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09/01/88 the Crawford County State v. Dwight H. Doss Et Al.

September 1, 1988





THE CRAWFORD COUNTY STATE BANK, as Adm'r of the Estate of

528 N.E.2d 436, 174 Ill. App. 3d 574, 123 Ill. Dec. 891 1988.IL.1341

Appeal from the Circuit Court of Piatt County; the Hon. Donald R. Parkinson, Judge, presiding.


PRESIDING JUSTICE GREEN delivered the opinion of the court. McCULLOUGH and SPITZ, JJ., concur.


On May 1, 1986, then plaintiff, the National Bank of Monticello, as executor of the estate of Eugene Bloomingdale, deceased, filed a three-count complaint in the circuit court of Piatt County against defendants Dwight H. Doss , Arvilla M. Doss , the Marine American National Bank (Marine), and the Commercial Bank of Champaign (Commercial), seeking to set aside certain conveyances made by DHD and AMD to Marine and Commercial on the grounds the conveyances were fraudulent as to plaintiff, a creditor of DHD. An amended and a second-amended complaint were filed containing additional counts, but the first three counts remained the same. The Crawford County State Bank, as administrator of the estate of the aforementioned decedent, was eventually substituted as plaintiff.

On January 29, 1988, the circuit court entered summary judgment in favor of defendants as to counts I, II, and III. On March 7, 1988, the circuit court entered an order denying plaintiff leave to file an amended count VIII to the second-amended complaint. Then, the circuit court made

The second-amended complaint alleges plaintiff's decedent became a creditor of DHD by virtue of a judgment in favor of that decedent and against DHD entered by the circuit court of Macon County on September 25, 1984, in the sum of $500,000 compensatory damages and $6 million punitive damages. This court reduced the punitive award to $2 million and affirmed the judgment as reduced. (National Bank v. Doss (1986), 141 Ill. App. 3d 1065, 491 N.E.2d 106.) The instant suit is brought pursuant to section 4 of "An Act to revise the law in relation to frauds and perjuries" (Act), which states:

"Every gift, grant, conveyance, assignment or transfer of, or charge upon any estate, real or personal, or right or thing in action, or any rent or profit thereof, made with the intent to disturb, delay, hinder or defraud creditors or other persons, and every bond or other evidence of debt given, suit commenced, or judgment entered, with like intent, shall be void as against such creditors, purchasers and other persons." Ill. Rev. Stat. 1983, ch. 59, par. 4.

Count I is against Marine. It alleges: (1) on February 16, 1983, DHD transferred to AMD, his wife, 3,000 shares of common stock of First State Bank of Monticello, then owned by DHD; (2) the conveyance of those shares was made at a time when the previously described judgment in favor of plaintiff's decedent was anticipated and was made for the purpose of preventing that judgment "from becoming a lien" upon that stock and with intent to defraud plaintiff; (3) the conveyance was without consideration and left DHD insolvent; (4) on September 21, 1984, and after a jury had rendered a verdict in favor of plaintiff's decedent, AMD conveyed 733 of those shares to Marine in satisfaction of a previous debt of AMD and DHD to Marine; and (5) at that time Marine knew or should have known of the transfer of the stock by DHD to AMD and knew or should have known of the fraudulent intent of DHD in doing so. The count requested that a constructive trust be imposed on the 733 shares in favor of plaintiff.

Count II is also against Marine. It alleges: (1) on September 22, 1984, Marine "took a mortgage in the amount of . . . ($85,000) from . . . " on a 35-acre tract; (2) DHD made that mortgage to prevent the then foreseen judgment of plaintiff's decedent from becoming a lien upon those premises; (3) Marine accepted the mortgage with knowledge of that intent; and (4) the execution of the mortgage made DHD insolvent and defrauded plaintiff as a creditor.

Count III is against Commercial. It asserts: (1) DHD transferred the previously described 3,000 shares of bank stock to his wife AMD with the fraudulent intent of preventing the judgment of plaintiff's decedent from becoming a lien on the property; (2) AMD received the property with knowledge of DHD's intent; (3) no consideration was given for the transfer; (4) the transfer rendered DHD insolvent; (5) after the aforesaid judgment was entered against DHD, AMD transferred 1,500 of those shares to Commercial in satisfaction of a debt of DHD and AMD to Commercial and with the intent to prefer Commercial over plaintiff and to defraud plaintiff; and (6) Commercial was aware of defendants' intent.

Proposed amended count VIII was also against Marine. It alleged: (1) in August 1979, DHD guaranteed the note of another to Marine; (2) in December 1981, that "note was discharged by the assumption of the same by" AMD with DHD guaranteeing the assumption by AMD; (3) on September 22, 1984, AMD assigned to Marine her interest in an escrow account for the "purchase of certain real estate"; (4) the balance in that escrow account was then the sum of $11,400; (5) the escrow account had been used "to secure the original guarantee undertaking of " on the aforesaid loan; (6) at the time of the assignment of the escrow account, Marine knew of the verdict in favor of plaintiff's decedent and against DHD; (7) judgment was then entered on that verdict, and the judgment, as reduced, affirmed on appeal; (8) AMD made the assignment to Marine because DHD anticipated the entry of judgment on the verdict ...

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