No. 3-07-0402 consolidated with No. 3-07-0462

______________________________________________________________ _ __ Filed June 16, 2008 IN THE APPELLATE COURT OF ILLINOIS THIRD DISTRICT A.D., 2008 WEATHER-TITE, INC., an ) Appeal from the Circuit Court ILLINOIS CORPORATION, ) of the 12th Judicial Circuit ) Will County, Illinois Plaintiff, ) ) v. ) ) UNIVERSITY OF ST. FRANCIS, ) STONITSCH CONSTRUCTION, INC., ) QUAKER WINDOW PRODUCTS ) COMPANY, EXCEL ELECTRIC, INC.,) LAFORCE, INC., SCOTT KARLI ) d/b/a SK SALES, MIDWEST ) ARCHITECTURAL GLASS, INC., ) UNKNOWN OWNERS AND NON-RECORD ) CLAIMANTS, ) ) Defendants. ) ______________________________) No. 06-CH-1131 ) 06-CH-1135 EXCEL ELECTRIC, INC., an ) ILLINOIS CORPORATION, ) ) Counter-Plaintiff- ) Appellant, ) ) vs. ) ) UNIVERSITY OF ST. FRANCIS, ) STONITSCH CONSTRUCTION, INC., ) WEATHER-TITE, INC., QUAKER ) WINDOW PRODUCTS COMPANY, ) LAFORCE, INC., SCOTT KARLI ) d/b/a SK SALES, MIDWEST ) ARCHITECTURAL GLASS, INC., ) UNKNOWN OWNERS AND NON-RECORD ) CLAIMANTS, ) ) Honorable Counter-Defendants- ) Bobbie Petrungaro Appellees. ) Judge Presiding.

_________________________________________________________________ JUSTICE LYTTON delivered the Opinion of the court:2

_________________________________________________________________ Excel Electric, Inc. filed a complain t to fo reclose a mechanic’s lien against University of St. Francis. St. Francis fileda motion for summary judgment, and Excel filed a cross-motion for summary judgment. The trial court granted University’s motion and denied Excel’s motion. We reverse and remand. BACKGROUND InMarch 2005, St. Francis hired StonitschConstruction, Inc. to be its general contractor on a project to renovate a residence hall. Stonitsch hir ed many subcontractors to complete the renovationproject, including Excel Electric, Inc.. According to the contract between Stonitsch and Excel, Excel was to provide electrical labor, materials and services for the project. From May 2005 to November 2 005, Excel provided the necessary labor, materials and services to Stonitsch. Onfour occasions during the course of the renovation project, Stonitschsubmitted documents to St. Francis entitled "Application and Certificate for Pa yments." In these documents, Stonitsch requested payment from St. Francis in the following amounts: (1) $123,703.20 on May 26, 2005, (2) $532,475.10 on June 16, 2005, (3) $1,204,333.10 on June 15, 2005, and (4) $1,081,999.69 on August 18, 2005. Each of the payment certif i cates listed Excel as the

e lectrical subcontractor and showed the amount that it was d ue . St. Francis provided Stonitsch payments in the amounts requested in each"Application and Certificate for Payments." After St. Francis paid Stonitsch, Stonitsch paid Excel the amount it was due as set forth in each payment certificate.3

Stonitschcompleted its renovationwork in November 2005. On December 6, 2005, St oni tsch issued its final "Application and Certificate for Payments" to U niver sity. According to that document, St. Francis owed Ston itsch $458,237.56, of which $130,948.48 was due Excel. St. Francis made its final payment of $458,237.56 on January 20, 2006. That amount was wire transferred into Stonitsch’s account at Harr is Ban k. Upon receiving the payment, Harris Bank exercised its right of set off and applied the funds received to partially satisfya debt Stonitsch owed Harris. Excel received no payment fromStonitsch with respect to the final payment certificate. OnFebruary 22, 200 6, Excel served a Notice and Claim for Mechanic’s Lien onUniversity, claiming it was owed $140,547.09 for its work onthe renovation project. Other subcontractors, including Weather Tite, Inc., served St. Francis with notices and claims for mechanics’ liens. InMay 2006, Weather Tite filed a complaint for foreclosure of its mechanic’s lien . One mo nth later, Excel filed a countercomplaint to foreclose its mechanic’s lien. St. Francis filed a motionfor summary ju dgment, arguing that Excel did not have an enforceable mechanic’s lien. Excel filed a cross-motion for summaryjudgment, arguing that it had a va lid and enforceable mechanic’s lien against St. Francis in the amount of $130,948.48. The trial court entered an order granting University’s motion for summary judgment and denied Excel’s cross-motion for summary judgment. In its order, the trial court relied on Luczak Bros., Inc. v. Generes , 116 Ill. App. 3d 286, 451 N.E.2d 1267 (1983),4

