Libertyville Township v. Woodbury , 121 Ill. App. 3d 587 ( 1984 )

JUSTICE LINDBERG

delivered the opinion of the court:

This case addresses the question whether a township may require an applicant for General Assistance to enter into a contract to repay as a condition to the receipt of benefits from the township. Because we hold such a contract to be permissible in this case, we reverse the judgments of the trial court in favor of the applicant.

On February 1, 1980, defendant Patricia Woodbury applied to the plaintiff, Libertyville Township (township), for General Assistance (GA) benefits. On the application form, Woodbury listed her house as real estate owned. At the end of the form were two statements relevant to this case: one stating that a lien would be placed on the recipient’s real estate and the other being a promise by the recipient to repay the township for aid given. Woodbury signed the form and received $1,090.26 in GA benefits from the township between February 1, 1980, and March 18, 1981. On February 2, 1980, a notice of lien was filed by the township on Woodbury’s house. The township supervisor testified that he would not have disbursed any aid to Wood-bury if she had not agreed to repay the township. Woodbury did not repay any part of the benefits she received.

On or about April 30, 1981, Woodbury sold her house for $42,000, receiving after all prorations a balance of $15,705.49. Defendant Mid America Title Company issued a title commitment on Woodbury’s house indicating the existence of the township’s lien against the property. Mid America Title Company holds an escrow account in an amount sufficient to pay the lien.

On May 8, 1981, the township initiated this action in the circuit court of Lake County in a complaint seeking contractual recovery from Woodbury and seeking recovery from Mid America Title Company of the money it holds in escrow. Count I was based on a written contract to repay; count II was based on an oral agreement to repay out of .specific proceeds; and count III, against Mid America Title Company, sought recovery on a lien securing the debt created by the alleged contract. Defendants’ motion for summary judgment on all counts was denied as to the first two counts and granted as to the third. On the day of trial, count II was dismissed. After trial on count I, the trial court entered judgment for Woodbury, but based its decision solely on the legal issues without reference to findings of fact. The township filed timely notice of appeal, specifying the summary judgment on count III and the judgment on count I. Thus, the dismissal of count II is not before this court. See 87 Ill. 2d R. 303(c)(2).

On appeal, three issues are raised: (1) whether the township was authorized to enter into the contract to repay, (2) whether there was consideration to support the promise to repay, and (3) whether the township was authorized to impose a lien to secure the contract.

While a township has the general power to enter into contracts (Ill. Rev. Stat. 1979, ch. 139, par. 38), Woodbury argues and the trial court held that the contract at issue is not enforceable because the township had no statutory authorization to make a contract requiring repayment of GA benefits. Although the Illinois Public Aid Code provides various means of recovery by the State or a unit of local government from the recipient of benefits or his relatives, estate or insurer (see Ill. Rev. Stat. 197.9, ch. 23, pars. 3 — 9, 5 — 13, 7 — 6, 11 — 22, 11 — 22a), including voluntary repayment (Ill. Rev. Stat. 1979, ch. 23, par. 11 — 14), there is no statutory right of recovery by a township against a nonmedical GA recipient. However, the Illinois Public Aid Code does not expressly answer the question of whether a township may properly obtain a contractual right of recovery of GA benefits. Thus, the question becomes one of statutory construction.

In addressing another issue of interpretation of the GA article of the Illinois Public Aid Code (Ill. Rev. Stat. 1979, ch. 23, pars. 6 — 1 through 6 — 7), the court in Miller v. Department of Public Aid (1981), 94 Ill. App. 3d 11, 418 N.E.2d 178, expressed a policy favoring a broad reading of governmental discretion. The Miller court, noting that the purposes of the GA program are limited in achievability by fiscal considerations, opined that constriction of that discretion which is granted to the Department of Public Aid to cope with economic concerns would defeat the legislature’s aim. (94 Ill. App. 3d 11, 17, 418 N.E.2d 178, 184.) Similarly here, discretion statutorily granted to the township should be read broadly so as to further the legislature’s aim to provide the greatest benefit possible under the fiscal constraints present.

