{
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  "name": "THE VILLAGE OF BUFFALO, Petitioner, v. THE ILLINOIS COMMERCE COMMISSION et al., Respondents (Illinois Power Company, Intervenor)",
  "name_abbreviation": "Village of Buffalo v. Illinois Commerce Commission",
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    "parties": [
      "THE VILLAGE OF BUFFALO, Petitioner, v. THE ILLINOIS COMMERCE COMMISSION et al., Respondents (Illinois Power Company, Inter-venor)."
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      {
        "text": "JUSTICE SPITZ\ndelivered the opinion of the court:\nIn 1976, intervenor, Illinois Power Company (Illinois Power), Soy-land Power Cooperative, Inc., and Western Illinois Power Cooperative, Inc. (Cooperatives), entered into the Clinton Power Station ownership participation agreement (OPA). The OPA, together with certain subsequent amendments thereto, provided, inter alia, that Illinois Power and the Cooperatives would jointly own and be jointly responsible for the construction and operating costs of the Clinton Power Station (Clinton). The OPA originally provided for the Cooperatives to own approximately 14% of Clinton. As subsequently amended, it provided that the Cooperatives\u2019 ownership share of Clinton would be 20%. Under the OPA, Illinois Power is responsible for the design, construction, licensing, testing, and operation of Clinton and pays all related direct costs to contractors and suppliers engaged on the project. The Cooperatives are billed periodically for their share of the cost and reimburse Illinois Power accordingly.\nFor many years, Illinois Power had provided bulk electric power to the Cooperatives at wholesale for resale to the Cooperative members. By 1983, Illinois Power and the Cooperatives began negotiating for Illinois Power to provide the Cooperatives with electric energy and power under a long-term agreement by which the prices to the Cooperatives would be similar to the cost the Cooperatives would incur if they owned their own generating facilities. Additionally, in 1983, the Cooperatives sought to limit their investment in the construction costs of Clinton. As a result of these negotiations, in March 1984, Illinois Power and the Cooperatives entered into a letter of intent which expressed the intent of the parties to reach certain definitive agreements relating to electrical service by Illinois Power to the Cooperatives and limiting the Cooperatives\u2019 direct investment in Clinton to $450 million.\nOn October 3, 1984, the Governor\u2019s Office of Consumer Services filed a verified petition on behalf of the Village of Buffalo (Village), requesting the Illinois Commerce Commission (Commission) to institute a proceeding to investigate and review the terms of the March 1984 letter of intent. On October 5, 1984, five agreements were executed by Illinois Power and the Cooperatives to finalize and implement the letter of intent. These agreements included: (1) a power coordination agreement; (2) amendment No. 6 to the OPA; (3) amendment No. 2 to the Clinton Station operating agreement; (4) a loan agreement; and (5) a mutual release and satisfaction agreement. This appeal concerns only amendment No. 6. Under this amendment, the Cooperatives\u2019 investment in the direct cost of Clinton would be capped at $450 million and the parties\u2019 ownership shares in Clinton would be adjusted in accordance with the ratios of their respective investments in the direct costs to the total direct costs.\nOn December 5, 1984, the Commission granted the Village\u2019s petition and instituted a proceeding to investigate the aforementioned agreements. A number of prehearing conferences and hearings were held before a hearing examiner. One of the Village\u2019s assertions throughout the proceedings was that amendment No. 6 violated section 7 \u2014 102(c) of the Public Utilities Act (Act) (111. Rev. Stat. 1987, ch. lll2/s, par. 7 \u2014 102(c)), which prohibits a public utility from encumbering the whole or any part of its business or property without prior approval or consent of the Commission. It was the Village\u2019s position that amendment No. 6 was an unlawful encumbrance on the property or business of Illinois Power, which required prior Commission approval pursuant to section 7 \u2014 102(c) of the Act. Illinois Power argued that the purpose of section 7 \u2014 102(c) was to protect a public utility from disposing of property it needs to serve the public. Illinois Power asserted that amendment No. 6 did not provide for the disposal of utility property used to serve the public and did not require prior Commission approval.