Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Marshall Savings & Loan Ass'n v. Henson

NOVEMBER 9, 1966.




Appeal from the Circuit Court of Cook County; the Hon. CORNELIUS J. HARRINGTON, Judge, presiding. Declaratory judgment order adverse to plaintiff affirmed. MR. JUSTICE BURMAN DELIVERED THE OPINION OF THE COURT.

Rehearing denied December 1, 1966.

Plaintiff, Marshall Savings and Loan Association, appeals from a declaratory judgment order entered in favor of Federal Savings and Loan Insurance Corporation (FSLIC) and against Marshall Savings and Loan Association (Marshall). Marshall originally appealed to the Supreme Court and that Court transferred the matter to this court. The relevance of the declaratory judgment order is best indicated in a summary structure of the three complaints in equity that are involved. The first suit (custody case) was brought by Marshall on January 29, 1965, contesting the custodial taking of its assets by Joseph E. Knight, the Director of Financial Institutions for Illinois. On April 9, 1965, Knight filed suit (liquidation case) for liquidation of Marshall under the Illinois Savings and Loan Act. Marshall filed the third case on July 26, 1965, to sequester its assets and to enjoin Knight from taking further proceedings in the liquidation case until there was a final adjudication in the custody case. It was in this last case that leave was granted FSLIC to file its Petition for Declaratory Judgment, which was declared a counterclaim, and trial was had on the petition and answers thereto. On May 4, 1966, the Chancellor signed the Declaratory Judgment Order from which Marshall appeals. This order decreed that the assignment to FSLIC of Marshall's withdrawable share accounts was valid; that FSLIC, as assignee, had all the rights, title, and interest including the voting rights in the insured funds of the assignors; that FSLIC was a member of Marshall; that there was no just reason for delaying enforcement; and that the order did not adjudicate the pending issues of the legality of the appointment of the receiver for Marshall nor the charge of conspiracy and collusion raised by Marshall.

The detailed chronology of events that took place are as follows:

On December 31, 1964, Joseph E. Knight, as Director of Financial Institutions for Illinois, took custody of Marshall and Marshall ceased doing business. On January 29, 1965, Marshall filed the custody case in the Circuit Court contesting the legality of the custodianship and requested that Knight be enjoined. Before the case was at issue, Knight issued an order placing Marshall in receivership for the purpose of liquidation and on the following day, April 9, 1965, he filed the liquidation case in the Circuit Court under section 10-2 of the Illinois Savings and Loan Act. Ill Rev Stats 1965, ch 32, § 922.

FSLIC, by directive of the National Housing Act, paid $83,877,901.99 in insurance to over 26,000 members of Marshall between April 19, 1965, and February 28, 1966.

On July 26, 1965, Marshall filed a complaint in the Circuit Court to sequester its assets, to enjoin further proceedings in the liquidation case, and to have a disinterested receiver appointed to manage its assets until there was a final adjudication in the custody case. Detailed averments were made concerning the "unlawful custodial taking" and the "purported" appointment of a receiver and it was alleged that the conflicting claims of the parties to Marshall's assets required a "plenary suit where all claimants could be made parties. . . ."

It was in this last case that leave was granted to FSLIC, on September 28, 1965, over objection by Marshall, to file its Petition for Declaratory Judgment seeking a determination of its voting rights as a member of Marshall. On October 14, 1965, Marshall requested a change of venue based upon the prejudice of the trial judge, which was denied on January 10, 1966. On February 1, 1966, the court heard and denied Marshall's motion for a temporary injunction to restrain the prosecution of the liquidation case, and on February 8, 1966, an order was entered denying Marshall's motion to Strike and Dismiss the Petition for Declaratory Judgment. On March 28, 1966, Marshall's motion to dismiss its complaint without prejudice upon payment of costs was denied, the Declaratory Judgment Petition was declared a counterclaim and Marshall filed its answer thereto. Marshall then moved to transfer the cause to the law division and for a jury trial which was denied on April 12, 1966.

The trial on petition and answers thereto commenced on April 25, 1966, and during its course Marshall filed a written motion for judgment on the pleadings upon which the court reserved its ruling. On May 4, 1966, after seven days of trial, Judge Cornelius Harrington (who was assigned all three cases) signed the Declaratory Judgment Order from which Marshall appeals.

