author: JUSTICE HARTMAN

text:
    CENTRAL NATIONAL BANK IN CHICAGO, Plaintiff-Appellant and Cross-Appellee, v. FLEETWOOD REALTY CORPORATION et al., Defendants-Appellees and Cross-Appellants.
    First District (2nd Division)
    No. 81—647
    Opinion filed October 26, 1982.

      Sidley & Austin, of Chicago (Robert A. Downing, of counsel), for appellant.
    Kenneth C. Prince and Robert Tarnoff, both of Prince, Schoenberg, Fisher & Newman, Ltd., of Chicago, for appellee Executive Business Centre, Inc.
    Paul Homer, Stephen C. Shamberg, and John M. Myers, all of Friedman & Koven, of Chicago, for other appellees.
   JUSTICE HARTMAN

delivered the opinion of the court:

Central National Bank (CNB), lessee, commenced an action against Fleetwood Realty Corporation (Fleetwood), building manager, Chicago Title and Trust Company (CT&T) as trustee, lessor, and the then “unknown owners” to obtain, inter alia, specific performance of an option contained in its lease of space in an office building located at 200 West Monroe St., Chicago (Building). Subsequently, the 200 West Monroe Partnership (Partnership), trust beneficiary, and Executive Business Centre, Inc. (EBC), a tenant claiming an option similar to CNB’s, among others, were allowed to intervene and to file a counterclaim. CNB added count II to its complaint seeking, inter alia, an order declaring that EEC’s right to any option space be deemed subordinate to CNB’s option rights as to all space becoming available in the Building. After trial, the circuit court entered judgment from which all parties appeal.

The principal issues raised in CNB’s appeal include whether: the circuit court erred in determining that CNB’s future rights to additional space are subject to the superior rights of EBC and other non-party tenants under certain option language; and, the circuit court erred in not ordering that paragraph 3(d) of CNB’s lease be incorporated into the leases to CNB of spaces in the building purportedly leased pursuant to CNB’s option rights. On cross-appeal the main issues presented by defendants for review include whether: the circuit court erred in holding that CNB validly and effectively exercised its option for the option spaces; and, the circuit court erred in its rulings on defendants’ defenses and claims based on CNB’s leasing activities as ultra vires under the National Bank Act (12 U.S.C. sec. 21 et seq. (1976)). For the reasons given below, we affirm in part and reverse in part.

CT&T holds legal title to the Building under trust agreement No. 56000. The Partnership is an Illinois limited partnership which owns 100% of the beneficial interest in the CT&T trust. Fleetwood is a partnership, engaged, among other things, as managing agent for the beneficiary of the trust. EBC is an Illinois corporation which leases and subleases space at the Building to individuals and businesses and provides them with secretarial services and conference facilities. Philip Teinowitz, Albert Rubenstein and Bernard Feinberg were general partners of the Partnership, the only partners of Fleetwood, and the sole stockholders of EBC.

On May 23, 1972, CNB and CT&T executed a lease under which CNB rented over 100,000 square feet on the lower level and second to fifth floors of the Building. Paragraph 3(d) of the CNB lease granted CNB the option to lease additional space in the Building, provided, in part:

“Not less than 240 days prior to the expiration of any lease of space in the building not included in this Lease,*** the Landlord shall serve notice on the Tenant of the termination of such Lease and the Tenant shall have the option to lease the space covered by the Lease so expiring by serving notice on the Landlord, within 30 days after the date of Landlord’s said notice to Tenant, of Tenant’s election to exercise such option. *** Notwithstanding the foregoing, any similar such option granted to any other tenant in the building shall be superior to the option granted to Tenant hereunder in respect of any space which is closer to or equidistant to such other tenant’s major leasehold interest (measured vertically and horizontally) than it is to Tenant’s major leasehold interest at the time.”

On September 3, 1975, EBC and CT&T, as trustee, executed a lease for approximately 8,256 square feet of space on the 16th floor of the Building for a term ending September 30,1980.

Jeffrey Wilson, CNB vice-president, testified that in early 1979 Rubenstein told him that he was having difficulty remortgaging the Building and asked CNB to relinquish its option rights. CNB refused. In April 1979, CNB was advised by an appraiser of real estate that the present value of CNB’s option may approximate $3 million, given certain assumptions. In a memorandum dated November 13, 1979, Rubenstein indicated that he met with Wilson and William Smith, vice chairman of CNB, to see if they would relinquish their option rights and consent to a possible takeover of leased space they were not presently occupying. The memorandum further noted that: “The motivation for this visit resulted from Neil Bloom’s comment that he would be willing to purchase 200 West Monroe for between $12 million and $12.5 million (equity) provided we could get rid of Central’s ‘right-of-first-refusal on all space.’ My second motive was a result of a letter I received from Central National Bank last week indicating they were going to enter into a new lease with Illinois Bell Telephone at 200 West Monroe for a five-year period, and in today’s market, I felt that we would probably do better with I.B.T. ourselves.”

Barry Bass, a Fleetwood leasing agent, and Sol Krause, a Fleet-wood building manager, both testified that after the CNB meeting they discussed with Rubenstein what could be done to limit or avoid CNB’s option rights. Rubenstein’s memorandum indicated that he, and Krause believed they could give EBC a right of first refusal because of their 16th floor tenancy, which would take precedence over CNB’s rights at least with respect to certain floors in the building. Leland Fay, a commercial real estate broker, testified that in early 1980 Teinowitz told him that he had made a “bad deal” in giving CNB rights which would take all of the upside potential out of the Building.

On January 23, 1980, Fleetwood sent a letter to CNB pursuant to paragraph 3(d) of the CNB lease that four spaces (option spaces) of specified square footage on the 11th, 15th and 16th floors of the Building would be available at certain specified times during 1980.

The letter described the spaces by square footage on each floor and date of expiration of lease, and required a response by CNB within 30 days.

On February 21, 1980, CNB notified Fleetwood by certified mail of “its intention to exercise its rights under paragraph 3(d) of the Lease, subject to inspection by the Bank” of the option spaces. (Emphasis added.) William Smith testified that, after receipt of the notice of option space availability, he and Wilson went to the Building to attempt to identify them, but were unable to do so from a visual inspection of the floors and a limited inquiry of the existing tenants. Wilson essentially corroborated Smith’s testimony.

On February 26, 1980, EBC and CT&T executed a lease renewal and amendment to the original EBC lease in which the parties agreed that the lease would be extended from September 30, 1980, to and including December 31, 1984. In addition, EBC was granted option rights, similar to the rights granted to CNB, not contained in the original EBC lease of 1975. According to Bass, the person in charge of overseeing EBC, the amendment was executed so that EBC would be able to acquire additional space on a competitive basis with CNB and any other tenant in the Building.

In March 1980, CNB requested twice, by way of certified mail, that Fleetwood execute its leases for the option spaces offered by the January 23, 1980, letter and accepted by CNB. Fleetwood did not comply. Fleetwood’s notification to EBC on March 14, 1980, of the availability of the four option spaces resulted in EEC’s letter of March 18, 1980, which states that EBC “does hereby exercise the option to lease” the option spaces. Two days later, CT&T signed a lease with EBC for the subject spaces.

I

The questions raised on cross-appeal will be considered first, since they deal with the validity of CNB’s purported exercise of its option as to the four option spaces, a threshold issue.

Paragraphs 1, 2, 3 and 4, respectively, of the circuit court’s March 5, 1981, judgment essentially found and ordered that: (1) CNB’s exercise of its option was valid and effective; (2) EEC’s lease of the option spaces dated March 20, 1980, was void and of no effect; (3) defendants, except EBC, were specifically directed to prepare and execute leases with CNB for the option spaces, similar to the existing CNB lease and otherwise comply with the terms of paragraph 3(d); and, (4) until defendants, except EBC, comply fully with paragraph 3 of the judgment, and until CNB’s lease of the option spaces pursuant to paragraph 3 expires, defendants were enjoined from executing with anyone, other than CNB, leases for the option spaces.

Defendants contend first that CNB did not properly and timely exercise its option for the option spaces, claiming that: under paragraph 3(d) of the CNB lease, CNB had 30 days after notice within which to exercise its option or until February 22, 1980; and, CNB’s February 21, 1980, letter to Fleetwood purporting to “exercise its rights under Paragraph 3(d) of the lease, subject to inspection by the Bank” was invalid and ineffective option exercise because it was conditional.

To be validly exercised, an acceptance must meet and correspond to the terms of the offer exactly. (Morris v. Goldthorp (1945), 390 Ill. 186, 195, 60 N.E.2d 857; Farley v. Roosevelt Memorial Hospital (1978), 67 Ill. App. 3d 700, 703, 384 N.E.2d 1352.) A qualification or condition made part of the acceptance will invalidate the acceptance. Department of Public Works & Buildings v. Halls (1966), 35 Ill. 2d 283, 286-87, 220 N.E.2d 167; Morris v. Goldthorp; Seaberg v. American National Bank & Trust Co. (1976), 35 Ill. App. 3d 1065, 1072-73, 342 N.E.2d 751. See also Gaskins v. Walz (1951), 409 Ill. 40, 45, 97 N.E.2d 798; Kadansky v. Fickett (1973), 54 Ill. 2d 14, 294 N.E.2d 262.