which"seemed factually si milar t o this case." The trial court summarized that case as follows: "[T]he subcontractor was entitled to a lien only in the amount s ho w to become due on the last st ate ment for which payment was made and the subcontractor must look to the con tra ctor for payment ." (Emphasis by trial court), citing Luczak , 116 Ill. App. 3d at 303, 4512 N.E.2d at 1281. The trial court conc l uded that because St. Francis did not receive Excel’s notice of lien and claimuntil after it made final payment to Stonitsch, Excel did not have a valid and enforceable mechanic’s lien against St. Francis and must look for Stonitsch for payment. ANALYSIS Excel argues that i t i s entitled to a lien of $130,948.48 because that amount was shown to be due Excel in the final payment certificat e Sto nitsch provided to St. Francis. St. Francis responds that Excel is not entitled to a lien because Excel did not

serve its lien notice until after St. Francis made its final payment to Stonitsch and all work on the project was complete. The purpose of the Mechanics Lien Act (Act), 770 ILCS 60/1 et seq. (We st 2004), is to protect those who in good faith furnish material or labor for the construction of a building. State Bank of Lake Zurich v. Winnetka Bank , 2 45 Ill. App. 3d 984, 994, 614 N.E.2d 862, 869 (1993). The Act attempts to balance the rights and duties of owners, contractors and subcontractors. Alliance Steel, Inc. v. Piercy , 277 Ill. App. 3d 632, 635, 660 N.E.2d 1341, 1343 (1996). Unde r secti on 5 of the Act, it is the owner’s duty, before making any payments, to require the general contractor to provide5

a sworn written statement listing the subcontractors and the amounts due or to become due to each one. 770 ILCS 60/5(a) (West 2004). If a subcontractor’s name is omitted from the contractor’s st ate ment or the subcontractor is owed an amount different from what is provided in the statement, the subcontractor must give the

owner written notice of its claim no later than 90 days after its completion of the contract. 770 ILCS 60/24(a) (West 2004). Whenan owner is notified of a subcontractor’s claim, he must retain from any money due the contractor an amount sufficient to paythe subco ntractor. 770 ILCS 60/27 (West 2004); see Knickerbocker Ice Co. v. Halsey Bros. Co , 262 Ill. 241, 246, 104 N.E. 665 (1941). If an owner pays a contractor and does not retain sufficient funds to pay a subcontractor after receiving notice that

a subcontractor is owed, such payment shall be considered illegal and made in violatio n of the subcontractor’s rights. 770 ILCS 60/27 (West 2004). Anowner will not be required to pay a greater amount than the contract price "unless payment be made to the contractor or to his order, in violation of the rig hts and interests of the persons intended to be benefitted bythis act." 770 ILCS 60/21(d) (West 2004). An owner who pays a contractor w ithout withholding sufficient funds for the subcontra ctor run s the risk of being obligated to pay the sub contract or even if he already paid the contractor the full contract price. See Hall v. Harris , 242 Ill. App. 315, 318 (1926); see also Capital Plumbing & Heating Supply Co. v. Snyder , 2 Ill. App. 3d 660, 666, 275 N.E.2d 663, 668 (1971) (once an owner is put on notice that money is due a subcontractor,6

he acts at his peril unless he retains sufficient funds to pay the subcontractor). Apayment to a contractor is not wrongful if it is made by an

owner prior to receiving notice of a subcontractor’s claim. See Contractors’ Ready-Mix, Inc. v. Earl Given Construction Co., Inc. , 242 Ill. App. 3d 448, 458, 611 N.E.2d 529, 535 (19 93)