Section 6 — 2 of the Illinois Public Aid Code provides that the “amount and nature” of GA benefits “shall be determined in accordance with local budget standards.” (Ill. Rev. Stat. 1979, ch. 23, par. 6 — 2.) Article XII gives GA administrative powers to the township supervisor. (Ill. Rev. Stat. 1979, ch. 23, pars. 12 — 21, 12 — 21.2, 12 — 21.8; Johnson v. Town of City of Evanston (1976), 39 Ill. App. 3d 419, 350 N.E.2d 70.) In Johnson, the court held that the supervisor has the authority to set the basic maintenance level in the community, from which the amount of aid is to be determined under section 6 — 2. (39 Ill. App. 3d 419, 425, 350 N.E.2d 70, 74-75.) In Cozart v. Winfield (7th Cir. 1982), 687 F.2d 1058, the court stated that section 6 — 2 authorizes township supervisors to create regulations governing the “amount and nature” of GA benefits; hence, it interpreted the statute to permit a township regulation barring benefits to employees fired for cause until 30 days after termination as a regulation governing the “nature” of GA benefits. Similarly here, we view the township supervisor’s requirement of an agreement to repay as relating to the “nature” of GA benefits.

Woodbury attempts to distinguish Cozart v. Winfield (7th Cir. 1982), 687 F.2d 1058, by asserting that that case involved a formal regulation adopted by the town board. In fact, the regulation in Cozart was apparently promulgated by the supervisor. Still, the evidence in this case shows the requiring of an agreement to repay to be merely a practice of the supervisor. The formal, written set of standards for the township’s GA program, entitled “Rules, Procedures and Eligibility,” does not mention agreements to repay, although it does state that “[ljiens will be placed against real estate property whenever possible.” Section 6 — 2, in providing for the determination of the “nature” of the GA benefits, does not specify whether that determination must be by formal regulation or may be by administrative practice. While this question might serve as the basis of a procedural due process claim (see White v. Roughton (7th Cir. 1976), 530 F.2d 750), no such claim has been raised here.

Woodbury also argues that the regulation in Cozart was a reasonable one and the requirement at issue here is not. Since the requirement of a repayment agreement is aimed directly at easing local budgetary concerns and would facilitate the giving of greater benefits, it directly serves the legislature’s intent. As applied in this case, the requirement served to aid a property-owning individual who was without cash for a time. The attempt to enforce the promise to repay did not occur until Woodbury voluntarily sold her real property and, thus, had the cash to repay the township. We view the township’s precondition to GA benefits to be reasonable under the facts of this case.

While no further Illinois cases can be found on point, two recent decisions from other States lend persuasive support to our interpretation that the township was authorized to enter into the contract here. In Oliver v. Petit (Me. 1981), 432 A.2d 428, a statute specifically gave municipalities and the State the right to recover general assistance costs from recipients in a civil action while barring such an action where repayment would make the recipient again eligible for more assistance or where the recipient is currently receiving any public assistance. The recipient in Oliver had requested general assistance during the time her application to the Federal Social Security Administration for Supplemental Security Income was pending. She signed an agreement by which she authorized the Social Security Administration to, in effect, reimburse the municipality and the State for their general assistance to her out of the initial SSI payment. In exchange, she received the municipality’s prompt aid during the Federal application pendency. The Supreme Judicial Court of Maine determined that the statute did not bar the contract. More significant to the present case, the court held that the State’s department of human services had the authority to enter into such a reimbursement contract under general statutory provisions giving the department “general supervision of the interests of health and life of the citizens of the State” and authority to “issue rules and regulations considered necessary and proper for the protection of life, health and welfare, and the successful operation of the health and welfare laws.” (432 A.2d 428, 431.) In Tunnicliff v. Pennsylvania Department of Public Welfare (1978), 483 Pa. 275, 396 A.2d 1168, a similar contractual reimbursement scheme was upheld by the Supreme Court of Pennsylvania. These cases permit the State or local government to require a promise to reimburse as a condition to the extension of benefits to an applicant whose need is temporary because of expected federal assistance. Here, the township likewise required a promise to reimburse as a condition to the extension of GA benefits where Woodbury faced a cash-flow problem subsequently resolved by the voluntary sale of her home.