CNB’s letter of February 21, 1980, purporting to exercise its option contained the proviso making the acceptance “subject to” its “inspection” of the space. Language such as “subject to,” when used in contracts generally, engrafts a condition upon the parties’ duty of performance and does not constitute a promise to perform. In Englestein v. Mintz (1931), 345 Ill. 48, 61, 177 N.E. 746, the supreme court construed these words, in a contract action, as follows:

“The words ‘subject to,’ used in their ordinary sense, mean ‘subordinate to,' ‘subservient to’ or ‘limited by.’ There is nothing in the use of the words ‘subject to,’ in their ordinary use, which would even hint at the creation of affirmative rights.”

To the same effect are Interway, Inc. v. Alagna (1980), 85 Ill. App. 3d 1094, 1099, 407 N.E.2d 615, appeal denied (1980), 81 Ill. 2d 592; Urban Investment & Development Co. v. Maurice L. Rothschild & Co. (1975), 25 Ill. App. 3d 546, 553-54, 323 N.E.2d 588 (concurring opinion); Michelin Tires (Canada) Ltd. v. First National Bank (1st Cir. 1981), 666 F.2d 673, 677; Burgess Construction Co. v. M. Morrin & Son Co. (10th Cir. 1975), 526 F.2d 108, 113; Anderson v. Southwest Savings & Loan Association (1977), 117 Ariz. 246, 248, 571 P.2d 1042, 1044.

Together with the foregoing must be considered the meaning of the word “inspection” as used by CNB in its asserted acceptance of the offer of option space. “Inspection” has a broader meaning than just viewing. It has been defined to include “examine carefully or critically, investigate and test officially, especially a critical investigation or scrutiny.” People v. Floom (1977), 52 Ill. App. 3d 971, 974, 368 N.E.2d 410, and authorities therein cited and quoted.

Contrary to CNB’s assertion that it neither introduced new terms nor made its acceptance conditional, but merely sought information directed toward performance of the contract (Welsh v. Jakstas (1948), 401 Ill. 288, 298, 82 N.E.2d 53; Farley v. Roosevelt Memorial Hospital), the clear import of the words “subject to inspection” is that an inspection will be forthcoming at some unspecified time, which must result satisfactorily to CNB before CNB deems itself bound. (See Seaberg v. American National Bank & Trust Co. (1976), 35 Ill. App. 3d 1065, 1072-73.) No standard, guide or other information is provided by which to measure the result of that inspection. Were we to assume, as CNB urges in effect, that the word “inspection” is interchangeable with the word “identification,” the conclusion is the same. If the identification of the option spaces reveals to CNB any reason to decline the offer, it can do so having made the offer “subject” thereto. “Subject to inspection” or “identification” could mean that CNB must be satisfied with such diverse elements as view, or physical condition, or configuration or similar attribute. Other considerations may include proximity to stairways, elevators, public lavatories, and width and location of public corridors. See The Advertising Checking Bureau, Inc. v. Canal-Randolph Associates (1981), 101 Ill. App. 3d 140, 427 N.E.2d 1039, appeal denied (1982), 88 Ill. 2d 549.

Nor is there implicit in CNB’s claimed acceptance any suggestion as to the period of time within which CNB would make its “inspection” or “identification,” or when it would make its acceptance final, or would make known to a lessor that its “inspection” or “identification” reveals to CNB that it does not want the space. (See, e.g., Dickey v. Hurd (1st Cir. 1929), 33 F.2d 415, 419, cert. denied (1929), 280 U.S. 601, 74 L. Ed. 646, 50 S. Ct. 82 (acceptance subject to, inter alia, a survey with which to verify and identify acreage and boundaries of subject land tract held invalid).) In the latter instance, the lessor would be in no position to claim that CNB accepted the offer unconditionally because CNB explicitly based its acceptance upon its approval of what it found either on “inspection” or “identification.” See Englestein v. Mintz (1931), 345 Ill. 48, 63.

If the offer was unclear to CNB, or the language of the offer insufficiently identified the space, CNB could have inquired of its lessor within the 30 days of the option period, or could have demanded further identification as part of its contract rights under the lease within that time. CNB points to no instance in which CNB did anything with regard to “inspecting” or “identifying” the option space beyond the visit of two of its officers to the floors on which the space was available, during which time they inquired of persons other than the lessor or its agents with respect to where the space might be. Nor did CNB advise defendants that the offer of option space was so unclear or deficient as to be in violation of the contract terms. Under these circumstances, its effort to clarify the offer by qualifying its acceptance upon its “inspection” or “identification” must be deemed conditional and thereby ineffective.

CNB attaches considerable significance to its March 6, 1980, letter to Fleetwood, in which CNB unequivocally confirmed the exercise of its option. This letter, however, was sent after the expiration date of CNB’s option. CNB’s argument that the activities of the defendants subsequent to the date it purportedly exercised its option were clear evidence that defendants acknowledged the validity of CNB’s exercised option must also be rejected. Indeed, by executing an amendment to EEC’s lease and leasing the option spaces to EEC on March 20, 1980, defendants appear to have demonstrated that they considered CNB’s purported exercise of an option to be ineffectual.

II

Defendants’ first affirmative defense, and paragraphs 9 and 10 of their counterclaim, alleged that CNB’s exercise of its option rights for .space not to be utilized for bank purposes were ultra vires by virtue of limitations imposed upon banks by section 29 of the National Bank Act (Act) (12 U.S.C. sec. 29 (1976)). That affirmative defense and paragraphs 9 and 10 were stricken in a separate order entered by the circuit court on August 12, 1980, from which order defendants appeal. The merits of the affirmative defense relating to the four option spaces need not be decided since CNB’s attempt to exercise its option with respect to them was conditional and thus ineffectual, as shown in the preceding discussion. Paragraphs 9 and 10 of defendants’ counterclaim portend to encompass CNB’s authority to exercise future options, however, and defendants’ contentions might be addressed in that context. Nevertheless, the merits of those contentions will not be reached because we agree with the circuit court’s conclusion, as a matter of law, that section 29 actions can be initiated only by the Comptroller of the Currency of the United States and could not constitute the basis for a claim for relief.

Paragraphs 9 and 10 of the counterclaim allege that: CNB’s authority is specifically limited by section 29 of the Act to acquiring real estate necessary for CNB’s business as a bank; CNB has sublet to others more than one-half the space leased under its original lease; and such subletting is unrelated to its business as a national bank, thereby violating section 29. The pertinent part of section 29 provides: “A national banking association may purchase, hold and convey real estate for the following purposes, and for no others: First. Such as shall be necessary for its accommodation in the transaction of business ***.”

The fact that a Federal statute is alleged to have been violated resulting in harm to someone does not necessarily give rise to a private cause of action in that person’s favor. (Cannon v. University of Chicago (1979), 441 U.S. 677, 688, 60 L. Ed. 2d 560, 570, 99 S. Ct. 1946, 1953.) In ascertaining whether a private remedy is implicit in a statute not expressly providing one, four factors are relevant. (Cort v. Ash (1975), 422 U.S. 66, 78, 45 L. Ed. 2d 26, 36, 95 S. Ct. 2080, 2087; California v. Sierra Club (1981), 451 U.S. 287, 293, 68 L. Ed. 2d 101, 107, 101 S. Ct. 1775, 1778-79.) The threshold question is whether the statute was enacted for the benefit of a special class of which plaintiff is a member. Cannon v. University of Chicago (1979), 441 U.S. 677, 689, 60 L. Ed. 2d 560, 571, 99 S. Ct. 1946, 1953.

The limitation on the power of national banks to invest in real estate contained in section 29 was designed to protect bank depositors and stockholders from risky investments. (Colorado National Bank v. Bedford (1940), 310 U.S. 41, 49, 84 L. Ed. 1067, 1072, 60 S. Ct. 800, 804; Exchange Bank of Commerce v. Meadors (1947), 199 Okla. 10, 13, 184 P.2d 458, 463.) Defendants do not purport to base standing upon their identity as members of either of these classes, therefore no private section 29 action may be implied here. (See Golar v. Daniels & Bell, Inc. (S.D.N.Y. 1982), 533 F. Supp. 1021, 1026; Stein v. Galitz (N.D. Ill. 1978), 478 F. Supp. 517, 520-21; but see American Society of Travel Agents, Inc. v. Bank of America National Trust & Savings Association (N.D. Cal. 1974), 385 F. Supp. 1084, which construes section 24 (seventh) of the Act.) Furthermore, it has long been recognized that the primary enforcement of the National Bank Act is left to the Comptroller of Currency, not to private parties. See, e.g., Kerfoot v. Farmers’ & Merchants’ Bank (1910), 218 U.S. 281, 54 L. Ed. 1042, 31 S. Ct. 14; Stein v. Galitz (N.D. Ill. 1978), 478 F. Supp. 517, 520.

