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Public Taxi Service v. Ayrton

NOVEMBER 1, 1973.




APPEAL from the Circuit Court of Cook County; the Hon. CHARLES P. HORAN, Judge, presiding.


This litigation arose from a collision between two vehicles which were westbound on Diversey Avenue, Chicago, on January 17, 1965. The vehicles were a taxi cab, owned by Public Taxi Service and driven by James Taylor, and an automobile driven by Karen Ayrton. Exactly two years after the accident Public Taxi and Taylor each sued Ayrton for $100 damages. Ayrton filed an answer, a jury demand and a counterclaim.

In late May 1970, Ayrton received notice that both Public Taxi and Taylor would move to raise their ad damna — Public Taxi to $300, Taylor to $4,700. R.S. Deutsch, the attorney representing Mrs. Ayrton, and Sherman Dickholz, the attorney for Public Taxi and Taylor, conferred in court on May 26, 1970, about the proposed increases. That same day the complaints were amended. Fifteen days later, default judgments were entered in favor of Public Taxi and Taylor in the amounts of $289.12 and $4,700 respectively, and against Ayrton on her counterclaim.

On September 25, 1970, garnishment summonses were issued on behalf of the plaintiffs against Ayrton's insurance carrier. On October 16, 1970, Ayrton filed a motion under section 72 of the Practice Act to vacate the judgments (Ill. Rev. Stat. 1969, ch. 110, par. 72) which was supported by the affidavit of her attorney. Deutsch swore that when he and Dickholtz conferred in court on May 26, 1970, an agreement was made that the motion to increase the ad damna would not be presented to the court that day and that a trial date would not be set until interrogatories had been answered. He stated that pursuant to this agreement he wrote to Dickholtz on June 25th and July 14th, 1970. He further stated that neither Ayrton nor he received notice of the defaults. The motion also averred that Ayrton had a meritorious defense in that the cab driven by Taylor made a sudden left-hand turn in front of her automobile.

Dickholtz did not answer the motion but, on October 26th, he filed a special and limited appearance supported by an affidavit. The latter stated that the court was without jurisdiction to hear the motion to vacate because Ayrton had not served notice of the motion on the judgment creditors as required by statute and rules. After a hearing in February 1971, at which testimony was heard and exhibits introduced, the court, based on its equitable powers, set aside the judgments and set the case for trial. Dickholtz, for Public Taxi and Taylor, elected to stand on the jurisdictional issue and perfected this appeal.

• 1 A petition to set aside a default judgment under section 72 is to be considered in the light of equitable principles. (Franklin v. Wellco Co. (1972), 5 Ill. App.3d 731, 283 N.E.2d 913.) A court of review is not disposed to overturn a decision based upon equitable considerations unless it concludes that there was an abuse of discretion by the trial court.

• 2 The facts of this case, insofar as they are known to us, cry out for equitable relief. We say insofar as they are known to us because Attorney Dickholtz did not answer the motion or present testimony at the hearing. Our knowledge of the facts comes from the motion, the affidavit of Attorney Deutsch and the evidence and testimony adduced in Ayrton's behalf. The uncontradicted averments and the testimony show that Ayrton aggressively defended Taylor's and Public Taxi's suits. She filed an answer and a counterclaim and her attorney appeared in court whenever it was necessary. He came to court on May 26, 1970, in response to a notice from Dickholtz that Taylor would move to raise his ad damnum from $100 to $4,700 and Public Taxi would move to raise its ad damnum from $100 to $300. The motions were not presented because of an agreement made between the attorneys. The agreement was that the motions would be held in abeyance until all interrogatories were answered and that after this was done a date for trial would be agreed upon. Pursuant to this agreement, Ayrton's attorney left the courtroom and wrote Dickholtz on June 25th and July 14th. Dickholtz did not respond to either letter. Ayrton's attorney did not learn until late in September that the agreement had been violated; that after he left the courtroom on May 26th the ad damna had been raised; and that, without further notice, default judgments were entered on June 10th. No notice of the judgments was ever received by him or Ayrton and no execution was issued. They first learned of the judgments some time after September 29, 1970, when Ayrton's insurance company informed them of the garnishment proceedings. A motion was quickly prepared and filed to vacate the judgments. Since more than three months had elapsed between the date of the defaults and the date they learned of them, the motion was regarded as a petition filed under section 72 of the Practice Act. The petition alleged a meritorious defense and was diligently filed.