The cases cited by the parties are not helpful. The township relies upon City of Champaign v. City of Champaign Township (1959), 16 Ill. 2d 58, Dandurand v. County of Kankakee (1902), 196 Ill. 537, and Tazewell County v. Cooney (1919), 215 Ill. App. 617, for the proposition that public policy, even in the absence of statutory authorization, would permit recovery by the State of disbursed public aid in appropriate cases. Those cases involved recovery from a deceased’s estate or for medical benefits, recoveries of the type now authorized by statute. (See Ill. Rev. Stat. 1979, ch. 23, pars. 3 — 9, 5 — 13, 7 — 6, 11 — 22.) They do not necessarily indicate that recovery is appropriate here and we therefore do not rely upon them for our disposition.

Woodbury relies upon Nelson v. Fogelstrom (1972), 5 Ill. App. 3d 804, 284 N.E.2d 339, for the proposition that no debtor-creditor relationship is created by the giving of public aid benefits authorized by statute. Nelson so held by approving the reasoning of another case which stated that the benefit payments at issue “were not made in pursuance of any contract between the parties.” (City of Worcester v. Quinn (1939), 304 Mass. 276, 277, 23 N.E.2d 463, 464, quoted in Nelson v. Fogelstrom (1972), 5 Ill. App. 3d 804, 807, 284 N.E.2d 339, 341.) Thus, Nelson cannot be said to deny the existence of a debtor-creditor relationship where public aid benefits are made in pursuance of a contract between the parties.

In sum, in light of the policy to broadly read governmental discretion under the Public Aid Code so as to provide the greatest benefits possible under the fiscal constraints present, we hold that the township was authorized to enter into the agreement at issue in this case.

Woodbury next contends that her agreement to repay the township is unenforceable for lack of consideration. She notes that the only thing she received in exchange for her promise to repay was the GA payments. Woodbury argues that because the township was already obligated to make those payments, they cannot constitute legal consideration.

Consideration is a basic element for the existence of contract and any act or promise which is of benefit to one party or disadvantage to the other is a sufficient consideration to support a contract. (Steinberg v. Chicago Medical School (1977), 69 Ill. 2d 320.) However, the promise to do something which one is already legally obligated to do is not consideration and creates no new obligation. (Moehling v. W E. O’Neil Construction Co. (1960), 20 Ill. 2d 255; In re Marriage of Roth (1981), 99 Ill. App. 3d 679, 426 N.E.2d 246.) Thus, if the township would have been legally obligated to pay Woodbury the benefits she received even without the agreement, then there was no consideration.

However, as the previous discussion demonstrated, the township supervisor possesses discretion in the granting or denial of GA benefits. While he is subject to the guidelines of the Public Aid Code and “shall provide public aid to all persons eligible” to receive GA benefits (Ill. Rev. Stat. 1979, ch. 23, par. 12 — 21.8), the township supervisor has discretion in determining the standards of eligibility. (See Johnson v. Town of City of Evanston (1976), 39 Ill. App. 3d 419, 350 N.E.2d 70; Cozart v. Winfield (7th Cir. 1982), 687 F.2d 1058.) We must give wide latitude to the township supervisor in the exercise of that discretion. (See Miller v. Department of Public Aid (1981), 94 Ill. App. 3d 11, 418 N.E.2d 178.) His determination to provide benefits only upon a promise to repay was a valid exercise of his discretion. By providing benefits to Woodbury, the supervisor decreased the limited funds from which other eligible GA applicants might receive benefits. The supervisor’s discretionary acts of determining Woodbury’s eligibility and awarding her benefits from the limited township GA funds constituted sufficient consideration for Woodbury’s promise to repay.

Finally, we address the issue of the township’s authorization to impose the lien in this case. The trial court, in granting summary judgment on count III, concluded that there was no such authorization under the statutes. The township contends that the lien was a valid means of enforcing the contractual debt Woodbury owed.