Paragraph 11 of the counterclaim alleges that defendants compete directly with CNB for the leasing and subleasing of space at the Building. Defendants as counterplaintiffs sought a declaratory judgment finding that CNB cannot exercise its options for space not used in its banking business. EEC claims that it has standing as a director competitor of CNB to seek declaratory relief against CNB for its real estate activities purportedly violating section 29 of the Act. None of the cases relied upon by EBC hold that a private party competitor has standing to directly challenge a national bank’s real estate transactions assertedly prohibited by section 29 of the Act. In Investment Company Institute v. Camp (1971), 401 U.S. 617, 28 L. Ed. 2d 367, 91 S. Ct. 1091, Arnold Tours, Inc. v. Camp (1970), 400 U.S. 45, 27 L. Ed. 2d 179, 91 S. Ct. 158, Association of Data Processing Service Organizations, Inc. v. Camp (1970), 397 U.S. 150, 25 L. Ed. 2d 184, 90 S. Ct. 827, and Baker, Watts & Co. v. Saxon (D.D.C. 1966), 261 F. Supp. 247, 248, the courts granted standing to private.competitors to seek judicial review of a ruling or regulation issued by the Comptroller of Currency. No such administrative action is involved in the instant controversy. In Saxon v. Georgia Association of Independent Insurance Agents, Inc. (5th Cir. 1968), 399 F.2d 1010, 1016-17, the decision to grant standing to a group of insurance agents was based on the legislative history of the Act which reflected a congressional intent to protect insurance agents from an invasion of their insurance agency business by national banks in certain cities. No analogous legislative intent with respect to EBC emerges here.

Defendants meet no other criteria set forth in Cort v. Ash. We conclude that EBC lacks standing to obtain the relief sought in its counterclaim and decline to comment on the merits thereof.

III

A. Implicit in the circuit court’s written judgment of March 5, 1981, which it orally expressed éarlier, was a denial of the relief sought in count II of CNB’s complaint, namely, a judgment declaring EEC’s option rights subordinate to CNB’s option rights as to all space becoming available in the Building. CNB urges error, arguing that the evidence clearly established: the unity of ownership and interest among the Partnership, Fleetwood and EBC; the importance of the original CNB lease in the development of the Building; and that the option rights of EBC were granted only after defendants had been unable to persuade CNB to give up the benefits of its option and was solely designed to limit or avoid CNB’s valuable option rights. CNB concludes that the “belated” attempt to grant a superior option right to EBC constituted bad faith dealing in violation of the CNB lease.

Contracting parties impliedly promise to act in good faith. (Osten v. Shah (1982), 104 Ill. App. 3d 784, 786, 433 N.E.2d 294.) An instrument capable of two conflicting constructions, one of which imputes bad faith to one of the parties and the other does not, requires the latter construction to be adopted. (Martindell v. Lake Shore National Bank (1958), 15 Ill. 2d 272, 286, 154 N.E.2d 683.) Although the express words may be absent, a court of equity will order performance in accordance with what it believes to be required by good faith and fair dealing. (Spircoff v. Spircoff (1979), 74 Ill. App. 3d 119, 128, 392 N.E.2d 363.) Questions of good faith are generally issues of fact, reserved to the sound discretion of the trier of fact. Honkomp v. Dixon (1981), 97 Ill. App. 3d 476, 480, 422 N.E.2d 949.

The circuit court here made no express findings on the issue of defendants’ bad faith. Were it not for CNB’s conditional exercise of the options for the four spaces, its argument with respect thereto might have been persuasive under these facts. Not having exercised its option according to its terms leaves no basis for altering the circuit court’s decision in this regard. As to future option opportunities, paragraph 3(d) of CNB’s lease does not suggest that no other tenant would be granted similar option rights. To the contrary, the option is made specifically subordinate to the rights of other tenants holding a major leasehold interest more proximate to option space than CNB’s major leasehold interest. The record demonstrates further that EBC was formed in 1975, several years prior to the time the instant controversy arose. It engages in the business of leasing spaces not only in the Building, but in another at 200 West Jackson Blvd. It subleases space in the Building to individuals and businesses, and provides to them secretarial services and conference facilities. According to EEC’s operations overseer, the purpose of the lease renewal agreement granting EBC its option rights was to enable EBC to acquire additional space on a “competitive basis” with all tenants in the Building, not just CNB. Rubenstein stated that the purpose of granting EEC’s option rights was to limit CNB’s rights and to implement the original purpose of EBC, which was to create a profitable real estate business. The circuit court could have found that Teinowitz, Feinberg, Rubenstein and the Partnership had a valid business reason for granting the option to EBC: they would receive greater rent under a lease of option space to EBC than they would receive under a lease of space to CNB. The circuit court also could have found that CNB contractually assumed the risk that its option rights would be limited under terms consistent with paragraph 3(d) of their lease for valid business reasons. Under these circumstances, no abuse of discretion emerges in the circuit court’s determination of this issue.

B. CNB contends that defendants’ grant of option rights to EBC, insofar as it vitiates CNB’s rights, should be disregarded because EBC was not a separate entity. CNB emphasizes the fact that Teinowitz, Rubenstein, and Feinberg were the general partners of the Partnership, the only partners of Fleetwood and the sole stockholders of EBC. CNB maintains that even the Partnership disregarded EEC’s lack of substance in the EBC lease when it instructed CT&T to lease to a third party space in the Building already allegedly covered by a lease to EBC under its new option right.

Generally, a corporation is deemed separate and distinct as a legal entity from its shareholders and officers. (Superior Coal Co. v. Department of Finance (1941), 377 Ill. 282, 289, 36 N.E.2d 354.) The corporate entity will be disregarded when the corporation is merely the alter ego or the business conduit of a dominating personality, or the corporate entity presents an obstacle to the protection of private rights, or when, under the circumstances, an adherence to the fiction of separate existence of the corporation would sanction a fraud or promote injustice. (People ex rel. Scott v. Pintozzi (1971), 50 Ill. 2d 115, 128-29, 277 N.E.2d 844; Gallagher v. Reconco Builders, Inc. (1980), 91 Ill. App. 3d 999, 1004, 415 N.E.2d 560.) Stock ownership by itself in one corporation by another entity, however, in and of itself does not create an identity of interest between the two or the relation of alter ego (see Main Bank v. Baker (1981), 86 Ill. 2d 188, 204, 427 N.E.2d 94), even where the corporation is closely held (Gallagher v. Reconco Builders, Inc. (1980), 91 Ill. App. 3d 999, 1004). The circuit court’s oral finding that EEC was a valid and viable corporation was sufficiently supported by the record for the reasons stated in part IIIA of this opinion. It cannot be concluded as a matter of law that the distinctiveness of Fleetwood, Partnership and EEC ceased to exist under the circumstances of this case.

CNB recognizes that paragraph 3(d) implicitly allows defendants to grant option rights which may conflict with CNB’s but asserts that such rights must be granted in the tenant’s original lease or in a subsequent lease on space upon which CNB did not exercise its option and may not be created by amendment to the existing lease. It urges that because the original EEC lease did not contain any option rights to lease additional space in the Building, CNB’s option rights vested and were superior to any newly granted option rights to EBC. CNB’s “vested rights” argument has no support in the language of paragraph 3(d), however, nor in any other provision in the CNB lease and, accordingly, must be rejected.

C. CNB objects to that part of the order specifying that other tenants’ option rights are superior to CNB’s under paragraph 3(d) with respect to proximity of that tenant’s major leasehold interest to new option space becoming available in the future, maintaining that the circuit court should not have adjudicated the rights of non-party tenants. Defendants respond that since CNB failed to object to the non-joinder of parties until the final hearing, the circuit court committed no error in not joining those tenants, citing Crescio v. Crescio (1937), 365 Ill. 393, 6 N.E.2d 628; Chicago, Burlington & Quincy R.R. Co. v. Illinois Commerce Com. (1936), 364 Ill. 213, 4 N.E.2d 96; Theodorou v. Community Builders, Inc. (1972), 6 Ill. App. 3d 277, 285 N.E.2d 474. Defendants argue that the absent tenants were benefited by the order if they were affected at all. Defendants’ response, however, misses the thrust of CNB’s argument. CNB does not contend that absent tenants should have been joined at the trial court level or that they were necessary parties; rather, it maintains that these tenants and their rights in relation to CNB’s rights were never before the circuit court and that there was nothing for it to adjudicate. We agree. The cases relied upon by defendants are inapposite to the present issue. In those cases, the appellants were attacking the judgments rendered because necessary parties were not joined.

Defendants also argue that the “non-joinder” of other tenants was not reversible error because their interests were adequately represented by EBC and the lessors. They cite Moore v. McDaniel (1977), 48 Ill. App. 3d 152, 362 N.E.2d 382, for the proposition that the rule requiring joinder of indispensable parties is not applied when an absent party is so represented by another that his interest receives actual and efficient representation. This doctrine of representation applies where persons are before the court who have the same interests, and will be equally certain to bring them forward and protect them, as those of the omitted persons. (Mortimore v. Bashore (1925), 317 Ill. 535, 540, 148 N.E. 317.) We are not persuaded that such is the case here in light of the self-avowed competitive nature of EEC’s business. Further, when CNB attempted to offer into evidence the lease of one nonparty tenant, defendants objected on the ground that the nonparty lease was irrelevant and defendants’ objection was sustained.

