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Kirchheimer Brothers Co. v. Jewelry Mine

OPINION FILED SEPTEMBER 18, 1981.

KIRCHHEIMER BROTHERS CO., PLAINTIFF AND PETITIONER-APPELLEE,

v.

JEWELRY MINE, LTD., ET AL., DEFENDANTS. — (THE COMMERCIAL UNION ASSURANCE COMPANY, RESPONDENT-APPELLANT.)



APPEAL from the Circuit Court of Cook County; the Hon. MICHAEL JORDAN, Judge, presiding.

MR. JUSTICE LORENZ DELIVERED THE OPINION OF THE COURT:

Kirchheimer Brothers Co. (petitioner) obtained a default judgment against Jewelry Mine, Ltd., and Ian J. Scott (defendants) in the amount of $1,600 plus costs. Failing to receive satisfaction of the judgment, petitioner instituted supplementary proceedings authorized by section 73 of the Illinois Civil Practice Act (Ill. Rev. Stat. 1979, ch. 110, par. 73 (the Act).) On June 25, 1980, The Commercial Union Assurance Company (respondent) was served with a citation to discover assets. In this citation, petitioner sought to discover a claim made by defendants against respondent. The claim arose from a dispute over insurance coverage contained in a policy provided to defendants by respondent, and was then pending in the circuit court of Cook County and captioned as Jewelry Mine, Ltd. v. Commercial Union Assurance Company, No. 79 L 15406.

Respondent, disputing any liability under the insurance policies issued to defendants, moved to quash the citation on the grounds that the claim sought to be discovered was not an asset subject to the citation proceedings.

The circuit court, on October 3, 1980, entered an order denying respondent's motion to quash. The order stated:

"1. That Commercial Union Assurance Company is hereby restrained from paying over to the Jewelry Mines, Ltd. any portion of an amount not to exceed the amount of judgment entered against Jewelry Mines, Ltd. by the judgment creditor here, plus interest, and court costs.

2. The court maintains jurisdiction over the subject matter and parties and that the Commercial Union Assurance Company is restrained as aforesaid until the case of Jewelry Mines, Ltd. v. Commercial Union Assurance Company, 79 L 15406 currently pending in the circuit court of Cook County is resolved by judgment, settlement or otherwise.

Respondent appeals, contending that: (1) the trial court's order erroneously created a lien against the prior pending lawsuit between defendant and respondent; and (2) the trial court abused its discretion in granting injunctive relief which exceeds the authority of section 73 of the Illinois Civil Practice Act (Ill. Rev. Stat. 1979, ch. 110, par. 73).

Respondent first asserts that the trial court's order creates a lien against the prior pending lawsuit which reaches property that is not contemplated under section 73 of the Act. In support of this assertion, respondent cites section 73(2)(a) of the Act, which states:

"(2) When assets or income of the judgment debtor not exempt from execution, a deduction order or garnishment are discovered, the court may, by appropriate order or judgment:

(a) Compel the judgment debtor to deliver up, to be applied in satisfaction of the judgment, in whole or in part, money, choses in action, property or effects in his possession or control, so discovered, capable of delivery and to which his title or right of possession is not substantially disputed." (Emphasis added.) (Ill. Rev. Stat. 1979, ch. 110, par. 73(2)(a).)

Since the insurance claim made by defendant, the judgment debtor, is "substantially disputed" by respondent, it is argued that the claim falls outside the purview of subsection (2)(a) of section 73.

Petitioner asserts, however, that the trial court's order was entered pursuant to subsection 4(a) of section 73, which states:

"The citation may prohibit the party to whom it is directed from making or suffering any transfer or other disposition of, or interfering with, any property not exempt from execution, a deduction order or garnishment, belonging to the judgment debtor or to which he may be entitled or which may thereafter be acquired by or become due to him, and from paying over or otherwise disposing of any moneys not so exempt which are due or to become due to the judgment debtor, until the further order of the court or the termination of the proceeding, whichever occurs first." (Ill. Rev. Stat. 1979, ch. 110, par. 73(4)(a).)

Subsection (4)(a) provides a means of forestalling the judgment debtor or a third party from frustrating the supplementary proceedings before the judgment creditor has had an opportunity to reach assets, indebtedness or income in the possession of debtor or of a third party (Ill. Ann. Stat., ch. 110, par. 73, Committee Comments, at 399 (Smith-Hurd 1968)). A restraining provision under this section does not adjudicate any rights in the property held by the party to whom it is addressed; it merely requires that the party hold property which is subject to the reach of the judgment creditor in status ...


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