Notice of the motion was mailed to Dickholtz, Taylor's attorney, and to Public Taxi, Taylor's last known employer. Dickholtz, who knew Taylor's address, refused to reveal it and every effort was made to locate Taylor. A search was made of telephone books; the Driver's License Division of the Secretary of State's office was contacted as were the Auto License Division of the City Clerk of Chicago and the Cook County Credit Bureau. An investigator was hired. He visited Taylor's last known address and called upon his last known employer. He contacted cab companies and the license bureau of the livery service of the City of Chicago; he asked questions in Taylor's neighborhood and checked his insurance carrier, and he addressed inquiries to Taylor's attorney and the president of Public Taxi — all without success.

In addition to all these factors, it was disclosed to the court that Taylor, two or three months after the accident, had signed a general release of all claims against Ayrton.

The violation of the agreement, the increase in Taylor's ad damnum from $100 to $4,700, the default judgments entered a few days thereafter, the $4,700 judgment in 1970 in favor of a party who had in 1965 renounced all claim for damages, the obvious attempt to conceal the judgments by not replying to letters concerning the case, the failure to take out execution within 30 days after the judgments, the more than three months delay in starting garnishment, and the attempt to frustrate the defendant's petition for redress by refusing to divulge Taylor's whereabouts, demonstrated the unfair conduct of the plaintiffs and their attorney and the unconscionable advantage taken of the defendant. Justice and fair play called for the exercise of the trial court's equitable powers.

• 3, 4 A more difficult problem, however, is whether the trial court had jurisdiction to consider the motion. A section 72 petition, although filed in the same case under the same number and title, is regarded as an independent action (In re Estate of Peterson (1972), 3 Ill. App.3d 636, 279 N.E.2d 434) and the defendants named in the petition must be notified anew. The statute (Ill. Rev. Stat. 1969, ch. 110, par. 72(2)) states that all parties shall be notified as provided by rule. Rule 106 (ch. 110A, par. 106) provides that notice of the filing of a petition under section 72 shall be given by the same methods as provided for in Rule 105 (ch. 110A, par. 105). Subparagraph (b) of Rule 105 states that notice may be served in one of three ways: (1) by the method provided by law for service of summons, (2) by prepaid registered mail and (3) by publication. Notice is indispensable to due process and compliance with the rules is essential to jurisdiction. If the notice is invalid, jurisdiction is lacking and subsequent orders are likewise invalid. Andonoplas v. Jaremko (1972), 9 Ill. App.3d 298, 292 N.E.2d 225; Acosta v. Burris (1964), 47 Ill. App.2d 201, 197 N.E.2d 757.

• 5 Because of the different facts applying to each, the cases of Public Taxi and Taylor must be distinguished. There is a dispute as to whether proper notice was served upon Public Taxi. Public Taxi's address was known; it could have been served personally or by registered mail. The defendant represented to the court that proper notice was served and called attention to a copy of the notice in the court file. Counsel for Public Taxi examined the notice, said it was deficient but stood upon his special appearance. No notice with proof of service can be found in the record and we are unable, therefore, to determine its legal adequacy. In its absence, we must abide the judgment of the trial court who saw the notice and set aside Public Taxi's judgment. We must conclude there was a sound basis for the court's decision. Smith v. Smith (1962), 36 Ill. App.2d 55, 183 N.E.2d 559.

As far as Taylor is concerned, it is undisputed that the defendant did not use any of the methods of serving notice prescribed in Rule 105(b). Taylor's address was unknown to the defendant and in spite of all her efforts could not be ascertained. Therefore, she could not serve him personally, and she could not serve him by prepaid registered mail and obtain a receipt evidencing such service as is required by Rule 105(b) (2). She could have notified him by publication (Rule 105(b) (3)), but she did not.

What she did do was to send notice to Dickholtz, Taylor's attorney. Notice of a section 72 petition was also served upon an attorney in Pease v. Herb Julian Cab Co. (1972), 7 Ill. App.3d 179, 287 N.E.2d 200. A default judgment had been entered against the defendants. They filed a section 72 petition to vacate the judgment and served notice upon the plaintiff's attorney of record but not upon the plaintiff. The plaintiff filed a special appearance for the sole purpose of contesting the trial court's jurisdiction. The default was vacated and, on the plaintiff's appeal, the defendants urged that Rule 11 (Ill. Rev. Stat. 1969, ch. 110A, par. 11), which provides that if a party is represented by an attorney of record service shall be made upon the attorney, authorized the procedure they used. Although the reviewing court in the Pease case found that it did not have to decide the issue, the authors of the supplement to the Historical and Practice Notes of ...

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