A court is without jurisdiction to enter a decree or order which directly affects a right or interest of a person not before it. (Lain v. John Hancock Mutual Life Insurance Co. (1979), 79 Ill. App. 3d 264, 269, 398 N.E.2d 278; Lerner v. Zipperman (1979), 69 Ill. App. 3d 620, 624, 387 N.E.2d 946.) The only rights before the circuit court were CNB’s vis-a-vis defendants’; the court was without authority to adjudicate the substantial rights of absent tenants.

IV

Paragraph 3 of the judgment, in part, orders defendants, except EBC, to prepare and cause to be executed leases for the subject four option spaces with CNB in a “form substantially similar to the CNB Lease.” CNB argues that this part of the judgment should be modified so as to require the inclusion of paragraph 3(d) of its lease in the leases of the four option spaces at issue as well as in leases of option spaces as they become available in the future. The notice of appeal and the order from which the appeal was taken by CNB referred to the four subject option spaces involved in the instant controversy. As to those spaces, the disposition of CNB’s acceptance as conditional and invalid makes this issue moot.

With respect to any controversy which may arise affecting option spaces becoming available in the future, neither the order entered by the circuit court nor the orders proposed by CNB nor its notice of appeal purport to address this issue and we decline to do so for that reason. Nevertheless, since the parties in their respective briefs appear to view the language of paragraph 3(d) from entirely different perspectives, no doubt the issue will again arise and may become subject to future litigation. Because of that likelihood, we make the observation that the language contained in paragraph 3(d) of CNB’s lease with respect to the proposed inclusion or suggested exclusion of new option language in each new lease which may emerge is far from clear. The construction of leases is subject to the same rules and standards of interpretation applicable to contracts. (Pioneer Trust & Savings Bank v. Lucky Stores, Inc. (1980), 91 Ill. App. 3d 573, 575, 414 N.E.2d 1152.) The primary object of the construction of a contract or lease is to give effect to the intentions of the parties. (Blackhawk Hotel Associates v. Kaufman (1981), 85 Ill. 2d 59, 64, 421 N.E.2d 166.) In some circumstances, such as appears in the present language, parol evidence may be considered in ascertaining those intentions. (Main Bank v. Baker (1981), 86 Ill. 2d 188, 199, 427 N.E.2d 94.) The language used in paragraph 3(d) is patently susceptible to more than one meaning, and its interpretation should be subject to further hearing with such extrinsic evidence as may be necessary in arriving at the intent of the parties.

For the foregoing reasons, paragraphs 1, 3 and 4' of the March 5, 1981, judgment, finding CNB’s exercise of its option with respect to the four option spaces there involved to have been valid and concommitant injunctive relief granted pursuant thereto is reversed. Paragraph 2 of that judgment, finding EEC’s lease of the option spaces void and of no effect, is reversed. Paragraph 6 of that order, insofar as it purports to adjudicate the rights of nonparty tenants, is reversed. The balance of the circuit court order of March 5, 1981, is otherwise affirmed, except that each party shall bear its own costs. The order of August 12, 1980, striking paragraphs 9 and 10 of defendants’ counterclaim is also affirmed.

Affirmed in part, reversed in part.

STAMOS, P.J., and DOWNING, J., concur.

      Feinberg died on September 28, 1980, while the action was pending and the co-executors of his estate have been substituted as defendants.

      The four criteria in Cort v. Ash are: “First, is the plaintiff ‘one of the class for whose especial benefit the statute was enacted,’ [citation] — that is, does the statute create a federal right in favor of the plaintiff? Second, is there any indication of legislative intent, explicit or implicit, either to create such a remedy or to deny one? [Citation.] Third, is it consistent with the underlying purposes of the legislative scheme to imply such a remedy for the plaintiff? [Citations.] And finally, is the cause of action one traditionally relegated to state law, in an area basically the concern of the States, so that it would be inappropriate to infer a cause of action based solely on federal law? [Citations.]” (Emphasis in original.)


source: Caselaw Access Project

author: JUSTICE GOLDBERG

license: Public Domain

text:
    RICHARD PARKS et al., Plaintiffs-Appellees, v. THE DEPARTMENT OF MENTAL HEALTH AND DEVELOPMENTAL DISABILITIES, Defendant-Appellant.
    First District (1st Division)
    No. 81—3084
    Opinion filed October 18, 1982.
    Tyrone C. Fahner, Attorney General, of Springfield (Georgene M. Wilson, Assistant Attorney General, of counsel), for appellant.

      Handel Legal Aid Clinic, of Chicago (Mark C. Weber, of counsel), for appellees.
   JUSTICE GOLDBERG

delivered the opinion of the court:

Richard and Marilyn Parks, parents, and Lester Parks, their son, by his next friend Richard Parks (plaintiffs), filed this action seeking judicial review of an administrative decision rendered by the Illinois Department of Mental Health (defendant). (Ill. Rev. Stat. 1981, ch. 110, par. 264 et seq.) Defendant had ruled that the assessment of a responsible relative liability charge against plaintiffs for the care of Lester Parks, a handicapped child diagnosed as autistic, was mandated by section 5 — 105 of the Mental Health and Developmental Disabilities Code (Ill. Rev. Stat. 1979, ch. 911/2, par. 1 — 100 et seq.) (hereinafter Code). The trial court found this decision was in violation of the Education for All Handicapped Children Act of 1975 (20 U.S.C. sec. 1401 et seq. (1976)) (hereinafter EAHC). Defendant appeals. The facts are not in dispute. Plaintiff Lester Parks, now approximately 17 years old, is a multihandicapped child. In 1975 it was determined he required residential placement. On February 16, 1976, defendant placed Lester at the New Hope Living and Learning Center in Waterloo, Illinois. The propriety of this placement is not questioned.

On August 1, 1979, defendant notified Richard and Marilyn Parks that, effective July 1, 1979, a responsible relative liability charge of $100 per month would be assessed against them. (Ill. Rev. Stat. 1979, ch. 91V2, par. 5 — 105.) Plaintiffs appealed from this assessment. After a hearing, the assessment was affirmed. On further appeal to the State of Illinois Board of Reimbursement Appeals, the assessment was again affirmed.

On administrative review, the trial court ruled the assessment of liability against the parents of a handicapped child for the cost of a residential placement that is necessary to meet the child’s educational needs is a violation of section 612 of the EAHC (20 U.S.C. sec. 1412 (1976)) and regulations thereunder (45 C.F.R. secs. 121a.2, 121a.301(a), and 121a.302 (1980)). The trial court ruled the State must pay for all placements educationally necessary and must bear all costs incurred therein under the above cited authorities. The trial court further ruled, since defendant must bear these costs, it was unnecessary to remand the case for a determination of which costs of the placement are “educational.”

In this court, defendant contends it is not precluded from charging parents of a handicapped child a responsible relative liability pursuant to section 5 — 105 of the Code (Ill. Rev. Stat. 1979, ch. 911/2, par. 5 — 105). Defendant also contends the trial court went beyond the scope of judicial review when it found all costs associated with the child were for educational purposes.

In our opinion, the ruling by the trial court is completely supported by Federal law. It is undisputed Lester Parks is a handicapped child and Federal law requires maintenance by the State of “a policy that assures all handicapped children the right to a free appropriate public education” (20 U.S.C. sec. 1412(1) (1976)). Such education is to include both “special education” and “related services” (20 U.S.C. sec. 1401(18) (1976)). The EAHC defines “special education” to be (20 U.S.C. sec. 1401(16) (1976)):

“specially designed instruction, at no cost to parents or guardians, to meet the unique needs of a handicapped child, including classroom instruction, instruction in physical education, home instruction, and instruction in hospitals and institutions.”

The EAHC defines “related services” to include (20 U.S.C. sec. 1401(17) (1976)):

“transportation, and such developmental, corrective, and other supportive services (including speech pathology and audiology, psychological services, physical and occupational therapy, recreation, and medical and counseling services, except that such medical services shall be for diagnostic and evaluation purposes only) as may be required to assist a handicapped child to benefit from special education, and includes the early identification and assessment of handicapping conditions in children.”

With respect to residential placement of a handicapped child, the regulations promulgated to enforce the EAHC provide (45 C.F.R. sec. 121a.302 (1980)):

“If placement in a public or private residential program is necessary to provide special education and related services to a handicapped child, the program, including non-medical care and room and board, must be at no cost to the parents of the child. Comment. This requirement applies to placements which are made by public agencies for educational purposes, and includes placements in State-operated schools for the handicapped, such as a State school for the deaf or blind.”

Defendant contends these statutes and regulations should not prevent the State of Illinois from assessing responsible relative liability charges pursuant to section 5 — 105 of the Code (Ill. Rev. Stat. 1979, ch. 911/2, par. 5 — 105). We disagree. In our opinion, the regulations cited above unequivocally establish residential placement for the purpose of special education and also all related services are to be provided free from cost to the parents. The above excerpts from the Code and the regulations illustrate graphically the strong insistence by Federal law in the requirement that all expenditures of every kind for the education and welfare of the child are to be borne not by the parents but by the educational authorities of the State.

