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Shatkin Investment Corp. v. Connelly





Appeal from the Circuit Court of Du Page County; the Hon. William E. Black, Judge, presiding.


Lee A. Dominguez (Dominguez or citation respondent) and Richard Morton (Morton or citation respondent) appeal from orders of the circuit court of Du Page County finding them in contempt of court for failing to answer certain questions propounded by Shatkin Investment Corporation (Shatkin or judgment creditor) during a citation proceeding intended to discover income or assets of Thomas J. Connelly III (Connelly or judgment debtor). Dominguez and Morton both contend that the trial court erred in allowing Shatkin to ask questions about the time period preceding the issuance of the citations, in allowing Shatkin to accept affidavits of compliance from other citation respondents, in entering orders which violated their constitutional rights, and in holding them in contempt of court. Dominguez also asserts he properly refused to answer questions based upon the attorney-client privilege and that the trial court abused its discretion in fining him for the contempt. Since we find the trial court committed no reversible errors, we affirm.

On November 29, 1977, Shatkin filed a complaint against Connelly for judgment on a promissory note in the amount of $303,377 plus interest at the rate of 5%. On February 6, 1979, judgment was entered in favor of Shatkin for $323,071.78 plus costs. On March 6, 1979, Shatkin had a citation to discover assets issued against Connelly, and on April 3, 1979, an alias citation to discover assets was issued and served on judgment debtor. Three separate rules to show cause were issued against Connelly for failure to appear for his citation, and finally, a writ of attachment was issued against him.

In July 1983, James Carney, an officer of judgment creditor, learned that Connelly was in Du Page County. An order for an alias writ of attachment was issued for judgment debtor at Churchfield Management and Investment Corporation (Churchfield), and a Du Page sheriff's officer went there to serve the writ, but was denied access to serve judgment debtor. The next day, Shatkin had issued and served upon Churchfield a citation to discover assets, a wage deduction summons, a non-wage-garnishment summons, affidavits and interrogatories. Dominguez, a vice-president of Churchfield, accepted service. Dominguez was also served personally with a citation to discover assets in a non-wage-garnishment summons. Six other businesses located in the office building where judgment debtor was sighted were served with citations.

Morton filed on August 12, 1983, Churchfield's answers to interrogatories to employer in response to judgment creditor's wage garnishment stating that judgment debtor was not employed by Churchfield on August 4, 1983, the day the wage deduction summons was served. Morton also responded that an interrogatory asking the date of employment of judgment debtor with Churchfield was not applicable.

On September 9, 1983, Churchfield filed its appearance, and Morton appeared in court to testify for Churchfield in response to the citation to discover assets served on Churchfield. Each time judgment creditor's counsel asked Morton a question about Churchfield's relationship with judgment debtor or about property owed to judgment debtor prior to August 4, 1983, the day after the sheriff tried to serve judgment debtor at Churchfield, Churchfield objected. The trial court overruled Churchfield's objections, and Churchfield's counsel advised Morton not to answer. The trial court found Morton in contempt for refusing to answer the questions propounded by judgment creditor, and ordered Morton incarcerated for a period not to exceed six months, but stated he could purge himself by answering the questions. Morton's jail term was stayed pending this appeal.

On September 24, 1983, George Olson of Charter Mortgage Corporation signed a sworn affidavit stating that between October 1982 and May 1983 judgment debtor had sought financing from Charter Mortgage Corporation on behalf of Churchfield. Both Morton and Dominguez filed separate notices of appeal which were subsequently consolidated by this court.

Morton first contends that the trial court erroneously held him in contempt for refusing to answer certain questions propounded by judgment creditor. Section 2-1402 of the Code of Civil Procedure (Ill. Rev. Stat. 1981, ch. 110, par. 2-1402(a)) provides:

"A judgment creditor, or his or her successor in interest when that interest is made to appear of record, is entitled to prosecute supplementary proceedings for the purposes of examining the judgment debtor or any other person to discover assets or income of the debtor not exempt from the enforcement of the judgment therefrom, a deduction order or garnishment, and of compelling the application of non-exempt assets or income discovered toward the payment of the amount due under the judgment."

This statute is to be construed liberally. (Second New Haven Bank v. Kobrite, Inc. (1980), 86 Ill. App.3d 832, 835, 408 N.E.2d 369, 371.) According to Supreme Court Rule 277 (73 Ill.2d R. 277(a)), which governs citation procedure:

"A supplementary proceeding authorized by section 73 of the Civil Practice Act may be commenced at any time with respect to a judgment upon which execution may issue. The proceeding may be against the judgment debtor or any third party the judgment creditor believes has property of or is indebted to the judgment debtor. If there has been a prior supplementary proceeding with respect to the same judgment against the party, whether he is the judgment debtor or a third party, no further proceeding shall be commenced against him except by leave of court. The leave may be granted upon ex parte motion of the judgment creditor, but only upon a finding of the court, based upon affidavit of the judgment creditor or some other person, having personal knowledge of the facts, (1) that there is reason to believe the party against whom the proceeding is sought to be commenced has property or income the creditor is entitled to reach, or, if a third party, is indebted to the judgment debtor, (2) that the existence of the property, income or indebtedness was not known to the judgment creditor during the pendency of any prior supplementary proceeding, and (3) that the additional supplementary proceeding is sought in good faith to discover assets and not to harass the judgment debtor or third party."

The examination of the debtor or third party shall be before open court and the court is directed to conduct the proceeding to protect the rights of all parties and to avoid harassment. (73 Ill.2d R. 277(e).) To promote these goals, the court is authorized to punish for contempt any person who fails to obey an order of the court issued in a supplementary proceeding. 73 Ill.2d R. 277(h).

• 1 Morton contends that the numerous questions he refused to answer were either irrelevant, invaded Churchfield's privacy, or exceeded the scope of questioning permissible at a supplementary proceeding. The unanswered questions can be grouped into two general categories: those relating specifically to Morton and Churchfield and those relating to Churchfield's knowledge of and relationship with judgment debtor. The five questions in the first group are not sufficiently related to the location of judgment debtor's assets to warrant a contempt citation. For example, knowledge of Morton's home address, whether he resides in Du Page County, or about the names of Churchfield's employees is not relevant to the location of judgment debtor's assets absent additional information. The second group, however, contains questions which are material to the inquiry. For example, judgment creditor asked whether Churchfield had ever done business with the judgment debtor, had ever been owed money by or owed money to judgment debtor, had ever employed or received things of value from judgment debtor, and asked other questions relating to Churchfield's past relationship with judgment debtor.

Morton objected at trial and reasserts on appeal that these questions were improper because they were not limited to Churchfield's knowledge after August 4, 1983, the day Churchfield was served with the citation. Any relationship between Churchfield and judgment debtor prior to that time, Churchfield asserts, is irrelevant. We disagree. The statute does not limit the scope of the questioning to the period following issuance of the citation. Employing a liberal construction of the statute, we find the questions asked by judgment creditor about the prior period are capable of eliciting information concerning the location of judgment debtor's assets. Churchfield should not be allowed to circumvent the purpose of the proceedings by limiting his questions to the one-month period between receipt of the citation and its appearance before the court. Apart from the generalized and unsubstantiated privacy invasion concerns ...

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