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Amcore Bank, N.A. v. Hahnaman-Albrecht Inc.

May 26, 1999


Appeal from the Circuit Court of Lee County. No. 97--L--15 Honorable David T. Fritts, Judge, Presiding.

The opinion of the court was delivered by: Justice Thomas


Modified Upon Denial of Rehearing

Plaintiff, Amcore Bank, N.A. Rock River Valley, brought an action against defendant Hahnaman-Albrecht, Inc. (HAI), to collect on two promissory notes and also joined the guarantors of the notes, defendant Dean Hamilton, president of HAI, along with defendants Jeffrey Hamilton, Thomas F. Conley, David Von Holten and Paul Rittmanic. Plaintiff then filed an action for prejudgment attachment, which is at issue in the instant appeal, against defendant Dean Hamilton (Hamilton) only. At the close of plaintiff's case on the action for attachment, the trial court granted Hamilton's motion for judgment in his favor, denied plaintiff's request for attachment, and held that there was no just reason to delay enforcement or appeal of the order. Plaintiff now appeals the trial court's ruling in favor of Hamilton.

The facts relevant to this appeal are as follows. On March 13, 1997, plaintiff filed a complaint against HAI alleging that on August 30, 1994, plaintiff and HAI had entered into a revolving credit agreement, pursuant to which plaintiff was the holder of two promissory notes executed by HAI and payable to plaintiff for $2 million and $15 million, respectively. Hamilton and the other individual defendants were guarantors of the notes. Plaintiff alleged that on February 10, 1997, it had sent HAI a letter declaring the agreement to be in default, that plaintiff had demanded full payment of the promissory notes, and that HAI had refused to pay the notes. Plaintiff's complaint also contained counts against each of the guarantors for the amounts due under the notes.

Plaintiff then filed an affidavit for attachment against Hamilton alleging that with actual intent to hinder, delay, or defraud creditors, Hamilton had transferred personal assets to insiders at a time when he was or became insolvent and when he knew that HAI would be unable to repay plaintiff. Plaintiff alleged that on January 24, 1997, Hamilton had executed a warranty deed conveying a condominium unit that he owned to his stepdaughters, Dina K. Frye and Dana K. Andrus, and on December 27, 1996, executed a quitclaim deed conveying a condominium unit he owned in Arizona to his daughter, Carol Hamilton.

A bench trial was held on plaintiff's affidavit for attachment. At the close of plaintiff's case, Hamilton orally moved for a finding in his favor on the ground that plaintiff had not met its burden of proof. The trial court then raised the issue of whether plaintiff was required to show that it would be unable to collect a judgment against the other defendants, including HAI and the other guarantors, in order to obtain an order of attachment against Hamilton's assets. The trial court then allowed Hamilton to file a written motion for a finding in his favor.

On April 29, 1998, the trial court entered its written memorandum opinion. The court held that the elements that plaintiff had to prove under the statute were that (1) plaintiff probably would prevail in its action against Hamilton; (2) Hamilton had fraudulently conveyed part of his assets; (3) the fraudulent activity had occurred since November 25, 1995; and (4) as a result, the plaintiff was hindered or delayed. The court held that, viewing the evidence in the light most favorable to plaintiff, plaintiff probably would prevail in its action against Hamilton. Further, the court held that Hamilton did fraudulently dispose of part of his property, evidenced by the fact that since November 25, 1995, Hamilton knew that HAI was experiencing financial difficulties and during that time he had (1) conveyed his Arizona condominium to his daughter by quitclaim deed for no consideration; (2) conveyed the remainder interest in his home to his stepdaughters for no consideration while retaining a life estate for himself and his wife; (3) conveyed a remainder interest in another Arizona condominium to his daughter for no consideration while reserving a life estate for himself and his wife; (4) transferred an investment interest to his daughter; and (5) purchased a substantial annuity for his wife.

The court then noted that it had found no case law concerning whether an attachment could issue against Hamilton when other guarantors also would be responsible for the full amount and were able to pay the plaintiff. The court concluded that the statute required that the debtor's actions must be such that the creditor would be hindered or delayed as a result of those actions. The court denied plaintiff's request for attachment against the assets of Hamilton, finding that, if the other guarantors were able to pay the debt, plaintiff would not be hindered or delayed no matter what Hamilton did and that the burden should be on the plaintiff to show whether the other guarantors would be able to pay the judgment.

On appeal, plaintiff contends that the trial court's analysis concerning whether plaintiff was hindered or delayed by Hamilton's fraudulent transfers was misdirected and argues that the fact that plaintiff might be able to obtain payment of the indebtedness from others has no bearing on the attachment action against Hamilton. Plaintiff argues that the relevant inquiry is whether Hamilton's actions were taken with the intent to hinder or delay his creditors. Plaintiff asks this court to reverse the trial court's order in favor of Hamilton.

In response, Hamilton contends that the trial court was correct in dismissing plaintiff's action on the ground that it was necessary to determine the financial status of the other joint debtors in order to determine whether a debtor's conduct would hinder or delay his creditor. Hamilton, however, also asks this court to find that the trial court erred in holding that Hamilton's transfers of property were made with the intent to defraud plaintiff and erred in finding that there was a likelihood that the plaintiff would succeed on the merits of the underlying cause of action.

The attachment statute (735 ILCS 5/4--101 et seq. (West Supp. 1997)) provides, in pertinent part:

"In any court having competent jurisdiction, a creditor having a money claim, whether liquidated or unliquidated, and whether sounding in contract or tort, or based upon a statutory cause of action created by law in favor of the People of the State of Illinois, or any agency of the State, may have an attachment against the property of his or her debtor, or that of any one or more of several debtors, either at the time ...

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