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People Ex Rel. Resnik v. Curtis & Davis

OPINION FILED FEBRUARY 24, 1978.

THE PEOPLE EX REL. FRANK RESNIK, DIRECTOR OF THE STATE DEPARTMENT OF GENERAL SERVICES, PLAINTIFF-APPELLANT,

v.

CURTIS AND DAVIS, ARCHITECTS AND PLANNERS, INC., ET AL., DEFENDANTS-APPELLEES.



APPEAL from the Circuit Court of Sangamon County; the Hon. HARVEY BEAM, Judge, presiding. MR. JUSTICE SLATER DELIVERED THE OPINION OF THE COURT:

Rehearing denied April 4, 1978.

The State sued several architects and contractors for breach of contract. The trial court dismissed the amended complaint for two reasons: First, the State was not the proper party plaintiff; second, the defendant, Curtis & Davis, Architects and Planners, Inc. (C&D Inc.), was not a party to the contract.

Plaintiff appeals from that order dismissing its claims against fewer than all of the parties, pursuant to Supreme Court Rule 304 (Ill. Rev. Stat. 1975, ch. 110A, par. 304).

On April 26, 1966, the Illinois Building Authority (IBA) entered into a contract with Curtis & Davis Partnership (C&D Partnership) and Samuel E. Sanner & Associates, Inc., as joint venturers, for services preliminary to and during construction of the Vienna Correctional Center. On May 27, 1968, Sachs Electric Co. (Sachs) entered into a contract with IBA under which Sachs would provide electrical contracting services. On May 29, 1968, S.M. Wilson, Inc. (Wilson), entered into a contract with IBA under which Wilson would provide general contracting services. Prior to all of this, on August 20, 1965, a construction lease pertaining to the correctional center had been entered into with IBA as lessor and the State of Illinois, Department of Finance, as lessee.

The State acknowledges that at the time the contracts were entered into, the IBA was a public corporation and not a State agency. The State could not sue to enforce contracts entered into between the IBA and third parties. However, the State argues that the IBA has been made a State agency and, therefore, the State is the proper party plaintiff.

The State argues that it has statutorily succeeded to the interest of the IBA, that it was a third-party beneficiary, or that it had been assigned rights under the aforementioned lease.

A brief description of the nature of the IBA will be helpful.

The IBA was created by statute in 1961. (Illinois Building Authority Act, Ill. Rev. Stat. 1961, ch. 127, par. 213.1.) It served as a mechanism for the funding of State building projects at a time when the 1870 Constitution forbade a State budget deficit in excess of $250,000, absent a referendum. Funding was accomplished by issuing IBA bonds, which were not State obligations. The bonds would be repaid over an extended period by leasing IBA buildings to the State for rental payments. It has been expressly decided that the IBA is not a State agency, but a separate corporation entity. Berger v. Howlett (1962), 25 Ill.2d 128, 182 N.E.2d 673; see also Electrical Contractors Association of City of Chicago, Inc. v. Illinois Building Authority (1966), 33 Ill.2d 587, 213 N.E.2d 761.

The constitution adopted in 1970 did not contain a debt proscription, and the funding scheme became unnecessary. In 1975, the General Assembly made several changes in the IBA Act. The State argues that these changes made the IBA a State agency. The provisions relied upon are: Illinois Building Authority Act (Ill. Rev. Stat. 1971, ch. 127, pars. 213.5(i), 213.6(d)); Capital Development Bond Act of 1972 (Ill. Rev. Stat. 1972 Supp., ch. 127, par. 757); Capital Development Board Act (Ill. Rev. Stat. 1973, ch. 127, par. 773); State Comptroller Act (Ill. Rev. Stat. 1973, ch. 15, par. 207); and, the State Auditing Act (Ill. Rev. Stat. 1973, ch. 15, par. 301.7).

The import of these citations, say defendants, is that the IBA has been made a State agency for some limited purposes, but for the purposes of suing on its contracts, the IBA is a legal entity, separate and apart from the State.

• 1 Of the statutes cited above, the Capital Development Board Act is the most pertinent. Section 3 (par. 773) thereof expressly defines a State agency to include the IBA. Other provisions of the Act make it clear that the Board is to assume functions previously delegated to the IBA, and is to oversee the IBA and other State agencies in their performance of other functions. This leads us to the conclusion that the status of the IBA, as defined in Berger, has been altered by the legislature so that the IBA is now a State agency. Accordingly, we hold that the State of Illinois is the proper party plaintiff to sue for breach of an IBA contract.

Defendants claim that such a result would impair contractual obligations in violation of the Federal and State constitutions. Especially is this so, they say, because now they cannot counterclaim against the State. However, they can counterclaim to the extent that there would not be a net judgment against the State, and they may proceed against the State in the court of claims. We do not find a constitutional deprivation.

• 2 Count II, against Sachs, alleges that all rights of recovery for breach of contract had been assigned to the State by the IBA in the lease of August 1975. The lease provision relied upon by plaintiff is not specifically identified in the complaint, but a reading of the lease discloses this:

"* * * Lessor shall further procure from the said contractor or contractors all material and equipment guarantees and warranties as may be required by the specifications for the construction of said Facilities, and hereby assigns to Lessee during the lease term all right, title and interest therein and agrees to do all things and execute all instruments ...


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