Under the doctrine of preemption as derived from the United States Constitution (U.S. Const., art. VI), a State law in conflict with Federal statutes and regulations “is nullified to the extent that it actually conflicts with federal law.” (Fidelity Federal Savings & Loan Association v. de la Cuesta (1982), 458 U.S. 141, 153, 73 L. Ed. 2d 664, 675, 102 S. Ct. 3014, 3022. See also Olsen v. Financial Federal Savings & Loan Association (1982), 105 Ill. App. 3d 364, 366-67, 434 N.E.2d 406, and cases there cited.) Thus, the imposition of the responsible relative liability charge by defendant cannot stand in view of the express language of the Federal statutes and regulations.

Our view is supported by the recent ruling in Parks v. Pavkovic (N.D. Ill. 1982), 536 F. Supp. 296. In Parks, the same plaintiffs as in the instant case filed suit to enjoin the instant defendant and other State agencies from discharging plaintiff Lester Parks from a residential facility because of the failure of his parents to pay the responsible relative liability charges for 1980 and 1981. In granting the plaintiffs’ request for a preliminary injunction, the district court addressed the question of whether these costs may be imposed upon the plaintiffs. The court stated (536 F. Supp. 296, 304):

“There is no dispute that the outstanding bill for services provided to Lester *** involves the provision of special education and related services. There is also no dispute that placement *** was necessary *** in order to provide Lester with special education and related services. This being the case, the unambiguous mandate of federal law is that these services be provided at no cost to Lester’s parents. While defendants’ refusal to meet fully Lester’s expenses may be authorized by state law, such laws are inconsistent with the mandate to provide an appropriate free public education, and cannot stand. [Citations.]”

In adopting the reasoning of the district court, we are mindful the analysis was limited to the probability of the plaintiffs’ eventual success on the merits and therefore does not have the res judicata effect of a final order. However, the reasoning and the authorities cited therein are so persuasive we find no difficulty in relying upon the pertinent and well stated opinion of the district court. Parks v. Pavkovic (N.D. Ill. 1982), 536 F. Supp. 296, 304-05.

Defendant contends it does not have the authority to provide the relief sought by plaintiffs. Defendant argues only the Illinois State Board of Education (ISBE) is authorized to educate handicapped children. Defendant refers to 20 U.S.C. sec. 1412(6) (1976), which states the requirements of the Act are to be administered by the “state educational agency.” Therefore, urges defendant, plaintiffs must obtain their relief exclusively from the ISBE.

We cannot agree. The regulations state the EAHC extends (34 C.F.R. sec. 300.2(b) (1981)):

«*** £0 an political subdivisions of the State that are involved in the education of handicapped children. These would include:
(1) The State educational agency,
(2) local educational agencies and intermediate educational units,
(3) other State agencies and schools (such as Departments of Mental Health and Welfare and State schools for the deaf or blind), and
(4) State correctional facilities.” (Emphasis added.)

We believe it cannot be seriously asserted defendant is not “involved in the education of handicapped children” in view of the facts of this case and the Parks decision in the district court. We are therefore impelled to conclude the EAHC is binding on defendant as it is upon all other educational agencies of Illinois. In Parks v. Pavkovic (N.D. Ill. 1982), 536 F. Supp. 296, 304, the court held:

“Under the EHA, while the ultimate responsibility for assuring compliance with federal law rests with ISBE, see 34 C.F.R. §300.600 (1981), the Act’s requirements also apply to all other state and local departments involved with the education of handicapped children. [34 C.F.R. §300.2(b) (1981).]”

The original brief filed by defendant stated that the hearing officer pointed out that the ISBE is responsible for the administration of EAHC. The brief then quoted from the EAHC to the effect that the ISBE was responsible for carrying out the Federal programs. (20 U.S.C. sec. 1412 (1976).) However, defendant’s reply brief contains an elaborate argument to the effect that the ISBE is a necessary party to these proceedings. We reject this contention.

The original brief did not pursue and advance this theory with citation of authorities. Therefore, it has been waived. (Saldana v. Wirtz Cartage Co. (1978), 74 Ill. 2d 379, 386, 385 N.E.2d 664.) The applicable rules provide that the reply brief is, to be “confined strictly to replying to arguments presented in the brief of the appellee ***.” (73 Ill. 2d R. 341(g).) We conclude that the matter has been waived and was improperly raised in defendant’s reply brief. Department of Transportation v. Drobnick (1977), 54 Ill. App. 3d 987, 993, 370 N.E.2d 242, appeal denied (1978), 71 Ill. 2d 597.

In addition, on the merits of the situation, plaintiffs did not commence this litigation. The defendant made demand upon plaintiffs for payment of money and brought plaintiffs into a proceeding conducted by defendant in an effort to collect certain assessments. Plaintiffs were then obliged to proceed with administrative review. The necessary party argument has no place in this record.

We believe our ruling here to be in accordance with our decision in In re Special Education Placement of Steven Walker (1982), 107 Ill. App. 3d 1053, 438 N.E.2d 582. There, a disagreement arose between the parent of a handicapped child and the local school district concerning the educational placement of the child. While awaiting a hearing on this issue, the parent placed the child in a private special educational facility. A subsequent hearing which resulted in a recommendation of residential placement was overruled by the Illinois Office of Education (IOE). The parent brought an action in administrative review. The trial court reversed the administrative decision and found the IOE liable for payment of all costs of the child’s placement. On appeal, we affirmed. We specifically rejected the IOE’s contention that Steven Walker received “only mainstream instruction” and not “special education” and “related services” at the institution. Based on the record before us, we concluded the services provided Steven Walker fell into the categories of “special education” and “related services” and must therefore be provided for him at no cost to his family. 107 Ill. App. 3d 1053, 1060-61.

Defendant’s second and final contention is that the trial court went beyond the scope of administrative review in its holdings. Defendant urges the court found all costs of Lester Parks’ care were related to his education whereas no evidence as to this point was heard before the administrative body. Therefore, defendant requests the case be remanded to a hearing officer so this question may be properly determined.

We do not agree. The trial court below did not find as a factual issue all costs for Lester Parks’ care were related to his education. Rather, the trial court concluded as a matter of law that where residential placement was necessary for the education of the handicapped child, it was a violation of Federal law as set forth in EAHC and of its attendant regulations to assess the responsible relative liability charge against the parents. The trial court further held Federal law required defendant to pay the costs of “all placements that are educationally necessary, not only those placements that are ‘solely for educational purpose.’ ” The trial court also found defendant erred as a matter of law in finding only the ISBE to be bound by the Federal statutes and regulations. These rulings by the trial court are all legal matters upon which the trial court properly ruled. Actually, the only question of fact before the trial court was the propriety of Lester Parks’ residential placement, which was never questioned by either party. This situation contrasts with the Steven Walker case, where the type of educational services provided was an issue. Therefore, in the instant case, the trial court did not exceed its scope of review. Actually, the trial court determined only issues of law in complete accordance with the pertinent statute (Ill. Rev. Stat. 1981, ch. 110, par. 274), and with the decided cases. Caterpiller Tractor Co. v. Department of Revenue (1963), 29 Ill. 2d 564, 566, 194 N.E.2d 257, as cited in Cook County Masonic Temple Association v. Department of Revenue (1982), 104 Ill. App. 3d 658, 660, 432 N.E.2d 1240.

The judgment appealed from is accordingly affirmed.

Judgment affirmed.

CAMPBELL, P.J., and McGLOON, J., concur.


author: JUSTICE RIZZI

text:
    DANIEL T. FOEGE, Plaintiff-Appellee, v. JIM EDGAR, Secretary of State, Defendant-Appellant.
    First District (3rd Division)
    No. 82—386
    Opinion filed October 27, 1982.

      Donald L. Metzger, of Chicago (Metzger & Associates, Ltd., of counsel), for appellant.
    Richard T. Sikes, of Chicago, for appellee.
   JUSTICE RIZZI

delivered the opinion of the court:

Plaintiff, Daniel T. Foege, filed a complaint for administrative review of the decision of defendant, Jim Edgar, Secretary of State, denying his petition for a restricted driving permit. The circuit court reversed the decision in part and ordered the Secretary of State to issue plaintiff a restricted driving permit applicable only while driving his employer’s truck during regular work hours on his regular route. We reverse the order of the circuit court and affirm the decision of the Secretary of State.

