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Reuben H. Donnelley Corp. v. Thomas





APPEAL from the Circuit Court of Cook County; the Hon. MEYER H. GOLDSTEIN, Judge, presiding.


Plaintiff, Reuben H. Donnelley Corporation, obtained a default judgment against defendant, Joseph S. Thomas, and thereafter defendant filed a section 72 petition to vacate the judgment. (Ill. Rev. Stat. 1977, ch. 110, par. 72.) This petition was granted on August 4, 1978, and plaintiff appeals. The issues presented for review by plaintiff are whether the trial court abused its discretion in granting the petition and whether the court erred in not allowing plaintiff to answer defendant's petition and to have an evidentiary hearing thereon.

On July 3, 1973, defendant, doing business as National Security Systems, entered into a contract with plaintiff to purchase an advertisement in the January 1, 1974, issue of the Chicago yellow pages telephone directory. The contract stated that the advertisement would continue at the same rate in subsequent issues unless cancelled by defendant 75 days prior to the date of publication. If defendant ceased to conduct the business referred to, the entire amount to be paid for the advertisement in the current issue would be due and payable, and directory representation would be omitted from subsequent issues. The contract also contained an integration clause stating that the agreement did not include any representation not incorporated in the contract in writing. Soon thereafter, and more than 75 days before publication, defendant inquired of plaintiff as to its policy concerning billing for advertising in cases where the telephone is disconnected. Plaintiff replied in a letter stating the general policy was to discontinue billing for such advertising from the date the telephone was disconnected where the advertiser had completely gone out of business and no referral of calls was made. However, the letter stated that this policy could be modified or become inapplicable where the advertiser or an affiliated person or company continued to do business in the same or related type of trade or industry in the same general market area, and plaintiff would determine at its discretion whether a write-off for directory advertising would be made.

On January 21, 1974, 3 weeks after the publication date, defendant cancelled his advertisement in a letter stating he was "no longer in business" and would have his telephone number changed immediately. On January 25, 1974, plaintiff wrote defendant a letter stating that his advertisement would be cancelled for the January 1975 issue. Plaintiff also sent defendant a "cancellation acknowledgment" giving the same information.

On January 27, 1977, plaintiff filed suit against defendant for $2,898.50, the balance due from the time of cancellation until the end of 1974. Defendant failed to file an answer to the complaint, and on February 17, 1977, the court entered a default judgment in the amount of $2,898.50 plus costs.

Defendant filed a section 72 petition on February 8, 1978, and filed an amended petition on May 2, 1978. In his amended petition defendant alleged that at the time of the default judgment he was in Federal court defending himself in a criminal matter and was incarcerated 5 days later. He alleged that 5 days was insufficient time to effectively protect his rights and further alleged that, even while incarcerated, he attempted to protect his rights through the efforts of his partner who was in contact with plaintiff's attorneys.

Defendant further alleged that after being paroled on October 14, 1977, he required 1 month to adjust himself to civilian life and gain employment. He then telephoned plaintiff's attorneys and was told to be in court on December 15, 1977. At that time he was told that the only thing he could do was to file a section 72 petition. He sought legal representation, and his attorney attempted to file his petition on January 27, 1977. However, because of a procedural error it was not filed until February 8, 1978.

Defendant alleged in the petition that he had a meritorious defense because (1) the contract upon which plaintiff's suit was based could be cancelled if he went out of business as plaintiff indicated in its letter in September of 1973, and (2) he, in fact, cancelled the contract as evidenced by his own letter and the acknowledgment by plaintiff. Attached to the section 72 petition were exhibits which indicated that, at the time he cancelled his directory service, he was doing business at the same address as that listed in his advertisement under the name of the Triangle Service Company. However, the telephone number was not the same as in the advertisement. There was no allegation as to what the business of Triangle Service Company was, but at the hearing on the petition defense counsel indicated it was wholly unrelated to the business advertised in the directory.

Plaintiff's "response" to the amended section 72 petition alleged that defendant had not shown diligence because he knew the judgment had been entered on February 17, 1977, but filed no petition to vacate until almost a year later. Plaintiff also alleged that defendant did not have a meritorious defense because the notice acknowledging cancellation was for the 1975 classified directory and did not relate to any charges due for 1974. Plaintiff also alleged that defendant's exhibits show that he was still doing business at the same address listed in his advertisement, and therefore he did not qualify for the cancellation of charges.

At a hearing on August 4, 1978, the court heard arguments and concluded that it was up to the trier of fact to determine whether defendant had gone into the same or related type of business in the general market area after canceling his advertisement. The court indicated it was concerned as to what the policy of the plaintiff was with respect to the cancellation of agreements, and the court vacated the default judgment.

Defendant filed an answer to the underlying complaint on August 29, 1978, setting forth as an affirmative defense plaintiff's policy of cancellation where the applicant goes out of business. Defendant alleged that he was not in the advertised business, no referral calls were made, and neither he nor an affiliated person continued to do a similar type of business in the same market area.

Also on August 29, 1978, plaintiff filed a motion to set aside the order vacating the judgment. It alleged its previous response was in the nature of a motion to strike and argued with particularity that defendant's defense was legally insufficient to prevail at trial. Plaintiff also argued that on August 4, 1978, the court erred in not giving it leave to file an answer to the amended petition and not setting the matter for hearing.

On September 29, 1978, plaintiff's motion to vacate the order of August 4, 1978, was denied. Plaintiff's alternative motion for leave to answer the amended petition and have an evidentiary hearing was also denied with the notation that it was not timely made. On October 24, 1978, plaintiff filed a notice of appeal from the order of August 4, 1978, and from the order of September 29, 1978.

Plaintiff first contends that defendant failed to show due diligence. Plaintiff specifically argues that defendant did not offer sufficient explanation for his failure to answer prior to the date of the default judgment or provide sufficient excuse for his failure to file his section 72 petition until almost a year after judgment. Plaintiff asserts that defendant's incarceration was not sufficient excuse, ...

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