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Nat'l Equip. Co. v. Polyphasic Health Sys.





Appeal from the Circuit Court of Cook County; the Hon. James C. Murray, Judge, presiding.


This is an appeal from an order dismissing plaintiff's action to register a judgment rendered against defendants by a New York court. Plaintiff filed a petition in the circuit court of Cook County to enforce a default judgment obtained against defendants, Robert D. Phillips, Patricia Phillips, E.J. Shanahan, and Jean Shanahan, in the Supreme Court of the State of New York. Defendants resisted plaintiff's efforts to make the foreign judgment final on the grounds that the New York court lacked personal jurisdiction over the parties and that both a prior injunction and section 12-108 of the Illinois Code of Civil Procedure barred the registered judgment against defendants from becoming final. Upon plaintiff's motion to reconsider the entry of a summary judgment in favor of the defendants, the trial court concluded that the prior injunction entered in a chancery proceeding and the seven-year statutory limitation period barred further action on the New York court judgment.

For the reasons stated herein, the judgment of the circuit court of Cook County is reversed and the cause is remanded for further proceedings not inconsistent with this opinion.

This multiple-defendant action insofar as it relates to the defendants Phillips and Shanahans is grounded upon a guarantee of payment executed by them separately in plaintiff's favor. Said guarantee reads in relevant part as follows:

"This instrument shall be deemed to have been made in Nassau County, New York, and should be interpreted in accordance with the laws of the State of New York, and as part of the consideration for the Lessor's execution of the aforementioned Lease, the undersigned Guarantor hereby agrees that any and all actions or proceedings arising directly or indirectly from this Guarantee shall be litigated in courts having a situs within the State of New York, and the undersigned Guarantor hereby consents to the jurisdiction of any local, State or Federal Court located within the State of New York, and the undersigned Guarantor hereby waives personal service of any and all process, and consents that all such service of process may be made by certified or registered mail, return receipt requested, directed to the undersigned Guarantor at the address indicated below; and service so made shall be complete two (2) days after the same has been posted as aforesaid."

Upon defendant lessee's (Polyphasic Health Systems, Inc.) default on its payment under a written lease, plaintiff, National Equipment Rental, Ltd., commenced an action against the Phillips and Shanahans, among others, in the Supreme Court of the State of New York. On September 30, 1975, the plaintiff received a default judgment against the aforesaid defendants for $346,744.

On January 8, 1976, plaintiff filed a petition to have the New York court judgment registered in the circuit court of Cook County, Illinois. Defendants, Phillips and Shanahans, neither admitting nor denying that the Supreme Court of the State of New York had entered judgment against them, filed an answer alleging that said court lacked jurisdiction over the subject matter and the parties.

Thereafter, defendants Heusinkvelds, who had signed guarantees of payment limited to $50,000, brought a separate chancery action against plaintiff to enjoin the latter from registering and enforcing the New York judgment against them. The temporary restraining order, which ultimately resulted in a permanent injunction, read in pertinent part as follows:

"[National Equipment Rental is restrained from] registering and enforcing a certain foreign judgment of the Supreme Court of the State of New York, County of Nassau in Case No. 11627-75, in whole or in part, against the plaintiffs herein, and from taking any action whatsoever in the prosecution of or prosecution of a certain lawsuit now pending in the law division of the Circuit Court of this Court in Cause No. 767 L 318 captioned NATIONAL EQUIPMENT RENTAL, LTD., Plaintiff v. POLYPHASIC HEALTH SYSTEMS, INC. (etc., et al.) entitled `Petition for Registration of Foreign Judgment.'"

Subsequent to filing the petition to register its foreign judgment, plaintiff moved for summary judgment on the petition to make the registered judgment final for enforcement. Plaintiff's motion was supported by an affidavit attesting that service of process had been made in the method specified by the "guarantee" document. Defendants Phillips and Shanahans in their response to the motion did not contest this fact, but later moved to dismiss the proceeding based on section 12-108 of the Code of Civil Procedure and the Heusinkveld's injunction. The Phillips and Shanahans also filed a cross-motion for summary judgment. Said motion was supported by affidavits contesting numerous bases for the possible exercise of jurisdiction over them by a New York court. The trial court, holding in favor of defendants, denied the motion for summary judgment from which order this appeal is taken.


The controlling question presented by this appeal is whether the court of New York had jurisdiction to enter its judgment against the Phillips and Shanahans.

• 1 It is well-settled that a party may not only agree to submit to the jurisdiction of a particular court which would not otherwise have authority over him, but also to the manner and method of service exercised upon him. (National Equipment Rental, Ltd. v. Szukhent (1964), 375 U.S. 311, 315-16, 11 L.Ed.2d 354, 358, 84 S.Ct. 411, 414; Comprehensive Merchandising Catalogs, Inc. v. Madison Sales Corp. (7th Cir. 1975), 521 F.2d 1210.) In the instant case, the personal jurisdiction of the New York court depends upon the "Guarantee of Payment" document wherein each defendant agreed to both the selection of the State of New York as the forum where all litigation concerning the guarantees would occur and the manner in which they would be served with process.

Notwithstanding the consent to jurisdiction language contained in the aforementioned guarantee document, the Phillips and Shanahans adhere to the notion that dismissal of the instant action was proper because of the lack of minimum contacts between the party defendants and the forum State. Defendants first note that actual "contacts, ties or relations" are required in order for the assertion of jurisdiction to meet constitutional requirements. (See Shaffer v. Heitner (1977), 433 U.S. 186, 53 L.Ed.2d 683, 97 S.Ct. 2569.) According to defendants, since they did not engage in any activity that could possibly satisfy the ...

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