The first issue in this case involves the authority of the Secretary of State to deny a petition for a restricted driving permit where it is shown that undue hardship will result. To our knowledge, this issue has never been addressed by an Illinois reviewing court. Plaintiff contends that where, as here, undue hardship is established, the Secretary of State has no discretion and must allow the petitioner’s request for a restricted driving permit. The applicable statute provides:

“Whenever a person is convicted of any of the offenses enumerated in this Section, the court may recommend and the Secretary of State in his discretion, without regard to whether such recommendation is made by the court, may, if application is made therefor, issue to such person a restricted driving permit granting the privilege of driving a motor vehicle between his residence and his place of employment or within other proper limits, except that this discretion shall be limited to cases where undue hardship would result from a failure to issue such restricted driving permit. *** A restricted driving permit issued hereunder shall be subject to cancellation, revocation and suspension by the Secretary of State in like manner and for like cause as a drivers license issued hereunder may be can-celled, revoked or suspended; except that a conviction upon one or more offenses against laws or ordinances regulating the movement of traffic shall be deemed sufficient cause for the revocation, suspension or cancellation of a restricted driving permit. The Secretary of State may, as a condition to the issuance of a restricted driving permit, require the applicant to participate in a designated driver remedial or rehabilitative program.” Ill. Rev. Stat. 1981, ch. 95V2, par. 6 — 205(c).

Although the statute gives the Secretary of State discretion to issue a restricted driving permit only in cases where undue hardship would result from a failure to issue a restricted driving permit, we believe that this limitation does not mandate that the Secretary of State issue a restricted driving permit merely because undue hardship would result. Plainly, the language of the statute is permissive only and not mandatory.

Since the legislature has expressly given the Secretary of State discretion under the statute, the Secretary of State must exercise the discretion based upon the public interest. This means that the Secretary of State should not issue a restricted driving permit unless he has determined that granting the applicant a restricted driving permit will not endanger the public safety or welfare. Conversely, if the Secretary of State determines that granting the applicant a restricted driving permit will not endanger the public safety or welfare, then the Secretary of State should carry out the purpose of the statute by granting the applicant a restricted driving permit.

Here, the Secretary of State determined that plaintiff’s petition for a restricted driving permit should be denied because the public safety and welfare would be endangered if plaintiff were given a restricted driving permit to drive on the public roadways. Under our analysis of the applicable statute, the Secretary of State had the authority to deny the petition on that basis.

We next address the ruling of the trial court that the Secretary of State abused his discretion in denying plaintiff a restricted driving permit to drive his employer’s truck during regular work hours on his regular route. In this regard, we agree that plaintiff, age 35, and his family would suffer severe and undue hardship if he is not granted a restricted driving permit, but the critical issue here is whether the public safety and welfare will be endangered if plaintiff is permitted to drive on the public roadways. Plainly, public interest transcends and supersedes any undue hardship to an applicant seeking a restricted driving permit.

Plaintiff’s driving record is as follows:

ARREST INCIDENT 1
11/23/73
Arrested and charged with a moving viola-
12/20/73
Convicted of charge.
ARREST INCIDENT 2
3/22/74
Arrested and charged with driving under the influence of intoxicating liquor.
6/9/74
License suspended for refusing to take and complete a test or chemical analysis of breath to determine alcoholic content of his blood.
6/17/74
Convicted of charge.
6/25/74
Issued restricted driving permit.
8/23/74
License revoked.
2/14/75
Issued restricted driving permit.
ARREST INCIDENT 3
9/3/74
Arrested and charged with operating motor vehicle during period of revocation.
2/26/75
Convicted of charge^cancellation of restricted driving permit and reinstatement of revocation.
ARREST INCIDENT 4
6/18/75
Arrested and charged with a moving violation.
10/16/75
Convicted of charge.
ARREST INCIDENT 5
4/3/76
Arrested and charged with driving under the influence of intoxicating liquor.
8/25/76
Convicted of charge.
12/10/76
License revoked.
ARREST INCIDENT 6
10/26/76
Arrested and charged with operating motor vehicle during period of revocation.
3/1/77
Convicted of charge.
5/25/77
Period of revocation extended.
ARREST INCIDENT 7
12/17/76
Arrested and charged with operating motor vehicle during period of revocation.
5/6/77
Convicted of charge.
7/11/77
Period of revocation extended.
12/16/77
License suspended.
ARREST INCIDENT 8
7/19/77
Arrested and charged with driving under the influence of intoxicating liquor and operating motor vehicle during period of revocation.
2/14/78
Convicted of charges.
3/16/78
License revoked.
4/18/78
Period of revocation extended.
7/26/78
Issued restricted driving permit.
ARREST INCIDENT 9
9/28/77
Arrested and charged with a moving violation.
11/29/77
Convicted of charge.
1/24/78
Period of revocation extended.
ARREST INCIDENT 10
10/25/78
Arrested and charged with driving under influence of intoxicating liquor.
7/17/79
Convicted of charge.
8/21/79
License revoked.
ARREST INCIDENT 11
9/27/79
Arrested and charged with driving motor vehicle during a revocation other than that allowed by restricted driving permit.
3/11/80
Convicted of charge.

In the present case, the hearing on plaintiff’s petition for a restricted driving permit took place on September 10, 1981. Thus, from November 1973 to September 1981, plaintiff had 11 arrests and convictions related to driving. Four of those convictions were for driving under the influence of alcohol. Plaintiff’s license was revoked or his revocation was reinstated or extended nine times. He was issued three restricted driving permits which were cancelled because of driving violations. Moreover, although plaintiff’s drivers license had been revoked at the time of the hearing on September 10, 1981, plaintiff testified as follows:

“Q. Now, are you — have you contacted your business since your license has been taken away from you?
A. I haven’t changed anything. I haven’t informed anybody.
Q. You’re still driving?
A. Right.
Q. Each day?
A. Yes.
Q. Taking your chances?
A. My fingers crossed.”

Basically, plaintiff states two factual reasons in support of his argument that the Secretary of State abused his discretion in not granting him a restricted driving permit to drive a truck for his employer, Pepsi Cola, during regular work hours on his regular route. First, plaintiff argues that the Secretary of State abused his discretion because plaintiff has driven for Pepsi Cola for 15 years without having a traffic citation while driving a Pepsi Cola truck. However, myopia must be avoided in a case such as this, where the safety and welfare of the public is involved. The record demonstrates that plaintiff was driving a Pepsi Cola truck without a valid drivers license for substantial periods with his “fingers crossed,” hoping not to get caught violating the law. In addition, plaintiff has four convictions for driving under the influence of alcohol, and his total driving record manifests his recalcitrance. It would therefore be shortsighted to focus solely on plaintiff’s record while driving his Pepsi Cola truck, even if he is seeking a restricted driving permit only for that purpose. Moreover, if plaintiff’s argument is carried to its logical conclusion, a person whose driving record indicates that he poses a serious threat to the public safety and welfare would be permitted, nevertheless, to drive any motor vehicle in which he had not been arrested previously for any period of time in which he had not been arrested previously. Concern for the public safety and welfare demands that such paralogistic reasoning not be accepted by the Secretary of State or the judiciary. Plainly, a person’s entire record must be considered when examining and evaluating an application for a restricted driving permit.

Next, plaintiff states that he is attempting to control his admitted alcoholic problems by attending a clinic and that he has not had anything alcoholic to drink, except for two glasses of wine, since approximately March of 1980. However, in view of plaintiff’s driving record and his manifested inability to obey the laws of Illinois relating to driving, we do not believe that the hardship to plaintiff outweighs the risk to the safety and welfare of the public if plaintiff were to be given a restricted permit at this time.

Generally, a decision of an administrative body should not be reversed unless it is against the manifest weight of the evidence. However, the circuit court here ruled that the Secretary of State abused his discretion, and we have therefore examined the record on that basis. For the reasons stated herein, we conclude that the Secretary of State did not act arbitrarily or capriciously, and therefore his decision to deny plaintiff’s petition for a restricted driving permit was not an abuse of discretion. Moreover, we have reviewed the record in order to determine whether the decision of the Secretary of State was against the manifest weight of the evidence. We conclude, for the reasons stated herein, that there is substantial evidence to support the Secretary of State’s decision and that it is not against the manifest weight of the evidence.

Accordingly, the order of the circuit court is reversed, and the decision of the Secretary of State is affirmed.

Reversed.

WHITE, P.J., and McGILLICUDDY, J., concur.

      Since the legislature has seen fit to provide for the issuance of a restricted driving permit after a person’s drivers license has been revoked when undue hardship would result, the Secretary of State should not deny an application for a restricted driving permit solely on the basis of the fact of the conviction which resulted in the license revocation. Rather, in order to carry out the intent of the legislature, when undue hardship would otherwise result, the Secretary of State should exercise his discretion liberally in favor of the issuance of restricted driving permits so long as the public safety and welfare is not put in jeopardy.

       Nothing stated in this opinion is intended to mean that plaintiff should be barred forever from receiving an Illinois drivers license or a restricted driving permit. Any subsequent decision of the Secretary of State relating to any application submitted by plaintiff for a license or permit to drive will have to be reviewed on the merits of each case as presented at that time.


author: PRESIDING JUSTICE CAMPBELL

text:
    EDUARDO GONZALES-BLANCO, M.D., et al., Plaintiffs-Appellants and Cross-Appellees, v. GARY L. CLAYTON, Director, Illinois Department of Registration and Education, et al., Defendants-Appellees and Cross-Appellants.—(Mount Sinai Hospital Medical Center of Chicago, Defendant-Appellee.)
    First District (1st Division)
    No. 82—562
    Opinion filed November 1, 1982.

