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Judicial Rulings




Machine food same as store food

Most but not all food sold from vending machines is indistinguishable from that sold in stores according to the Illinois Supreme Court's decision of May 26. The Canteen Corporation had appealed a ruling by the Illinois Department of Revenue (DOR) that all food sold through its machines had to be taxed at the highest statutory rate, in contrast to other foods subject to varying exemptions.

The Retailers' Occupation Tax Act (see Illinois Revised Statutes 1981, ch. 120, sec. 441) sets reduced rates for "food. . . which is to be consumed off the premises where it is sold (other than. . . food which has been prepared for immediate consumption)" (section 2). The DOR's regulations implementing the act specifically say that "sales of food items in vending machines are sales of food for immediate consumption" (86 Ill. Adm. Code 130.310 (1985) sec. 2C), which would make it subject to the higher rate. The department said that this carried out the legislative intent to tax necessities at a lower rate than luxuries.

The high court disagreed, citing Canteen's exhibit of a box of items purchased at a convenience store and an identical assortment available from its machines. It said, "We fail to see why a bag of chips purchased at a grocery store is a necessity while the same bag of chips purchased from a vending machine is a luxury. Nor do we see why lobster should be considered a necessity merely because it is purchased at a grocery store." Noting that machines are placed in factories and educational institutions, the court said, "Laborers and students are not automatically excluded from the class of people who need tax relief."

Canteen had not sought exemption for all items it sells, since hot beverages and sandwiches might be purchased for immediate consumption. It estimated that these comprise 4.3 percent of its sales. The court agreed that they would be subject to the full tax.

Chief Justice Thomas J. Moran wrote the opinion for the unanimous decision in Canteen Corp. v. Department of Revenue (Docket No. 66014).


Who owns the water in the lake?

On June 20 the Illinois Supreme Court issued its first decision on the ownership of the waters in a privately owned lake.

The plaintiff owns roughly 20 percent of the bed of Lake Zurich and rents boats to the public for recreational use on the lake. A property owners association, whose members own most of the lake bed, sought to limit use of the lake by a scheme of quotas and permits.

Of the two prevailing approaches to the question, the court chose the civil law rule, under which ownership of part of the bed of a non-navigable lake entitles the owner and any licensees to reasonable use of the entire lake surface, as long as this does not infringe upon the reasonable use by other owners. The court rejected the common law approach, which would give the owner the right to exclude all others from the waters above the portion of the lake bed he or she owns. It said that this rule "can only frustrate the cooperative and mutually beneficial use of that important resource." The court pointed out that it was not asked to determine whether boat rental is a reasonable use of the rights of the owner of part of the lake bed, leaving that matter open.

Justice Ben Miller wrote for the unanimous finding in Beacham v. Lake Zurich Property Owners Association (123 Ill. 2d 227).


Beware of attorneys bearing gifts

In December 1981 Chicago attorney Walter Ketchum solicited gifts and loans from six other attorneys to Richard LeFevour, presiding judge of the first municipal district of the Cook County circuit, who needed money both for taxes and for his mother's hospital expenses. The six had either no contact or little contact with LeFevour in their practices and asserted that their intention was charitable. As a result of the Greylord investigation, in which LeFevour was convicted, the Attorney Registration and Disciplinary Commission charged that the six violated rule 7-110(a). It says: "A lawyer shall not give or lend anything of value to a judge. . . ." which the commission interpreted as a per se prohibition of any attorney gift of anything at all to a judge.

The high court held that "Attorney gifts or loans to judges, even if well-intended, are simply too susceptible to abuse, and too prone to creating an appearance of impropriety." It held, however, that it did not have to rule on the commission's contention that the prohibition is absolute because the Code of Judicial Conduct describes types of gifts that a judge can accept from an attorney (see 107 Ill. 2d Rule 65 (C)(4)). It set forth the principle: "Since it would not be reasonable to hold that a judge may accept something from a lawyer which the lawyer is not permitted to give, the Code and the rule must be read together." It also suggested some general principles for interpreting the code.

The court concluded that the actions by the six attorneys did not come under those permitted by the code, but since they occurred in 1981 and the code only became effective in 1987, they "acted without the guidance of precedent or settled opinion, and there was, apparently, considerable belief among members of the bar that they had acted properly." It therefore imposed no penalty on them.

The court wrote a per curiam opinion in In re Corboy et al, (Docket Nos. 65609, 65629, 65666, 65673, 65674, 65681 cons.). It issued a separate decision and per curiam opinion In re Ketchum (Docket No. 65431). (Judge John J. Stamos did not participate in either decision).

Ketchum and LeFevour were friends and neighbors of long standing. Ketchum had made a series of loans to LeFevour, but their frequency increased markedly after LeFevour became presiding judge. All, except perhaps the first, were never repaid. At times Ketchum had as many as 50 percent of his pending cases in the first district. In addition, LeFevour frequently referred cases to Ketchum.

The court concluded that "under any analysis of Rule 7-110(a), respondent's loans were improper. The evidence supports the conclusion that respondent intended to and did in fact receive an actual benefit from the loans made to LeFevour." The court said that "although it appears there had never been an occasion when LeFevour had actually favored him in the past, there was certainly the appearance of impropriety." It suspended Ketchum for two years.


August & September 1988 | Illinois Issues | 56



Rules are to be followed

The Illinois Supreme Court, in a decision filed June 20, left no doubt that defendants wishing to appeal convictions resulting from guilty pleas must follow its 10-year-old rule requiring a written motion to withdraw the plea (see 107 Ill. 2d R. 604(d)).

