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Lawrence v. Williamson Ford

AUGUST 21, 1973.

DANIEL LAWRENCE, PLAINTIFF-APPELLANT,

v.

WILLIAMSON FORD, INC. ET AL., DEFENDANTS-APPELLEES.



APPEAL from the Circuit Court of Winnebago County; the Hon. WILLIAM R. NASH, Judge, presiding.

MR. JUSTICE SEIDENFELD DELIVERED THE OPINION OF THE COURT:

The plaintiff, Daniel Lawrence, filed suit on October 1, 1971, to recover for personal injuries resulting from a 1952 accident, alleging that he had become of age on October 6, 1969. A defense of the statute of limitations based on failure to join the proper party defendant until after the limitations period had run was sustained. Plaintiff appeals from the judgment dismissing his amended complaint.

The original complaint was captioned Daniel Lawrence, plaintiff, against "Frontier Ford, Inc. (formerly Williamson Motor Company, an Illinois corporation), and John Doe, defendants." In paragraph 2 of the complaint, plaintiff alleged that he was struck by an automobile driven by an unknown salesman "for the Williamson Motor Company, an Illinois corporation, which it is believed became Frontier Ford, Inc.". Paragraph 7 alleged:

"That because of the length of time which has elapsed between the date of the injury and the present time, plaintiff is informed and believes that the defendant company involved was the Williamson Motor Company and that by acquisition of stock, merger, sale or otherwise, Frontier Ford, Inc. is the legal successor to the business of Williamson Motor Company, but that in any event, the intent of this complaint is to name Williamson Motor Company as a defendant. * * *"

Frontier Ford, Inc. was served with summons. It appeared and filed a motion to dismiss on the ground it was not in existence at the time of the occurrence. An attached affidavit detailed the formation of Williamson Motor Company, Inc., as a Delaware corporation in 1957, with a change of name to Fairway Motor Co. Inc. in 1958; Willett Ford, Inc., in 1964; and to Frontier Ford, Inc., a Delaware corporation, in 1969, and its continued existence since then as a Delaware corporation by that name. A supplemental affidavit supplied the allegations that on May 6, 1957, Williamson Motor Co., Inc., a Delaware corporation, purchased the assets of Williamson Motor Co., Inc., an Illinois corporation, complied with the Bulk Sales Law and assumed no liabilities of the Illinois corporation except for unperformed obligations under assigned leases and service and equipment contracts.

On November 29, 1971, plaintiff moved to correct the party defendant to Williamson Ford, Inc., a Delaware corporation, as the successor to the Illinois corporation of Williamson Motor Company which he had named originally. Supporting documents traced an Illinois corporation named Barnes Motor Company formed in 1911; change of name to Williamson Motor Company in 1914; a further change of name to Dor-Will Company in 1957; and a 1965 merger between the latter Illinois corporation and the Delaware corporation called Williamson Ford, Inc. The court granted leave to file an amended complaint against Williamson Ford, Inc., a Delaware corporation, and on motion alleging the bar of the statute of limitations, the cause was dismissed.

In a memorandum opinion the trial court stated that it was apparent that plaintiff had sought to name as defendant the legal successor of the entity which in 1952 was known as Williamson Motor Co. The court concluded that the issue is determined by section 46(4) of the Civil Practice Act (Ill. Rev. Stat. 1971, ch. 110, par. 46). It held that since service of summons was not had upon the appropriate defendant within the statute of limitations, and there was no showing by plaintiff that defendant had within that period knowledge of the pending cause, the action was barred under sections 46(4) (c) and (d) of the Civil Practice Act. Ill. Rev. Stat. 1971, ch. 110, par. 46(4)(c) & (d). *fn1

Plaintiff contends that its original complaint filed before the limitations period had run showed a clear intent to and did in fact name the original corporation, Williamson Motor Co., as a defendant; that the filing of the complaint tolled the statute of limitations; that section 46(4) of the Civil Practice Act does not apply; and that under section 69(e) of the Business Corporation Act (Ill. Rev. Stat. 1971, ch. 32, par. 157.69 (e) *fn2) the substitution of the correct successor corporation after the statute has run is permissible even though an incorrect successor corporation was initially named in the complaint against the original corporation.