      Cyriac D. Kappil, of Chicago (Bernard J. Ferguson and Michael R. Morow, of counsel), for appellants.
    Roger L. Price, of Aaron, Schimberg, Hess, Rusnak, Deutsch & Gilbert, and Tyrone C. Fahner, Attorney General, both of Chicago (Karen Konieczny, Assistant Attorney General, of counsel), for appellees.
   PRESIDING JUSTICE CAMPBELL

delivered the opinion of the court:

Plaintiffs appeal from an order of the circuit court of Cook County denying relief under their second amended complaint for administrative review, preliminary injunction and declarative relief. Plaintiffs, medical doctors, sought relief from the refusal of the Illinois Department of Registration and Education (hereinafter the Department) to issue plaintiffs temporary certificates of registration required for participation in residency training programs at Illinois hospitals. The issues raised by plaintiffs on appeal may be summarized as follows: (1) whether an administrative agency may apply its new rules retroactively so as to prevent plaintiffs from receiving temporary certificates; (2) whether the Department’s rules and procedures were vague and arbitrary so as to violate plaintiffs’ substantive due process; (3) whether the hearing held before the special master protected plaintiffs’ right to procedural due process; (4) whether the Department’s classification of plaintiffs’ medical school and the alleged inconsistent application of its rules denied plaintiffs equal protection of the law and denied plaintiffs their privileges and immunities of national citizenship; (5) whether the Department’s use of the reports of a private accreditation association constituted an impermissible delegation of authority; and (6) whether the Department’s decision was against the manifest weight of the evidence and was based upon concerns not stated in its rules.

On cross-appeal, defendant raises the issue of whether the circuit court erroneously invoked the doctrine of equitable estoppel to enjoin the Department to issue a temporary certificate of registration to one of the plaintiffs.

Plaintiffs are nine doctors who attended the Universidad Central Del Caribe Escuela de Medicina de Cayey in Puerto Rico (hereinafter Del Caribe). Plaintiffs began their course of studies at Del Caribe in either the fall of 1976, January 1977 or September 1977. Each plaintiff graduated and received the degree of M.D. between June 1980 and December 1981. Each had been accepted into a residency training program at a Chicago area hospital including the residency program of defendant, Mount Sinai Hospital Medical Center of Chicago. The residency appointments commenced in July 1981, with the exception of plaintiff Figueroa Sanchez who had been in Mount Sinai’s training program since July 1980. Participation in the residency program was contingent upon plaintiffs’ ability to obtain a temporary certificate of registration from defendant, the Illinois Department of Registration and Education (hereinafter the Department).

Plaintiffs began submitting applications for temporary certificates to the Department in April and May of 1981, except for Figueroa Sanchez who first submitted his application in April 1980 but did not complete the application until April 1981. Plaintiffs assert that all but two of the plaintiffs had completed their applications prior to July 1, 1981.

The Medical Practice Act provides that, “Persons holding the degree of Doctor of Medicine *** who wish to pursue programs of graduate *** training in this State, may receive without examination, in the discretion of the Department, a two-year Temporary Certificate of Registration.” (Ill. Rev. Stat. 1981, ch. 111, par. 4422.) An applicant is required to fulfill several requirements including that “he is or will be a graduate of a medical school or college reputable and in good standing in the judgment of the Department.” (Ill. Rev. Stat. 1981, ch. Ill. par. 4422.) Under section 19 the Department is directed to make rules for establishing reasonable minimal standards of educational requirements to be observed by medical colleges and is further directed to determine the reputability and good standing of all schools. Ill. Rev. Stat. 1981, ch. 111, par. 4454.

Pursuant to this statutory mandate the Department promulgated a regulation which provided:

“RULE I
Medical colleges having rules and curricula commensurate with and equivalent to the rules and curricula of the College of Medicine of the University of Illinois, will be considered for accreditation by the Department of Registration and Education.”

This rule was in effect from September 3, 1973, to July 1, 1981. In the spring of 1980 the Joint Committee of the Legislature recommended that the Department revise Rule I to incorporate standards and criteria by which to evaluate medical schools. There also was concern apparently that Rule I, as it existed, was unconstitutional. Indeed, Rule I was later declared unconstitutional as an impermissible delegation of authority to an outside body. St. George’s University School of Medicine v. Department of Registration & Education (1982), 102 Ill. App. 3d 1208 (Rule 23 order).

The record indicates that the procedure used to determine acceptability of an applicant’s school under Rule I consisted of ascertaining whether that school was listed in a directory of American medical schools called The Directory of Residency Training Programs or, if a foreign school, in the directory of medical schools compiled by the World Health Organization. If the medical school attended by the applicant was listed in these directories, a temporary certificate of registration was issued.

The Directory of Residency Training Programs listed programs accredited by the Liason Committee on Medical Education (hereinafter LOME). LOME was created by the American Medical Association and the Association of American Medical Colleges for the accreditation of United States and Canadian schools. Del Caribe was listed in that directory.

Sometime in early 1980, the supervisor of the medical section of the Department became concerned about the quality of education received in new schools that were being formed in the Caribbean. Her concern was triggered by an article in a professional journal which was critical of these new proprietary schools. About this time she also saw a letter written by the Illinois medical school deans to Governor Thompson which advocated particular vigilance toward the credentials of Caribbean medical school graduates. Also, various newspaper articles dealing with these schools were circulated in the Department. The supervisor testified that she considered three schools to be in that category: St. George’s, Domenic and American University of the Caribbean. Sometime in 1980, the supervisor instructed the medical section to hold all applications from graduates of Caribbean schools. Consequently, the clerk who handled applications set aside, and did not process, applications from graduates of Del Caribe.

In the latter part of 1980 the Department discontinued using the World Health Organization book for determining the respectability and good standing of foreign schools. Instead, the Department used a list of foreign schools whose graduates had become licensed physicians in Illinois. Two Puerto Rican schools other than Del Caribe were mistakenly placed on the list of foreign schools.

The Department’s attention was first drawn to Del Caribe in April of 1981 when the Department began to receive numerous applications from its graduates. Since a revised version of Rule I was being drafted, the decision was made to hold the plaintiffs’ applications and evaluate Del Caribe according to the revised Rule I which would become effective on July 1, 1981. In June 1981, the Department requested the Dean of Del Caribe to forward material on the medical program and obtained material from LCME relative to its evaluation of Del Caribe. There was a delay in obtaining this material since LCME would not release the materials relative to its accreditation study of Del Caribe without permission from the school.

The Medical Examining Committee began its evaluation of Del Caribe in the fall of 1981. The evaluation was conducted under the standards contained in the revised Rule I. The revised rule sets forth in detail the minimum criteria necessary for a recommendation that a medical school is reputable and in good standing. The criteria include the prescribed duration of the program, the subject areas which must be covered in the curriculum, the necessity of a competent and balanced faculty sufficient for the size of enrollment and the maintenance of a clinical program in affiliation with a hospital. The revised Rule I provides that the Medical Examining Committee shall take into consideration but shall not be bound by the accreditation of a number of medical associations including LCME. The rule also contains a “grandfather” clause which provides that the Department has determined that all medical programs accredited by LCME and other medical associations meet the minimum criteria set forth in the rule and are, therefore, approved.

The chairman of the Medical Examining Committee asked a committee member to a review of the material received from Del Caribe and the survey reports prepared by LCME after each visit to the school by the accreditation team. A summary of these materials was submitted to the committee. At its October 14, 1981 meeting, the committee recommended approval of Del Caribe for students who had begun their studies there subsequent to September 1978. On Decernber 18, 1981, after further study of Del Caribe the committee decided to deny approval to graduates of Del Caribe who had begun their studies there before September 1978, during the first two years of Del Caribe’s existence. A letter was sent to plaintiffs notifying them that their applications were denied. Until the denial of the certificates plaintiffs were working in residency programs of Chicago hospitals.

The committee noted the following deficiencies in Del Caribe during its first two years of operation: the number of faculty was insufficient for the number of students; the absence of a clinical facility affected the entire program; no pathology course was listed in the curriculum; student records were not centralized nor was there sufficient information to determine the time students spent in laboratories versus the time spent in class; and the curriculum vitae of the faculty was not available.

Plaintiffs filed a complaint in the circuit court of Cook County seeking to compel the Department to issue temporary certificates of registration. The trial court remanded this matter to the Department for an evidentiary hearing. Extensive hearings were held before a special master.

The parties entered into several stipulations before the hearing officer. The Department stipulated that the plaintiffs performed satisfactorily in their various residency programs before the denial of the certificates forced them to leave these programs. The Department also stipulated that the plaintiffs’ performances were comparable to the performance of students from approved medical colleges. The Department further stipulated that if plaintiffs’ applications had been processed in accordance with the practices and procedures employed by the Department prior to July 1, 1981, temporary licenses would have issued because Del Caribe was listed in the 1980-1981 Directory of Residency Programs accredited by LOME. The special master concluded that the Department’s denial of the certificates was not contrary to the manifest weight of the evidence and that plaintiffs were not subject to discrimination by the Department in its administration of Rule I.