\nIn an order dated April 29, 1988, the Commission denied the Village\u2019s requested relief and dismissed the petition. The order stated:\n\u201cThe Commission *** does not accept the Village\u2019s position that Amendment No. 6 constitutes an encumbrance upon the business or property of [Illinois Power] undertaken without Commission approval in violation of Section 7 \u2014 102(c) of the Act. *** While [Illinois Power] takes on additional obligations under Amendment No. 6 *** the assumption of these obligations does not constitute an encumbrance on [Illinois Power\u2019s] property.\u201d\nThe Commission concluded that amendment No. 6 did not require Commission approval under the Act, and therefore, was not subject to the Commission\u2019s jurisdiction. The Village\u2019s subsequent application for reconsideration was denied on June 15, 1988. On July 18, 1988, the Village filed a petition for review in this court. (107 Ill. 2d R. 335; Ill. Rev. Stat. 1987, ch. lll2/3, par. 10 \u2014 201(a).) On September 2, 1988, Illinois Power was granted leave to intervene.\nThe sole issue before the court is whether the Commission\u2019s interpretation of section 7 \u2014 102(c), that the obligation created by amendment No. 6 did not constitute an encumbrance, was correct.\nSection 7 \u2014 102 of the Act provides in pertinent part:\n\u201cUnless the consent and approval of the Commission is first obtained or unless such approval is waived by the Commission in accordance with the provisions of this Section:\n* * *\n(c) No public utility may assign, transfer, lease, mortgage, sell (by option or otherwise), or otherwise dispose of or encumber the whole or any part of its franchises, licenses, permits, plant, equipment, business or other property ***.\u201d (111. Rev. Stat. 1987, ch. 1112/3, par. 7 \u2014 102.)\nSpecifically, the instant case involves the propriety of the Commission\u2019s interpretation of the word \u201cencumber\u201d in section 7 \u2014 102(c) of the Act. (Ill. Rev. Stat. 1987, ch. 1112/3, par. 7 \u2014 102(c).) A resolution of the issue presented requires an examination of the statute involved together with an application of the rules of statutory construction.\nThe primary rule of statutory interpretation and construction, to which all other canons and rules are subordinate, is to ascertain and effectuate the true intent and meaning of the legislature. (People ex rel. Hanrahan v. White (1972), 52 Ill. 2d 70, 73, 285 N.E.2d 129, 130.) In interpreting a statute, a court must give the legislative language its plain and ordinary meaning. (Illinois Power Co. v. Mahin (1978), 72 Ill. 2d 189, 381 N.E.2d 222.) If the language of the statute is plain, clear, and unambiguous, and if the legislative intent can be ascertained therefrom, it must prevail and will be given effect by the courts without resorting to other aids for construction. In re Marriage of Logston (1984), 103 Ill. 2d 266, 469 N.E.2d 167.\nHowever, the proper interpretation of a statute and determination of legislative intent cannot always be based upon its language alone. Where a statute is ambiguous and the legislative intent cannot be ascertained from the plain and ordinary meaning of its language, then the court is guided by the rules of statutory construction. (Rigney v. Edgar (1985), 135 Ill. App. 3d 893, 482 N.E.2d 367; Trigg v. Sanders (1987), 162 Ill. App. 3d 719, 515 N.E.2d 1367.) Generally, the interpretation of a statute must be grounded on the nature and object of the statute as well as the consequences which would result from construing it one way or another. (Andrews v. Foxworthy (1978), 71 Ill. 2d 13, 373 N.E.2d 1332.) Legislative intent may be ascertained from the reason and necessity for the act, the evils sought to be remedied, and the objects and purposes sought to be obtained. (In re Marriage of Antonich (1986), 148 Ill. App. 3d 575, 499 N.E.2d 654, dismissed (1987), 113 Ill. 2d 574, 505 N.E.2d 350.) Moreover, statutory interpretations by administrative agencies express an informed source for ascertaining legislative intent. Adams v. Jewel Cos. (1976), 63 Ill. 2d 336, 348 N.E.2d 161.