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Zickuhr v. Bowling

OPINION FILED JUNE 19, 1981.

KEITH ZICKUHR ET AL., PLAINTIFFS-APPELLEES,

v.

WILLIAM M. BOWLING, DIRECTOR, DEPARTMENT OF LABOR, ET AL., DEFENDANTS-APPELLANTS.



APPEAL from the Circuit Court of Ogle County; the Hon. F. LAWRENCE LENZ, Judge, presiding.

MR. JUSTICE VAN DEUSEN DELIVERED THE OPINION OF THE COURT:

The defendant, the Department of Labor, appeals from the entry of a declaratory judgment which determined that a project financed and authorized under the Industrial Project Revenue Bond Act (Ill. Rev. Stat. 1979, ch. 24, par. 11-74-1 et seq.) was not a public work as defined by the Illinois prevailing wage act (Ill. Rev. Stat. 1979, ch. 48, par. 39s-1 et seq.).

The stipulated statement of facts submitted to the trial court revealed the following information. In May of 1979 Central Quality Industries, Inc. (Central), submitted to the city of Polo a proposed agreement between the city and Central. Under this proposed agreement, a warehouse would be built by Central as an addition to its current facilities. The agreement further provided that funding for the construction would be obtained through municipal bonds issued by the city of Polo under the Industrial Project Revenue Bond Act (hereinafter Bond Act) (Ill. Rev. Stat. 1979, ch. 24, par. 11-74-1 et seq.) Central also submitted to the city a proposed bond purchase agreement between the city and the proposed purchaser of the bonds, the Dixon National Bank. Shortly thereafter, the city passed a preliminary bond resolution.

By June 1, 1979, Central had entered into a contract with the plaintiff, Keith Zickuhr. Under this contract, Zickuhr was named the general manager of the proposed construction. In August of 1979, the city and Central executed the proposed project agreement. Under the agreement, the parties agreed to comply with the statutory requirement of the Bond Act. By the end of August, the city had passed the final bond resolution, and the city and the Dixon National Bank had executed the bond purchase agreement.

The formal closing of the financing arrangement occurred on October 1, 1979. At that time, Central conveyed its real and personal property to the city for use as security. The city then leased all of the property back to Central. Under this lease, Central had the right to purchase back all the property. The city also pledged the property as security to the Dixon National Bank, and issued its bonds to the bank. The bank issued a $350,000 check to Central for construction of the warehouse. This was done pursuant to the Bond Act.

The Bond Act establishes a scheme whereby municipalities, through the issuance of bonds, may finance:

"(2) * * * in whole or in part the cost of the acquisition, purchase, construction, reconstruction, improvement, betterment or extension of any industrial project." (Ill. Rev. Stat. 1979, ch. 24, par. 11-74-4(2).)

Section 11-74-4(3) of the Act authorizes the municipality to lease the industrial project for an amount which will defray the costs of issuing the bonds and create a fund for redemption of the bonds. While legal title to the project remains in the municipality, the municipality has the power:

"(6) To sell and convey such industrial project, including without limitation the sale and conveyance thereof subject to a mortgage as provided in this Division 74, for such price and at such time as the governing body of the municipality may determine." Ill. Rev. Stat. 1979, ch. 24, par. 11-74-4(6).

The bonds issued under the Bond Act, however, create no liability against the municipality. (Ill. Rev. Stat. 1979, ch. 24, par. 11-74-10.) The bonds do create a lien, however, on the project's rental proceeds. Ill. Rev. Stat. 1979, ch. 24, par. 11-74-9.

The warehouse was completed in November of 1979. During the construction, the plaintiff Zickuhr was authorized to and did hire laborers from the other named plaintiff, Viking Builders, Inc., to work on the project.

In March of 1980, the defendant, the Illinois Department of Labor, pursuant to the prevailing wage act (Ill. Rev. Stat. 1979, ch. 48, par. 39s-1 et seq.) issued a subpoena requesting that plaintiffs produce, among other things, the employment records for the construction of the warehouse. Plaintiffs obtained temporary injunctive relief from the subpoena, and filed a suit for declaratory relief. In this suit, plaintiffs sought a declaratory judgment to the effect that the project, financed and authorized under the Bond Act, was not subject to the provisions of the prevailing wage act.

The trial court, after considering the stipulated statement of facts and the briefs submitted by the parties, found that the warehouse was not a "public work" as defined in the prevailing wage act; therefore, the act was inapplicable and the ...


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