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Bonanno v. La Salle & Bureau County R.r. Co.





APPEAL from the Circuit Court of La Salle County; the Hon. LEONARD HOFFMAN, Judge, presiding.


Plaintiff Joseph Bonanno appeals from two orders of the Circuit Court of La Salle County, one of which dismissed his complaint against defendant La Salle & Bureau County Railroad Company on the ground of res judicata and the other which denied him leave to file an amended complaint. The litigation which preceded the orders appealed from must be summarized in order to understand the contested rulings.

The transactions giving rise to this litigation occurred in 1970 when plaintiff, through his wholly owned corporation, Diversified Properties, Inc., purchased 466 surplus railroad boxcars at $1,000 each from Equitable Life Assurance Company and financed the purchase with a bank loan. Plaintiff then contracted with defendant railroad to lease tracks and facilities for the repair and refurbishing of the cars which were to be delivered to defendant by the previous lessee, Penn Central Railroad. Defendant agreed to place the refurbished cars back in service and to collect the per diem fees for the use of the cars. The term of the contract was to be 7 years, but difficulties arose when Penn Central delivered to defendant some cars which were not listed by serial number in the purchase and lease contracts, and as to other cars which were listed in the contracts, Penn Central retained possession and collected the per diem fees for their use. Eventually Penn Central, Diversified, and defendant settled their conflicting claims to the per diem payments collected upon the boxcars and agreed to return the boxcars to their rightful owners. At the same time, Diversified released defendant from the service agreement, and plaintiff entered into an agreement with another railroad, Cadillac & Lake City Railroad, to act as servicing agent for his boxcars. By July 1971, most of plaintiff's boxcars had been transferred to Cadillac, but not all.

In order to meet the payments due on his New Jersey bank loan, plaintiff sold his interest in Diversified, including his claim to the remaining boxcars and his claim of $175,000 in unpaid per diem fees, to Emons Industries. Diversified had, in the meantime, filed a Federal suit against defendant to collect the withheld fees, but this suit was subsequently dismissed for want of diversity jurisdiction. When defendant declined to turn over the cars and the fees to Emons, plaintiff extricated himself from the Emons deal by agreeing to pay Emons $166,000 and other property in return for the claim against defendant for the fees and boxcars.

Plaintiff, then, in November of 1972, entered into a contract with Medic Enterprises whereby Medic paid $175,000 for title to about 86 boxcars and the claim to the fees. Medic recovered possession of 20 of the boxcars from another railroad and returned them to service after refurbishing, but defendant again refused to turn over the remaining 66 cars and the per diem fees. In May of 1973 Medic filed suit against defendant, alleging that defendant had wrongfully detained 66 cars having a value of $660,000 in violation of defendant's agreement with Diversified; that Medic is the successor in interest to Diversified; that Medic has lost $175,000 due to defendant's failure to place these cars in service; that Medic has lost $100,000 for repairs that will be required because the brass fittings have been stripped from the cars; and that Medic has lost $100,000 in fees wrongfully withheld. On June 11, 1973, defendant filed a motion to dismiss the complaint because of certain technical defects in the complaint, and on November 6, 1974, after notice to the attorney of record, the motion was granted. The court's order recited that there was no appearance for the plaintiff at the hearing. A copy of the order was sent to plaintiff's attorney. In June of 1975 defendant filed a motion for final order of dismissal which asserted that plaintiff had engaged in no activity in this suit since the November 6, 1974, dismissal order, and again, after notice to plaintiff's attorney of record, the requested order was entered on June 9, 1975. That order recited that plaintiff did not appear for the hearing and then stated that "this Cause is hereby finally dismissed with prejudice."

A few days later on June 18, 1975, plaintiff filed a petition in the Medic suit requesting the court to substitute him as plaintiff in place of Medic and to grant leave to file an amended complaint. In support of this petition plaintiff attached his own affidavit which asserted that he has "succeeded to all right and interest of Medic Enterprises, Inc.," in the La Salle County suit by virtue of a consent order entered in a New Jersey proceeding. The New Jersey order declared the contract between plaintiff and Medic rescinded. In the amended complaint, which plaintiff sought leave to file, plaintiff stated, inter alia, that he acquired "right, title and interest in the subject matter of this suit" pursuant to the New Jersey consent order; that he was the successor in interest to Diversified; and that Diversified had contracted with defendant for the use of certain railroad cars, 66 of which were wrongfully detained by defendant. The remainder of the amended complaint was identical to the Medic complaint except that the fees lost for failure to place these cars in service was computed at $500,000. Plaintiff later filed a motion to vacate the dismissal of the Medic suit, and that motion was denied on July 31, 1975. No appeal was taken in that proceeding.

