Meyer v. First America Title Insurance Agency of Mohave, Inc.

No. 2--96--0381
_________________________________________________________________

IN THE

APPELLATE COURT OF ILLINOIS

SECOND DISTRICT
_________________________________________________________________

DIANNE L. MEYER and THE ) Appeal from the Circuit Court
SPAUDIE FAMILY TRUST, by ) of Du Page County.
Bernice E. Spaudie, Trustee, )
)
Petitioners-Appellants, )
) No. 95--MR--349
v. )
)
FIRST AMERICAN TITLE INSURANCE )
AGENCY OF MOHAVE, INC., ) Honorable
) John W. Darrah,
Respondent-Appellee. ) Judge, Presiding.
_________________________________________________________________

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 "spinoff" 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 maintained that the registration in Illinois
could not stand because of the result of the Arizona 1992 action.
On September 6, 1995, the trial court denied First
American's amended motion to vacate the registration. First
American moved for reconsideration of that order. On November
15, 1995, the trial court denied the motion for reconsideration.
In making its ruling, the trial court stated that First American
"must procure something in an Arizona court that is traditionally
recognized as a release or a satisfaction and present it to this
court." The trial court recommended that First American return
to the court that issued the Arizona 1988 judgment to accomplish
this purpose. "Do that and I'll honor it," the trial court
admonished.
On December 4, 1995, First American moved for an emergency
order of satisfaction, pursuant to section 12--183 of the Code of
Civil Procedure (Code) (735 ILCS 5/12--183 (West 1994)). That
motion asserted additional orders in Arizona entered on November
17, 1995, and November 18, 1995.
On December 15, 1995, First American filed a notice of
appeal from the November 15, 1995, order denying its motion for
reconsideration and to vacate.
During the time granted for briefing on First American's
December 4, 1995, motion, First American then set out another
Arizona order, this one entered on December 21, 1995. In that
order, the Arizona court that entered the judgment in the Arizona
1988 judgment found First American's liability "specifically
satisfied in full as to any and all claims by Dianne L. Meyer and
the Spaudie Family Trust, *** as set forth in Cause No. 95 MR
0349 filed in the Circuit Court of the Eighteenth Judicial
Circuit, Du Page County, Illinois, or otherwise." First
American's motion to procure that December 21, 1995, order
expressly premised such a finding on the judgment entered on
November 4, 1994, in the Arizona 1992 action (the interpleader
which was ex parte as to the petitioners herein). The Arizona
order dated December 21, 1995, did not recite any payment of the
Arizona 1988 judgment to the petitioners and did not recite any
releases executed by the petitioners.
In response, Dianne Meyer and the Spaudie Family Trust each
filed affidavits which stated: they have never received any
payments whatsoever from First American on the Arizona 1988
judgment; they have never released First American from any
judgment in any action; they have never filed an appearance in,
or authorized anyone to appear on their behalf, in any proceeding
in Arizona; they never received any summons or service of any
kind in either the Arizona 1988 judgment or the Arizona 1992
action; and they were never personally served with any notice of
any motion to obtain the December 21, 1995, order of satisfaction
in the Arizona '88 judgment. There is nothing in the record of
the instant case to controvert these allegations of fact. Thus,
the Arizona proceedings were prima facie ex parte as regards the
petitioners. See Bank of Ravenswood v. Domino's Pizza, Inc., 269
Ill. App. 3d 714, 720 (1995). The petitioners also moved to
strike the filing of the Arizona December 21, 1995, order.
On February 27, 1996, the petitioners filed a motion, later
denied, with the Arizona court to vacate the Arizona court's
December 21, 1995, order.
On February 28, 1996, the circuit court of Du Page County
entered an order granting First American's motion for an order of
satisfaction and denying the petitioners' motions to strike the
filing of the Arizona December 21, 1995, order. Specifically,
the court ordered, "In accordance with the Code of Civil
Procedure, the judgment heretofore entered by the court in the
above entitled matter is hereby vacated and held for naught."
The petitioners now appeal the circuit court of Du Page County's
February 28, 1996, order in our court.
On March 21, 1996, this court granted First American's
motion to dismiss voluntarily, with prejudice, its appeal
stemming from the circuit court's November 15, 1995, order.
Section 12--652 of our Code provides that, once a foreign
judgment has been filed, it "has the same effect and is subject
to the same procedures, defenses and proceedings for reopening,
vacating, or staying" as any other judgment of a circuit court.