We are first confronted with Marshall's assertion that the improperly denied petition for a change of venue voided all subsequent proceedings. The Petition was filed under section 1 of the Venue Act, Ill Rev Stats 1965, ch 146, § 1, which allows a change of venue when either party believes that he will not receive a fair trial because of the judge's prejudice against him. We stated in Miller v. Miller, 43 Ill. App.2d 214, 215, 193 N.E.2d 105, that this "statute gives an absolute right to a change of venue to a petitioner, when his petition asserting the prejudice of the trial judge is duly made, verified, and filed in accordance with the statute." The petition is in proper form and the controlling question is whether it was filed in apt time. It is the established law in Illinois that a petition comes too late when it is presented after the judge has ruled on a substantive issue in the cause. City of Chicago v. Hamlin, 24 Ill.2d 148, 180 N.E.2d 473. As was said in Commissioners of Drain. Dist No. 1 v. Goembel, 383 Ill. 323, 328, 50 N.E.2d 444:

The reason that supports the rule is obvious. It would be highly improper to permit an attorney representing parties to a suit to try out the attitude of the trial judge on a hearing as to part of the questions presented and, if his judgment on such questions was not in harmony with counsel's view, to then permit counsel to assert that the court was prejudiced and that a change of venue must be allowed.

Marshall argues that any consideration of the change of venue should be restricted to the last complaint filed and does not involve the pending custody or liquidation cases, and that no substantive rulings were made in the case at bar at the time the petition for change of venue was filed. We do not find this reasoning easy to follow. Generally both the consideration of the substantive issue and the request for a change of venue occur in the same proceeding. In the instant case the substantive issues in our judgment occur in three proceedings which should have been consolidated. All three cases primarily involved the custodial taking over of Marshall by the Director of Financial Institutions. We are at a loss to understand why they were not consolidated, particularly in view of the fact that Judge Harrington presided over all of them. To insist that they are not related seems to us to be unrealistic. Indeed, in the complaint at bar filed by Marshall, it contests the custodial taking over by the Director and seeks to enjoin him from further custody which seems to include the custody case as the prime issue in this action. It was also alleged that the restricted and sole legal jurisdiction in the custody case was for review of the administrative acts of Knight and that the court did not have jurisdiction of the liquidation case until the custody case was finally determined.

FSLIC was not a named party in the first two cases, but was included by Marshall as one of the defendants, in the case at bar, as a conspirator by "virtue of having wilfully and unlawfully" made payments to Marshall's depositors and making claim of "some right, title or interest in and to the assets of plaintiff as subrogees pursuant to the provisions of Section 406 of the National Housing Act." As counsel for FSLIC points out that except for different court members, the custody case, the liquidation case, and the case presently on appeal to this court, are one integrated series of legal disputes involving generally the same parties and issues even though FSLIC was not a named party in the first two proceedings.

The Chancellor ruled against Marshall's application for fees for counsel in the custody case as of that time and the Chancellor commented that the "largest single representative in this proceeding" is FSLIC which has advanced over $82,000,000 to Marshall's insured depositors. In the case at bar, Marshall renewed in its complaint its request for the protection of its rights in the premises. On March 25, 1965, the Chancellor also entered an order in the custody case striking certain paragraphs of a pleading filed by Marshall, and it appears that the stricken allegations are substantially realleged in the complaint at bar. The Chancellor in the custody case enjoined the directors and officers of Marshall from the prosecution of ten foreclosure cases except when authorized by the Director. Further, in the case at bar, FSLIC requested leave to file a petition for a declaratory judgment, averring that FSLIC as a holder of the majority of the voting rights in Marshall should have the right to call, hold and vote at a special meeting of the members of Marshall for the purpose of electing directors. It was after the Chancellor permitted FSLIC to file this petition over vigorous objection by Marshall, and after the aforementioned orders were entered and rulings made, that Marshall requested a change of venue.

In the course of Marshall's argument to the Chancellor on many of the matters before him, there obviously were extensive discussions concerning the legal effects of many of the charges made by Marshall which concerned common questions of law and fact and which were intimately related to all three complaints. The decisions and remarks necessarily made by the Chancellor, in our opinion, afforded Marshall's counsels an opportunity to try out Judge Harrington's attitude with respect to the ultimate similar issues in ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.