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Sora Loan Corp. v. Shlifka

OCTOBER 20, 1971.




APPEAL from the Circuit Court of Cook County; the Hon. MEYER H. GOLDSTEIN, Judge, presiding.


This is an appeal from an order of the circuit court of Cook County, vacating plaintiff's ex parte judgment. Plaintiff, the Sora Loan Corporation, had loaned the defendants, Stewart and Elaine Shlifka, $1800 and instituted suit for the balance of $1415.35 after the defendants had paid a total of $384.65. Suit was filed in this case after the defendants had filed a bankruptcy petition.

Plaintiff alleged the loan had been made in reliance on a written statement signed by the defendants, stating they owed only three debts totaling $2753 when, in fact, they owed six other creditors amounts totaling $4938.86. Plaintiff alleged it would not have made the loan had it known about the additional debts. The defendants filed an answer, denied any fraud, and stated one debt was a forgery, admitting the other five debts, and set up bankruptcy as a defense. Under the law at that tice, bankruptcy was no defense to fraud.

At a hearing on December 2, 1969, no one appeared for the defendants, and an ex parte judgment was entered for plaintiff for the loan balance of $1415.35. Defendants first became aware of the judgment more than thirty days later, when a garnishment summons was served on the employer of one of the defendants. On February 2, 1970, defendants' attorney filed his motion to vacate the judgment ten days after learning of the judgment. A motion to strike by plaintiff was sustained and defendants allowed to file an amended petition under section 72. A motion to strike was denied, and the judgment was vacated March 19, 1970.

Defendants' attorney claims neither he nor his clients appeared for the hearing on December 2, 1969, because he had several other items on his calendar that day and was under the impression plaintiff would ask for a continuance. He stated he assumed he had called the office of plaintiff's attorney to request a continuance. Plaintiff's attorney filed an affidavit executed by the three lawyers and a secretary in his office, denying he or any other member of his office received such a telephone call.

The plaintiff complains that the section 72 petition should have been denied because the defendants were not diligent and they did not set forth facts showing a meritorious defense.

The leading cases are Ellman v. DeRuiter (1952), 412 Ill. 285, and Elfman v. Evanston Bus Co. (1963), 27 Ill.2d 609. In Ellman, the court held that a section 72 proceeding could be addressed to the equitable powers of the court when the exercise of such power is necessary to prevent injustice. In Elfman, the court reiterated the holding of Ellman and suggested a default judgment would not be allowed to stand where the plaintiffs would gain an unconscionable advantage. The court also noted, while not conclusive or controlling, the fact that plaintiff delayed execution until after thirty days had expired cast a cloud on the proceedings.

• 1 However, in subsequent cases it has become clear that before a final judgment for default may be vacated, the defendant must not only show he has a meritorious defense to the allegations contained in the complaint, but that he also exercised due diligence in presenting his defense. Esczuk v. Chicago Transit Authority (1968), 39 Ill.2d 464; Bartolini v. Popovitz (1969), 108 Ill. App.2d 89. In Esczuk, the court stated:

"Section 72 of the Civil Practice Act substitutes a simple remedy by petition for various forms of post-trial relief and enables a party to bring before the court rendering a judgment matters of fact which, if known to the court at the time judgment was entered, would have prevented its rendition. (Brockmeyer v. Duncan, 18 Ill.2d 502; Glenn v. People, 9 Ill.2d 335.) However, a party may not avail himself of the remedy provided by section 72 `unless he shows that through no fault or negligence of his own, the error of fact or the existence of a valid defense was not made to appear to the trial court. [Citations] Such a motion or petition is not intended to relieve a party from the consequences of his own mistake or negligence.' (Brockmeyer v. Duncan, 18 Ill.2d 502, 505.) The burden is upon the petitioner under section 72 to allege and prove the facts justifying relief."

• 2 In the case at bar the attorney for the defendants was negligent in assuming that a continuance would be granted the first time the matter came up for hearing and by failing to inquire about the future date or checking the court files, had his assumption been correct. The fact he promptly filed his petition to vacate after discovering the default is not controlling.

We regret this matter cannot be disposed of on the merits, particularly since the plaintiff apparently waited for thirty days to expire before issuing a garnishment summons. Nevertheless, we believe the rationale of Danforth v. Checker Taxi Co., Inc. (1969), 114 Ill. App.2d 471, is applicable here:

"To have a case tried on its merits is, of course, the desirable goal, but we must also have rules relating to procedure and even statutes of limitation. Courts are reluctant to dismiss suits for failure to comply with procedural rules and court orders intended to enforce them, but there are circumstances under which that must be done or the whole system will bog down. That which would best serve the interests of the dilatory party is not the only factor to be considered. The argument that fundamental fairness demands a trial on the merits might be persuasive if urged in the trial court before the expiration of the thirty day period, the current substitute for term time.

Disregard for procedural rules intended to expedite the disposition of litigation can only contribute to the problem those rules were designed to ameliorate. Considering the enormous backlog of cases confronting our courts * * * we cannot be indifferent to procedural rules such as those here involved. A general understanding that section 72 was always available for relief regardless of neglect in failing to comply with court orders would add to the case load and penalize those who obey the court's orders by subjecting them to further delay."

For these reasons, the decision of the circuit court of Cook County is reversed and the cause remanded with ...

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