Ill. 2d 190, and In re Marriage of Leopando (1983), 96 Ill. 2d 114, that all issues within a dissolution-of-marriage case should be resolved in a single judgment. On the authority of Leopando, therefore, we believe that a dissolution-of-marriage case involves only one claim. Since the trial court reserved the allocation of attorney fees in its May 7 order, that order was not a final judgment from which an appeal could be taken. Our conclusion that the trial court’s May 7 dissolution-of-marriage judgment did not become final until the court apportioned the two attorney fees judgments promotes finality, judicial economy and avoids multiple litigations of several partial judgments within one dissolution case.

Even if we are incorrect in concluding that a dissolution-of-marriage case involves only one claim and therefore attorney fee judgments must be allocated before a divorce decree an became final, the reasoning of our supreme court in In re Marriage of Lentz (1980), 79 Ill. 2d 400, compels us to conclude that we are nonetheless without jurisdiction to decide this appeal. In Lentz, the court stated it did not have to decide whether an order which granted a dissolution petition, but reserved maintenance and property distribution was final. Even if final, the Lentz court reasoned, since the order reserved several claims it was not appealable because it did not contain the Rule 304(a) language.

The order here reserves the allocation of attorney fees and therefore disposed of fewer than all of the claims. If, as we believe, this case involves but one claim, the May 7, 1982, order is not a final judgment and is not appealable. If the order is a final judgment, then the unallocated attorney fees are a separate claim which could only be appealable in the manner prescribed by Rule 304(a). That rule provides that an appeal cannot be taken from an order which disposes of fewer than all of the claims in the absence of an express written finding that there is no just reason to delay enforcement or appeal of the order. (In re Marriage of Lentz (1980), 79 Ill. 2d 400, 408; Burtell v. First Charter Service Corp. (1979), 76 Ill. 2d 427, 432-33.) Here, just as in Lentz, the order appealed from did not contain the Rule 304(a) language. Absent this language, the May 7 order was not a judgment from which an immediate appeal could1 be taken. Since respondent failed to file a notice of appeal after the judgment became final on June 23, 1982, and 30 days have now elapsed from entry of that final judgment, we believe no basis exists for respondent to initiate another appeal of the instant judgment to this court.

Accordingly, we grant petitioner’s motion to dismiss, dismiss respondent’s appeal from the circuit court of Lake County and dismiss petitioner’s cross-appeal and supplemental appeal.

Petitioner’s motion to dismiss granted, appeal dismissed, cross-appeal and supplemental appeal dismissed.

SEIDENFELD, P.J., and HOPE, J., concur.


author: JUSTICE NASH

text:
    McHENRY STATE BANK, Plaintiff-Appellee, v. Y & A TRUCKING, INC., et al., Defendants-Appellants.
    Second District
    No. 82 — 887
    Opinion filed August 23, 1983.

      Richard J. Short, of Chicago, for appellants.
    Michael F. Kukla, of Crystal Lake, for appellee.
   JUSTICE NASH

delivered the opinion of the court:

Defendants, Peter Jantzen and Jantzen International, Ltd. (International), appeal from orders of the circuit court of McHenry County granting summary judgment to plaintiff, McHenry State Bank (Bank), and against defendants in the amount of $22,548.52 and denying defendants’ motion for summary judgment. Defendant, Y & A Trucking, Inc. (Y & A), is not a party to this appeal.

The parties appear to be in substantial agreement as to the facts. On October 8, 1977, the Bank loaned Y & A $44,100 to be repaid in installments under the terms of a promissory note executed by the president and vice-president of Y & A, Sino J. Ave’la and William W. Yates III. The reverse side of the note contained a paragraph for its guarantee which was signed by Avella, Yates and Peter Jantzen; the parties agree that it constitutes a valid personal guarantee of the note.

The loan was secured by collateral in the form of a 1972 GMC tractor and a 1974 Ford tractor. However, shortly after the execution of the note the Ford tractor was stolen. As a result, on October 29, 1977, Jantzen entered into a written modification of the guarantee with the Bank pursuant to which, in exchange for the Bank’s release of the title to the Ford tractor, Jantzen would pay $10,000 from the insurance proceeds and supply substitute collateral with a value in excess of $6,500.

