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UNITED FEDERAL SAV. BANK v. MCLEAN

September 1, 1988

UNITED FEDERAL SAVINGS BANK, A CORPORATION, AND FIDELITY FEDERAL SAVINGS AND LOAN ASSOCIATION, A CORPORATION, PLAINTIFFS,
v.
LEE MCLEAN, JR., DEFENDANT.



The opinion of the court was delivered by: Mihm, District Judge.

  ORDER

Presently before the Court is the Defendant's Motion to Dismiss the Complaint on the basis that this Court does not have in personam jurisdiction over the Defendant. The Defendant asserts that he is a citizen of the State of Missouri and was not and is not subject to service of process for the relief set forth in the Complaint. The Defendant argues that suit on the guarantee is not the type of action which would provide a basis for in personam jurisdiction as to this Defendant under the Long Arm Statute of the State of Illinois, Ill.Rev.Stat., ch. 110, § 2-209 or the Due Process clause of the United States Constitution.

FACTS

This case arises out of a document denoted as a personal guarantee purportedly signed by the Defendant. The date of execution is shown to be May 12, 1978, three months subsequent to the execution of two real estate mortgages by a corporation, McLean Enterprises, Inc., on February 14, 1978.

The Complaint recites a mortgage foreclosure proceeding in Knox County, Illinois, against the corporate signatory of the mortgages, McLean Enterprises, Inc. (Case No. 87-CH-7). This proceeding resulted in the sale of the real estate in question for $1,100,000 on June 30, 1987.

The Plaintiffs, savings and loan associations, seek to recover in this lawsuit the deficiency between the real estate sale price and the sum allegedly personally guaranteed by the Defendant, in the amount of $862,498.32. The basis of the claim is a document entitled "Agreement as to Conveyance by Mortgagor, Continued Guarantee by Mortgagor and Guarantee by Mortgagor's Grantee." By its own terms, the document was conditioned upon "the actual conveyance" of real estate to the individual Defendant. While the Complaint alleges that the Plaintiffs duly performed all their conditions of the guarantee, there is no separate allegation that the property was, in fact, actually conveyed by the corporation to the individual Defendant.

A complaint was filed by the Plaintiff and against the Defendant in Knox County, Illinois as 87-L-62 on September 4, 1987. Summons was served on the Defendant on September 14, 1987, in Greene County, Missouri. On October 14, 1987, a Petition to Remove this action was filed with the United States District Court for the Central District of Illinois on the basis of diversity of citizenship. On October 14, 1987, the Defendant filed his Motion to Dismiss under Rule 12(b) for lack of personal jurisdiction over the Defendant.

DISCUSSION

Under 28 U.S.C. § 1441 et seq., removal jurisdiction is based upon the federal court's original jurisdiction over diversity suits. As a general rule, a cause is not removeable unless it is properly before the state court. If a state court lacks jurisdiction over one of the parties, the federal court cannot acquire jurisdiction. People of the State of Illinois v. Kerr-McGee Chemical Corp., 677 F.2d 571 (7th Cir. 1982).

To determine the existence of personal jurisdiction, the federal court must first look to state law long arm statutes, and second, determine whether the exercise of such jurisdiction is consistent with the Due Process clause of the Fourteenth Amendment. As noted in O'Hare International Bank v. Hampton, 437 F.2d 1173 (7th Cir. 1971):

  "In situations where federal jurisdiction is
  based upon diversity of citizenship, in personam
  jurisdiction `is determined in accordance with
  the law of the state where the court sits, with
  federal law entering the picture only for the
  purpose of deciding whether a state's assertion
  of jurisdiction contravenes a constitutional
  guarantee.' (Citation omitted)."

The Illinois Long Arm Statute (Ill.Rev. Stat., ch. 110, § 2-209) provides in relevant part:

  "Acts submitting to jurisdiction — Process. (a)
  Any person, whether or not a citizen or resident of
  this state, who in person or through an agent does
  any of the acts hereinafter enumerated, thereby
  submits such person, and, if an individual, his or
  her personal representative, to the jurisdiction of
  the courts of this state as to any cause of action
  arising from the doing of any of such acts:
  (1) The transaction of any business within this
  state;

(2) * * *

  (3) The ownership, use, or possession of any real
  estate situated in the state;

(4) * * *

  (b) Service of process upon any person who is
  subject to the jurisdiction of the courts of this
  state, as provided in this section, may be made
  by personally serving the summons upon the
  defendant outside the state, as provided in this
  Act, with the same force and effect as if those
  summons had been personally served within the
  state.
  (c) Only causes of action arising from acts
  enumerated herein may be asserted against a
  defendant in an action in which jurisdiction over
  him or her is based upon this section.

(d) * * *

  [Cook Associates, Inc. v. Lexington United Corp.,
  87 Ill.2d 190, 197-198, 57 Ill.Dec. 730,
  429 N.E.2d 847 (1981)-long long arm two elements § 2-209 and
  due process]."

The Defendant's Motion to Dismiss asserts that this Court has no in personam jurisdiction over the Defendant pursuant to the Illinois Long Arm Statute. However, the Plaintiff asserts jurisdiction pursuant to two prongs of the statute: (1) transaction of business, and (2) ...


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