R.W. Dunteman Co. v. C/G Enterprises Inc.

R.W. Dunteman v. C/G Enterprises, Nos. 81853, 82184 cons.
(2/20/98)
Docket Nos. 81853, 82184 cons.--Agenda 18--September
1997.
R.W. DUNTEMAN COMPANY, Appellee, v. C/G
ENTERPRISES, INC., et al. (C/G Enterprises, Inc., et al.,
Appellants).
Opinion filed February 20, 1998.

CHIEF JUSTICE FREEMAN delivered the opinion of the
court:
Section 1.1 of the Mechanics Lien Act (770 ILCS 60/1.1
(West 1992)) provides:
"An agreement to waive any right to enforce or claim
any lien under this Act where the agreement is in
anticipation of and in consideration for the awarding of
a contract or subcontract, either express or implied, to
perform work or supply materials for an improvement
upon real property is against public policy and
unenforceable. This Section does not prohibit
subordination or release of a lien under this Act." 770
ILCS 60/1.1 (West 1992).
The circuit court of Cook County found section 1.1 to be
unconstitutionally vague. Defendants appealed directly to this
court pursuant to Supreme Court Rules 302(a)(1) and 304(a)
(134 Ill. 2d R. 302(a)(1); 155 Ill. 2d R. 304(a)). For the reasons
that follow, we hold that section 1.1 is not unconstitutionally
vague and, therefore, reverse the trial court.

BACKGROUND
In March 1996, plaintiff, R.W. Dunteman Company
(Dunteman), entered into a written contract with the City of Des
Plaines (the City) to perform road work for a street
reconstruction project. Paragraph 18 of the contract provided:
"The Subcontractor waives and releases any and all
liens or rights to lien arising under this Agreement or
because of any work or materials heretofore or hereafter
furnished against the premises of the Owner or any
adjoining or contiguous premises or against any funds
due or to become due to the Contractor. The provisions
of this paragraph will extend to all subcontractors,
materialmen and workmen engaged or employed under
or through the Subcontractor and every contract, both
written and oral, made by the Subcontractor or in the
execution of the Subcontractor's work, will expressly so
provide."
Dunteman entered a subcontract agreement with C/G Enterprises
(C/G) to perform underground sewer and water construction for
the project. Subsequently, C/G entered into various agreements
with F&M Trucking Company (F&M), Ziebell Water Service
Products, Inc. (Ziebell), and Christofano Equipment Company,
Inc. (Christofano), for the provision of labor and materials for
the project.
During the course of construction, the City became
dissatisfied with C/G's performance and directed Dunteman to
remove C/G from the project. Pursuant to section 23 of the
Mechanics Lien Act (the Act) (770 ILCS 60/23 (West 1992)),
C/G filed a lien in the amount of $246,826.08 against the
monies due Dunteman from the City. Thereafter, F&M and
Christofano also filed liens on the project, totalling $71,793.17.
The City advised Dunteman that funds would not be released
because of the lien claims.
Dunteman filed a complaint for declaratory judgment,
requesting a court determination that the lien claims filed with
the City were void and unenforceable pursuant to paragraph 18
of the subcontract agreement. C/G counterclaimed, arguing that
paragraph 18 was void as against public policy based upon
section 1.1 of the Mechanics Lien Act.
Subsequently, F&M's and Christofano's motions to
intervene in C/G and Dunteman's action were granted. F&M
and Christofano also counterclaimed against Dunteman, C/G,
and the City, alleging, inter alia, foreclosure of lien and breach
of contract. F&M also filed a motion for partial summary
judgment, arguing that it had no actual or constructive notice of
the no-lien provision contained in Dunteman's contracts with
C/G and the City.
On July 17, 1996, the court entered an agreed order
directing the City to deposit the sum of $312,732.05 in escrow
with the clerk of the court for work done on the road project.
On August 14, 1996, the court ruled that the lien filed by C/G
was void and unenforceable and that section 1.1 was
"unconstitutionally vague and unenforceable." Therefore, the
trial court granted Dunteman's complaint for declaratory
judgment and denied C/G's motion for partial summary
judgment. The trial court also ordered the City to pay Dunteman
all sums owed for work performed and not to withhold any
amount sought by subcontractors due to liens filed by those
subcontractors.