. However, whenan owner has notice of a subcontractor’s claim, through the contractor’s statement under section 5 or thr ou gh the subcontractor’s 90-day notice under section 24, and nevertheless makes payment to the c ont ractor without retaining funds for the

su bcontractor, such payment is wrongful under the Act. See Contractors’ Ready-Mix , 242 Ill. App. 3d at 458, 611 N.E.2d at 535; Snyder , 2 Ill. App. 3d at 667, 275 N.E.2d at 668-69; Gilbert v . Croshaw , 178 Ill. App. 10, 12-13 (1913); Butler v. Gain , 128 Ill. 23, 26-27, 21 N.E. 350 (18 89). When an owner makes a wrongful payment, the subcontractor is entitled to a lien in the amount of the wrongful payment. See Contractors’ Ready Mix , 242 Ill. App. 3d at 458, 611 N.E.2d at 535. Inan attempt to balance the rights and duties of own ers , contractors andsubcontractors, the Act draws lines establishing who is entitled to relief whenan owner and subcontractor are both bona fides . Under the Act, a bona fide owner is protecte d from having to pay out twice as long as he follows the terms of the Act. See 770 ILCS 60/21(d) (West 2004); see also Gilbert , 178 Ill. App. at 13 (an owner will be required t o pay more than the original contract price only if he has not complied withthe provisions of7

the Act). However, if an owner does not abide by the provisions of the Act, "he acts at his peril." Capital Plumbing , 2 Ill. App. 3d at 666, 275 N.E.2d at 668. In other wo rds, an inn ocent owner protects itself and a subcontractor by complying with the Act; but if an otherwise i nnocent owner does not follow the terms of the Act, t he subcontractor is entitled to relief. See Contractors’ Ready-Mix , 242 Ill. App. 3d at 458, 611 N.E.2d at 535; Snyder , 2 Ill. App. 3d at 667, 275 N.E.2d at 668-69; Gilbert , 178 Ill. App. at 12-13; Butler , 128 Ill. at 26-27, 21 N.E. 350. Here, we agree with Ex cel that St. Francis was required to retaint he amount it was due as set forth in Stonitsch’s last payment certificat e. Our analysis begins with the case of Contractors’ Ready-Mix , 242 Ill. App.3d 448, 611 N.E.2d 529. In that case, First Midwest Bank contracted with Earl Given ConstructionCo. to erect a Wal-Mar t . Given entered into a subcontract with Ready-Mix. In September and October 1990, ReadyMixdelivered materials to Given and did not receive payment in the amount of $77,102.77. After that, Given gave First Midwest a sworn statement showing that Ready-Mix was d ue $127. 25. Given also served First Midwest witha document purporting to be a waiver of Given’s lien for $280,800 worth of work that Given had completed. InNovember, First Midwest paid Given $280,800. In January 1991, Ready-Mix mailed its notice of lien to First Midwest. The ap pellate court found that Ready-Mix was entitled to a lienin the amount of $127.25 because " except for the owner’s failure to withhold $127.25 from the s um which it paid Given on Novembe r 2, 199 0, the owner complied with the requirements of8

section5 of the Act when the owner obtained Given’s section 5 affidav it on October 25, 1990, and then paid Given $280,800 o n November 2, 1990." Contractors’ Ready-Mix , 242 Ill. App. 3 d at 454, 611 N.E.2d at 533. The court held that "Ready-Mix’s section 24 notice to the owners did not render wrongful payments made by the owner to Givenprior to the owner’s receipt of that notice." 242 Ill. App. 3d at 456, 611 N.E.2d at 53 4. H owever, the court foundthat "[w]here, as here, th e owner has made some wrongful payments, the subcontractor or supplier is entitled to a mechanic’s lien to the extent of those payments." 242 Ill. App. 3d at 458, 611 N.E.2d at 535. The court found that "the owner wrongfully paid out the sum of $127.25 and Ready-Mix is entitled to a mechanic’s lienbut only to that extent." 242 Ill. App. 3d at 458, 611 N.E.2d at 535. The facts in Ready-Mixare similar to those in the instant

case. In both, the contractor’s sworn statements showed that one

or more subcontractors were owed money. Nevertheless, the owners paid the contractors the full amount requested and did not withhold anymoney for the subcontractor(s). Ac cording to the court in Ready-Mix , such a payment is w rongfu l and entitles the subcontractor to a lien inthe amount of the wrongful payment. 242 Ill. App. 3d at 458, 611 N.E.2d at 535. Stonitsch’s final payment certificate requested payment from St. Francis in the amount $458,237.56, of which $130,948.48 was due Excel. St. Francis paid Stonitsch the entire amount it requested and did not withhold $130,948.48 for Excel’s benefit. After making its final payment to Stonitsch, University received Excel’s Notice9

