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P.s.l. Realty Co. v. Granite Investment Co.

OPINION FILED JULY 23, 1976.

P.S.L. REALTY COMPANY ET AL., PLAINTIFFS-APPELLEES,

v.

GRANITE INVESTMENT COMPANY ET AL., DEFENDANTS-APPELLANTS.



APPEAL from the Circuit Court of Madison County; the Hon. JOSEPH J. BARR, Judge, presiding.

MR. JUSTICE JONES DELIVERED THE OPINION OF THE COURT:

Mr. JUSTICE JONES delivered the opinion of the court:

This is an appeal from an order of the trial court denying defendants' motion to dissolve a temporary injunction and appointing a receiver. This case presents the question: May a party seek the relief of a temporary injunction and the appointment of a receiver pendente lite without concurrently seeking a determination of the merits and the ultimate rights of the parties regarding the cause in issue?

On April 11, 1972, plaintiffs, P.S.L. Realty and Illini Federal Savings and Loan Association (hereinafter "Illini"), filed a four-count complaint seeking an immediate temporary injunction, without notice and without bond, against defendants, Granite Investment Company (hereinafter "Granite"), James C. Green, Darryl Layman, and First National Bank in Madison (hereinafter "Bank"). Granite is a real estate firm consisting of a general partner, Green, and several limited partners, including Layman. Bank is the depository of certain funds of Granite. P.S.L. Realty is the seller, and Illini the financing institution, with respect to the sale to Granite of certain property (valued at approximately $16 million) under several contracts for deeds.

On the date the complaint was filed, the court, without notice to defendants, granted the temporary injunction exactly as requested by plaintiffs, upon plaintiffs' posting bond of $50,000, "security waived." The injunction ordered Granite, Layman, and Green to refrain from collecting or attempting to collect any rents due or to become due on the properties in question and from interfering with the attempts of plaintiffs to collect such rents, and directed Granite, Layman, and Green to turn over to plaintiffs any rents already collected. The court also directed Granite, Layman, and Green to turn over their books and records for examination by plaintiffs, and directed Bank to hold any funds in the account of Granite until further order of the court.

Granite and Green were served with the writ of injunction on April 17, 1972. They then filed a motion for change of venue and a motion to dissolve the temporary injunction. The change of venue was granted and on April 21, 1972, a hearing commenced on the motion to dissolve. On April 26, during a resumed session of the hearing, plaintiffs made an oral motion for appointment of a receiver. By its order entered on April 28, 1972, the court denied the motion to dissolve and appointed the Federal Savings and Loan Insurance Corporation temporary receiver of Granite. Granite and Green filed their notice of interlocutory appeal pursuant to Supreme Court Rule 307(a) (Ill. Rev. Stat., ch. 110A, par. 307(a)) on May 23, 1972. At the same time, Layman filed a motion to dissolve the injunction issued against him. The next day this motion was allowed. Plaintiffs were subsequently allowed leave to file an amended complaint as to Layman, which they did. However, we need not concern ourselves with that matter, since only Granite and Green are appellants in the cause presently before us.

Defendants have raised several issues in this appeal. However, because of the nature of this case and the manner in which we have chosen to deal with it, we need not discuss all those issues. Initially we note that this case was first set for oral argument in October of 1972, and thereafter was again set for oral argument on several occasions. However, upon the occasion of each setting the oral argument was continued at the request of the parties because a settlement of the matters involved was imminent. The negotiations for a settlement proved fruitless, and the parties requested that the case again be set for oral argument. Consequently, the case was finally orally argued on March 31, 1976.

Although approximately four years had passed from the time the temporary injunction was issued and the receiver appointed until the time of the oral argument, during the argument the attorneys for the respective parties made it clear to this court that no further action had been taken in the trial court with respect to the substantive matter in dispute. Although the trial court below had issued what it termed a "temporary injunction," no complaint relating to the merits of this case had been filed at or before the time the injunction was granted and, apparently, none has been filed since. Plaintiffs' complaint for injunction made no reference to a pending or contemplated action upon the merits of the disputed matter. From the face of plaintiffs' complaint and plaintiffs' subsequent oral motion for the appointment of a receiver, it appears that the injunctive relief and receivership constituted the only relief plaintiffs wanted. The lack of further action during the four years that have elapsed since the time plaintiffs' requested relief was granted clearly indicates that the injunction and receivership, although termed by the court "temporary," amounted to the only relief plaintiffs wanted, and, for that matter the only relief they would ever want.

• 1 It is established that a temporary or preliminary injunction should not be granted where its effect would be to give all the relief that could be obtained after a final hearing on the merits of the dispute. (People's Gas Light & Coke Co. v. Cook Lumber Terminal Co., 256 Ill. App. 357; Cassidy v. Triebel, 337 Ill. App. 117, 85 N.E.2d 461; Knuppel v. Adams, 12 Ill. App.3d 708, 298 N.E.2d 767.) The purpose of a preliminary injunction is not to finally decide the controverted facts or merits of a case. (Lonergan v. Crucible Steel Co. of America, 37 Ill.2d 599, 229 N.E.2d 536.) The preliminary injunction is merely provisional in nature and concludes no rights (Nestor Johnson Manufacturing Co. v. Goldblatt, 371 Ill. 570, 21 N.E.2d 723; Schuler v. Wolf, 372 Ill. 386, 24 N.E.2d 162), its office being merely to preserve the status quo until a final hearing on the merits. (Dunne v. County of Rock Island, 288 Ill. 359, 123 N.E. 501; Duval v. Severson, 15 Ill. App.3d 634, 304 N.E.2d 747.

That a receivership is of the same nature and serves a similar function has been well established.

"By the weight of authority it is a well-recognized province of equity jurisdiction to give aid to an action in another court, either by injunctive process or by appointment of a receiver, whenever either or both of these remedies are necessary to preserve the existing status of the property until the proper distribution of the property has been determined in litigation then pending respecting the property, provided irreparable damage may result if the existing status of the property is not preserved. Such an injunction is merely a mode by which the court preserves the property in dispute, with the least injury to all parties, until it can finally determine their respective rights and upon such a hearing, if a perpetual injunction is ordered, the defendant may be required to restore the status." 2 Puterbaugh, Illinois Chancery Pleading and Practice § 626 (7th ed. 1930).

"By the weight of authority it is a well-recognized province of equity jurisdiction to give aid to an action in another court, either by injunctive process or by the appointment of a receiver whenever either or both of these remedies are necessary to preserve the existing status of property until the proper disposition of the property has been determined in litigation then pending respecting the property, provided irreparable damage may result if the existing status of the property is not preserved." (Kulwin v. Harsh, 232 Ill. App. 419, 423-24.)

To the same effect is People ex rel. Hoagland v. Streeper, 12 Ill.2d 204, 211, 145 N.E.2d 625, 628-29. To say that a "temporary" injunction and receivership are "provisional" in nature, or that they are used "in aid to" an action, or that their function is "to preserve the existing status of property until" some litigation determines the proper disposition of the property, is merely to say that a "temporary" injunction and a receivership are ancillary remedies and cannot be maintained as the sole relief sought. That this is so, subject to a few specific exceptions in cases of waste and other similar torts, has been often stated.

"[S]uch matters as a receivership and preliminary injunction cannot per se be the subject of suit in equity." De Rees v. Costaguta ...


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