735 ILCS 5/12--652 (West 1994). In Illinois, a collateral attack
may be had on a foreign judgment based upon the defenses of fraud
in the procurement of the judgment or the lack of jurisdiction in
the foreign court. Practice Management Associates, Inc. v.
Thurston, 225 Ill. App. 3d 470, 474 (1992). Further, other
courts, interpreting the Uniform Enforcement of Foreign Judgments
Act (Uniform Act) (735 ILCS 5/12--650 et seq. (West 1994)), have
held that "satisfaction, lack of due process, or other grounds
that make the judgment invalid or unenforceable" (emphasis added)
may constitute valid grounds for vacating a judgment which
stemmed from the registration of a foreign judgment. Welltech,
Inc. v. Abadie, 666 So. 2d 1234, 1236 (La. App. 1996); Wooster v.
Wooster, 399 N.W.2d 330, 333 (S.D. 1987); Matson v. Matson, 333 N.W.2d 862, 867 (Minn. 1983).
Section 12--183(h) of our Code states, "Upon the filing of a
release or satisfaction in full satisfaction of judgment, signed
by the party in whose favor the judgment was entered or his or
her attorney, the court shall vacate the judgment, and dismiss
the action." 735 ILCS 5/12--183(h) (West 1994). The Appellate
Court, First District, has held that this section does not bar
the judgment creditor's right to appeal following payment of that
judgment. Herron v. Anderson, 254 Ill. App. 3d 365, 371-72
(1993); see also In re Marriage of Pitulla, 202 Ill. App. 3d 103,
110 (1990). While the instant case differs slightly in that the
petitioners, the alleged judgment creditors, were not the
recipients of the payment allegedly made by First American, we
see no reason to deny the petitioners the right to appeal the
trial court's granting of the respondent's section 12--183 motion
(735 ILCS 5/12--183 (West 1994)).
Neither Herron, 254 Ill. App. 3d 365, In re Marriage of
Pitulla, 202 Ill. App. 3d 103, nor the parties in the present
case make mention of what our burden of review should be with
regard to orders granted under section 12--183 (735 ILCS 5/12--
183 (West 1994)). Our review of Illinois law reveals that no
other court has had occasion to determine the proper standard of
review for orders entered pursuant to section 12--183 (735 ILCS
5/12--183 (West 1994)). When a valid order of release or
satisfaction of judgment is entered, an obligor is relieved of
his duty to further satisfy the judgment. Thus, we determine
that orders entered pursuant to section 12--183, dealing with the
"release of judgment" (735 ILCS 5/12--183 (West 1994)), should be
reviewed on appeal under the same standard of review as orders
entered pursuant to section 2--1401 of the Code, dealing with
"relief from judgments" (735 ILCS 5/2--1401 (West 1994)).
Consequently, a reviewing court should only interfere with a
trial court's decision on whether a release or satisfaction of
judgment has been properly proved where it is shown that the
trial court abused its discretion. 735 ILCS 5/12--183 (West
1994); see also Kaput v. Hoey, 124 Ill. 2d 370, 378 (1988); Smith
v. Cole, 256 Ill. App. 3d 806, 809 (1993) (abuse of discretion is
proper standard of review for petitions for relief from judgment
brought under section 2--1401 of the Code.
Turning to the merits, we determine that the circuit court
erred for three reasons. First, the December 21, 1995, Arizona
order should not have directly affected the Illinois registered
judgment. Second, because the Arizona orders were entered ex
parte as to the petitioners, they may be collaterally attacked in
the circuit court. Third, First American did not sufficiently
establish that "payment to the proper parties" was made in
accordance with section 12--183 (735 ILCS 5/12--183 (West 1994)).
First, the circuit court erred by not recognizing that the
December 21, 1995, order did not directly affect the Illinois
registered judgment. Once the Arizona 1988 judgment was
registered in Illinois, an Illinois judgment with a legally
independent life of its own was formed. Light v. Light, 12 Ill. 2d 502, 508-09 (1957); 735 ILCS 5/12--652 (West 1994). In Light,
the plaintiff registered a Missouri judgment in Illinois. After
the judgment was registered, the judgment debtor claimed that the
foreign judgment had become satisfied and uncollectible by law in
Missouri. After analyzing Missouri law, the Illinois Supreme
Court disagreed with the defendant, but also held that the
uncollectibility of the Missouri judgment had no effect on the
collection of the Illinois registered judgment. Light, 12 Ill. 2d at 508-09. The court held that "unless the registration is
set aside after a hearing [in Illinois], it is the registered
judgment that becomes the final judgment of the Illinois court."
