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Hanna v. Breese Trenton Mining Co.

OPINION FILED MAY 9, 1983.

C. EARL HANNA, PLAINTIFF-APPELLANT,

v.

BREESE TRENTON MINING CO. ET AL., DEFENDANTS-APPELLEES.



Appeal from the Circuit Court of Cook County; the Hon. Brian B. Duff, Judge, presiding.

JUSTICE GOLDBERG DELIVERED THE OPINION OF THE COURT:

C. Earl Hanna (plaintiff) brought this action to recover declared dividends on his stock allegedly wrongfully withheld by Breese Trenton Mining Co. and its officers-directors William D. Eaton and Robert A. Hummert (defendants). The trial court granted defendants' motion for change of venue to Richland County, Illinois. This court allowed plaintiff's motion for interlocutory appeal under Supreme Court Rule 306 (87 Ill.2d R. 306).

Plaintiff is a resident of Cook County, Illinois. The registered office of the defendant corporation is in Richland County, Illinois. The corporation has no other offices and does not do business in Cook County. Defendant Hummert is a resident of Clinton County, Illinois. Defendant Eaton is a resident of St. Peters, Missouri.

Plaintiff's complaint alleges plaintiff is the owner of 487 shares of common stock in defendant corporation. Commencing in 1976, plaintiff had received dividends in Cook County based on his ownership of that stock. On May 15, 1981, the corporation declared a dividend of $20 per share of common stock. Defendant corporation paid these dividends to certain of its shareholders. Defendant corporation has not paid the dividends owed plaintiff despite plaintiff's repeated demands.

The pertinent provisions of the Code of Civil Procedure provide (Ill. Rev. Stat. 1981, ch. 110, pars. 2-101, 2-102):

"Sec. 2-101. Generally. Except as otherwise provided in this Act, every action must be commenced (a) in the county of residence of any defendant who is joined in good faith and with probable cause for the purpose of obtaining a judgment against him or her and not solely for the purpose of fixing venue in that county, or (b) in the county in which the transaction or some part thereof occurred out of which the cause of action arose.

Sec. 2-102. Residence of corporations and partnerships defined. For purposes of venue, the following definitions apply:

(a) Any private corporation or railroad or bridge company, organized under the laws of this State, and any foreign corporation authorized to transact business in this State is a resident of any county in which it has its registered office or other office or is doing business. A foreign corporation not authorized to transact business in this State is a nonresident of this State."

Because none of the defendants are residents of Cook County, and the defendant corporation maintains its registered office in Richland County and does not do business in Cook County, venue is proper in Cook County only if the transaction or some part thereof, out of which the cause of action arose, occurred in Cook County. See Ill. Rev. Stat. 1981, ch. 110, par. 2-101(b).

Thus, the issue here presented is whether nonpayment of dividends by a corporation, with its registered office in Richland County, to a shareholder residing in Cook County is sufficient basis under the statutory language above cited to authorize venue in Cook County in a suit by the shareholder. There is a paucity of Illinois and other case law dealing directly with this transactional element of venue.

In La Ham v. Sterling Canning Co. (1943), 321 Ill. App. 32, 52 N.E.2d 467, cited by both parties here, plaintiff was a resident of Wisconsin. The defendant corporation had its registered office in Whiteside County, Illinois. The action involved misappropriation of assets and mismanagement of the corporation, wrongful issuance of shares and refusal to permit inspection of corporate records. Thus, the case throws no light upon the specific issue before us. However, the court there considered the meaning of the word "transaction" in the same statute involved in the case at bar. Although the court pointed out that none of the parties there involved resided in Cook County, the language used by the court in its opinion should be considered.

The court categorized the term "transaction" with the statement that it "must necessarily refer to dealings between the parties themselves where they are in a sense adversaries." (La Ham v. Sterling Canning Co. (1943), 321 Ill. App. 32, 44.) The court also approved a broad construction of the word "transaction" as meaning, "`every variety of affairs which forms the subject of negotiations or actions between the parties.'" 321 Ill. App. 32, 44.

Defendants contend the facts here show only the "non-receipt of a declared dividend" by a plaintiff shareholder in Cook County. They urge this cannot be a "transaction" for the purpose of establishing venue. We disagree.

In Bagarozy v. Meneghini (1955), 8 Ill. App.2d 285, 131 N.E.2d 792, defendant, Maria Callas, was a resident of Italy. Plaintiff was a resident of New York. They entered into a contract whereby plaintiff was entitled to commissions based on defendant's operatic performances. Plaintiff sued defendant in Cook County after defendant made another contract to ...


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