On December 1, 1977, Jantzen delivered to the Bank, as substitute collateral, a motor vehicle title for a 1970 Hendrickson tractor. That title had been issued to John Cremin and Kathleen Cremin (not parties to this litigation), but carried only the unnotarized endorsement of John Cremin. On December 10, 1977, the Bank returned the title to the Cremins requesting that Kathleen Cremin endorse the title, notarize both signatures and return it to the Bank. At no time did the Bank advise Jantzen of its dissatisfaction with the state of the title nor did it notify him that the title had been returned to the Cremins. Nor did the Bank take any steps to insure the return of the title to it and it never was returned. In 1980, the Hendrickson tractor was also stolen, and John Cremin received $7,500 from his insurance company.

In April 1979, Y & A ceased making payments on the note and this litigation was commenced on February 25, 1981. Initially, Jantzen and International moved for summary judgment contending that the Bank’s release of the 1970 Hendrickson title to the Cremins was an impairment of collateral which discharged defendants from their obligation under the guarantee. The motion was supported by the affidavits of Jantzen and John Cremin which set forth the foregoing facts and further alleged that the value of the Hendrickson tractor at the time title was delivered to the Bank was $11,300. The Bank filed no response or counteraffidavit. The motion was denied.

Subsequently, the Bank filed a motion for summary judgment as to defendants’ liability under the guarantee on the note which was granted and judgment entered against defendants for principal and interest ($18,146.52); attorney fees ($4,202); and court costs ($568.60) in the total amount of $22,917.12. On appeal, Jantzen and International contend that the trial court erred in entering summary judgment for the bank and in denying defendants’ motion for summary judgment. In the alternative, defendants contend the court erred by failing to offset the lost collateral against damages.

Initially, we note that section 57 of the Civil Practice Act (now codified as section 2 — 1005 of the Code of Civil Procedure) (Ill. Rev. Stat. 1979, ch. 110, par. 57) provides that either plaintiff or defendant may move, with or without supporting affidavits, for summary judgment and the opposite party may file counteraffidavits. If the pleadings, depositions, affidavits, exhibits and admissions on file then show there are no remaining genuine issues of material fact, the moving party is entitled to summary judgment as a matter of law. (Burks Drywall, Inc. v. Washington Bank & Trust Co. (1982), 110 Ill. App. 3d 569, 575, 442 N.E.2d 648, 653; Smith v. St. Therese Hospital (1982), 106 Ill. App. 3d 268, 270, 435 N.E.2d 939, 940.) Summary judgment is a drastic remedy and is to be awarded with caution; only if the right of the movant is clear and free from doubt may it be granted. Burks Drywall, Inc. v. Washington Bank & Trust Co. (1982), 110 Ill. App. 3d 569, 575, 442 N.E.2d 648, 653; In re Estate of Tomaso (1980), 82 Ill. App. 3d 286, 288, 402 N.E.2d 702, 704-05; Indiana Harbor Belt R.R. Co. v. Budd Co. (1980), 87 Ill. App. 3d 91, 94, 408 N.E.2d 944, 947.

It is apparent that the promissory note at issue is a negotiable instrument for purposes of the Uniform Commercial Code (UCC). (Ill. Rev. Stat. 1981, ch. 26, par. 3 — 104; Farmers State Bank v. Doering (1980), 80 Ill. App. 3d 959, 962, 400 N.E.2d 705, 707-08, appeal denied (1980), 81 Ill. 2d 584.) The UCC states that a guarantor to an instrument is included within the term “surety” and thus for purposes of the UCC it is ordinarily immaterial whether a person is a true surety, an absolute guarantor or a conditional guarantor. (Ill. Rev. Stat. 1981, ch. 26, par. 1 — 201(40); 1 Anderson, Uniform Commercial Code sec. 1 — 201:128, at 157 (2d ed. 1970).) In order to establish, a guarantee contract, the guarantor need not receive separate or additional consideration since he is bound by the consideration moving to the primary obligor. Ill. Rev. Stat. 1981, ch. 26, par. 3 — 415; Burke v. Burke (1980), 89 Ill. App. 3d 826, 829-30, 412 N.E.2d 204, 207-08; Continental National Bank v. Schiller (1980), 89 Ill. App. 3d 216, 219, 411 N.E.2d 593, 596.

