The opinion of the court was delivered by: Presiding Justice Buckley
Appeal from the Circuit Court of Cook County.
Honorable IRWIN COHEN, judge Presiding.
This appeal arises from attempts by plaintiff City of Chicago (the City), to collect a judgment against defendants, Air Auto Leasing Co., et al., for more than $460,000, entered on findings that defendants had breached an automobile rental concession license agreement with the City. In order to aid in its collection of the judgment, the City filed and served citations to discover assets upon respondent, David Zaransky, personally and as a corporate officer of all the defendants. Subsequent to receiving the citations, respondent transferred more than $82,000 from defendants' checking accounts.
A hearing was ordered to settle the issue of whether respondent Zaransky violated the City's citations as a matter of law by making payment, not for his benefit but for defendants in the operation of business and as a matter of necessity. After the hearing, the trial court dismissed the City's petition. All questions arise on the pleadings.
The following issues are raised on appeal: (1) whether the circuit court erred in dismissing the City's petition for a judgment remedy on the ground that respondent's transfer of defendants' assets after respondent had been served with citations prohibiting such transfers were justified on equitable grounds because they were made in the ordinary course of defendants' business; (2) whether the circuit court erred in dismissing the City's petition on the ground that the City should have executed on its judgment rather than relying upon the prohibition on transfer of defendants' assets in the citations; and (3) whether the circuit court erred in dismissing the City's petition on the ground that respondent, as a corporate officer, cannot be held personally liable for transfers of defendants' property in violation of the prohibition on transfer of corporate assets in the citations served personally on the officer.
On October 9, 1985, the City entered into an automobile rental concession license agreement with O'Hare Rent-A-Car, Inc. (O'Hare) under which the City granted O'Hare a license to operate an automobile rental concession at O'Hare International Airport. O'Hare defaulted on its obligation to pay certain fees to the City, and on March 5, 1993, the City filed a complaint for breach of contract against O'Hare.
The circuit court allowed the complaint to be amended to add Air Auto Leasing Co., Airways Rent-A-Car Co., Embassy Auto Leasing, Inc., Leased Car Sales, Inc., Main Auto Leasing Co., and Ridgeview Motors, Inc. as party defendants. On April 26, 1995, judgment was entered in favor of the City and against defendants in the amount of $461,956.75.
Immediately after the judgment was entered, numerous citations to discover assets were issued by the City. The citations were all served on respondent, both personally and as the responsible corporate officer of all defendants. Respondent was served with these citations at his residence in the evening. Each of the citations contained the following restraining provision:
"You are prohibited from making or allowing any transfer or other Disposition of, or interfering with, any property not exempt from execution or garnishment belonging to the judgment debtor or to which he may be entitled or which may be acquired by or become due to the judgment debtor and from paying over or otherwise disposing of any money not so exempt, which is due or become due to judgment debtor, until further order of court or termination of the proceedings. You are not required to withhold the payment of any money beyond double the amount of the judgment. Warning: Your failure to comply with the citation proceeding may result in a judgment being entered against you for the unsatisfied amount of this judgment." 735 ILCS 5/2-1402(d)(1) (West 1996).
On December 29, 1995, the City filed a petition for a rule to show cause why David Zaransky should not be held in contempt (the petition). The petition sought the imposition of a judgment remedy against respondent under section 2-1402(f)(1) of the Illinois Code of Civil Procedure (735 ILCS 5/2-1402(f)(1) (West 1996)). That section provides:
"The citation may prohibit the party to whom it is directed from making or allowing any transfer or other Disposition of, or interfering with, any property not exempt from the enforcement of a judgment therefrom, *** belonging to the judgment debtor ***, and from paying over or otherwise disposing of any moneys not so exempt which are due or to become due to the judgment debtor, until the further order of the court or the termination of the proceeding, whichever occurs first. The third party may not be obliged to withhold the payment of any moneys beyond double the amount of the balance due sought to be enforced by the judgment creditor. The court may punish any party who violates the restraining provision of a citation as and for a contempt, or if the party is a third party may enter judgment against him or her in the amount of the unpaid portion of the judgment ***, or in the amount of the value of the property transferred, whichever is lesser." 735 ILCS 5/2-1402(f)(1) (West 1996). In its petition, the City alleged that respondent had been served with the citations barring the transfer of defendants' property by no later than April 28, 1995, in his personal capacity and in his capacity as officer of all defendants.
The City further alleged that respondent was the only authorized signatory on defendants' primary checking and payroll checking accounts. Despite the citations, respondent caused $55,445.58 to be transferred from the primary account and $27,367.49 from the payroll account, totaling $82,813.07, by writing over 120 checks in a seven-week period. Respondent had personally guaranteed a substantial amount of defendants' debt to banks and finance companies, and the City alleged that respondent made the transfers "for the purpose of maintaining the judgment debtors' day to day operation *** [which] in turn would increase the likelihood that the judgment debtors would be in a position to continue business, refinance the loans guaranteed by David Zaransky, and thereby diminish David Zaransky's ultimate liability for those loans."
On March 7, 1996, a hearing was held on question of whether respondent violated the citations "as a matter of law, when, notwithstanding the issuance of those citations he made payments, not for his benefit but for the judgment debtors in the operation of business and as a matter of necessity." The City claimed that pursuant to section 2-1402(f)(1) (735 ILCS 5/2-1402(f)(1) (West 1996)), it was entitled to a judgment remedy against respondent in the amount that he had transferred from defendants' checking accounts in violation of the restraining provision of the citations.
At the hearing, the circuit court first established that respondent had been served with citations both in his personal capacity and in his capacity as an officer of defendants. The court also found that respondent had waived any ...