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Chi. Ex Rel. Konstantelos v. Dun. Tr. Eq. Co.

OPINION FILED MARCH 25, 1983.

THE CITY OF CHICAGO EX REL. DEMETRI KONSTANTELOS ET AL., APPELLEES,

v.

DUNCAN TRAFFIC EQUIPMENT COMPANY ET AL., APPELLANTS. — THE CITY OF CHICAGO, APPELLEE,

v.

DUNCAN TRAFFIC EQUIPMENT COMPANY ET AL., APPELLANTS.



Appeal from the Appellate Court for the First District; heard in that court on appeal from the Circuit Court of Cook County, the Hon. Nathan M. Cohen, Judge, presiding.

JUSTICE GOLDENHERSH DELIVERED THE OPINION OF THE COURT:

Demetri Konstantelos (hereafter plaintiff) appealed from the order of the circuit court of Cook County dismissing his action filed as a taxpayer pursuant to section 1-5-1 of the Illinois Municipal Code (Ill. Rev. Stat. 1979, ch. 24, par. 1-5-1) in the name and for the benefit of the city of Chicago against Duncan Traffic Equipment Company (hereafter Duncan). He also appealed from the order dismissing with prejudice, pursuant to a stipulation between the parties to the suit, the action brought by the city of Chicago against defendant Duncan. The appellate court reversed and remanded (102 Ill. App.3d 304), and we allowed the petition for leave to appeal of Duncan and two of its corporate officers, and that of John Geocaris, deputy commissioner of the Department of Streets and Sanitation of the city of Chicago.

On April 12, 1979, plaintiff filed this action against Duncan Parking Meter Maintenance Company, Inc. (hereafter Duncan Parking), Jerome Robinson and Ted Mieczynski, as president and vice-president of Duncan Parking, respectively, John Geocaris, deputy commissioner of streets and sanitation, and the treasurer of the city of Chicago in his official capacity. The complaint alleged that defendant, Duncan Parking, had a contract to inspect the city's parking meters and that it submitted invoices to the city totaling $270,681 for inspections during the months of January and February 1979 which were not in fact performed. The complaint alleged that "near blizzard conditions" prevented inspection of parking meters, that Geocaris, Robinson and Mieczynski were aware that this work was not performed, and that a conspiracy existed among these defendants "whereby Geocaris is to pay all bills submitted by Duncan whether or not Duncan in fact performs services for the city of Chicago."

On April 23, 1979, Duncan Parking answered the complaint, stating that it had no contract with the city of Chicago to inspect parking meters, and moved to dismiss the complaint. On April 26, 1979, an order was entered giving plaintiff until May 17 to respond to Duncan Parking's motion to dismiss.

After extensive correspondence and discussion with the office of the corporation counsel, plaintiff, joined by intervenor, Clifford Kelley, a Chicago alderman, on June 12, 1979, filed an amended complaint. Defendant, Duncan, was joined as a party defendant, and it was alleged in the amended complaint that defendant Robinson, president of Duncan, was also the president of Duncan Parking, which contributed financially to Geocaris' ward organization; that Duncan's vice-president, Mieczynski, was a financial contributor to Geocaris' ward organization; that there was a contract between defendant and the city; that invoices for meter inspections for January and February 1979 were submitted to the city although no inspections took place; that all of the defendants except the city treasurer knew that the work was not performed and could not have been performed and that the sworn invoices submitted to the city were false and contained material misrepresentations of fact; that defendant Geocaris gave his approval of these payments despite his knowledge that the sworn invoices were fraudulent, or, in the alternative, Geocaris approved the invoices with reckless disregard as to whether any work was actually performed. The amended complaint prayed, inter alia, for an accounting and for actual and punitive damages against Robinson, Mieczynski and Geocaris.

On May 30, 1979, the city of Chicago filed an action against defendant Duncan alleging that the city had paid Duncan for services which were not performed and seeking judgment "for any and all sums found to have been paid for work reported and billed for by Defendants * * * but never actually performed." It was alleged in the complaint that "[r]ecords furnished to the City of Chicago by the First National Bank of Chicago indicate that at least 636 meters located in the metered facilities maintained by the city were not collected during the months of January and February, 1979, despite the fact that meters are to be collected at least once each month"; that the repair and maintenance reports for those same meters indicated that full service was rendered to those meters by Duncan; that comparison of collection reports with Duncan's maintenance reports would indicate that at least 636 meters were not properly serviced by Duncan; that discovery of Duncan's books and records was necessary to determine the accuracy of Duncan's invoices.