There is no express statutory imposition of a township lien such as the one asserted here. The Illinois Public Aid Code does grant to the State or local governmental unit a charge or lien under certain circumstances as a means of recovery (Ill. Rev. Stat. 1979, ch. 23, pars. 3 — 10, 11 — 22), but does not specifically create a lien as a means for recovery of nonmedical GA benefits. None of the acts relating to liens creates a lien in the present case. (Ill. Rev. Stat. 1979, ch. 82, par. 1 et seq.) The township act (Ill. Rev. Stat. 1979, ch. 139, par. 1 et seq.) creates a township lien in only one provision unrelated to the present case. Ill. Rev. Stat. 1979, ch. 139, par. 126.16.

However, while none of the relevant statutes expressly provides for the type of lien asserted here, it is equally true that none of the statutes specifically or impliedly exclude the creation of such a lien. A lien may be created by agreement or by statute. (Streams Sports Club, Ltd. v. Richmond (1982), 109 Ill. App. 3d 689, 440 N.E.2d 1264, aff’d (1983), 99 Ill. 2d 182; Sullivan v. Sudiak (1975), 30 Ill. App. 3d 899, 333 N.E.2d 60.) In Streams Sports Club, this court held valid a lien which, while not provided for by statute, was expressly created by contract. (109 Ill. App. 3d 689, 692, 440 N.E.2d 1264, 1267.) In the application form signed by Woodbury, just above the promise to repay, it is stated, “A lien will be placed against any and all real estate property owned by a recipient.” Thus, the lien asserted here was expressly provided for by contract.

While a lien in general may be contractually created in the absence of statute, the township may only have contracted for the lien if it had authority to do so. This is because townships have no inherent powers, but only those granted to them by the constitution or authorized by statute. (Diversified Computer Services, Inc. v. Town of York (1982), 104 Ill. App. 3d 852, 433 N.E.2d 726.) Among the powers of townships granted by statute are the power to make contracts and the power to acquire and to hold real and personal property for the use of its inhabitants. (Ill. Rev. Stat. 1979, ch. 139, par. 38.) Since a lien is property (A.S.S. Wrecking Co. v. Guaranty Bank & Trust Co. (1971) , 2 Ill. App. 3d 66, 275 N.E.2d 724, rev’d on other grounds (1972) , 53 Ill. 2d 249), there exists general statutory authority for a township to acquire a lien by contract.

Woodbury relies upon Nelson v. Fogelstrom (1972), 5 Ill. App. 3d 804, 284 N.E.2d 339, to deny the township’s authority to impose a lien. In Nelson, the State attempted to assert a lien on a trust property interest of the estate of a deceased recipient of Old Age Assistance. The appellate court first denied the existence of the lien under section 3 — 10 of the Illinois Public Aid Code (Ill. Rev. Stat. 1967, ch. 23, par. 3 — 10) because that section establishes a lien only on real property while the beneficial interest at issue was personal property. (5 Ill. App. 3d 804, 805-06, 284 N.E.2d 339, 340-41.) The court secondly denied the existence of an equitable charge or lien on the reversionary interest of the plaintiff-settlor. In so holding, the court quoted Corpus Juris Secundum as follows: “ ‘Statutory provisions relating to the creation and satisfaction of the lien are controlling; and it is only pursuant to statutory provisions that the authorities may have a lien for assistance furnished.’ ” 5 Ill. App. 3d 804, 806, 284 N.E.2d 339, 341, quoting 81 C.J.S. Social Security and Public Welfare sec. 31 (now sec. 110 (1977)).

This stated rule runs counter to the township’s assertion that public policy, in the absence of statute, would support the lien claimed here. However, it does not contradict our position that the lien is sustainable as contractually created pursuant to the general statutory powers of the township.

Accordingly, we reverse the summary judgment of the circuit court of Lake County on count III; we reverse the judgment of that court on count I; and we remand for further proceedings consistent with this opinion.

Reversed and remanded.

UNVERZAGT, J., concurring.