Defendant argues that section 69(e) of the Business Corporation Act has nothing to do with the statute of limitations or the timely filing of suit; that under the facts of this cause, the issue should be determined by section 46(4) of the Civil Practice Act. It argues that the successor corporation must be sued before the statute of limitations has run and that the plaintiff did not merely misname the proper party defendant but made a mistake as to its identity and therefore commenced a new suit after the statute had run as against the present defendant.

• 1 We think that defendant is correct in contending that by naming Frontier Ford, Inc. in the original complaint, serving summons on it, and forcing it to come in and move for a dismissal, plaintiff made a mistake, not merely a misnomer, as to the proper successor corporation of the original corporation. (Proctor v. Wells Bros. Co. (1914), 262 Ill. 77, 81-82. See also Hoagland v. Brown (1966), 71 Ill. App.2d 240, 243.) However, the record shows that plaintiff also commenced suit against Williamson Motor Co., an Illinois corporation, in the original, timely complaint. While the title of the complaint does not make it clear that plaintiff is intending to sue the former corporation, the body, particularly paragraph 7 when combined with the title and other portions of the complaint which we have previously noted, do make it clear that a timely suit was commenced against Williamson Motor Co., an Illinois corporation. See Ill. Rev. Stat. 1971, ch. 110, par. 21(4); Fleshner v. Copeland (1958), 13 Ill.2d 72, 77.

• 2, 3 Plaintiff's action in naming and serving the wrong party, Frontier Ford, Inc., does not automatically defeat his cause of action. Plaintiff did include and intend to name the original corporation, Williamson Motor Company, an Illinois corporation, as a party defendant in his complaint which was filed before the statute of limitations had run. The dismissal of an unnecessary and improper party to an action after the statute has expired does not effect a discontinuance in the sense that a new cause of action is created against the original corporation named in the timely filed complaint. (Patten v. Iroquois Furnace Co. (1905), 124 Ill. App. 1.) The bringing of suit against the original corporation within the statute of limitations may enable liability to be determined against the successor. Franklin Life Insurance Co. v. Hickson (1901), 97 Ill. App. 387, aff'd, 197 Ill. 117.

• 4 Defendant argues, in effect, that once a merger of corporations takes place, a plaintiff must join the successor corporation before the running of the limitations period to avoid its bar. We disagree. A former corporation since merged, may be sued under its original name under the provisions of section 69(e) of the Business Corporation Act. (Ill. Rev. Stat. 1971, ch. 32, par. 157.69(e).) The language of the statute would permit suits against the successor corporation for alleged acts of the former corporation, unrestricted because of the fact of merger. Thus, a plaintiff has the choice of describing the defendant by its old or its new corporate name in commencing suit against it. Board of Education v. Herzog Building Corp. (1963), 41 Ill. App.2d 44, 48-49.

In Herzog, suit was commenced and judgment was entered against the Herzog Construction Company after it had merged, but without the plaintiff's knowledge of the merger. The successor corporation, Herzog Building Corporation, contended unsuccessfully that it was not responsible for the judgment against the nonexisting entity. Although Herzog did not deal with the statute of limitations, its underlying rationale is that section 69(e) permits suit to be effectively commenced and prosecuted against a corporation which has already merged before suit has commenced, so long as the claim upon which the suit is based existed against the merged corporation before the merger.

In Herzog, the successor corporation did know about the suit and defended against it. However, obvious problems exist when the successor corporation is not served with process within the limitation period and does not defend against it. Although the wording of section 69(e) of the Business Corporation Act permits suit against a merged corporation in its original name as well as in the name of the survivor, the proceeding is actually against the surviving corporation regardless of the name under which the defendant is sued. (Board of Education v. Herzog Building Corp. (1963), 41 Ill. App.2d 44, 49.) Since the effect of a merger is to dissolve the original corporation and create a new one (Southern Illinois Gas Co. v. Commerce Com. (1924), 311 Ill. 299, 302), and the original corporation becomes a nonentity (Ill. ...


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