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Morton v. Environmental Land Systems

OPINION FILED NOVEMBER 23, 1977.

DOUGLAS R. MORTON, M.D., ET AL., PLAINTIFFS-APPELLANTS,

v.

ENVIRONMENTAL LAND SYSTEMS, LIMITED, ET AL., DEFENDANTS-APPELLEES.



APPEAL from the Circuit Court of Cook County; the Hon. JOSEPH M. WOSIK, Judge, presiding.

MR. PRESIDING JUSTICE SULLIVAN DELIVERED THE OPINION OF THE COURT:

Plaintiffs appeal from two orders of the trial court — one of which granted defendants' motion to quash service of process (cause 77-1126) and the other denied plaintiffs' motion for costs and attorneys' fees (cause 77-1251).

In March, 1973, Dr. Morton, individually and as trustee of two trusts, purchased three partnership units in Environmental Land Systems, Limited (ELS), a limited partnership organized under Florida law for the purpose of real estate development. Owning one such unit individually, Dr. Morton subsequently purchased the remaining two units from the trusts and transferred four-tenths of one unit to William F. Hogan. In August, 1976, they and the other plaintiffs, residents of Illinois, brought this action against ELS and its general partners, seeking rescission of the original sales of units and damages based upon allegations of material misrepresentation, breach of fiduciary duty, and fraud. Defendants, who are nonresidents of Illinois, then filed a special and limited appearance, moving the trial court to quash service of process for want of personal jurisdiction, and appended to the motion affidavits of two general partners, Carl F. Gugino and Bradford Dingwell. In opposition to the motion, plaintiffs Morton and Hogan also filed affidavits and attached a letter from Dingwell to Hogan which was addressed to his Illinois office and dated November 17, 1972. After reviewing these documents and hearing argument, the trial court granted defendants' motion to quash service of process and found no just reason to delay enforcement or appeal. Later, the court denied motions of plaintiffs to amend their complaint and for attorneys' fees and costs.

In cause 77-1126, the issues are whether the trial court erred in quashing service on the nonresident defendants and whether the trial court improperly denied plaintiffs' motion to amend the complaint.

In cause 77-1251, plaintiffs contend that the trial court erred in denying their section 41 motion for costs and attorneys' fees. (Ill. Rev. Stat. 1975, ch. 110, par. 41.) In this motion, they alleged that defendants, without reasonable cause, made untrue statements in their motion to quash service of process and in the affidavits of Gugino and Dingwell which were appended to the motion. The appeals have been consolidated for the purposes of review.

It is clear that prior to February 1973, Gugino and Hogan met in Buffalo, New York, and that Hogan was identified as an investment counselor. Later, in a letter dated November 17, 1972, to Hogan addressed to his office in Illinois, Dingwell advertised partnership units in ELS for sale. Additionally, Gugino, while attending a business meeting in Chicago prior to February 1973, contacted Hogan (either by telephone call made in Chicago, according to Gugino; or, as stated by Hogan, in person at his office in Park Ridge, Illinois) to ascertain whether Hogan would be interested in selling partnership units.

Although Dingwell maintains that Morton first heard of ELS from a Florida real estate developer when Morton was in that state on vacation, the affidavit of the developer was not made a part of the record. To the contrary, Morton and Hogan maintain that the information and materials concerning ELS which Hogan had acquired from Gugino and Dingwell were transmitted by Hogan to Morton prior to the latter's Florida visit. In any event, the parties are in agreement that late in February 1973, Morton toured the ELS development in Florida, that partnership agreements were then mailed to Morton in Illinois and executed by him in Illinois, and that Morton sent checks from Illinois to Florida covering the purchase price of three units.

OPINION

• 1 Plaintiffs first contend that the trial court erred in quashing service of process. It is their position that defendants' actions constituted minimum contacts with the State of Illinois so as to satisfy the requirements of section 17 of the Civil Practice Act (Ill. Rev. Stat. 1975, ch. 110, par. 17) and of due process of law. We agree.

Section 17 provides in pertinent part:

"An Act submitting to jurisdiction — Process. (1) Any person, whether or not a citizen or resident of this State, who in person or through an agent does any of the acts hereinafter enumerated, thereby submits such person, and, if an individual, his personal representative, to the jurisdiction of the courts> of this State as to any cause of action arising from the doing of any such acts:

(a) The transaction of any business within this State;

(3) Only causes of action arising from acts enumerated herein may be asserted against a defendant in an action in which jurisdiction over him is based upon this Section." (Ill. Rev. Stat. 1975, ch. 110, par. 17.)

Illinois courts> have consistently held that the legislature intended section 17 to exert personal jurisdiction over nonresidents to the extent permitted under the due process clause of the fourteenth amendment to the United States Constitution. (E.g., Nelson v. Miller (1957), 11 Ill.2d 378, 143 N.E.2d 673; Ward v. Formex, Inc. (1975), 27 Ill. App.3d 22, 325 N.E.2d 812.) Due process requires that a nonresident defendant must "have certain minimum contacts with [the forum] such that the maintenance of the suit does not offend `traditional notions of fair play and substantial justice.' [Citations.]" (International Shoe Co. v. Washington (1945), 326 U.S. 310, 316, 90 L.Ed. 95, 102, 66 S.Ct. 154, 158.) The determination of whether defendants' contacts will support the exercise of personal jurisdiction turns on the ...


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