However, once a contract of guarantee has been established it imports good faith and confidence between the parties with respect to the whole transaction (St. Charles National Bank v. Ford (1976), 39 Ill. App. 3d 291, 295-96, 349 N.E.2d 430, 434, appeal denied (1976), 63 Ill. 2d 563; Watkins Products, Inc. v. Walter (1973), 11 Ill. App. 3d 417, 420, 296 N.E.2d 859, 861) and the terms of the contract will be strictly construed in favor of the guarantor since the guarantor has the right to stand upon the strict terms of his obligation. (Newberry Theatre, Inc. v. SBB Theatre, Inc. (1981), 96 Ill. App. 3d 928, 930, 422 N.E.2d 152, 153, appeal denied (1981), 85 Ill. 2d 567; Harris Trust & Savings Bank v. Stephans (1981), 97 Ill. App. 3d 683, 686, 422 N.E.2d 1136, 1140-41.) Accordingly, any action taken by a creditor without the guarantor’s consent which varies the terms of the principal obligation, increases the guarantor’s risk or deprives the guarantor of the opportunity to protect himself will result in a discharge pro tanto of the guarantor from his obligation. Grundy County National Bank v. Cavanaugh (1982), 105 Ill. App. 3d 718, 721, 434 N.E.2d 803, 806, appeal denied (1982), 91 Ill. 2d 569; Watkins Products, Inc. v. Walter (1973), 11 Ill. App. 3d 417, 420, 296 N.E.2d 895, 861.

When a note is secured by collateral, as in this case, the holder of the note will discharge a guarantor of the instrument to the extent that, without the guarantor’s consent, the holder “unjustifiably impairs any collateral for the instrument given by or on behalf of the party or any person against whom he has a right of recourse.” (Ill. Rev. Stat. 1981, ch. 26, par. 3 — 606(l)(b); Chicago Bridge & Iron Co. v. Reliance Insurance Co. (1970), 46 Ill. 2d 522, 526, 264 N.E.2d 134, 136; Watkins Products, Inc. v. Walter (1973), 11 Ill. App. 3d 417, 420, 296 N.E.2d 859, 861-62.) To determine whether a holder’s actions in dealing with collateral may be “unjustifiable,” one must consider section 9 — 207 of the UCC, which defines the rights and duties of a secured party in possession of collateral. (Ill. Ann. Stat., ch. 26, par. 3— 606, Uniform Commercial Code Comment, at 412 (Smith-Hurd 1982 Supp.); Shaffer v. Davidson (Wyo. 1968), 445 P.2d 13, 15.) A secured party holds collateral for the benefit of guarantors and sureties and “must use reasonable care in the custody and preservation of collateral in his possession.” (Ill. Rev. Stat. 1981, ch. 26, par. 9 — 207(1); North Bank v. Circle Investment Co. (1982), 104 Ill. App. 3d 363, 369-70, 432 N.E.2d 1004, 1007-08, appeal denied (1982), 91 Ill. 2d 560; Wohlhuter v. St. Charles Lumber & Fuel Co. (1975), 25 Ill. App. 3d 812, 815-16, 323 N.E.2d 134, 138, aff'd (1975), 62 Ill. 2d 16, 338 N.E.2d 179; Brown v. State Farm Fire & Casualty Corp. (1975), 33 Ill. App. 3d 889, 893-94, 338 N.E.2d 427, 430.) When a secured party impairs collateral which materially prejudices a guarantor’s rights, the guarantor need not show injury to be discharged from his obligation. Watkins Products, Inc. v. Walter (1973), 11 Ill. App. 3d 417, 420, 296 N.E.2d 859, 861; Passman v. Budnizky (1936), 284 Ill. App. 533, 541-42, 1 N.E.2d 707, 710.

