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01/27/88 Heller Financial, Inc., v. Conagra

January 27, 1988

HELLER FINANCIAL, INC., PLAINTIFF

v.

CONAGRA, INC., DEFENDANT AND THIRD-PARTY, PLAINTIFF-APPELLANT (JOHN L. SULLIVAN ET AL., THIRD-PARTY DEFENDANTS; JAMES A. LEE ET AL., THIRD-PARTY DEFENDANTS-APPELLEES)



APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, THIRD DIVISION

520 N.E.2d 922, 166 Ill. App. 3d 1, 117 Ill. Dec. 571 1988.IL.84

Appeal from the Circuit Court of Cook County; the Hon. Richard L. Curry, Judge, presiding.

APPELLATE Judges:

JUSTICE FREEMAN delivered the opinion of the court. WHITE, P.J., and McNAMARA, J., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE FREEMAN

Third-party plaintiff, Conagra, Inc. (Conagra), a Delaware corporation, appeals from the circuit court of Cook County's grant of the motion of third-party defendants, James and Glenda Lee (the Lees), pursuant to their special and limited appearance, to quash service of process upon them and to dismiss the third-party complaint against them.

The underlying action of plaintiff, Heller Financial, Inc., also a Delaware corporation, alleged, inter alia, that: (1) pursuant to a loan and security agreement with Seco, Inc. (Seco), a Georgia corporation engaged in the manufacture and sale of fertilizer, it had obtained an assignment of, and security interest in, Seco's accounts and inventory; (2) Conagra, by and through an unincorporated division, AgriBasics Company, executed and delivered to plaintiff an unconditional guarantee of payment to plaintiff of the invoices for Conagra's purchases from Seco to induce plaintiff to finance Seco; and (3) there was due and owing from Conagra to plaintiff $1,696,639.11 under Conagra's guarantee. Plaintiff sought, inter alia, recovery of that amount from Conagra.

In their motion, the Lees alleged that: (1) they were residents and domiciliaries of Texas; (2) Conagra had caused summons to issue to them in Texas; (3) Conagra had not asserted that the Lees ever transacted any business in Illinois or that they had executed in Illinois the guarantee to Conagra upon which it based its third-party action against them; (4) Conagra's third-party complaint alleged no facts permitting the Conclusion that it had met the requirements of section 2-209 of the Civil Practice Law (the long-arm statute) (Ill. Rev. Stat. 1985, ch. 110, par. 2-209); (5) the guarantee to Conagra was executed in Houston, Texas, related to the obligations of Seco, of Columbus, Ohio, and was delivered to Conagra, a Delaware corporation with its principal place of business in Omaha, Nebraska; and (6) the Lees, being nonresidents of Illinois and never having committed any act subjecting them to the jurisdiction of Illinois courts, were immune from process outside of Illinois, and the exercise of jurisdiction over them by the circuit court of Cook County, Illinois, would deny them due process.

Preliminarily, we note that the Lees have not filed a brief with this court. However, as the record herein is simple and as we easily may decide Conagra's claim of error without the aid of an appellee's brief, we may decide the merits of the appeal. First Capitol Mortgage Corp. v. Talandis Construction Corp. (1976), 63 Ill. 2d 128, 345 N.E.2d 493.

Conagra contends that the trial court erred in granting the Lees' motion. Conagra asserts that the Lees submitted to the in personam jurisdiction of Illinois courts in that, as required under Illinois' long-arm statute, they transacted business in Illinois and its cause of action against them arose from that transaction of business. Specifically, Conagra asserts that James Lee transacted business in Illinois when he came here in July 1984 for two days to negotiate his acquisition of a 50% interest in Seco "with representatives of Seco, Union Bank of Streator, Illinois, and Heller Financial Company in Chicago, Illinois." In view of our Disposition of this appeal, we need not decide whether the acts of James Lee while in Illinois in July 1984 constituted the transaction of business such as to subject him to the personal jurisdiction of the courts of Illinois.

Under the Illinois long-arm statute, a person submits to the jurisdiction of Illinois courts as to any cause of action arising from certain acts performed in Illinois, including the transaction of any business within the State. When so submitting to the jurisdiction of Illinois courts, a person may be personally served with process outside the State and such service has the same force and effect as though made within Illinois. (Ill. Rev. Stat. 1985, ch. 110, par. 2-209(a).) In addition, the exercise of jurisdiction over a party must be consistent with due process, i.e., a nonresident must have "certain minimum contact with the forum State such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial Justice.'" People ex rel. Mangold v. Flieger (1985), 106 Ill. 2d 546, 550, 478 N.E.2d 1366, quoting International Shoe Co. v. Washington (1945), 326 U.S. 310, 316, 90 L. Ed. 95, 102, 66 S. Ct. 154, 158.

A plaintiff asserting the existence of personal jurisdiction over a nonresident defendant must satisfy the minimum contact requirements of the statute and due process and must also demonstrate that the cause of action arose from the jurisdictional acts of the defendant. (Johnston v. United Presbyterian Church in the United States of America, Inc. (1981), 103 Ill. App. 3d 869, 431 N.E.2d 1275.) That is, a plaintiff must allege facts in the complaint upon which to base jurisdiction over a nonresident defendant under the long-arm statute. As such, we must first examine Conagra's third-party complaint to determine whether it has made a prima facie showing of jurisdiction. Bobka v. Cook County Hospital (1983), 117 Ill. App. 3d 359, 360-61, 453 N.E.2d 828.

In its third-party complaint against the Lees, Conagra alleged, in pertinent part, that: (1) it is a Delaware corporation, with its principal place of business in Omaha, Nebraska; (2) the Lees are residents of Houston, Texas; (3) Seco was engaged in the manufacture and sale of fertilizer at a plant in Streator, Illinois; (4) the Lees executed and delivered to Conagra a guarantee agreement whereby they guaranteed all of Seco's indebtedness to Conagra; and (5) if Conagra is found liable to plaintiff by virtue of its guarantee, Conagra is entitled to judgment over against the Lees pursuant to their guarantee to Conagra.

Examination of Conagra's third-party complaint reveals that it is wholly devoid of any allegations of fact upon which an Illinois court could base personal jurisdiction over the Lees. Conagra asserted in the trial court and asserts on appeal that James Lee's activities in Illinois in July 1984 constituted the transaction of business for purposes of the exercise of long-arm jurisdiction over the Lees. However, it wholly failed to include any allegations of those, or any similar, activities in its third-party complaint. This failure is fatal to Conagra's ...


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