Before DUFFY, Chief Judge, SCHNACKENBERG, Circuit Judge, and WHAM, District Judge.
Plaintiffs herein planned to construct a twenty-three story brick apartment building and a three story attached brick garage, on property owned by them on Delaware Place, Chicago.The construction costs were estimated at $2,500,000.00. Defendant herein brought three civil actions against plaintiffs each charging violation of the zoning ordinance of the City of Chicago. The three actions were unsuccessful. These actions may be designated as 1) the Zoning Variation suit (56 S 5518) finally determined by the Supreme Court of Illinois; 2) the State Court Injunction suit (56 S 4196) finally determined by the Appellate Court of Illinois, First Division, and 3) the Federal Court Injunction suit (57 C 160) which was finally determined by this Court, 253 F.2d 484. The letters and figures in parentheses in each case indicate the official designation of the case in the respective courts. To avoid confusion, when reference is made to the plaintiff in each of these three suits, it will be called "222."
Plaintiffs brought the suit now before us to recover damages occasioned by the alleged malicious prosecution of two of these actions. The matter is here on the pleadings as the trial court, on defendant's motion, dismissed the suit with prejudice on the grounds 1) the action based on one of the suits (56 S 5518) is barred by res judicata and 2) that part of the action based upon the second suit (57 C 160) fails to state a claim upon which relief can be granted.
In order to obtain building permits, plaintiffs, on December 6, 1955, filed an application with the Zoning Board of Appeals of the City of Chicago for a variation of the Chicago zoning ordinance to permit the erection of the apartment building on the front lot line of the premises which they owned. Plaintiffs claimed that if the building were so erected, it would be in direct line with all other buildings located in that block. Five hearings were held by the Board of Appeals. 222 was the sole objector to plaintiffs' application. 222's claimed interest was based on its ownership and operation of an apartment building upon a different but nearby street. At the nearest point 222's property was 184 1/2 feet from plaintiffs' property. On March 13, 1956, the Board of Appeals determined the variation sought by plaintiffs should be allowed.
A building permit was not issued because on March 29, 1956, 222 filed a complaint in the Superior Court of Cook County (56 S 5518) against plaintiffs herein and certain municipal officials seeking to reverse the action of the Board of Appeals and to prevent the Commissioner of Buildings from issuing a building permit. On June 27, 1956, the Superior Court of Cook County affirmed the decision of the Board of Appeals and refused to grant a supersedeas to 222. On August 7, 1956, the Commissioner of Buildings issued the permit and shortly thereafter plaintiffs commenced work on the foundation of the buildings.
222 took an appeal to the Supreme Court of Illinois, and filed a motion for a supersedeas and stay order before a justice of the Illinois Supreme Court. On September 5, 1956, Justice Schaefer granted the supersedeas and stay order which specifically prohibited further construction of said buildings pending the final disposition of the case in the Illinois Supreme Court. As a condition precedent to the issuance of the supersedeas order, defendant herein was required to and did execute and file a supersedeas bond in the amount of $60,000.00. On November 26, 1956, the Supreme Court of Illinois ruled that 222 had no standing to bring the action and affirmed the decision of the Superior Court. 222 East Chestnut St. Corp. v. Board of appeals, 10 Ill.2d 310, 139 N.E.2d 221. On December 19, 1956, the supersedeas and stay order was terminated and dissolved. Plaintiffs again applied to the Commissioner of Buildings for the issuance of a building permit, and on January 31, 1957 such permit was issued. Shortly thereafter construction was resumed. On January 23, 1957 the Supreme Court denied 222's petition for rehearing.
On March 8, 1956, while the Zoning Board of Appeals hearings were in progress, 222 filed a separate suit for injunction in the Superior Court of Cook County (56 S 4196). In that suit 222 prayed that the issuance of building permits to plaintiffs be enjoined. The basis of the complaint was that the proposed construction would violate the zoning ordinance by being too close to the rear lot line of the property. After eight hearings and a number of continuances, the Superior Court, on September 25, 1956, dismissed the suit for want of equity. 222 appealed to the Appellate Court of Illinois, First District. On November 6, 1957, the Appellate Court affirmed the decree of the Superior Court on the ground that 222 had not established that it had suffered or would suffer any injury by reason of the construction of the buildings. 15 Ill.App.2d 460, 146 N.E.2d 717. A rehearing was denied and leave to appeal was denied by the Supreme Court of Illinois.