Under these criteria, it has been held that the failure of a secured party to perfect its security interest in collateral will discharge a guarantor to the extent the secured party’s lien is subordinated to that of a third party. (North Bank v. Circle Investment Co. (1982), 104 Ill. App. 3d 363, 369-70, 432 N.E.2d 1004, 1007-08, appeal denied (1982), 91 Ill. 2d 560; Wohlhuter v. St. Charles Lumber & Fuel Co. (1975), 25 Ill. App. 3d 812, 817, 323 N.E.2d 134, 138, aff’d (1975), 62 Ill. 2d 16, 338 N.E.2d 179; First Bank & Trust Co. v. Post (1973), 10 Ill. App. 3d 127, 132, 293 N.E.2d 907, 910-11.) Also, if a secured party releases collateral without the consent of the guarantor, the guarantor will be discharged pro tanto from his obligation. Chicago Bridge & Iron Co. v. Reliance Insurance Co. (1970), 46 Ill. 2d 522, 526, 264 N.E.2d 134, 136; Godfrey State Bank v. Mundy (1980), 90 Ill. App. 3d 142, 149, 412 N.E.2d 1131, 1138; Key Credit Corp. v. Young (1970), 124 Ill. App. 2d 309, 316-17, 260 N.E.2d 488, 491-92.

We conclude that the Bank’s return of the Hendrickson title to the Cremins without the consent of Jantzen and without causing its return was an unjustified impairment of the collateral resulting in a discharge pro tanto of Jantzen’s obligation as guarantor. At the time Jantzen delivered the title to the Bank there was a contract of guarantee between Jantzen and the Bank. As a result, Jantzen had a right to expect the Bank to behave with at least a minimal degree of commercial reasonableness and care to secure the collateral. (North Bank v. Circle Investment Co. (1982), 104 Ill. App. 3d 363, 370, 432 N.E.2d 1004, 1008-09, appeal denied (1982), 91 Ill. 2d 560.) The Bank also had a duty in the spirit of good faith and fair dealing to inform Jantzen of circumstances which materially increase his risk as guarantor. (St. Charles National Bank v. Ford (1976), 39 Ill. App. 3d 291, 295, 349 N.E.2d 430, 434, appeal denied (1976), 63 Ill. 2d 563.) The Bank’s unequivocal release of the title to a third party with whom it had no contractual relationship or expectation of cooperation and without notice to or consent from Jantzen cannot, in our view, be deemed commercially reasonable. This is true notwithstanding that the Bank’s motivation for releasing the title may have been to improve its secured position. (See Godfrey State Bank v. Mundy (1980), 90 Ill. App. 3d 142, 150-51, 412 N.E.2d 1131, 1139.) As a result, Jantzen is discharged from his obligation as guarantor to the extent of the value of the collateral released.

The Bank contends, however, that it should not be held accountable for the collateral since it never, in fact, held the collateral. The Bank argues that since the title to the Hendrickson tractor contained only the unnotarized signature of John Cremin, there was no valid transfer of title pursuant to the Illinois Vehicle Code (Ill. Rev. Stat. 1981, ch. 95½, pars. 1 — 100 et seq.), and it should not be held liable for the release of the title. This argument misconstrues the relationship between the Illinois Vehicle Code and the UCC. While section 3 — 302 of the Vehicle Code (Ill. Rev. Stat. 1981, ch. 951/2, par. 3 — 202) provides the exclusive means of perfecting a security interest in a motor vehicle, the Vehicle Code does not purport to control the creation of a security interest in a vehicle nor the legal ramifications flowing therefrom since that is covered exclusively by article 9 of the UCC. (Huber Pontiac, Inc. v. Wells (1978), 59 Ill. App. 3d 14, 17, 375 N.E.2d 149, 152; Peterson v. Ziegler (1976), 39 Ill. App. 3d 379, 382, 350 N.E.2d 356, 359-60.) The Bank erroneously assumes that title to collateral is required in order to create a valid security interest. Such is not the case. (Ill. Rev. Stat. 1981, ch. 26, par. 9 — 202; Blackhawk Heating & Plumbing Co. v. Geeslin (7th Cir. 1976), 530 F.2d 154.) The fact that the Bank did not have both owners’ signatures on the title did not relieve it of its obligations to the guarantor.

Accordingly, the orders granting the summary judgment motion of the Bank and denying defendants’ motion for summary judgment are reversed. We remand with directions that summary judgment be entered in favor of defendants under their motion and that in entering the judgment under the guarantee the value of the lost collateral be credited to defendants against the principal balance due to the Bank on the note. See Shaffer v. Davidson (Wyo. 1968), 445 P.2d 13.

Reversed and remanded with directions.

HOPE and VAN DEUSEN, JJ., concur.