APPEAL from the Circuit Court of Cook County; the Hon. GEORGE
E. DOLEZAL, Judge, presiding.
MR. JUSTICE SIMON DELIVERED THE OPINION OF THE COURT:
This action was brought to recover the unpaid amount of a judgment on the theory that plaintiff, Gordon S. Mark, is a third-party beneficiary of a contract between plaintiff's judgment debtor, McDonnell & Co., Inc. (McDonnell), and defendant, the New York Stock Exchange (Exchange).
Plaintiff obtained a judgment in the United States District Court for the Northern District of Illinois against McDonnell, a stock brokerage firm. Prior to the entry of this judgment, McDonnell, which had ceased business operations, and the Exchange had entered into a "Liquidation Agreement" (the Agreement). Pursuant to the Agreement, the Exchange had appointed a liquidator of McDonnell's business, and the liquidator was given a power of attorney to dispose of McDonnell's assets and to pay the claims of customers and other creditors of McDonnell. The liquidator filed a portion of McDonnell's assets as a supersedeas bond while the judgment was being appealed to the United States Court of Appeals. That court subsequently affirmed the judgment but the bond proved insufficient to pay the entire judgment; thus, McDonnell still owes plaintiff the sum of $9,016.67 on the judgment, plus accrued interest.
Plaintiff then attempted to collect the deficiency from the Exchange in the United States District Court action in which the judgment was entered. He moved for leave to file a complaint against the Exchange, asserting the same cause of action as in the present case. When this motion was denied, plaintiff filed this action against the Exchange in the circuit court of Cook County to recover the deficiency. Plaintiff contended in the circuit court, as he does here, that the Agreement entitles him to recover the balance of his judgment from the Exchange as a creditor, third-party beneficiary to the Agreement. The Exchange argued it had no duty to pay the debts of McDonnell. On cross-motions by both parties for entry of a summary judgment, the circuit court granted the Exchange's motion, denied plaintiff's motion and entered judgment accordingly. Plaintiff appeals from this order.
Plaintiff's right to sue the Exchange as a third-party beneficiary depends upon the liability of the Exchange to McDonnell as established by the Agreement. (Carson Pirie Scott & Co. v. Parrett (1931), 346 Ill. 252, 178 N.E. 498.) The Agreement is controlling with respect to the rights of plaintiff, and the liability of the Exchange cannot be extended beyond the terms of the Agreement. (Carson Pirie Scott.) Therefore, we must first determine the liability of the Exchange to McDonnell under the Agreement.
The Agreement authorized the trustees of the Special Trust Fund (the Fund) of the Exchange to advance monies of the Fund to McDonnell so McDonnell could meet its obligations. The Fund is provided for by the constitution of the Exchange; it was established by a deed of trust as a common law trust under the laws of the State of New York and accorded perpetual life by act of the New York State Legislature. (1965 N.Y. Laws, ch. 401.) The trust deed provided that the trust assets were to be used for assistance to customers of members of the Exchange "threatened * * * with loss * * * because such * * * member firm * * * in the opinion of the Trustees * * * is insolvent or is in such financial condition * * * it may not be able without assistance to meet * * * its obligations to such customers * * *."
The power to decide whether monies from the Fund should be advanced to McDonnell was given to the trustees of the Fund. A preamble paragraph of the Agreement stated that "a portion of the * * * Fund * * * may under certain circumstances and at the absolute discretion of the Trustees * * * be used for the purpose of providing direct or indirect assistance to customers of McDonnell * * *." (Emphasis added.) The Agreement also provided:
"II. Each of the signatories hereby agrees that, in the event the Trustees loan any cash, securities or other property to McDonnell or expressly guarantee any obligation of McDonnell to any one or more of its creditors, or pay all or any portion of any obligation of McDonnell to any one or more of its creditors (any such loan, guarantee, or payment to be made only in the absolute discretion of the Trustees), any and all such loans shall be repaid the Trustees by McDonnell in full * * *." (Emphasis added.)
This is consistent with the Exchange's constitution, which declares that the decision to advance Fund monies shall be "exclusively within the sole and absolute discretion of the Trustees * * *."
The Agreement also contained the following provision, which gave the Exchange the right to appoint a liquidator:
"From and after the date on which the first Loan, or the first guarantee by the Trustees of any obligation of McDonnell, or the first payment by the Trustees of all or any portion of any obligation of McDonnell to any of its creditors, is made, the Exchange shall have the right to appoint such person as it may choose as Liquidator of the business of McDonnell."
In addition, the Agreement also defined the powers of the liquidator, stating that he was to take control of McDonnell's business and property for the purpose of conducting an orderly liquidation of the assets and business. The Agreement further directed the liquidator to proceed as follows:
"i.) he shall promptly take such steps as he may deem practicable to reduce McDonnell's operating expenses and to dispose of McDonnell's salable assets;
ii.) he shall have power to retain independent public accountants, consultants, counsel and other agents and assistants and shall have power to augment and ...