On January 30, 1957, 222 filed a suit in the United States District Court for the Northern District of Illinois, Eastern Division (57 C 160), again seeking to enjoin the issuance of construction permits, and to enjoin plaintiffs from erecting the building. On July 24, 1957, the District Court dismissed the suit because 222 failed to allege sufficiently that the court had jurisdiction, and further, because the matter complained of was barred by res judicata . 222 took an appeal to this Court and we affirmed the decision of the District Court, 222 East Chestnut St. Corporation v. LaSalle National Bank, 253 F.2d 484, certiorari denied 358 U.S. 827, 79 S. Ct. 44, 3 L. Ed. 2d 66, rehearing denied 358 U.S. 901, 79 S. Ct. 220, 3 L. Ed. 2d 151. This Court's decision was on the ground that 222 did not have any right to bring the action.
The holding below that plaintiffs herein are barred because of res judicata is based upon what we may designate the First Malicious Prosecution Suit (56 C 6110) which was filed by plaintiffs herein on September 27, 1956 in the United States District Court for the Northern District of Illinois, Eastern Division. This was prior to the filing by 222 of the Federal Court Injunction Suit (57 C 160) and was during the pendency of the Zoning Variation Suit before the Illinois Supreme Court (56 S 5518). On November 30, 1956, plaintiffs filed a supplemental complaint setting forth the termination of the Zoning Variation Suit in their favor. 222 resisted this effort on grounds, inter alia, that "* * * If an essential element is then [at the time of filing the original suit] missing the fact that this missing element later comes into existence, cannot be given a retroactive effect so as to supply nunc pro tunc the deficiency, at the time of original filing." On July 25, 1957, the court dismissed the complaint in the First Malicious Prosecution Suit for the reason that "it fails to allege a special interference by the deft with pltfs or pltfs' property by arrest, injunction, attachment or other provisional writ as required by the controlling Illinois authorities."
On August 16, 1957, plaintiffs filed a motion for leave to reinstate, amend and supplement plaintiffs' complaint and amendment to complaint in the First Malicious Prosecution Suit (56 C 1610). 222 filed a motion to strike. On October 7, 1957, plaintiffs orally moved the court to withdraw the motion for leave to reinstate, etc. The court granted the motion. That ended the First Malicious Prosecution Suit (56 C 1610).
On August 29, 1957, prior to the commencement of the suit at bar, plaintiffs filed a suit in the United States District Court against 222 on the $60,000.00 supersedeas bond. In that suit plaintiffs asked $60,000.00 damages because of delays caused by 222 in the erection of plaintiffs' buildings. Thus, there are now pending two suits against 222 covering at least in part the same items of damage. The first (57 C 1457) against 222 and the corporate surety for $60,000.00 on the supersedeas bond; and second, the instant suit wherein plaintiffs seek $1,000,000.00 damages for malicious prosecution.
We shall first consider the holding of the District Court that "the action herein (except that portion thereof which relates to suit filed in the United States District Court as No. 57 C 160) should be dismissed because it is barred by res judicata ." On oral argument before this court, both parties agreed that Illinois law is applicable. We shall endeavor to ascertain and apply pertinent Illinois law.
It is well settled Illinois law that where a prior suit was dismissed on the merits for lack of substance, the bar of res judicata is not limited to the grounds set up in the prior suit but extends to all other grounds for recovery which then existed and might have been presented and adjudicated. Godschalck v. Weber, 247 Ill. 269, 93 N.E. 241. However, the basic and difficult question is whether the first suit for malicious prosecution was dismissed upon the merits. 222 claims the dismissal was on the merits because it was based on a failure to allege "special interference." Plaintiffs herein argue to the contrary, pointing out ...