On the same date on which his amended complaint was filed, plaintiff filed a motion to consolidate his case with that of the city and to disqualify the office of the corporation counsel from representing the city in this litigation. He also moved that the court appoint plaintiff's counsel to represent the city in the consolidated cases. The circuit court consolidated the causes "for trial" and ordered that the parties brief the motion concerning disqualification of corporate counsel.

In the motion to disqualify the office of the corporation counsel it was stated that subsequent to the filing of the motion to dismiss the original complaint, plaintiff's counsel sought to obtain from the city of Chicago's corporation counsel's office the name of the corporation, and a copy of the contract providing for the inspection of parking meters in the city of Chicago. On April 26, 1979, plaintiff's attorney spoke with James Daley, assistant corporation counsel, and asked Daley whether the corporation counsel's office, without the necessity of a subpoena, would divulge the name of the corporation which inspected the city's parking meters. Mr. Daley responded that he would call plaintiff's attorney within a few days. Two subsequent telephone calls elicited essentially the same response, and in a third telephone conversation Mr. Daley suggested that "it would be better" for plaintiff's attorney to contact Mr. James Arnold, purchasing agent of the city of Chicago. A letter was delivered by messenger to Arnold on May 2, 1979, requesting a copy of the contract and asking that the copy be forwarded by May 7. A copy of the contract was not received by the date requested, so plaintiff's attorney called Mr. Daley, who replied that he would call back promptly concerning the matter. Plaintiff's attorney received no response from Mr. Daley, so on May 10, 1979, a subpoena for deposition was served on Mr. Arnold. On May 14, 1979, a contract was delivered to plaintiff's attorney's office accompanied by a letter from M. Ellen Sutton, assistant corporation counsel, but the document proved to be the wrong contract. On May 17, 1979, James Daley supplied plaintiff's attorney with the name of the proper corporation. Plaintiff then filed a motion to dismiss Duncan Parking as a defendant and for leave to file an amended complaint naming the proper corporate defendant.

That same day, plaintiff's attorney again requested assistant corporation counsel to furnish him a copy of the contract between the city and Duncan. The assistant corporation counsel told plaintiff's counsel that a copy would be sent to him. Again, no contract was sent to plaintiff's counsel. Duncan then moved to dismiss the amended complaint on the basis, inter alia, that the amended complaint was barred by the pendency of a prior suit filed by the city of Chicago in the same cause; that the plaintiffs lacked standing because they did not demand that the city of Chicago file an action against defendants, and because the complaint failed to state a proper statutory taxpayers' action since there was no allegation that any of the expenditures made by the city were without legal authority.

The city filed a request for production of documents seeking detailed information regarding reports and records concerning the inspection and repair of meters during the months of January and February of 1979. Plaintiff filed a request for production of documents, objects and tangible things seeking to discover a wide variety of information including the shareholders, corporate officers and corporate directors of Duncan, their political affiliations and recent contributions to political parties, and all invoices, vouchers, and requests for payment submitted from the date the contract was entered into by defendant Duncan. Duncan objected to plaintiff's discovery request. Apparently no response was ever made to the city's request for production of documents.

On September 27, 1979, the circuit court allowed Duncan's motion to dismiss the amended complaint because it alleged no demand that the city bring the action and ruled that plaintiff's motion to disqualify the corporation counsel was thus rendered moot. On October 19, 1979, the city and Duncan entered into a stipulation and settlement agreement providing for payment by Duncan to the city of the sum of $5,000. That same day the circuit court dismissed the city's cause with prejudice subject to and conditioned upon the terms of the stipulation and settlement agreement. Only plaintiff Konstantelos appealed from the order.

Defendants contend that the appellate court erred in holding that plaintiff had standing to bring this action. They argue that plaintiff had no standing to sue in the name and for the benefit of the city of Chicago because plaintiff's complaint alleges neither that he made a demand on the appropriate officials to sue nor sufficient facts to show that such a demand would have been futile.

Plaintiff contends that while common law taxpayer actions require a prior demand that the proper public official bring suit before a taxpayer may maintain such an action, no such requirement may be read into section 1-5-1 of the Illinois Municipal Code (Ill. Rev. Stat. 1979, ch. 24, par. 1-5-1). He notes that "It is the general rule that in the absence of a controlling statute, a demand upon the proper public officers to bring suit in the name of the taxing unit is a condition precedent to the maintenance of a taxpayer's action." (74 Am.Jur.2d Taxpayers' Actions sec. 31 (1974); see also Reiter ...


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