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La Verne v. Jackman

JUNE 26, 1967.

ALBERT A. LA VERNE, PLAINTIFF-APPELLEE,

v.

ABRAHAM I. JACKMAN, DEFENDANT-APPELLANT.



Appeal from the Circuit Court of Cook County; the Hon. DANIEL A. COVELLI, Judge, presiding. Judgment affirmed. MR. JUSTICE ADESKO DELIVERED THE OPINION OF THE COURT.

Defendant appeals from a judgment of the Circuit Court of Cook County sustaining a motion for summary judgment in favor of Albert A. LaVerne, plaintiff, against Abraham I. Jackman, defendant. Plaintiff filed a petition in the Circuit Court of Cook County pursuant to the Illinois Uniform Enforcement of Foreign Judgments Act, (Ill Rev Stats 1963, c 77, §§ 88-105) to enforce a judgment of the New York Supreme Court entered May 19, 1965, in favor of the plaintiff. The judgment of the New York Court was based on an award of the American Arbitration Association in New York City in favor of the plaintiff.

Sometime in 1959, plaintiff, Dr. Albert A. LaVerne of New York City, the defendant, Dr. Abraham I. Jackman and Dr. L.J. Meduna, the latter two residing in Chicago, Illinois, agreed to publish a journal dealing with neuropsychiatry. Their agreement to publish this journal was contained in two letters, each dated April 30, 1959. The first signed by the plaintiff and the defendant, and countersigned by Dr. Meduna, provided that the plaintiff and the defendant would set up a not-for-profit corporation, under the laws of the State of New York; that Dr. Meduna would be editor-in-chief of the periodical to be published by the corporation and that each of them would be a director and share equally in the ownership of the corporation. The second letter signed by plaintiff and countersigned by defendant was addressed to the defendant and stated that the plaintiff and the defendant would contribute services and financial loans to the corporation and each would have one-third control of the corporation. The final sentence of the letter was as follows:

"If there should be any disagreement between us as to any matter under these agreements, or as to any matter relating to the affairs of the publishing company, we agree to arbitrate the matter before the American Arbitration Association in New York City."

Pursuant to these letters a membership corporation in the State of New York was incorporated by plaintiff's attorney under the name The Journal of Neuropsychiatry, Inc., and the corporation commenced publishing the "Journal of Neuropsychiatry." No corporate bylaws were adopted. In the fall of 1962, a tax dispute arose between this corporation and the Internal Revenue Service which requested a copy of the bylaws. Subsequently a standard set of not-for-profit corporation bylaws was prepared by the attorneys for the corporation and submitted to the plaintiff's attorney. These bylaws conformed with the original intention of the parties as set forth in the letters of April 30, 1959.

These bylaws were submitted to plaintiff's attorney for his comments and examination. No commentary or criticism was received, but instead another set of bylaws had already been proposed and adopted by plaintiff's attorney and four of his employees, the original incorporators of the corporation. Defendant claims that these bylaws were adopted without consultation with him, Dr. Meduna, or their attorneys and were unacceptable.

In April, 1964, the defendant and Dr. Meduna, desiring to operate the corporation under less stringent auspices of an Illinois general not-for-profit corporation and desiring to operate the Journal in a form which could possibly gain tax-exempt approval from the Internal Revenue Service, called a meeting of the corporation's board of directors in Chicago, where the offices of the Journal had always been located. Plaintiff received notice of the meeting in writing and by telephone. Plaintiff told defendant and Meduna that he approved of the proposed transfer. He did not appear at the time and place for the meeting on April 27, 1964. He was supplied with copies of corporate minutes approving the transfer of the assets of the corporation subject to its liabilities to "Research in Organic Psychiatry, Inc.," an Illinois general not-for-profit corporation in which plaintiff, defendant and Dr. Meduna were the sole officers and directors. The new corporation continued to publish the periodical under the name "International Journal of Neuropsychiatry." In September, 1964, Dr. Meduna died. Defendant assumed the editorship of the Journal.

In December, 1964, plaintiff, following the proper procedures as outlined in the rules of the American Arbitration Association, sent defendant a demand for arbitration. In the demand the nature of the dispute was stated as being: "Whether said contract was violated by Dr. Abraham I. Jackman in combination with Dr. L.J. Meduna, now deceased." The relief sought was: "Restitution of the American Journal of Neuropsychiatry, Inc., and its assets including the Journal and all manuscripts to their rightful owners and such other relief as is proper including an appropriate accounting."

Section 39(6) of the American Arbitration Association rules provides that:

"Each party to an agreement which provides for arbitration under these Rules shall be deemed to have consented that any papers, notices or process necessary or proper for the initiation or continuation of an arbitration under these Rules and for any court action in connection therewith or for the entry of judgment on any award made thereunder may be served upon such party by mail addressed to such party or his attorney at his last known address or by personal service, within or without the state wherein the arbitration is to be held (whether such party be within or without the United States of America), provided that reasonable opportunity to be heard with regard thereto has been granted such party."

The proper documents were mailed to defendant. The American Arbitration Association sent a notice to defendant that the Demand for Arbitration had been filed with them and a list of arbitrators from which defendant was to select in accordance with the association's rules. Notice of who had been appointed to arbitrate the dispute was sent to defendant as was a notice of the hearing. On March 4, 1965, the hearing was held before the arbitrators. After the hearing defendant was again notified that the hearing had been held and was given a certain time in which to present any proofs or evidence he desired. Defendant did not appear at the hearing, nor did he send witnesses, nor counsel, nor make any offer of proof or evidence. On March 31, 1965, the arbitrators rendered their decision and a copy was sent to defendant.

Under New York's Arbitration Law, Civil Practice Law and Rules, section 7501, provides:

"A written agreement to submit any controversy thereafter arising or any existing controversy to arbitration is enforcible without regard to the justiciable character of the controversy and confers jurisdiction on the courts of the state to enforce it and to enter judgment on an award. In determining any matter arising under this article, the court shall not consider whether the claim with respect to which arbitration is sought is tenable or otherwise pass upon the merits of the dispute."

Thereafter, on May 1, 1965, defendant was personally served in New York with a notice of motion, returnable May 11, 1965, before the New York County Supreme Court, seeking entry of a final judgment on the award. Defendant ignored these proceedings, a hearing was had and a final judgment was entered for plaintiff. Under New York law, defendant had three months to move to vacate the award or to modify it. Defendant took no action.

On June 8, 1965, plaintiff filed a petition in the Circuit Court of Cook County, pursuant to the Illinois Uniform Enforcement of Foreign Judgments Act, (Ill Rev Stats 1963, c 77, §§ 88-105), which had been enacted to implement the Full Faith and Credit Clause of the United States ...


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