and C laim for Mechanic’s Lien, showing that it was owed $140,547.09. Because St. Francis did not receive Excel’s section24 notice until after it made payment to Stonitsch, that notice would have beenineffective; however, St. Francis did receive notice of Excel’s claim in Stonitsch’s final paym ent certificate, which showed that Excel was owed $130,948.48. Pursuant to that notice, St. Francis was obligated to withhold $130,948.48 from its final payment to Stonitsch . S ee 770 ILCS 60/27 (West 2004); Knickerbocker , 262 Ill. at 246, 104 N.E. 665; Contractors’ Ready Mix , 242 Ill. App. 3d at 458, 611 N.E.2d at 535. Because St. Francis paid Stonitsch the full amount requested and did not retain anyfunds to payExcel, St. Francis’s payment was wrongful. See 770 ILCS 60/27 (West 2004); Contractors’ ReadyMix , 242 Ill. App. 3d at 458, 611 N.E.2d at 535; Snyder , 2 Ill. App. 3d at 667, 275 N.E.2d at 668-69; Gilbert , 178 Ill. App. at12-13; Butler , 128 Ill. at 26-27, 21 N.E. 350. Nevertheless, St. Francis argues that the cases of Luczak , 116 Ill. App. 3d 28 6, 451 N.E.2d 1267, and Knickerbocker Ice Co. v. HalseyBros., Co. , 262 Ill. 241, 104 N.E. 655 (1914), support the trial court’s conclusion that Excel did not have a valid and enforceable mechanic’s lien against St. Francis. We disagree. The trial court relied on the court in Luczak , finding that "the subcontractor was entitled to a lien only in the amount shown to become due on the last statement for which payment was made * * *." (Emphasis added by trial court). However, the court in Luczak actually held that the su b contractors in that case were10

"entitled to a lien only in the amount shown to be due on the last statement for which payment was made." Luczak , 116 Ill. App. 3d at 304, 451 N.E.2d at 1281. (Emphasis added). Thus, applying Luczak to this case, Excel is ent it led to a lien in the amount of $130,948.48, the amount shown to be due Excel on the final payment certificate. Nor does Knickerbocker support St. Fra ncis’ argument. In Knickerbocker , the contractor issued false sworn statements to the

owner. According to the contractor’s la st stat ement, the subcontractor was owed $900. The subcontractor was actuallyowed $1,426.33 and filed a petition against the owner, claiming a lien inthat amount. The trial court held that the subcontractor had a lienin the amount of $911, the remaining unpaid balance o n the contract between the owner and the contractor. The appellate court and supreme court affirmed. The supreme court explained: "Having

no knowledge of the falsity of the statements, the owner had the right to act upon them, and the subcontractor must l ook to t he contra ctor for any balance due on its claim over and above the amount withheld by the owner pursuant to the s worn statements made." Knickerbocker , 262 Ill. At 245. Like the courts in Ready-Mixand Lucza k , the Knickerbocker court found that the subcontractor had a valid and enforceable lien against the owner pursuant to the contractor’s sworn stateme n t. However, Kn ick erbocker is distinguishable from this case in a significant way. In Kn i ckerbocker , the owner properly withheld fromthe contractor the amount that the final swo rn state ment reflected was still due to the subcontractor. Thus, the owner in11

Knickerbocker fulfil led al l of his duties under the Act and, therefo re, could not be required to pay more than the contra c t price. See 770 ILCS 60/21(d). Here, St. Francis had not properly withheld fromStonitsch the amount Excel was owed pursuant to the final payment certificate. Thus, St. Francis’ payment to Stonitsch was wrongful, and St. Francis could be required to pay more than the contract price. See Hall , 242 Ill. App. at 318; Snyder , 2 Ill. App. 3d at 666, 275 N.E.2d at 668. E xcel is entitled to a mechanic’s lien of $130,948 .48, th e amount shown to be due Excel in the final payment certificate that St. Francis wrongfully paid Stonitsch. See Contractors’ Ready Mix , 242 Ill. App. 3d at 458, 611 N.E.2d at 535; see also Luczak , 116 Ill. App. 3d at 304 , 45 1 N.E.2d at 1281 (a subcontractor is entitled to a lien in the amount shown t o be d ue on the last statement for which payment is made). The trial cour t erred in granting St. F rancis’s motion for summary judgment and denying Excel’s motion for summary judgment. The judgmen t of t he circuit court of Will County granting summaryjudgment to St. Francis and denyin g s ummary judgment to Excel is reversed. We remand to the trial court to enter an order granting Excel’s motion for summary judgment. Reversed and remanded. HOLDRIDGE and O'BRIEN, JJ., concurring.