F&M and Christofano thereafter filed motions for
reconsideration of the August 14, 1996, order. At a hearing held
on the motions, the trial court declared the liens of the sub-
subcontractors invalid and unenforceable as a derivative of the
principal contract between Dunteman and C/G. C/G appealed the
court's August 14, 1996, order. The trial court granted Ziebell
leave to intervene and join in the appeal. This court consolidated
the appeals of Ziebell and F&M with the appeal filed by C/G.
Christofano has not joined in this appeal.

ANALYSIS
Jurisdiction
Initially, Dunteman argues that this court lacks jurisdiction
to hear this appeal because C/G's notice of appeal was not
timely filed. The timely filing of a notice of appeal is both
jurisdictional and mandatory. 134 Ill. 2d R. 301; Hassan v.
Wakefield, 204 Ill. App. 3d 155, 157 (1990). A reviewing court
must be certain of its jurisdiction prior to proceeding in a cause
of action. Hassan, 204 Ill. App. 3d at 157.
This appeal was filed pursuant to Supreme Court Rules 302
and 304(a) (134 Ill. 2d R. 302; 155 Ill. 2d R. 304(a)). Supreme
Court Rule 304(a) provides for an immediate appeal in cases
involving judgments as to fewer than all the parties or claims
only if the trial court has made an express written finding that
there is no just reason for delaying either enforcement or appeal
or both. An order is final and appealable if it terminates the
litigation between the parties on the merits or disposes of the
rights of the parties, either on the entire controversy or a
separate part thereof. Blott v. Hanson, 283 Ill. App. 3d 656
(1996).
The order entered on August 14, 1996, stated that judgment
was entered in favor of Dunteman and against C/G. The order
also stated that "[t]he court finds there is no just reason to delay
either enforcement or appeal of the order." At the August 28,
1996, hearing, C/G sought clarification regarding whether the
August 14, 1996, order included F&M and Christofano. The trial
judge explained that the order had not been directed towards,
nor could it be effective against, F&M and Christofano because
he had not considered F&M's motion for summary judgment
and Christofano had not yet filed its motion for partial summary
judgment. Accordingly, C/G timely filed its notice of appeal on
September 13, 1996, because the August 14, 1996, order
terminated the litigation between C/G and Dunteman.
Dunteman argues that because C/G filed its notice of appeal
before the trial court disposed of the parties' last pending post-
judgment motions, C/G's notice of appeal was premature and
void, and this court lacks jurisdiction to hear C/G's appeal
pursuant to Supreme Court Rule 303(a)(2) (155 Ill. 2d R.
303(a)(2)). The resolution of this issue requires us to detail the
events which transpired in the circuit court after the entry of the
August 14, 1996, order.
On August 26, 1996, Christofano filed a motion seeking
reconsideration of the trial court's August 14, 1996, order. On
August 28, 1996, F&M appeared before the court to present a
motion for reconsideration. All parties were present at the
subsequent hearing on the motions, and counsel for Dunteman
noted that F&M's motion for reconsideration had not been
briefed and was never presented to the court. Rather than
addressing either F&M's or Christofano's motion to reconsider,
the court ordered Christofano to file its motion for partial
summary judgment on or before August 30, 1996, and allowed
Dunteman 14 days to respond to F&M's motion for partial
summary judgment. The court set both matters for hearing on
September 30, 1996.
Supreme Court Rule 303 governs the timing of appeals
from final judgments of the circuit court. 155 Ill. 2d R. 303.
Subpart (a)(1) of the rule states that a notice of appeal must be
filed within 30 days after entry of the final judgment appealed
from, or "if a timely post-trial motion directed against the
judgment is filed, *** within 30 days after the entry of the order
disposing of the last pending post-trial motion." 155 Ill. 2d R.
303(a)(1). Subpart (a)(2) states that a notice of appeal filed
before entry of an order disposing of the last pending post-trial
motion has no effect and must be withdrawn by the party who
filed it. This is so whether the post-trial motion was filed before
or after the notice of appeal. A new notice of appeal must be
filed within 30 days after entry of the order disposing of the last
pending post-trial motion. 155 Ill. 2d R. 303(a)(2).
We do not believe that Supreme Court Rule 303 applies to
the instant case. Based on the record, it appears that F&M's and
Christofano's motions for reconsideration were abandoned due
to the court's clarification that the August 14, 1996, order was
not directed towards F&M and Christofano. Therefore, C/G
timely filed its notice of appeal on September 13, 1996.
