APPEAL from the Circuit Court of Lake County; the Hon. FRED H.
GEIGER, Judge, presiding.
MR. JUSTICE UNVERZAGT DELIVERED THE OPINION OF THE COURT:
This appeal grows out of a suit for an accounting whereby the plaintiffs seek to fix the liability of the Village of Mundelein (hereinafter the Village) on certain special assessment bonds issued by the Village from 1925 through 1928. Lesser purchased his bonds during 1964 through 1967; Sutton acquired hers by inheritance in 1959. This is the second appeal in this case, see Lesser v. Village of Mundelein (1975), 36 Ill. App.3d 433, reversed and remanded on appeal.
Some 131 of the bonds held by Lesser were declared by the circuit court of Lake County to be unenforceable by reason of having been stamped "Final Payment" at a date more than 10 years prior to the suit. There remained 26 bonds of Lesser's and eight bonds of Sutton's, which are the basis of the judgment granted by the trial court in this case. While contesting the amount allowed on the 26 bonds of Lesser and the eight bonds of Sutton which were considered by the trial court, Lesser also raises, by cross-appeal, the contention that the 131 bonds declared by the trial court to be invalid were not legally repudiated and are still valid and collectible.
The trial court, after a trial on the merits which consisted mainly of testimony and cross-examination of the plaintiffs' and defendant's accountants, awarded Lesser $12,874.48 and Sutton $2,231.33. These sums represent what the court found to be the plaintiffs' pro rata share of the sums collected by the Village on the assessments underlying the bonds and which had not been paid to the bondholders. The court also awarded Lesser $750 in attorney fees and $6,000 for accountant fees. In addition, although not asked for in the complaint, the trial court found that the Village owed $37,000 plus a supplemental sum of $10,564 as trustee in connection with public benefits assessed against the Village in special assessment Warrant No. 7, which the Village had never paid into the trust account.
The Village appeals the order of the trial court awarding Lesser $12,874.48 and Sutton $2,231.33 and the award of attorney and accountant fees as well as that part of the order concerning public benefits. The Village contends that Lesser is only entitled to $146 and Sutton nothing. Plaintiffs cross-appealed, contending they are entitled to some $39,000 (including interest) and that the allowance for attorney and accountant fees is substantially inadequate. Lesser also appeals the trial court's ruling eliminating the 131 bonds from the suit.
• 1 We consider first the plaintiffs' motion taken with the case to strike certain tables, computations and worksheets purporting to show errors in the plaintiffs' exhibits or supposedly showing compilations or summaries of amounts due to the plaintiffs. The plaintiffs' motion is based on the contention that none of the schedules, compilations, summaries or worksheets in question were ever submitted to the trial court during the trial of the case, therefore they constitute an attempt to introduce new evidence before this court.
The defendant denies that these schedules, compilations or worksheets are new evidence, contending that the same were submitted in oral argument before the trial court on post-trial motions prior to the judgment order being entered and that the amounts shown on these materials are all taken from exhibits in evidence and therefore are not new evidence. It appears from the nature of these materials that they are compilations of material introduced in one form or another as exhibits during trial and while new in the form presented, are not actually new materials, that is, new evidence introduced on appeal. The same information is contained in exhibits previously offered into evidence. This material is helpful to the court in this case, and we do not consider it to be new evidence which we cannot consider. The motion to strike this material is denied.
The Village's contention that the trial court erred in the award to Lesser proceeds from the differences in accounting theory between Fredericks, the plaintiffs' accountant, and Lyons, the Village's accountant. To understand the controversy over accounting concepts it must be realized that the plaintiffs' calculations as to the balances due them on the bonds they hold are based on the percentage of collections to total outstanding bond liabilities. Thus, not only the amount collected but the amount of total liability against which these collections must be applied are critical factors in determining the amounts that the plaintiffs can recover. There are several factors affecting the total outstanding bond liability against which collections should be applied to calculate the percentage of recovery due the plaintiffs: (1) "applications", that is, bonds used to pay assessments and being regarded as having been "applied" to the assessment; (2) certain bonds which were cancelled without payment after July 1957, following a final pro rata distribution; (3) interest deficiencies; (4) apportionment of surpluses between installments; and (5) alleged errors increasing the apparent collections due to a correction for missing records, referred to in the briefs as "plugged in" figures.
The question of applications is complicated by a change in the law in 1939, following the issuance of the bonds in question. At the time the bonds were issued the statute provided that a bond applied on an assessment was subject to cancellation, thus eliminating the balance remaining, if any, after paying the installment. This provision, however, was not always followed in practice and it appears that it was the custom of the Village to merely reduce the face amount of the bond by the amount of the assessment and return the bond to the bondholder. *fn1 In this treatment of such "applications" the plaintiffs' accountant regarded such bonds as having been cancelled and reduced the outstanding bond liability accordingly, thus increasing the percentage of collections by reducing the amount against which the collections should be applied in calculating the plaintiffs' recovery.
Certain bonds were cancelled by the Village following a final pro ration and distribution in July of 1957, and no further payment was made on these bonds. Fredericks treated these cancellations as reducing the amount of outstanding bond liability, thus again increasing the percentage of collections on the bonds remaining.
Interest collections were another source of dispute. In Fredericks' calculations, interest deficiencies were not made up out of principal where there was a deficiency in an interest installment. Lyons, the Village's accountant, contended that where there was a deficiency in an interest installment it should be made up out of principal collections, since payments of interest come first, thus reducing the amount allocated to principal collections. It was also alleged by the Village that in Fredericks' calculations surpluses in collections in certain installments were improperly allocated to other installments which were deficient, thus increasing the collections in such installments. Since each installment is regarded as a separate entity, this affected the net result to the plaintiffs.
In making his initial calculations, Fredericks discovered a "gap" or hiatus in the Village assessment roles between 1931 and November 1934. This he made up for by taking principal collections shown on the Village audit reports from 1929 to 1958, subtracting therefrom the collections taken from special assessment rolls and the Village records after November 1, 1934, and then dividing the differences equally between the years in which the hiatus occurred. The Village contends these figures could have been calculated more accurately by using only the audit reports for 1931 to 1934, and it would be indicated thereby that collections were considerably less than by the "plug-in" method used by Fredericks.
It will be observed that the areas of conflict delineated above proceed from opposing accounting concepts. The issues are technical, requiring special expertise, and the testimony was voluminous — nearly 700 pages — and highly contradictory. The trial court did not clearly rule on all the matters in controversy, nor does ...