\nIt is generally recognized that courts will give substantial weight and deference to an interpretation of an ambiguous statute by the administrative body charged with the application and enforcement of the statute. (Radio Relay Corp. v. Illinois Commerce Comm\u2019n (1977), 69 Ill. 2d 95, 370 N.E.2d 528; Scott v. Edgar (1987), 152 Ill. App. 3d 221, 505 N.E.2d 4.) A significant reason for this deference is that courts appreciate that agencies can make informed judgments upon the issues, based upon their experience and expertise. (Illinois Consolidated Telephone Co. v. Illinois Commerce Comm\u2019n (1983), 95 Ill. 2d 142, 447 N.E.2d 295.) The supreme court has recognized that while they are not binding on a court, \u201cinterpretations by administrative agencies express an informed source for ascertaining the legislative intent\u201d (Adams v. Jewel Cos. (1976), 63 Ill. 2d 336, 344-45, 348 N.E.2d 161, 165), and such interpretations should be and normally are persuasive (Mississippi River Fuel Corp. v. Illinois Commerce Comm\u2019n (1953), 1 Ill. 2d 509, 116 N.E.2d 394; Milkowski v. Department of Labor (1980), 82 Ill. App. 3d 220, 402 N.E.2d 646). This deference to administrative constructions is often applied in the case of factual situations where constructions have been consistently adhered to for a long period of time. (Radio Relay Corp., 69 Ill. 2d 95, 370 N.E.2d 528.) Yet, while lack of consistency or duration may affect the weight a court will give to an administrative interpretation in a particular case, consistency and duration are not requisites for applying the rule. (See Illinois Consolidated Telephone Co. v. Illinois Commerce Comm\u2019n (1983), 95 Ill. 2d 142, 152, 447 N.E.2d 295, 300 (and cases cited therein).) It is against this backdrop that the Village\u2019s contentions will be analyzed.\nIn support of its position, the Village first argues that the Commission erroneously limited section 7 \u2014 102 to a proscription only of encumbrances on the property of a utility. The Village asserts that the Commission considered only whether the encumbrance existed on the property of Illinois Power, but that the Act exceeds such limitations to proscribe encumbrances on the business of Illinois Power. The Village further asserts that the term \u201cencumbrance\u201d in section 7\u2014 102(c) encompasses not only \u201cliens\u201d but also \u201cobligations\u201d such as the $230 million obligation in the instant case. The Village cites to Monti v. Tangora (1981), 99 Ill. App. 3d 575, 425 N.E.2d 597, for the proposition that the word \u201cencumbrance\u201d not only includes liens but is also any right in a third party which diminishes the value of a utility as a business. The Village maintains that the $230 million obligation here diminishes the value of the business of Illinois Power and creates a right in a third party to be paid in a full and timely fashion. The Village concludes that the $230 million obligation, while not creating a lien on Illinois Power property, is an encumbrance on the business of Illinois Power and, therefore, Illinois Power was required under section 7 \u2014 102 of the Act to seek prior Commission approval.\nThese contentions are unpersuasive. First, the Village\u2019s assertion that the Commission considered only whether an encumbrance existed on the property of Illinois Power mischaracterizes the Commission\u2019s ruling. The Commission\u2019s order actually stated:\n\u201cThe Commission likewise does not accept the Village\u2019s position that Amendment No. 6 constitutes an encumbrance upon the business or property of [Illinois Power] undertaken without Commission approval in violation of section 7 \u2014 102(c) of the Act.\u201d (Emphasis added.)