Four people who pleaded guilty to completely different charges wished to appeal their convictions. All four failed to comply with the requirement that they first file the required motion in the trial court. Their appeals were dismissed. This is not always the case. The court noted "a general perception in our criminal justice system. . . that a complete relaxation of [the rule] is acceptable in this State." It attributed this in part to a desire in the appellate division to shield defendants from suffering because of their attorney's incompetence.

The high court said, "Over the past decade, a somewhat confusing practice has grown up concerning Rule 604(d)." At the one extreme appellate courts have ruled ineffective assistance of counsel and returned the case to the trial court to permit the withdrawal. This means an unnecessary trip to the appellate court. Others have retained the appeal and decided it on its merits, which is not the proper function of the appellate level.

The high court affirmed that motions must be filed and heard in the trial court. If denied, the appellate court is to rule on appeals from the decision on the record established in circuit court. If the motion is not filed, the defendant must seek relief under the Post-Conviction Hearing Act (see Ill. Rev. Stat. 1985, ch. 38, sec. 122-1 et seq.) which permits claims that the right to effective assistance of counsel has been breached. For a hearing on such a motion the court ruled that the appropriate tests are to be found in Strickland v. Washington ((1984), 466U.S. 668, 686, 80 L. Ed. 2d 674, 692, 104 S.Ct. 2052, 2063).

Justice Howard C. Ryan wrote the majority opinion in People v. Wilk et al (Docket Nos. 64738, 64739, 64742, 64744 cons.). Justice William G. Clark, joined by Justice John J. Stamos, concurred that compliance with the rule is mandatory but failed to agree that, a post-conviction hearing is appropriate.


Court must approve modified child support agreements

An agreement by divorced parents modifying conditions of the divorce decree is not enforceable unless approved by the court. The Illinois Supreme Court handed down its ruling on June 20.

In this case the father surrendered visitation rights in exchange for relinquishment by the mother of child support. After seven years he resumed visitation. The mother filed for payment of the skipped support, medical and dental expenses, assistance with college expenses for the older child and increase in the level of support.

The Supreme Court pointed out that the courts must protect the interests of children in marital dissolution proceedings. "Allowing former spouses to modify a court-ordered child support obligation by creating a new agreement between themselves without judicial approval would circumvent judicial protection of the children's interests."

Justice Ben Miller wrote for the majority in Blisset v. Blisset (123 Ill. 2d 161). Justice Howard C. Ryan dissented with the portion of the opinion directing the father to make up the missed payments in a lump sum. He agreed with the father's claim that this would be barred under the principle of equitable estoppel, under which a person is damaged by reliance upon the statements or actions of another. The majority held that such a ruling would allow parents "to look past the best interests of their children and. . . frustrate the intent of child support and visitation orders."


August & September 1988 | Illinois Issues | 57



Limit on damages for nonfatal injury to child

Parents cannot use nonfatal injury to claim compensation for loss of society and companionship of a child, according to the Illinois Supreme Court's ruling of June 20.

In this case, among other charges, the parents sought compensation for themselves from the manufacturer of a drug given before the birth of a child with nonfatal injuries. They cited as precedent cases brought under the Wrongful Death Act as well as cases on loss of spousal consortium.

The court pointed out that since "the nonfatally injured victim retains his own cause of action against the tortfeasor. . . there is no danger that the injury. . . will go uncompensated. . . ." Allowing the parents' suit as well "would invite duplicate recoveries." It would also mean that the parents would have to prove a diminution of the child's society and require the court to perform "the sensitive, and perhaps impossible, task of evaluating — and perhaps assigning a monetary figure to — the reduced value of the parents' relationship with the affected child."

Justice Ben Miller wrote the opinion in Dralle v. Ruder (Docket No. 64424). Justice John J. Stamos did not participate. Justice William G. Clark wrote a special concurrence in which he disagreed totally with the reasoning of the majority and said that it could have reached the same result much more simply via the "agreement that a plaintiff alleging strict product liability can only recover for physical harm." He said, "Loss of companionship and society do not constitute 'physical harm.'"

Weight loss is not amusing

Chicago's so-called "yuppie tax" on dues in racquetball and health clubs was found unconstitutional by the Illinois Supreme Court. It filed its opinion on June 20.

The tax was imposed in December 1985 as an amendment to the Chicago Amusement Tax Ordinance (see Chicago Municipal Code sections 104 through 104-8 (1985)). It applies to "any entertainment or recreational activity offered. . . on a membership or other basis including. . . racquetball or health clubs. . . ." The court held that since the tax is imposed on dues paid by patrons, it concerns services offered by the clubs rather than tangible goods. The Illinois Constitution (art. VII, sec. 6(e)) forbids service taxes, but the Cities and Villages Act (see Ill. Rev. Stat. 1985, ch. 24, sec. 11-42-5) exempts amusements. The court cited the array of nonamusement activities, such as weight loss and nutritional counseling, carried out at such clubs, saying; "[W]e simply cannot conclude that a tax on their membership fees is a tax on either 'amusements' or 'places of amusement.' "

Justice Howard J. Ryan wrote a special concurrence to Justice William C. Cunningham's opinion in Chicago Health Clubs Inc. v. Picur (Docket No. 65386). He centered on the intention of the framers of the Constitution to prohibit imposition of service taxes by home-rule units.

F. Mark Seibert


August & September 1988 | Illinois Issues | 58



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