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Just Pants v. Bank of Ravenswood

OPINION FILED AUGUST 29, 1985.

JUST PANTS ET AL., PLAINTIFFS-APPELLEES,

v.

THE BANK OF RAVENSWOOD, TRUSTEE, DEFENDANT (EDGAR LEVINE ET AL., DEFENDANTS-APPELLANTS).



Appeal from the Circuit Court of Cook County; the Hon. Albert Green, Judge, presiding.

JUSTICE JOHNSON DELIVERED THE OPINION OF THE COURT:

Defendants, Edgar Levine, Lawrence Oberman, and W.E. Warnstedt, beneficial owners of a building under a trust, appeal from a judgment of the circuit court of Cook County finding them liable for the breach of a lease agreement. They claim that the trial court abused its discretion by amending its original judgment against the trustee to join them as additional judgment debtors, without service of process and despite their special and limited appearance to contest the trial court's exercise of jurisdiction over them. On appeal, defendants argue that (1) they were necessary and indispensable parties to the proceeding; (2) the initial judgment was void due to their absence; and (3) the trial court did not possess the jurisdiction to enter the judgment against them.

We reverse and remand.

The record shows that plaintiffs, Just Pants and B-Hyve Corporation, entered into a commercial lease with the lessor, Arcade Building Corporation, in February 1971 for space in a building located at 6355 North Broadway Avenue, in Chicago. Just Pants and Arcade later entered into an agreement on October 21, 1975, allowing Just Pants to affix a sign to the building. The Bank of Ravenswood (the bank), defendant, as trustee under trust No. 2141, dated September 16, 1976, with Levine, Oberman and Warnstedt as beneficiaries, bought the premises from Arcade on September 14, 1976. On August 2, 1977, the bank allegedly removed the sign while plaintiffs were still tenants and leased the vacant space to another tenant.

Plaintiffs sued the bank, claiming that the removal of the sign was a breach of their agreement. They sought specific performance of the agreement, an order compelling the bank to remove the sign not belonging to them and to erect a new Just Pants sign, and compensatory and punitive damages against the bank for the alleged breach of the lease and for the alleged conversion of their sign. The bank contended at trial that a notice of Chicago building code violations necessitated building renovation, resulting in the removal of the sign.

Plaintiffs filed their complaint on February 25, 1980, identifying the bank as trustee, but neither naming the beneficiaries to the trust nor discussing the beneficiaries' involvement in the litigation. The record shows that the beneficiaries created a new land trust with Commercial National Bank as trustee and themselves as beneficiaries on October 20, 1980. The bench trial began on March 18, 1983, and the trial judge entered judgment for plaintiffs and against defendant bank on October 11, 1983, in the amount of $4,500 in compensatory damages and $25,000 in punitive damages. The trial court's findings of fact and conclusions of law discussed only defendant bank as trustee; the court did not mention either the beneficiaries to the trust or their rights and responsibilities to the trust property.

In the course of a tract search after the trial court's entry of judgment, plaintiffs discovered the 1980 transfer of the trust to Commercial National Bank. On November 4, 1983, plaintiffs notified all of the interested parties that on November 9 they would ask the trial court, inter alia, to (1) amend the complaint to add the Commercial National Bank and the beneficiaries as defendants and (2) amend its judgment to also name Commercial National Bank and the beneficiaries as judgment debtors.

On November 8, 1983, the beneficiaries filed a "Special and Limited Appearance" to contest the court's exercise of jurisdiction over them. On November 29, plaintiffs filed a "Supplemental Motion to Amend Complaint and Judgment and For a Finding of Contempt," to which the beneficiaries filed a response on December 13, 1983, in addition to a "Brief on Legal Points" in plaintiffs' supplemental motion.

On January 25, 1984, the trial court entered an order that, inter alia, (1) denied a finding of contempt against the beneficiaries and Commercial National Bank, (2) denied the special and limited appearances of the beneficiaries and Commercial National Bank and held that they had submitted themselves to the jurisdiction of the court, and (3) granted plaintiffs' motion to amend the complaint and judgment and entered judgment against only the beneficiaries for $4,500 in compensatory damages and $25,000 in punitive damages. The order further enjoined the beneficiaries from transferring their interests in the trust at Commercial National Bank. The beneficiaries appeal from this order.

I

The beneficiaries contend that the trial court should have made them parties to the proceeding because they were necessary and indispensable. As a result, they further contend, the original judgment entered against the trustee was void and could not be amended by adding them.

• 1 Jurisdiction of the person is a court's power to bind a particular person to its judgment and requires in part that defendant be given sufficient notice. A defendant or unnamed party who was never served and who never appeared in the proceedings but whose rights were directly adjudicated therein may attack a judgment either directly or collaterally as void for failure to obtain jurisdiction over his person. However, failure to join such an indispensable party does not deprive a court of jurisdiction over the parties properly before it. Hence, where a failure to join an indispensable party is brought to the attention of a reviewing court, the appropriate course is to vacate the judgment, not because the trial court lacked jurisdiction over the joined parties, but because fairness to the nonjoined party dictates such a result. In re Vaught (1981), 103 Ill. App.3d 802, 804, 431 N.E.2d 1231, 1233.

Relying on these principles, we must examine the necessity of the beneficiaries to the action, not because the original judgment against the trustees was void, but, rather, to determine whether ...


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