\nThis indicates that the Commission did not limit the application of section 7 \u2014 102(c) to only encumbrances on the property of Illinois Power, but considered and rejected whether amendment No. 6 was an encumbrance on Illinois Power\u2019s business or property. Next, the Village has misstated the language from Monti by deleting the word \u201cland.\u201d This court in Monti defined an encumbrance as \u201cany right to, or interest in, land which may subsist in a third party to the diminution of the value of the estate, but consistent with the passing of the fee by conveyance.\u201d (Emphasis added.) (Monti v. Tangora (1981), 99 Ill. App. 3d 575, 580, 425 N.E.2d 597, 602.) The Monti court\u2019s definition of \u201cencumbrance\u201d was based upon and is identical to the Supreme Court\u2019s definition of \u201cencumbrance\u201d in Brown v. Lober (1979), 75 Ill. 2d 547, 389 N.E.2d 1188. After defining the term, the Monti court reasoned:\n\u201cAlthough the word \u2018encumbrance\u2019 is said to have no technical, legal meaning, the covenant is construed broadly to include not merely liens such as mortgages, judgment liens, taxes, or others to which the land may be subjected to sale for their payment, but also attachments, leases, inchoate dower rights, water rights, easements, restrictions on use, or any right in a third party which diminishes the value or limits the use of the land granted. 3 Am. Law of Prop. \u00a712.128 (1952).\u201d (Monti, 99 Ill. App. 3d at 580-81, 425 N.E.2d at 602.)\nThe foregoing definition and discussion support the Commission\u2019s interpretation. The obligation in this case was not a claim against, right to, or interest in the land or property of Illinois Power, nor could it be characterized as one of the types of encumbrances listed by this court in Monti. Furthermore, the holding in Monti, that the existence of a building code violation which created a future obligation to pay money was not an encumbrance, does not support the Village\u2019s position.\nThe Village\u2019s second contention is that the Commission erred in not finding that the term \u201cencumbrance\u201d included \u201cto load with debt\u201d or \u201cto burden with financial obligations.\u201d The Village cites to Fuller v. Dillon (1964), 220 Ga. 36, 136 S.E.2d 733, and Underwood v. Fairbanks, Morse & Co. (1933), 205 Ind. 316, 185 N.E. 118, to argue that the term \u201cencumbrance\u201d means, among other things, to load with debt or burden with financial obligations. The Village also relies upon the fourth edition of Black\u2019s Law Dictionary, asserting that it defines \u201cincumbrance\u201d as \u201c[a] claim, lien, charge or liability.\u201d (Black\u2019s Law Dictionary 908 (4th ed. 1957).) The Village concludes that these definitions demonstrate that the obligation in the case at bar constitutes an encumbrance.\nWe are unpersuaded by these contentions. Initially, we point out that the Village\u2019s reliance upon Fuller and Underwood is misplaced. The court in Fuller held that a court order requiring payment from a particular trust fund constituted an encumbrance on that fund. The Fuller court reasoned: \u201cThe word \u2018encumbrance\u2019 has been defined as follows: A burden on the title or a charge on property; to load with debts; a claim or lien upon an estate which may diminish its value, a lien created by a judgment.\u201d (Fuller, 220 Ga. at 39, 136 S.E.2d at 737.) The court concluded that the lien created by the court order in that case was an encumbrance. In the instant case, no court order or lien is involved. Next, in Underwood, the court held that the issuance by an Indiana municipality of \u201cpledge orders\u201d whose payment was to be from identified revenue did not create an \u201cencumbrance\u201d under a statute similar to the one at issue in the instant case. In so holding, the court stated:\n\u201c[I]t is insisted that [defendant] has encumbered [its plant] by pledging net revenue of the present municipal plant to the payment of the pledge orders. We cannot so construe the word encumber. The word \u2018encumber\u2019 ordinarily means \u2018to charge, or burden with financial obligations or mortgages.\u2019 There is no question of a mortgage involved and the pledge orders, when issued, will not be a lien on the plant ***.