The trial court reviewed the findings of the special master and the record of the hearing. The court dismissed the complaint except the portion dealing with plaintiff Dr. Jose M. Figueroa Sanchez’ claim of estoppel. The court found that the Department’s conduct toward Figueroa Sanchez and the fact that it had informed him by letter that he was to receive a license estopped the Department from now denying Figueroa Sanchez a license.

Although plaintiffs have raised a number of equal protection and due process claims, their argument has been directed principally to the issue of whether the Department’s adoption of a new and more stringent rule and practice without notice to plaintiffs and the denial of temporary certificates to plaintiffs under that rule, despite the fact that plaintiffs’ applications were complete before the effective date of the new rule, constituted an abuse of the Department’s authority. Plaintiffs rely upon Gatica v. Department of Public Aid (1981), 98 Ill. App. 3d 101, 107, 423 N.E.2d 1292, 1296, to argue that an administrative agency may not abruptly deviate from prior rules with respect to the applicability of a fundamental directive without prior notice of its intended change. Plaintiffs assert that this is especially true where, as in the case at bar, plaintiffs’ fundamental liberty to practice in the professions is adversely affected by the change in administrative procedures and plaintiffs required certain knowledge of what is required of them by the State. (Burke v. Department of Registration & Education (1980), 83 Ill. App. 3d 647, 650, 404 N.E.2d 961, 963; Briscoe v. Kusper (7th Cir. 1970), 435 F.2d 1046.) Plaintiffs urge this court to follow the decision in Burke. There, the court ordered the Department of Registration and Education to consider the applications of plaintiff nurses under a former interpretation of an agency rule rather than under the current interpretation where it was clear that the nurses had relied upon the old interpretation, that they had no notice of the change in the interpretation, and that they would have been licensed under the former interpretation.

The Department argues that the key inquiry in determining the validity of an administrative activity is whether the action was undertaken in furtherance of the intent of the legislature as set forth in the statutes. The Department argues that the State is legitimately concerned with the qualifications of those practicing in the professions and that the General Assembly determined that graduation from a medical program which is “reputable and in good standing in the judgment of the Department” (Ill. Rev. Stat. 1981, ch. 111, par. 4422) is an absolute prerequisite for receipt of a temporary certificate. The Department argues that the statute expressly commits the determination of a medical program’s standing to the Department’s judgment and includes a grant of authority to do all that is reasonably necessary to execute that legislative power.

The Department argues that the supreme court, in Rios v. Jones (1976), 63 Ill. 2d 488, 348 N.E.2d 825, found a similar allegation of denial of due process in the. area of medical licensing to be without merit. The Department contends that under Rios, the manner in which the Department applied the revised Rule I is constitutionally permissible. In Rios, foreign doctors who held special licenses to practice medicine challenged the constitutionality of legislation which curtailed the renewal of their limited licenses and imposed additional examination requirements upon it. Previously, foreign doctors who had not obtained a license to practice medicine in all its branches were able to receive a limited license to practice medicine under certain restrictions in State hospitals. The court held that the doctors’ property interest in their licenses was not so great as to render unconstitutional legislation reasonably enacted under the State’s inherent power to protect public health and welfare. Rios v. Jones (1976), 63 Ill. 2d 488, 497, 348 N.E.2d 825, 829.

We find Rios to be inapposite to the case at bar. Here, we are not concerned with the constitutionality of legislation. Rather, the issue is whether an administrative agency may change its rules and apply them retroactively to permanently bar plaintiffs from participation in a residency program in the State of Illinois.

The Medical Practice Act (Ill. Rev. Stat. 1981, ch. 111, par. 4454), gives the Department authority to make rules for establishing reasonable minimum standards of educational requirements to be observed by medical colleges. Although an administrative agency may change its rules and practices, it may apply its rules retroactively only in the proper cases. Cartwright v. Illinois Civil Service Com. (1980), 80 Ill. App. 3d 787, 400 N.E.2d 581.

In determining whether an administrative agency may apply its newly adopted regulations retroactively, this court has outlined several considerations: whether the case is one of first impression, whether the agency action results in injury or substantial prejudice, whether the regulation represents an abrupt departure from well-established practice, the extent to which the party against whom the new regulation is applied relied on the former regulation and, the degree of the burden imposed upon that party. (Cartwright; see also Retail, Wholesale & Department Store Union v. NLRB (D.C. Cir. 1972), 466 F.2d 380.) In Cartwright, an employee of a State correctional center objected to the fact that his discharge hearing was brought before the newly created Inquiry Board, rather than the Employee Review Board, because the regulation creating the Inquiry Board had not yet become effective. There, this court held that the retroactive application of the regulation creating the Inquiry Board was proper. The structure of the Inquiry Board better served the ends of justice than its predecessor, the Employee Review Board, and plaintiff was not substantially prejudiced by the changed regulation since the two boards were similar (80 Ill. App. 3d 787, 792, 400 N.E.2d 581, 585).

In the case at bar, the revised Rule I represents an abrupt departure from the old rule and the practice employed by the Department. Under the former rule and the procedure for implementing it, Department approval of a medical program was foreseeable if that program was listed in the LOME Directory. The revised rule, however, requires in depth study of a medical school by the Medical Examining Committee to determine if the school is reputable and in good standing under the extensive criteria of the rule. Furthermore, the retroactive application of the revised Rule I substantially prejudices plaintiffs who are now prevented from pursuing the residency training programs to which they were accepted.

The United States Supreme Court has stated that in order to decide whether to grant or deny retroactive effect to a newly adopted administrative regulation:

“[RJetroactivity must be balanced against the mischief of producing a result which is contrary to a statutory design or to legal and equitable principles. If that mischief is greater than the ill effect of the retroactive application of a new standard, it is not the type of retroactivity which is condemned by law.” (SEC v. Chenery Corp. (1947), 332 U.S. 194, 203, 91 L. Ed. 1995, 2003, 167 S. Ct. 1575, 1581.)

A reviewing court may reject an administrative decision when the inequality of a retroactive application of an administrative regulation has not been counterbalanced by sufficiently significant statutory interests. (Retail, Wholesale & Department Store Union v. NLRB (D.C. Cir. 1972), 466 F.2d 380, 390.) The inequality of the retroactive application in the present case far exceeds the State’s statutory interest. The Department has stipulated that if the applications were processed at the time they were received the plaintiffs would have been granted licenses. The medical program at Del Caribe would have been acceptable. The Department, however, separated plaintiffs’ applications from the bulk of applications received and elected to hold these applications until the effective date of the new Rule I. The trial court found that “the practice of issuing these licenses was delayed, and, if you will, dilatory.” The inequality of applying Rule I retroactively is further evidenced by the fact that the Rule contains a broad “grandfathering” clause which provides that all schools approved by LOME are acceptable to the Department.

Although “[t]he State’s interest in promoting the general welfare by licensing physicians is of great importance” (Rios v. Jones (1976), 63 Ill. 2d 488, 497, 348 N.E.2d 825, 830), the fact that the Department issued licenses for several years in the manner revealed in the record suggests that the stringent requirements for approval of a medical school program established by the revised rule are not essential to protecting the State’s interest. Indeed, the record indicates that in 1980 the Department issued a temporary certificate to a graduate of Del Caribe who attended the school during the years the Department later found to be unacceptable. Furthermore, the Department has stipulated that plaintiffs’ performance in their residency programs, before the denial of the certificates forced them to leave those programs, was satisfactory and was comparable to the performances of students from approved medical schools. The Department has not made a sufficient showing that the deliberate delay in processing plaintiffs’ applications in order to evaluate Del Caribe under the revised rule was essential to protecting the State’s interest.

An agency’s construction of a statute or rule is considered persuasive, but not binding. (Howard v. Miller (1982), 108 Ill. App. 3d 1, 438 N.E.2d 680; Olin Corp. v. Pollution Control Board (1977), 54 Ill. App. 3d 480, 370 N.E.2d 3; see also Bastian v. Personnel Board (1982), 108 Ill. App. 3d 672.) We find from the record that the retroactive application of Rule I to the plaintiffs was not proper. Therefore, we reverse the Department’s determination that Del Caribe was not a medical school reputable and in good standing and hold that licenses should have issued to the seven plaintiffs whose applications were completed before July 1, 1981, in accordance with the Department’s stipulations before the special master. With respect to the two plaintiffs who applied after the effective date of the revised Rule I, we find that the good standing of Del Caribe having been determined under the old rule, the “grandfathering” clause of the new rule provides that they too are entitled to receive temporary licenses.

In view of our decision on this issue, we need not consider the remaining issues raised by the parties. Prior to oral argument on this case defendant Mount Sinai Hospital was dismissed by agreement between the parties. Plaintiffs have informed this court by supplemental brief that if granted the relief they seek they are all desirous of returning to Illinois to pursue residency training programs in this State.

Accordingly, the decision of the circuit court of Cook County is reversed and the cause remanded for further proceedings consistent with this opinion.

Judgment reversed and remanded.

GOLDBERG and O’CONNOR, JJ., concur.