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12/19/96 DIANNE L. MEYER AND SPAUDIE FAMILY TRUST

December 19, 1996

DIANNE L. MEYER AND THE SPAUDIE FAMILY TRUST, BY BERNICE E. SPAUDIE, TRUSTEE, PETITIONERS-APPELLANTS,
v.
FIRST AMERICAN TITLE INSURANCE AGENCY OF MOHAVE, INC., RESPONDENT-APPELLEE.



Appeal from the Circuit Court of Du Page County. No. 95--MR--349. Honorable John W. Darrah, Judge, Presiding.

Released for Publication January 22, 1997.

Presiding Justice McLAREN delivered the opinion of the court: Bowman and Thomas, JJ., concur.

The opinion of the court was delivered by: Mclaren

PRESIDING JUSTICE McLAREN delivered the opinion of the court:

The petitioners, Dianne Meyer and the Spaudie Family Trust, by Bernice Spaudie, trustee, are Illinois residents and appeal from the entry of an order by the circuit court, upon motion of the respondent, First American Title Insurance Agency of Mohave, Inc. (First American), which found satisfaction of their registered Illinois judgment. 735 ILCS 5/12--652 (West 1994). We reverse and remand.

The procedural posture of this case is unique in Illinois. On February 27, 1990, in Arizona case number CV 88--07376 (Arizona 1988 judgment), the respondent had a judgment entered against it, in the amount of $688,991.01, with post-judgment interest set at 10%, in favor of Fairfax Industries, Inc. (Fairfax). The respondent appealed, and the Arizona Court of Appeals affirmed the judgment, also entering an additional award of $8,200 in attorney fees against the respondent. Subsequently, the Arizona Supreme Court, on June 29, 1993, denied the respondent's request for further review of the Arizona 1988 judgment and ordered the respondent to pay additional costs of $250 and additional attorney fees totalling $2,500.

On July 1, 1989, Fairfax was dissolved under Illinois law. The petitioners in the case at bar allege that, as of that date, the beneficial rights to 50% of all of the outstanding shares of common stock in Fairfax were held by petitioner Meyer and the remaining 50% was held by petitioner the Spaudie Family Trust.

On October 25, 1992, a separate action was filed in Arizona, with an Arizona case number of CV 92--92186 (Arizona 1992 action), for a declaration of rights with respect to claims formerly belonging to Fairfax. Apparently, the Arizona 1992 action was instigated because a third-party judgment creditor of Fairfax wished to satisfy its own judgment from the award which Fairfax was to receive from First American. Fairfax was neither named nor joined as a party in the Arizona 1992 action. On February 12, 1993, as part of the Arizona 1992 action, John Robert Meyer, attorney for the petitioner Dianne Meyer, signed and filed an affidavit in which he stated, "from and after December 30, 1988, the Hamilton Trust and the Oradell Trust were each the owners of an undivided one-half interest in the Fairfax Cause of Action. The Trusts presently remain the owners and holders of all rights and interests in the Fairfax Cause of Action." At oral argument before this court, counsel for the petitioners indicated that, at the time John Robert Meyer made this statement, he reasonably believed it to be true.

In October 1994, First American interpleaded in the Arizona 1992 action. First American did not name Dianne Meyer or the Spaudie Family Trust as parties to the interpleader.

On November 4, 1994, the court in the Arizona 1992 action ordered that, upon payment of $1,032,792.18 to the clerk of the court, First American would be dismissed from the Arizona 1992 action. According to counsel for the petitioners when appearing for oral argument in this appeal, the Arizona court found that insufficient consideration was provided by the Hamilton Trust and the Oradell Trust to support the alleged "spin-off" from Fairfax to those trusts. Further, the court ordered that First American "be forever released and discharged from any and all liability to all parties to this action." The order also purported to adjudge "that the Fairfax Judgment is and has been satisfied in full."

On May 26, 1995, petitioner Dianne Meyer instituted the present action by filing a verified petition in the circuit court of Du Page County, Illinois, to enforce the Arizona 1988 judgment. On June 15, 1995, the trial court granted the motion of the Spaudie Family Trust for leave to intervene nunc pro tunc in the Meyer petition, and the Spaudie Family Trust filed a similar petition. The petitions related that a transfer of stock in Fairfax occurred, with Dianne Meyer and the Spaudie Family Trust as recipients, and that Fairfax was dissolved as of July 1, 1989. Therefore, the petitions concluded that 50% of the right, title, and interest in the judgment against First American belonged to Dianne Meyer, while the other 50% belonged to the Spaudie Family Trust.

In addition, the petitions alleged that, in October 1994, "which was more than five years after Fairfax' dissolution on July 1, 1989, First American filed an attempted, but incomplete and ineffective, interpleader action" in the Arizona 1992 action. According to the petitions, the court in the Arizona 1992 action could not properly entertain jurisdiction over Fairfax, due to the fact that the Illinois Business Corporation Act of 1983 provides that no action will lie against an Illinois corporation dissolved for more than five years. 805 ILCS 5/12.80 (West 1994). Further, the petitions set forth that First American did not attempt to serve the Illinois Secretary of State on behalf of Fairfax as a dissolved corporation (see 805 ILCS 5/5.05, 5.25 (West 1994)), nor did First American name Fairfax's alleged successors in interest, Dianne Meyer or the Spaudie Family Trust, in the Arizona 1992 action.

As a result of these petitions, the Arizona 1988 judgment was registered in Illinois.

On July 14, 1995, or more than 30 days after the registration of the Arizona 1988 judgment in Illinois, First American first entered its general appearance. On that date, First American moved to strike the May 26, 1995, registration of the Arizona 1988 judgment, asserting that the Arizona 1988 judgment had been fully satisfied, as determined by outcome of the Arizona 1992 action. First American later amended its motion, but still ...


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