\u201d (Underwood, 205 Ind. at 334, 185 N.E. at 124.)\nThus, the court , determined that as there was no lien or mortgage, there was likewise no encumbrance. Hence, these cases do not support the Village\u2019s position.\nFurthermore, the most current edition of Black\u2019s Law Dictionary defines an encumbrance, in full, as follows: \u201cAny right to, or interest in, land which may subsist in another to diminution of its value, but consistent with the passing of the fee. [Citation.] A claim, lien, charge, or liability attached to and binding real property; e.g., a mortgage; judgment lien; mechanics\u2019 lien; lease; security interest; easement or right of way; accrued and unpaid taxes.\u201d (Black\u2019s Law Dictionary 473 (5th ed. 1979).) This definition relates to real property or real estate and that there is nothing in the definition to indicate that the intangible aspect of a company, such as its \u201cbusiness,\u201d \u201cvalue\u201d or \u201cgoodwill,\u201d could be encumbered. The Village quoted only a brief portion of the definition of \u201cencumbrance\u201d in the fourth edition of Black\u2019s Law Dictionary. A reading of the entire definition in the current (fifth) edition fails to support the Village\u2019s argument.\nIn sum, the various definitions of \u201cencumbrance\u201d by this court in Monti, the supreme court in Brown, and that from Black\u2019s Law Dictionary demonstrate that an encumbrance is an interest in or right to property, not a contingent, unsecured obligation to pay money. In particular, the Monti court characterized encumbrances as liens creating security interests in land, including both those for which land may be subjected to sale for their payment as well as other restrictions which limit the use of the land granted, but do not subject that land to immediate sale for their payment. Each of those encumbrances is an interest in property adverse to the fee owner of the property. The Monti definition of encumbrance does not include a mere unsecured, contingent obligation to pay money, such as was created here by amendment No. 6. Furthermore, a reading of section 7 \u2014 102(c) reveals that each of the actions there listed, requiring prior Commission approval, involves the creation of an interest or right in the property of the utility in a third person. Amendment No. 6 created no interest in Illinois Power in favor of a third party. In view of the foregoing and because the Commission\u2019s interpretation is to be given substantial weight and deference, we will not disturb the Commission\u2019s decision.\nAccordingly, the order of the Illinois Commerce Commission is affirmed.\nAffirmed.\nMcCULLOUGH, P.J., and KNECHT, J., concur.",
        "type": "majority",
        "author": "JUSTICE SPITZ"
      }
    ],
    "attorneys": [
      "William Herrmann and Nancy Gaitskill, both of Governor\u2019s Office of Consumer Services, of Chicago, and Roger D. Colton, of Boston, Massachusetts, for petitioner.",
      "Neil F. Hartigan, Attorney General, of Springfield (Ana C. Cusack and Kathleen Nolan, Special Assistant Attorneys General, of Chicago, of counsel), for respondents.",
      "Owen E. MacBride, Edward J. Finn, and Heather F. Wood, all of Schiff, Hardin & Waite, of Chicago, for intervenor Illinois Power Company."
    ],
    "corrections": "",
    "head_matter": "THE VILLAGE OF BUFFALO, Petitioner, v. THE ILLINOIS COMMERCE COMMISSION et al., Respondents (Illinois Power Company, Inter-venor).\nFourth District\nNo. 4\u201488\u20140529\nOpinion filed March 9, 1989.\nModified on denial of rehearing April 18, 1989.\nWilliam Herrmann and Nancy Gaitskill, both of Governor\u2019s Office of Consumer Services, of Chicago, and Roger D. Colton, of Boston, Massachusetts, for petitioner.\nNeil F. Hartigan, Attorney General, of Springfield (Ana C. Cusack and Kathleen Nolan, Special Assistant Attorneys General, of Chicago, of counsel), for respondents.\nOwen E. MacBride, Edward J. Finn, and Heather F. Wood, all of Schiff, Hardin & Waite, of Chicago, for intervenor Illinois Power Company."
  },
  "file_name": "0591-01",
  "first_page_order": 613,
  "last_page_order": 621
}
