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Thorson v. Lasalle National Bank

March 12, 1999

ERIC THORSON, PLAINTIFF-APPELLANT,
v.
LASALLE NATIONAL BANK, F/K/A EXCHANGE NATIONAL BANK OF CHICAGO, AS TRUSTEE OF THE LINCOLN-KRILICH TRUST NO.2, DEFENDANT-APPELLEE.



The opinion of the court was delivered by: Justice Greiman

Appeal from the Circuit Court of Cook County Honorable Alexander White, Judge Presiding.

Plaintiff Eric Thorson obtained a money judgment in California against defendant LaSalle National Bank, f/k/a Exchange National Bank of Chicago, as Trustee of the Lincoln-Krilich Trust No. 2 (sometimes hereinafter the Trustee). Although plaintiff moved to have the judgment entered against LaSalle National Bank (hereinafter the Bank) in its individual capacity, the California court failed to enter such an order. Subsequently, plaintiff registered the California judgment in Illinois and served the Bank in its several capacities with four citations to discover assets, seeking, in relevant part, to recover on the California judgment from the Bank's individual assets. Plaintiff now appeals the trial court's order that granted the Bank's motion to quash plaintiff's citations, finding that, under Illinois law, plaintiff cannot reach the corporate assets of the Bank to satisfy a judgment entered against the Bank as trustee.

The primary contention raised on appeal by plaintiff is that the substantive law of California would allow recovery from the Bank's individual assets and that Illinois, as the state enforcing the foreign judgment, should apply the substantive law of California, as the rendering state, to permit such recovery. Based on the record in the present case, however, we find that the California court already considered the identical issue now raised by plaintiff and we cannot reconsider the merits here. Accordingly, we affirm the order of the trial court.

On June 20, 1989, plaintiff filed a complaint for breach of contract against "Exchange National Bank of Chicago, an Illinois banking corporation, as Trustee of the Lincoln-Krilich Trust No. 2 (Trust No. 40441)." *fn1 In his complaint, plaintiff alleged that on August 28, 1985, plaintiff and the Trustee entered into a contract for the purchase and sale of real estate and escrow instructions. This contract provided for the sale by plaintiff to the Trustee of plaintiff's residence and furniture in Newport Beach, California. The contract for plaintiff's residence was signed by Exchange National Bank as the Trustee. The furniture was covered in an addendum to the contract, which was signed by Exchange National Bank. The addendum provided that the Bank would pay plaintiff $145,000 for the furniture and fixtures located on the property. In his complaint, plaintiff alleged that the Bank never paid the $145,000 for the furniture.

In October 1991, following a trial, the California Judge entered a judgment against "Exchange National Bank of Chicago." The Trustee filed a motion, requesting that the judgment be amended to name the Bank only in its capacity as trustee, not as an individual. On December 16, 1997, a posttrial hearing was held on this motion, in addition to the Trustee's unsuccessful motion for a new trial. Thereafter, on October 20, 1993, after considering other matters that are not relevant to this appeal, the California court entered the final order, i.e., the fourth amended judgment against "Exchange National Bank of Chicago, an Illinois banking corporation, as Trustee of the Lincoln-Krilich Trust No. 2 (Trust No. 40441)."

On December 17, 1993, plaintiff filed an amended registration of foreign judgment for the October 20, 1993, California fourth amended judgment. The judgment debtor was named as "LaSalle National Bank f/k/a Exchange National Bank of Chicago, as Trustee of Lincoln-Krilich Trust No. 2."

In 1997, plaintiff filed four citations to discover assets, seeking to recover the monetary judgment entered in California and registered as a foreign judgment in Illinois. The citations were directed to the Bank (1) in its individual capacity, (2) as a third party in its individual capacity, (3) as a trustee, and (4) as a third party in its trust capacity.

In turn, the Bank filed a motion to quash the four citations to discover assets. The Bank argued that the trust has held no assets since February 1986 and that plaintiff is not entitled to reach assets that belong to the Bank in its individual capacity because the California judgment is solely against the Bank in its capacity as trustee. In response, plaintiff asserted that the matter is governed by California, not Illinois, law, and, under California law that was in effect prior to July 1, 1987, the monetary judgment against the Bank as trustee is enforceable against the Bank in its individual capacity.

Following a hearing in November 1997, the trial court took the matter under advisement and later issued its memorandum decision and judgment, granting the Bank's motion to quash. The trial court first found that Illinois law applied and, under Illinois law, a plaintiff cannot reach a bank's assets to satisfy a judgment.

Our review of the trial court's order granting the Bank's motion to quash plaintiff's citations to discover assets only involves questions of law and, thus, we apply a de novo standard of review. See, e.g., P.R.S. International, Inc. v. Shred Pax Corp., 184 Ill. 2d 224, 234 (1998); Hamwi v. Zollar, 299 Ill. App. 3d 1088 (1998) (de novo review applied to a question of law involving a foreign judgment).

The crux of plaintiff's position is that, under California common law prior to 1987, a bank's liability as trustee was legally interchangeable with a bank individually. Based on this premise, plaintiff maintains that the California judgment, on its face, makes the Bank individually liable, even though the judgment specifically and only names the judgment debtor to be the Trustee. To reach this result as to liability, plaintiff argues that the state enforcing a foreign judgment (Illinois) must apply the substantive law of the rendering state (California).

The federal constitution requires that "Full Faith and Credit shall be given in each State to the public Acts, Records, and judicial Proceedings of every other State." (U.S. Const., art. IV, §1.) "The intended purpose of the full faith and credit clause is 'to alter the status of the several states as independent foreign sovereignties, each free to ignore obligations created under the laws or by the judicial proceedings of the others, and to make them integral parts of a single nation throughout which a remedy upon a just obligation might be demanded as of right, irrespective of the state of its origin.'" Sackett Enterprises, Inc. v. Staren, 211 Ill. App. 3d 997, 1000-01 (1991), quoting Milwaukee County v. M.E. White Co., 296 U.S. 268, 277, 80 L. Ed. 220, 228, 56 S. Ct. 229, 234 (1935).

To implement the full faith and credit clause of the federal constitution, Illinois enacted the Uniform Enforcement of Foreign Judgments Act (Act) (735 ILCS 5/12-650 et seq. (West 1996)). Meyer v. First American Title Insurance Agency of Mohave, Inc., 285 Ill. App. 3d 330, 337 (1996); Pavey Envelope & Tag Corp. v. Diamond Envelope Corp., 271 Ill. App. 3d 808, 811 (1995). The purpose of the Act is "to facilitate the enforcement of interstate judgments by providing a summary procedure through which a party in whose favor a judgment has been rendered may enforce the judgment expeditiously in any jurisdiction where the judgment debtor is found." Firstar Bank Milwaukee, NA v. Cole, 287 Ill. App. 3d 381, 382-83 (1997) (and cases cited therein).

In accordance with the full faith and credit clause and the purpose of the Act, the enforcing court cannot address the merits of the foreign judgment because the principles of res judicata apply to the underlying judgment. "'Under the doctrine of full faith and credit, the forum court will not rehear a case on its merits because the judgment is res judicata.'" Firstar Bank Milwaukee, 287 Ill. App. 3d at 383, quoting All Seasons Industries, Inc. v. Gregory, 174 Ill. App. 3d 700, 703 (1988). The principles of res judicata dictate that "the nature and amount of the judgment, together with all defenses that could have been raised in the original court, are ...


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