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02/03/94 MOREY FISH COMPANY v. RYMER FOODS

February 3, 1994

MOREY FISH COMPANY, APPELLANT,
v.
RYMER FOODS, INC., APPELLEE.



Harrison

The opinion of the court was delivered by: Harrison

JUSTICE HARRISON delivered the opinion of the court:

Plaintiff, Morey Fish Company, appeals from the dismissal of its complaint for injunctive relief against defendant, Rymer Foods, Inc. Morey Fish Company had attempted, by collateral attack in the circuit court of Cook County, to enjoin enforcement of a Federal district court judgment that had been entered against it and in favor of Rymer Foods. The appellate court, with one Justice Dissenting, rejected Morey Fish Company's argument that the Federal district court's judgment was void for lack of personal jurisdiction, and held that the jurisdictional issue was not subject to collateral attack because the Federal court's determination on this point was entitled to full faith and credit in this State. (240 Ill. App. 3d 61.) We reverse.

The pertinent facts of record are as follows. In June 1988, Rymer Foods filed suit in the United States District Court for the Northern District of Illinois against W.J.F. International, Inc., and against WilliamJ. Frank and Stephen W. Frank, doing business as Morey's Fish House. The suit sought damages for, inter alia, breach of contract relating to the sale of fish products by Rymer Foods to the named defendants.

William, Stephen and Gregory Frank are shareholders of W.J.F. International. The shareholders of Morey Fish Company are Loren Morey, Kathryn Morey, Stephen Frank, and William Frank, the company's president. W.J.F. International and Morey Fish Company are separate and distinct businesses which do not compete. Morey's Fish House is a trademark which is owned by Morey Fish Company, and is the name given to retail stores through which Morey Fish Company conducts seafood sales.

Following a bench trial, the Federal district court entered judgment against Morey's Fish House and in favor of Rymer Foods. (Rymer Foods, Inc. v. W.J.F. International, Inc. (N.D. Ill. January 14, 1991), No. 88-C-5082.) The court made specific factual findings, not relevant here, regarding various business transactions during 1986, 1987, and 1988 that pertained to orders placed by W.J.F. International to purchase fish products from Rymer Foods. However, with respect to orders placed in March 1988, the court observed:

"9. The court notes that the March 1988 purchases which are also in dispute occurred while an April 1987 consent decree was in effect. In that decree Bailin [the vice-president in charge of sales at Rymer Foods] agreed that he would not contact or solicit business from W.J.F., a customer of his former employer * * *. Stephen Frank had received a copy of the injunction in the mail. In order to avoid problems with the injunction, Bailin and Frank decided to bill the five invoices for the [March 1988] purchases to Morey's Fish House. The testimony indicated that it was clearly understood by both Bailin and Frank that the purchases were made by Morey's on behalf of W.J.F.; William Frank also understood that the fish was sold to W.J.F., but billed to Morey's Fish House."

The court further determined that Rymer Foods had established that W.J.F. International and Morey's Fish House had breached their contract to purchase the fish ordered in 1988, stating, "it is not disputed that the goods were delivered, that all the terms of the contract were honored and that W.J.F. failed to pay." Nevertheless, the court explicitly found "the corporate entity Morey's Fish House liable for the breach," reasoning that "Morey's was the entity that actually bargained for and contracted for the fish * * * and is therefore liable for its failure to pay for those orders." Judgment was entered in favor of W.J.F. International, William Frank and Stephen Frank.

On January 17, 1991, Rymer Foods filed a motion for modification of the memorandum opinion and order, which stated that "the judgment entered by this Court should have been entered against Morey's Fish Company doing business as Morey's Fish House," and requested that the court's order be modified to enter judgment against "Morey's Fish Company." This motion referred to Rymer Foods' August 11, 1989, motion to amend plaintiff's complaint to conform the pleadings to the evidence, pursuant to Federal Rules of Civil Procedure 15(b) (Fed. R. Civ. P. 15(b)). In the motion to amend, Rymer Foods requested that Morey Fish Company, the actual owners of Morey's Fish House, be held liable under count I, the breach of contract claim, and that the pleadings be amended and the proper parties joined. However, no amended complaint was attached to the motion specifying the basis for the claims against Morey Fish Company, and the motion was never ruled upon.

On or about February 12, 1991, Rymer Foods withdrew its January 17, 1991, motion for modification and filed an amended motion for modification of the court's memorandum opinion and order. In this motion, Rymer Foods requested that the Federal district court modify the judgment entered under count I, stating:

"The judgment entered by this Court should have been entered against Stephen Frank and William Frank doing business as Morey's Fish House and W.J.F. International, Inc. Plaintiff never dealt with Morey Fish Co., the purported owner of Morey's Fish House. It is clear from the evidence and testimony before this Court that Stephen Frank or W.J.F. International, Inc., were the actual purchasers of the subject goods.

Stephen Frank purchased the subject fish while acting in the capacity of an agent and officer of Defendant W.J.F. International. Defendant Stephen Frank never identified Morey Fish Co. as a purchaser. Either he must be deemed an agent of W.J.F. International, Inc. or the actual purchaser of the goods."

On March 29, 1991, the Federal district court issued a second memorandum opinion and order. (Rymer Foods, Inc. v. W.J.F. International, Inc. (N.D. Ill. April 1, 1991), No. 88-C-5082.) The court again ruled that judgment should be entered in favor of defendants W.J.F. International, William Frank and Stephen Frank, but modified its order to enter judgment against "Morey Fish Company, doing business as Morey [sic] Fish House." The court noted that the defendants objected to this amendment on the ground that Morey Fish Company was never named in the complaint and never served with a summons, and that Rymer Foods took no action to join Morey Fish Company as a defendant. The court found these objections to be without merit, noting that Rule 15(a) of the Federal Rules of Civil Procedure directs courts to amend freely "'[when] Justice so requires.'"

The Federal district court further found that throughout discovery and trial, "the parties recognized that the issue of Morey Fish Company's liability was a crucial element in this case, which had to be resolved by the court," and stated that "the case was ultimately ruled on with the implicit understanding that ...


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