Dunteman further claims that if we conclude that C/G's
notice of appeal was timely filed, we must also conclude that
F&M's and Ziebell's notices were untimely since the final order
in the case was entered on August 14, 1996. We disagree. As
discussed above, the order for August 14, 1996, disposed of
C/G's lien claim only. On September 30, 1996, the trial court
ruled against F&M's and Christofano's motions for partial
summary judgment. The order also states that "this order is
appealable as to the sub-subcontractors as of today's order."
Thus, the September 30, 1996, order constituted a final
judgment with respect to the sub-subcontractors, and, therefore,
F&M and Ziebell timely filed their notices of appeal on October
29, 1996.
Notwithstanding the above, Dunteman claims this court
lacks jurisdiction over the appeals of F&M and Ziebell because
they improperly appealed directly to this court. F&M and
Ziebell filed their appeals pursuant to Supreme Court Rule
302(a)(1) (134 Ill. 2d R. 302(a)(1)), which allows appeals
directly to this court where a statute of this state has been held
invalid. Dunteman contends, however, the trial court voided
F&M's and Ziebell's liens based not on the constitutionality of
a statute but, instead, on principles of contract law. Dunteman
refers to the trial court's September 30, 1996, order, which
states that "[t]he liens of the Sub-subcontractors are declared
invalid and unenforceable as being derivative of the principle
contract [between Dunteman and C/G]." Also, the court's
October 29, 1996, order, declares:
"The ruling of September 30, 1996 as against the
Sub-subcontractors, including Ziebell, regarding the
invalidity of the liens filed by the Sub-subcontractors,
was not based on constitutional grounds regarding the
applicability of 60/1.1, but rather, for the reasons set
forth on the record of September 30, 1996."
As intervenors, F&M and Ziebell have all the rights of C/G.
See 735 ILCS 5/2--408(f) (West 1992); Klem v. Mann, 279 Ill.
App. 3d 735, 740 (1996). As a result, F&M and Ziebell can take
any action that C/G would be entitled to take. See In re Petition
for Submittal of the Question of Annexation to the Corporate
Authorities, 282 Ill. App. 3d 684, 691 (1996). Thus, we find
F&M's and Ziebell's right to appeal directly to this court on the
issue of the constitutionality of section 1.1 arises directly from
their uncontested right to intervene in C/G's action. See Braun
v. Retirement Board of the Firemen's Annuity & Benefit Fund,
125 Ill. App. 3d 132, 137 (1984).
Dunteman argues, alternatively, that the trial court was
divested of jurisdiction to hear F&M's and Christofano's
motions for partial summary judgment because C/G had filed its
notice of appeal prior to the hearing on the motions. Dunteman
is correct that, ordinarily, the filing of a notice of appeal divests
the trial court of jurisdiction to enter further orders of substance
in a cause. Chavin v. General Employment Enterprises, Inc., 222
Ill. App. 3d 398, 405 (1991); Homeowners Organized to Protect
the Environment, Inc. v. First National Bank, 167 Ill. App. 3d
714, 720 (1988). However, orders entered after the filing of the
notice of appeal are valid if the substantive issues on appeal are
not altered so as to present a new case to the reviewing court.
See In re Estate of Goodlett, 225 Ill. App. 3d 581, 587 (1992);
Chavin, 222 Ill. App. 3d at 405.
Here, C/G appeals the August 14, 1996, order finding that
the lien waiver agreement between C/G and Dunteman was
valid and enforceable and that section 1.1 of the Mechanics Lien
Act, which prohibits lien waiver agreements, is
unconstitutionally vague. The September 30, 1996, order
disposing of the motions for partial summary judgment declared
the liens of F&M and Christofano invalid and unenforceable as
a derivative of the principal contract between Dunteman and
C/G. Thus, we find that the September 30, 1996, order did not
affect the issue on appeal or change the nature of the appeal.

The Constitutionality of Section 1.1
Defendants contend that the trial court erred in finding
section 1.1 unconstitutionally vague. They argue that the
meaning and intent of section 1.1 is unambiguous. We note that
it is our duty to construe acts of the legislature so as to affirm
their constitutionality and validity if it can reasonably be done.
Lee v. Nationwide Cassell, L.P., 174 Ill. 2d 540, 549 (1996).
However, a legislative act which is so vague, indefinite and
uncertain that the courts are unable, by accepted rules of
construction, to determine with any reasonable degree of
certainty what the legislature intended will be declared to be
void. Spinelli v. Immanuel Lutheran Evangelical Congregation,
Inc., 118 Ill. 2d 389, 402 (1987), quoting Mayhew v. Nelson,
346 Ill. 381, 387 (1931). When faced with a vagueness
challenge to a statute, a court considers not only the language
used, but also the legislative objective and the evil the statute is
designed to remedy. People v. Meyers, 158 Ill. 2d 46, 59 (1994).
