Case Title: Cornue v. Department of Public Aid

Citation: 354 N.E.2d 359, 64 Ill. 2d 78

Docket Number: 

State: illinois

Court: Illinois Supreme Court

Date: 1976-06-28T00:00:00Z

Document:
64 Ill. 2d 78 (1976)
354 N.E.2d 359
EDNA CORNUE et al., Appellees,
v.
THE DEPARTMENT OF PUBLIC AID et al., Appellants.
No. 47821.

Supreme Court of Illinois.
Opinion filed June 28, 1976.
Rehearing denied September 30, 1976.
*79 William J. Scott, Attorney General, of Chicago (John D. Whitenack, Assistant Attorney General, of counsel), for appellants.
Robert A. Simon, of Chicago, for appellees.
Reversed and remanded.
MR. JUSTICE SCHAEFER delivered the opinion of the court:
The plaintiffs in this case are 20 elderly persons, each of whom entered into a contract with Deutsches Altenheim (German Old People's Home), a not-for-profit corporation organized in 1885 to maintain a home for aged Germans in needy circumstances. The terms of each *80 contract provided that the plaintiff (designated as applicant) conveyed to the Home:
In consideration for the transfer to the Home of all of the plaintiff's present and future assets the Home agreed to:
During 1971 each of the plaintiffs applied for public assistance. Those applications were denied by the Cook County Public Welfare Department on the ground that the needs of the applicants were met by their contracts for lifetime care. After a hearing the Illinois Department of Public Aid affirmed the ruling of the county department. On administrative review the circuit court of Cook County held that the plaintiffs were eligible for public assistance, and directed that payments be made retroactively to each plaintiff to the date of the application for assistance. The Appellate Court, First District, affirmed. (29 Ill. App.3d 546.) Because this result conflicts with the earlier decision of the appellate court in Reynolds v. Department of Public Aid (1975), 26 Ill. App.3d 933, we granted leave to appeal.
The Public Aid Code contains the following relevant provisions concerning the eligibility of an applicant for financial assistance:
The rules of the Illinois Department of Public Aid state:
The validity of this rule was attacked in Reynolds v. Department of Public Aid (1975), 26 Ill. App.3d 933, and it was there sustained upon the following grounds:
These views are in accord with the principles applied to contracts of this type, which were thus stated in Corzine v. Keith (1943), 384 Ill. 435, 441:
The opinion of the appellate court in the present case neither disputes nor discusses the ground upon which the Department's regulation was sustained in the Reynolds case. It appears rather to have based its contrary conclusion upon circumstances which were thought to be peculiar to this case, and thus to render the ordinary rules inapplicable. We therefore turn to those circumstances.
When this case was before the Department in 1971, there were 197 residents in the Home, of whom 119 had life care contracts like those of the 20 plaintiffs involved in this case. Seventy-eight residents did not have such contracts. It was stipulated that the Home had expended more funds in caring for each of the 20 plaintiffs than it had received from that plaintiff. Over the years since 1952, when the first of the 20 life care contracts here involved was entered into, the cost of care has very greatly increased. In 1952 the Home had 274 residents and 8 employees. At that time those residents who could do light work were required to do so. In 1967 this requirement was eliminated. The Home now has 197 residents and 114 employees. The Home employs two physicians whose services are available to residents without cost. Most of the cost of hospital care and medication is paid by Medicare; the Home attempts to recover any portion not so paid from relatives of the residents.
The increase in the number of employees is attributed in large part to the construction of a new infirmary which was opened in 1967. The circumstances that occurred in 1966 which gave rise to construction of the infirmary were thus described by the president of the Home:
It is the construction of the new infirmary that is primarily relied upon to set this case apart from the host of others in which efforts to avoid the obligations of life care contracts have been repudiated. The net value of the new infirmary and its equipment, after depreciation, was $1,433,000 in 1971 when the hearing took place. While the construction of the new infirmary greatly increased the value of the physical assets of the Home, its construction necessitated the sale of securities and the hiring of many more employees. The record shows that the operating losses of the Home were $251,000 in 1969, $424,000 in 1970, and $412,000 in 1971. The record does not show how assets received under life care contracts from residents and from new applicants for admission are treated upon the books of the Home.
We find no ambiguity on the face of the contracts between the Home and its residents, and ambiguity is not created by the circumstance that the Home has adopted the same policy with respect to expelling a resident whether or not he has a life care contract. The Home seeks to avoid its obligations under the 20 life care contracts involved in this case on the ground that those contracts "have become impossible to perform because of orders issued by the Department of Health of Cook County requiring the Home to build the new infirmary." The role of the county was, however, as a matter of law confined to the enforcement of health and safety requirements. *85 Whether to build a new infirmary, and if so, the amount of money to be spent in building and equipping it were decisions made by the Home, not by the county.
Whether the Home will be compelled by increasing costs to close its doors at some future date depends upon many factors  among them the value of the assets that will come to it under past and future contracts for lifetime care.
The judgments of the circuit and appellate courts are reversed, and the cause is remanded to the circuit court of Cook County with directions to affirm the decision of the Illinois Department of Public Aid.
Reversed and remanded, with directions.
MR. JUSTICE CREBS, dissenting:
I dissent for the reasons stated in the opinion of the appellate court. 29 Ill. App.3d 546.