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Green v. Alton Telegraph Printing Co.





APPEAL from the Circuit Court of Madison County; the Hon. CHARLES W. CHAPMAN, Judge, presiding.


We have before us the motion of plaintiff-appellee, James C. Green (Green), to dismiss the appeal of defendants-appellants, Alton Telegraph Printing Company (Alton Telegraph), Joseph Melosi and William Lhotka.

The subject appeal is that of Alton Telegraph, Joseph Melosi and William Lhotka from a $9.2 million judgment for libel entered against them in the circuit court of Madison County. The basis of Green's motion to dismiss the appeal is that this court lacks jurisdiction to hear the appeal because the case, including the appeal, was removed in its entirety to the United States Bankruptcy Court for the Southern District of Illinois when the Alton Telegraph filed a petition for chapter 11 relief (see 11 U.S.C. § 101 et seq. (1979 Supp.)) in that court. We also consider a motion of defendant Alton Telegraph occasioned by an order of the bankruptcy court. In that order the bankruptcy court stated that it lacked jurisdiction over the appeal from the judgment of the circuit court in the instant case but that in the event any reviewing court should determine that the bankruptcy court did have such jurisdiction the cause was to be remanded to that court instanter. As a result of that order defendants maintain in this motion that Green may not question this court's continuing jurisdiction over the appeal and have filed a motion for an order requiring Green to file his brief in this court forthwith and for an early oral argument of the case.

After due consideration we find that the entire case, including the appeal, was removed to the bankruptcy court and that the order of remand of the bankruptcy court was insufficient to revest this court with jurisdiction of the case. We accordingly dismiss the appeal and deny the motion of defendant Alton Telegraph to proceed with the appeal.

Defendants' notice of appeal to this court was timely filed on December 16, 1980, after judgment was entered for plaintiff on June 3, 1980, and the post-trial motion was denied. Defendants Alton Telegraph, Melosi and Lhotka, the latter two of whom are former employees of Alton Telegraph, posted no supersedeas bond to stay enforcement of the judgment pending appeal. (See 73 Ill.2d R. 305.) Defendant Alton Telegraph filed a motion in this court in which it stated that the enormity of the judgment against it made it a practical impossibility for it to post a supersedeas bond that would conform to the requirements of Supreme Court Rule 305. The motion asked for an order fixing a "reasonable" bond that would be realistic under the circumstances and that would serve as a supersedeas pending determination of the case on appeal. Lacking any authority under the rules or interpretative cases to grant the supersedeas relief requested, we denied the motion. The same motion was subsequently presented to our supreme court and was denied.

On April 10, 1981, defendant Alton Telegraph filed a voluntary petition for business reorganization under chapter 11 of the Bankruptcy Reform Act of 1978 (11 U.S.C. § 101 et seq. (1979 Supp.)) in the Bankruptcy Court for the Southern District of Illinois. Under 11 U.S.C. § 362 the petition for reorganization served as an automatic stay of any attempt by judgment creditor Green to enforce the judgment against Alton Telegraph.

On April 13, 1981, plaintiff Green commenced a supplementary judgment-enforcement proceeding against defendant Melosi by having him served with a citation to discover assets pursuant to section 73 of the Illinois Civil Practice Act (Ill. Rev. Stat. 1979, ch. 110, par. 73). The record before us contains no such citation directed toward either defendants Lhotka or Alton Telegraph. On April 21, 1981, Alton Telegraph, as debtor in the bankruptcy proceeding and as a party in the libel action underlying the supplementary proceeding for enforcement of judgment, thereupon filed an "application for removal of civil action" to bankruptcy court. The petition for removal was filed pursuant to 28 U.S.C. § 1478 (1981 Supp.) and Interim Bankruptcy Rule 7004. Under the provisions of that statute and that rule, removal of the case was effective upon the filing of the petition.

On May 28, 1981, Green sought to have Melosi held in contempt for failure to comply with the citation to discover assets. At the time of the filing of the petition for a finding of contempt as to Melosi, Melosi, unlike Alton Telegraph, had not filed a petition for relief with the bankruptcy court and had not joined Alton Telegraph in its April 21, 1981, petition for removal. In response to the May 28, 1981, petition for a finding of contempt as to Melosi, Alton Telegraph, together with Melosi and Lhotka, applied to the bankruptcy court for a temporary restraining order enjoining Green from further enforcement proceedings in the circuit court of Madison County. On June 10, 1981, the bankruptcy court entered the temporary restraining order as requested against Green, and on October 16, 1981, it extended this order to remain in effect indefinitely.

In its October 16, 1981, order the bankruptcy court found:

"9. The entire state action was removed pursuant to 28 U.S.C. § 1478, and there has been no motion to sever and remand the case."

The bankruptcy court further stated:

"The principle issue facing the Court is whether it should sever and remand a citation to discover assets directed to Joseph Melosi when the underlying debt involved in the citation to discover assets is one in which Joseph Melosi is jointly and severally liable with the debtor. In light of the facts, the Court should not make the severance and remand.

Under the facts of the present case where the judgment applicable to Joseph Melosi arises out of the same transaction as the judgment applicable to the Alton Telegraph, and there is joint and several liability, it is clear that the state court proceeding could have an effect upon the estate of the Telegraph, and, as such, the entire case should be removed.

In addition, there is no remedy, either legal or equitable, upon which James Green may avail himself that is not available in this Court. In re Brothers Coal Co., Inc., 3 C.B.C.2d 31 (W.D. Va., 1980). If Mr. Green is sincere in his effort in enforcing his judgment against the non-debtors, he may continue his action in this Court, so that this Court can be certain that the estate of the debtor is not affected."

Green's motion in the bankruptcy court to have Alton Telegraph's bankruptcy petition dismissed was denied when that court found that the petition had been filed in good faith.

On October 28, 1981, Green filed the motion under consideration to dismiss defendants' appeal, asserting that removal had been effected not only as to the supplementary proceeding in the circuit court but also as to the appeal pending in this court. Defendants responded by filing objections to Green's motion in this court and a motion in the bankruptcy court requesting that court to supplement its October 16, 1981, order by declaring that the instant appeal had not been removed to bankruptcy court. Defendants' motion to the bankruptcy court presented the alternative request that in the event the instant appeal might be found to have been removed, the bankruptcy court remand the appeal to this court.

On January 22, 1982, the bankruptcy court entered an order which it termed "Order Supplementing Earlier Order," the "earlier order" being that of October 16, 1981. The January 22, 1982, order made these findings:

"8. On or about October 16, 1981, this Court entered an order stating that the state court proceeding had been removed to this Court and that the restraining order that was issued on June 10, 1981, should remain in effect.

9. All that was removed to this Court were the supplementary proceedings that were pending in the ...

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