Dunteman argues that section 1.1 is vague because the
legislative intent of section 1.1 is not evident from reviewing the
legislative history of the section. There appears to have been no
discussion or debates regarding Public Act 87--361, which
created section 1.1 (Pub. Act 87--361, sec. 1, eff. January 1,
1992). Regardless, our determination of the legislative intent
must always begin with the statutory language itself. The
express language of an enactment is the best indication of the
intent of the drafters, and that language should be examined and
given its plain and ordinary meaning before resort is made to
other interpretive aides. Henry v. St. John's Hospital, 138 Ill. 2d 533, 540-42 (1990); see also Aluma Systems, Inc. v. Frederick
Quinn Corp., 206 Ill. App. 3d 828, 840 (1990).
Section 1.1 states, in pertinent part:
"An agreement to waive any right to enforce or claim
any lien under this Act where the agreement is in
anticipation of and in consideration for the awarding of
a contract or subcontract *** is against public policy
and unenforceable." (Emphasis added.) 770 ILCS 60/1.1
(West 1992).
It is evident from the language of the statute that the legislature
intended to prohibit provisions waiving the right to a mechanic's
lien because such provisions are against public policy. This
intent is consistent with the overall purpose of the Mechanics
Lien Act and, more importantly, with section 23 of the Act,
which is applicable to this case.
The purpose of the Act is to permit a lien upon premises
where a benefit has been received by the owner and where the
value or condition of the property has been increased or
improved by reason of the furnishing of labor and materials.
First Federal Savings & Loan Ass'n v. Connelly, 97 Ill. 2d 242,
246 (1983), quoting Colp v. First Baptist Church, 341 Ill. 73,
76-77 (1930). In particular, section 23 of the Mechanics Lien
Act allows subcontractors of a general contractor employed by
a public body to establish a lien on funds in the possession of
the public body. Section 23 is materially different from all other
liens established under the Act in that it is the sole remedy of
a subcontractor against a public body. Alexander Lumber Co. v.
Coberg, 356 Ill. 49, 54 (1934); Aluma Systems, Inc. 206 Ill.
App. 3d at 840-41.
Courts have consistently upheld lien waiver provisions
executed prior to performance on public contracts. See S.J.
Groves & Sons Co. v. Midwest Steel Erection Co., 666 F. Supp. 129 (N.D. Ill. 1986); Northbrook Supply Co. v. Thumm
Construction Co., 39 Ill. App. 2d 267 (1963); Ramco Industries,
Inc. v. Board of Trustees of the University of Illinois, 226 Ill.
App. 3d 173 (1992). However, effective January 1, 1992, section
1.1 declared lien waivers executed in anticipation of and in
consideration for entering into contracts void as against public
policy. As stated earlier, the public policy behind the Act is to
protect subcontractors who have, in good faith, expended labor
and materials to improve real property at the direction of the
owner or a general contractor. Section 23 is the sole vehicle
through which subcontractors may claim liens on funds for
public projects as an effective means to compelling payment.
The surrender of such protective rights through lien waivers as
a prerequisite to obtaining a contract or subcontract contravenes
the purpose of the Act.
Dunteman also argues, however, that section 1.1 is
unconstitutionally vague because it directly conflicts with
section 21 of the Mechanics Lien Act, which deals with liens on
private funds. 770 ILCS 60/21 (West 1992). A legislative act
which is so incomplete or conflicting and inconsistent in its
provisions that it cannot be executed will be declared
inoperative and void. Spinelli, 118 Ill. 2d at 402, quoting
Mayhew v. Nelson, 346 Ill. 381, 387 (1931).
Public Act 87--361, which created section 1.1, also
amended section 21. See Pub. Act 87--361, eff. January 1, 1992.
Specifically, the phrase "and the waiver is not prohibited by this
Act" was added to section 21 as follows:
"If the legal affect of any contract between the owner
and contractor is that no lien or claim may be filed or
maintained by any one and the waiver is not prohibited
by this Act, such provision shall be binding ***." 770
ILCS 60/21 (West 1992).
Dunteman argues that this court is presented with a statute
which provides in one section that lien waiver agreements are
void as against public policy, and in another section offers
multiple declarations that lien waiver agreements are valid and
enforceable. The trial court agreed with Dunteman, stating that
"it is impossible for this Court to determine with any reasonable
degree of certainty what the legislature intended in enacting 770
ILCS 60/1.1."