Plaintiff then commenced this proceeding by filing a complaint which was identical to the amended complaint he had sought unsuccessfully to file in the Medic suit, except that he now alleged the loss of fees to be $720,000. Defendant filed a motion to dismiss on the ground that Medic's litigation was binding upon its privies and successors, and the motion was denied. The trial court noted orally that plaintiff had not known the Medic suit was on file since he was not a party to it. Thereafter defendant filed an answer and counterclaim; plaintiff answered the counterclaim; various discovery procedures were undertaken; and finally, after the cause was set for trial, defendant filed another motion to dismiss, again asserting that plaintiff was barred by the dismissal with prejudice of Medic's suit. In support of the motion defendant submitted plaintiff's discovery deposition which related that plaintiff had known of the Medic suit and had discussed the suit with Medic's attorney. The motion to dismiss was granted.

Plaintiff then retained new counsel and filed a motion to vacate the order of dismissal. At the hearing on the motion, the trial court gave plaintiff 30 additional days to present a complaint stating a cause of action outside the four corners of the dismissed complaint. Thereafter plaintiff filed a motion for leave to file an amended complaint naming as defendants not only defendant corporation but also the corporate officers and directors as individuals, alleging a conspiracy to injure plaintiff by depriving him of the fees and boxcars to which he is entitled, and seeking an injunction as well as money damages. The amended complaint sets out in detail plaintiff's attempts to sell his claim against defendant, first to Emons and then to Medic, and alleges that each time, defendant refused to deliver the cars as promised in pursuit of its conspiracy with the malicious intention of depriving him of his railroad car business. The trial court denied plaintiff's motion to vacate and his motion for leave to file an amended complaint.

Plaintiff has perfected this appeal, contending that the trial court erred in dismissing his original complaint and in refusing him leave to file his amended complaint. We affirm.

Plaintiff contends that his original complaint filed herein should not have been dismissed for three reasons: (1) because res judicata should not be applied where the plaintiff would be unjustly denied a chance to have a fair trial on the merits of the case; (2) because Supreme Court Rule 273, providing that an involuntary dismissal acts as an adjudication on the merits, does not apply where the dismissal was based upon technical matters; (3) because plaintiff was not in privity with Medic and could not have controlled Medic's suit.

The doctrine of res judicata was described by the Illinois Supreme Court in Charles E. Harding Co. v. Harding (1933), 352 Ill. 417, 426, 186 N.E. 152, 155, as follows:

"The doctrine of res judicata is, that a cause of action finally determined between the parties on the merits, by a court of competent jurisdiction, cannot again be litigated by new proceedings before the same or any other tribunal, except as the judgment or decree may be brought before a court of appellate jurisdiction for review in the manner provided by law. A judgment of decree so rendered is a complete bar to any subsequent action on the same claim or cause of action, between the same parties or those in privity with them. The doctrine extends not only to the questions actually decided but to all grounds of recovery or defense which might have been presented."

Plaintiff first argues that the doctrine of res judicata should only be applied as fairness and justice require (Rotogravure Service, Inc. v. Borrowdale Co. (1979), 77 Ill. App.3d 518, 395 N.E.2d 1143; La Salle National Bank v. City of Chicago (1977), 54 Ill. App.3d 944, 369 N.E.2d 1363), and that it would be unfair and unjust to deny him a trial upon the merits of his claim. In the context of this appeal, we think the question of fairness and justice must be resolved in favor of defendant after taking into account the fact that defendant has been required to defend this controversy almost continuously since 1971 when Diversified filed a Federal action.

• 1 Plaintiff insists that there was no prior adjudication upon the merits because the involuntary dismissal was based upon technical deficiencies. Supreme Court Rule 273 (Ill. Rev. ...

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