(Emphasis added.) Light, 12 Ill. 2d at 508.
The Illinois statutes pertaining to the registration of
foreign judgments are an enactment of the Uniform Act (735 ILCS
5/12--650 et seq. (West 1994)). The purpose of the Uniform Act
is to implement the full faith and credit clause of the United
States Constitution (U.S. Const., art. IV, 1) and to facilitate
interstate enforcement of judgments in any jurisdiction where the
judgment debtor is found. Practice Management Associates, Inc.,
225 Ill. App. 3d at 473. By statute, the Uniform Act is to be
interpreted and construed to effectuate these purposes, as well
as to make uniform the law of the states which enact it. 735
ILCS 5/12--657 (West 1994).
Thus, we examine a case similar to Light, which arose under
Connecticut law. In Burchett v. Roncari, 434 A.2d 941 (Conn.
1980), a judgment creditor sought the enforcement of a Kentucky
judgment that it had registered in Connecticut. After
registration in Connecticut, the Kentucky judgment was nullified
by post-judgment action taken in the Kentucky court. The
defendant claimed that the Connecticut registered judgment, in
turn, was nullified by the post-judgment action taken by the
Kentucky court. In ruling that the post-judgment action of the
Kentucky court had no effect on the Connecticut registered
judgment, the Connecticut Supreme Court stated, "The Connecticut
judgment *** had its own independent life-support system. A
domestic judgment enforcing a foreign judgment is not directly
affected by subsequent proceedings in the originating state."
(Emphasis added.) Burchett, 434 A.2d at 943; see also Huntington
National Bank v. Sproul, 861 P.2d 935 (N.M. 1993) (once an Ohio
judgment was registered in New Mexico, the judgment was converted
into a New Mexico judgment).
Second, because the record in the instant case reveals that
the subsequent proceedings in Arizona, as well as the original
proceedings in Arizona, were ex parte as to the petitioners, the
trial court erred in not allowing the petitioners the right to
attack those orders collaterally. A judgment rendered by a court
which "fails to acquire jurisdiction of either the parties or the
subject matter of the litigation may be attacked and vacated at
any time or in any court, either directly or collaterally."
State Bank v. Thill, 113 Ill. 2d 294, 309 (1986); see also Dec v.
Manning, 248 Ill. App. 3d 341, 347 (1993). Thus, aside from the
fact that the Arizona December 21, 1995, order has no direct
effect on the independent Illinois judgment, that order was also
issued ex parte as to the petitioners and, consequently, may be
attacked collaterally by the petitioners in this case.
Third, we determine that the circuit court erred in ordering
the petitioners' case dismissed due to a satisfaction of judgment
because First American did not sufficiently establish that a
satisfaction had been entered under section 12--183 (735 ILCS
5/12--183 (West 1994)). Section 12--183(h) provides, "Upon the
filing of a release or satisfaction in full satisfaction of
judgment, signed by the party in whose favor the judgment was
entered or his or her attorney, the court shall vacate the
judgment, and dismiss the action." 735 ILCS 5/12--183(h) (West
1994). The record reveals that First American did not file a
satisfaction signed by the party in whose favor the judgment was
entered. Also, the record shows that the circuit court relied
exclusively on the December 21, 1995, order of the Arizona court,
and not any such signed satisfaction, when it granted First
American's motion. Thus, because the clear terms of the statute
were not met, we have the authority to reverse the trial court's
decision.
However, we note that the present case illustrates an
inherent problem with the language of section 12--183 (735 ILCS
5/12--183 (West 1994)). Where the original judgment creditor's
rights to collect on a judgment have accrued to a different
party, who then becomes the judgment creditor, and the judgment
debtor then satisfies the judgment with that different party, the
terms of section 12--183 may be difficult to meet. Section 12--
183 requires a "release or satisfaction *** signed by the party
in whose favor the judgment was entered." 735 ILCS 5/12--183(h)
(West 1994). Technically, the party which assumes or acquires
the right to be judgment creditor could never have a valid
satisfaction order entered against it, even where it had signed a
satisfaction document, because it was not the party "in whose
favor the judgment was entered." 735 ILCS 5/12--183(h) (West
1994). When construing a statute, a court must ascertain and
give effect to the legislature's intent, the best indicator of
which is the language of the statute itself. First of America
Bank v. Netsch, 166 Ill. 2d 165, 181 (1995); Moon v. Smith, 276
Ill. App. 3d 958 (1995). However, because section 12--183 does
not contemplate a situation where the right to be the judgment
creditor has been transferred to another party, we find it
ambiguous in such a context.