Defendants argue that sections 21 and 1.1 can be read
together without conflict. Defendants contend that the meaning
of the amended language in section 21 evidences the legislative
intent that not all agreements that waive liens are invalid. We
agree. As earlier stated, section 1.1 voids, as against public
policy, lien waivers that are executed in anticipation of and in
consideration for obtaining construction contracts. However,
lien waivers would not be prohibited if a party agrees to waive
a lien claim after work has been completed. We do not believe
that section 1.1 conflicts with section 21 or any other provisions
in the Act such that it cannot be executed or given any precise
or intelligible application in the circumstances under which it is
intended to operate. Therefore, we hold that section 1.1 is not
unconstitutionally vague.
Dunteman further argues that section 1.1 is unconstitutional
because it limits the right to freedom of contract under the
federal (U.S. Const., art. I, sec. 10) and state (Ill. Const. 1970,
art. I, sec. 16) constitutions. We note that subsequent to filing
of this appeal, C/G filed a motion to strike, arguing that
Dunteman did not raise this issue in the lower court. The motion
was taken with the case.
It is well settled that issues not raised in the trial court may
not be raised for the first time on appeal. See Committee for
Educational Rights v. Edgar, 174 Ill. 2d 1, 11 (1996). Dunteman
argues that it raised this constitutional issue in its reply in
support of its complaint for declaratory judgment. Reviewing the
record, we find that Dunteman did raise this issue in its
pleadings. The trial court also addressed and ruled favorably on
this issue. Therefore, we deny C/G's motion to strike and
address the substance of Dunteman's argument. Citing to the
contract clause of the federal (U.S. Const., art. I, sec. 10) and
state (Ill. Const. 1970, art. I, sec. 16) constitutions, Dunteman
argues that section 1.1 unconstitutionally limits the parties' right
to contract as they wish. Dunteman's argument is flawed,
however, because it confuses laws which limit the freedom to
contract with those that prohibit the state from impairing
preexisting contractual rights. These concepts, as we will
explain, are separate and distinct.
The right of individuals to contract as they deem fit is
grounded in the due process clause, which provides that no
person "shall be deprived of life, liberty or property without due
process of law." Ill. Const. 1970, art. I, sec. 2; see U.S. Const.,
amend. V; see also Board of Regents of State Colleges v. Roth,
408 U.S. 564, 33 L. Ed. 2d 548, 92 S. Ct. 2701 (1972);
Weinstein v. University of Illinois, 811 F.2d 1091, 1096 (7th Cir.
1987). In general, economic legislation satisfies the requirements
of due process so long as it is rationally related to a legitimate
governmental purpose. Regan v. Taxation with Representation,
461 U.S. 540, 547, 76 L. Ed. 2d 129, 137, 103 S. Ct. 1997,
2001 (1983).
On the other hand, the contract clause applies to state
actions that "impair the obligation of pre-existing contracts."
General Motors Corp. v. Romein, 503 U.S. 181, 189, 117 L. Ed. 2d 328, 339, 112 S. Ct. 1105, 1111 (1992). Thus a "statute
cannot be said to impair a contract that did not exist at the time
of its enactment." Texaco, Inc. v. Short, 454 U.S. 516, 531, 70 L. Ed. 2d 738, 752, 102 S. Ct. 781, 793 (1982); see Reding v.
Texaco, Inc., 598 F.2d 513, 519 (9th Cir. 1979).
Because section 1.1 predated the waiver agreement at issue,
there can be no statutory impairment of the contract. Therefore,
Dunteman's reliance on the contract clause is entirely misplaced.
Whether a statute unconstitutionally impinges upon an
individual's freedom to contract is a due process question. We
believe that section 1.1 furthers the purpose of the Mechanics
Lien Act to protect subcontractors by allowing liens as a means
of compelling payment. Thus, section 1.1 does not violate due
process because it advances a legitimate governmental interest.
Defendants raise additional arguments in support of their
lien waivers. However, because we hold that section 1.1 is not
unconstitutionally vague, we need not reach the merits of
defendants' other arguments.

CONCLUSION
For the foregoing reasons, we hold that section 1.1 of the
Mechanics Lien Act is not unconstitutionally vague. We
therefore reverse the judgment of the circuit court of Cook
County and remand this cause to that court for further
proceedings consistent with this opinion.

Reversed and remanded.