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Hupp v. Gray

OPINION FILED FEBRUARY 10, 1977.

GEORGE T. HUPP, PLAINTIFF-APPELLANT,

v.

LAURENCE GRAY ET AL., DEFENDANTS-APPELLEES.



APPEAL from the Circuit Court of Cook County; the Hon. ABRAHAM W. BRUSSELL, Judge, presiding.

MR. JUSTICE JOHNSON DELIVERED THE OPINION OF THE COURT:

Rehearing denied April 1, 1977.

George T. Hupp, the plaintiff, brought an action for common law fraud in the Circuit Court of Cook County, Illinois, County Department, Law Division. Named as defendants were A.G. Becker & Co., Inc., a brokerage firm, and Laurence Gray, its agent. The action arose out of a series of sales transactions between the plaintiff and the defendants. The defendants filed a motion to dismiss plaintiff's cause, based upon the applicable statute of limitations. The court sustained the defendants' motion and the plaintiff appeals.

The nature of the case is as follows. The defendant, A.G. Becker & Co., Inc. (hereinafter referred to as Becker), was a broker and dealer of securities operating in the Chicago area. Defendant Laurence Gray was an agent for Becker. Through the defendants, plaintiff Hupp made extensive purchases of shares of common stock in the Variable Annuity Life Insurance Company of America (hereinafter referred to as VALIC). The transactions occurred between May 1965 and January 1966. During this 9-month period, Hupp purchased a total of 1500 shares of VALIC at a total expenditure of $58,711.25.

Hupp alleges that his purchases of VALIC stock were made in reliance upon certain misrepresentations made to him by Gray. According to the plaintiff, Gray misrepresented certain material facts and omitted other material facts concerning VALIC, with the intent to cause plaintiff to purchase VALIC stock. The plaintiff alleges that these misrepresentations and omissions were made knowingly, with intent to deceive plaintiff, or were made without proper investigation of available facts. When the price of VALIC stock lowered significantly from $47 per share to approximately $17.50 per share, Hupp continued to rely upon misinformation furnished by Gray and refrained from selling his VALIC stock. Finally, on March 3, 1967, he sold his 1500 shares of VALIC stock for a price of approximately $26,250. From January 10, 1966, to March 3, 1967, it was necessary for Hupp to liquidate other assets owned by him and to post additional cash as security in order to maintain loans that had been secured by VALIC stock. Hupp contends that as a direct result of this, he suffered great mental anguish.

On September 17, 1971, plaintiff filed suit against Gray and Becker in the United States District Court for the Northern District of Illinois. Count II of the complaint was founded on common law fraud and Count IV on common law negligence. The defendants argued that plaintiff's cause of action matured in March 1967, and moved to dismiss the complaint on the ground that it was barred by the applicable 3-year statute of limitations (Ill. Rev. Stat. 1971, ch. 121 1/2, par. 137.13D). The plaintiff maintained that he exercised due diligence but failed to discern his cause of action until August 1970, due to fraudulent concealment on the part of the defendants. Thus, he argued that the statute of limitations had been tolled by the defendants' fraudulent concealment. On May 12, 1972, the United States District Court sustained the defendants' motion and the complaint was dismissed. On December 4, 1972, plaintiff was denied leave to file an amended complaint. On December 27, 1972, Hupp filed his notice of appeal. On August 12, 1974, the Seventh Circuit Court of Appeals affirmed the district court's dismissal of plaintiff's cause.

Hupp brought this action in the circuit court of Cook County on September 30, 1974. The instant complaint is founded on common law fraud, and is predicated on the identical facts alleged in the prior complaint. The defendants filed their motion to dismiss on October 30, 1974, asserting that plaintiff's action was barred by the 5-year statute of limitations (Ill. Rev. Stat. 1973, ch. 83, par. 16). The defendants further argued that the Limitations Act (Ill. Rev. Stat. 1973, ch. 83, par. 24a) required that plaintiff bring the instant action no later than 1 year following the date of dismissal by the district court, in order to bring himself within the purview of the protective statute. The trial court sustained the defendants' motion to dismiss. The court held that based on the prior finding of the district court, Hupp was collaterally estopped from denying that his cause of action accrued subsequent to March 1967; it was thus "time-barred on the substantive common law causes of action." The court held that section 24 (Ill. Rev. Stat. 1973, ch. 83, par. 24a) was not available to Hupp since he failed to file the instant complaint within 1 year after the dismissal of his cause by the Federal District Court.

The single issue presented for review is whether under section 24 of the Limitations Act (Ill. Rev. Stat. 1973, ch. 83, par. 24a), the 1-year extended limitations period for recommencement of an action following an involuntary non-suit should begin at the time of the original non-suit in the trial court or after the affirmance of the non-suit by a reviewing court.

The statute provides as follows:

"In the actions specified in this Act or any other act or contract where the time for commencing an action is limited, if judgment is given for the plaintiff but reversed on appeal; or if there is a verdict for the plaintiff and, upon matter alleged in arrest of judgment, the judgment is given against the plaintiff; or if the plaintiff is nonsuited, or the action is dismissed for want of prosecution then, whether or not the time limitation for bringing such action expires during the pendency of such suit, the plaintiff, his heirs, executors or administrators may commence a new action within one year or within the remaining period of limitation, whichever is greater, after such judgment is reversed or given against the plaintiff, or after the plaintiff is nonsuited or the action is dismissed for want of prosecution." Ill. Rev. Stat. 1973, ch. 83, par. 24a.

• 1 It is not disputed that the involuntary dismissal of the plaintiff's cause constitutes a non-suit within the meaning of section 24 of the Limitations Act. Roth v. Northern Assurance Co. (1964), 32 Ill.2d 40, 42, 203 N.E.2d 415, 416; In re Estate of Breault (1969), 113 Ill. App.2d 356, 361, 251 N.E.2d 910, 912-13.

The plaintiff maintains that the trial court erred in holding that a 1-year recommencement period began to run on the date of the dismissal by the United States District Court rather than on the date of the affirmance by the United States Court of Appeals. Further, Hupp maintains that the ruling requires a plaintiff to risk his privilege of renewal where he takes an appeal. He argues that the ruling in no way advances the true purpose of statutes of limitations, which is to allow a defendant a fair opportunity to investigate the facts and circumstances which engendered his liability, and to prepare a defense while the pertinent facts remain accessible. (Roth v. Northern Assurance Co. (1964), 32 Ill.2d 40, 49, 203 N.E.2d 415, 420.) We must agree.

In the instant case, the defendants were on notice as of September 1971, when plaintiff filed his first complaint, that he had a claim against them. They were fully apprised of the merits or substance of plaintiff's claim and that he intended to maintain his rights in a court of law. The Illinois Supreme Court, in quoting Mr. Justice Holmes in New York Central & Hudson River R.R. Co. v. Kinney (1922), 260 U.S. 340, 342, 67 L.Ed. 294, 43 S.Ct. 122, 123, held in Roth v. Northern Assurance Co. (1964), 32 Ill.2d 40, 49-50, 203 N.E.2d 415, 420, that:

"`* * * [W]hen a defendant has had notice from the beginning that the plaintiff sets up and is trying to enforce a claim against it because of specified conduct, the reasons for the statute of limitations do not exist, and ...


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