This court has previously determined that the purpose of
section 12--183 is, in relevant part, to ensure that proof of
payment of the judgment to the proper parties has been made, thus
barring any further attempt by the judgment creditor to enforce
the judgment. Heller v. Travel America, Inc., 229 Ill. App. 3d
439, 444 (1992), quoting In re Marriage of Pitulla, 202 Ill. App.
3d at 110. That being so, we determine that, when dealing in the
context of a party assuming or acquiring the right to be the
judgment creditor from the original judgment creditor, a circuit
court shall grant a motion pursuant to section 12--183 (735 ILCS
5/12--183 (West 1994)) upon sufficient proofs that "payment to
the proper parties has been made." This construction avoids an
otherwise absurd result. See People v. Coleman, 166 Ill. 2d 247,
253 (1995) (a court interpreting a statute must assume that our
legislature did not intend an absurd result).
We determine that the circuit court erred in ruling that
First American had sufficiently proved that "payment to the
proper parties" was made. First American filed the Arizona
court's December 21, 1995, order with the circuit court, and the
circuit court relied exclusively upon that order when granting
First American's section 12--183 motion. Mindful of the
proposition that "[a] domestic judgment enforcing a foreign
judgment is not directly affected by subsequent proceedings in
the originating state" (Burchett, 434 A.2d at 943), we determine
that the mere order of one of our sister states, by itself, does
not constitute such sufficient proof. This is especially so
where, as here, the order was entered ex parte as to the
petitioners.
We also determine that, while the circuit court erred in
dismissing the petitioners' registered judgment, equity demands
that we remand this case for an evidentiary hearing. Our supreme
court has envisioned and authorized such a hearing. Light, 12 Ill. 2d at 508 (the registration of a foreign judgment may be set
aside "after a hearing" (emphasis added)).
Upon remand, the trial court should be aware that our
supreme court held, under the Uniform Act, that, if there is a
defense that bars the foreign judgment completely, then final
judgment on the Illinois registered judgment must be for the
party alleged to be the judgment debtor. Light, 12 Ill. 2d at
514. Satisfaction would be such a defense. 735 ILCS 5/12--652,
12--183 (West 1994); Welltech, Inc., 666 So. 2d at 1236; Wooster,
399 N.W.2d at 333; Matson, 333 N.W.2d at 867.
Turning briefly to other issues, we determine that the
petitioners' argument that the respondent has waived its right to
raise the defense of satisfaction by not raising it in pleadings
within 30 days lacks merit. In Illinois, the defense of payment
and satisfaction may be raised by a defendant at any time. Klier
v. Siegel, 200 Ill. App. 3d 121, 125-27 (1990).
In addition, we determine that the respondent was not barred
by res judicata from making its section 12--183 motion to
dismiss, based upon the Arizona court's December 21, 1995, order.
While the respondent had, indeed, made similar motions under the
same statute, none of them relied upon the December 21, 1995,
order of the Arizona court. Instead, they relied upon the
outcome and orders of the Arizona 1992 action. Further, the
respondent dropped its appeal of the denial of its previous
motions only after the trial court dismissed the petitioners'
registered judgment. The petitioners cite no case law for the
proposition that res judicata applies in such an instance.
In closing, we note that the respondent alleges in its brief
that the reversal of the trial court's satisfaction order would
make Illinois a State in which:
"[A]nyone could claim to be successors in interest of a
foreign judgment and, even though the original judgment
holder had been satisfied, they would still be entitled to a
second payment of the judgment and any subsequent
'successors in interest' would then be entitled to third,
fourth, and fifth payments of the same judgment."
The respondent's statement starts from a false premise, that is,
that "the original judgment holder had been satisfied." Fairfax,
the original judgment holder, did not satisfy its judgment
against First American before dissolution. At the crux of this
case is whether the petitioners are the proper successors in
interest of the Fairfax judgment. Payment to a third party not
in privity with the original judgment holder does not protect the
judgment creditor from paying the judgment to a proper successor
in interest. See 49 C.J.S. Judgments 523, at 975 (1947).
The judgment of the circuit court of Du Page County is
reversed, and the cause is remanded in accordance with this
opinion.
Reversed and remanded.
BOWMAN and THOMAS, JJ., concur.