Gatto v. Walgreen Drug Co.

• Decision Date: 26 September 1975
• Docket Number: No. 47187,47187
• Citation: 337 N.E.2d 23,61 Ill.2d 513
• Parties: Frank GATTO, Individually and as Adm'r, Appellee, v. WALGREEN DRUG COMPANY et al. Appeal of CALUMET FLEXICORE CORPORATION, Third-Party Defendant.
• Court: Illinois Supreme Court

Page 23

337 N.E.2d 23

61 Ill.2d 513

Frank GATTO, Individually and as Adm'r, Appellee, v. WALGREEN DRUG COMPANY et al. Appeal of CALUMET FLEXICORE CORPORATION, Third-Party Defendant.

No. 47187.

Supreme Court of Illinois.

Sept. 26, 1975.

Rehearing Denied Nov. 21, 1975.

A. R. Peterson, Thomas K. Peterson, and William W. Jones, Chicago (Peterson, Ross, Rall, Barber & Seidel, Chicago, of counsel), for appellant.

Moriarty, Rose & Hultquist, Ltd., Chicago (Maurice James Moriarty, and Robert C. Hultquist, Chicago, of counsel), for appellee.

SCHAEFER, Justice.

Sophie Gatto was injured on June 19, 1964, when the roof of a Walgreen Drug Store in Cook County collapsed. She sued for personal injuries and her husband, Frank Gatto, sued for loss of consortium. A number of parties were joined as defendants, including the owners of the beneficial interest in the land trust which held title to the property (Lessors) and Louis Sladky, the lessee of the drug store. By their third amended complaint the plaintiffs attempted to join Calumet Flexicore Corporation (Calumet), the company which had installed the roof, as a defendant, but the statute of limitations had run. The Lessors, however, brought in Calumet as a third-party defendant. The jury returned a verdict in favor of Sophie Gatto for $100,000 and Frank Gatto for $20,000, against the Lessors. In addition, the jury returned a verdict of $120,000 in favor of the Lessors and against Calumet.

Calumet appealed from the judgment against it; on January 27, 1970, during the pendency of the appeal, the Lessors assigned their judgment against Claumet to the plaintiffs, Frank and Sophie Gatto. By the terms of the assignment the judgment for $120,000 against Calumet was assigned to the Gattos, and in exchange the Gattos promised that if the judgments were affirmed on review, they would pay $60,000 to the Lessors. At that time there was a substitution of attorneys, and the Lessors were represented on appeal by the same attorneys who represented the plaintiffs. The appellate court affirmed the judgments in an opinion filed on June 26, 1972. Gatto v. Curtis, 6 Ill.App.3d 714, 286 N.E.2d 541.

In July, 1972, Calumet moved in the appellate court to reduce the third-party judgment against it to $60,000. The motion was supported by an affidavit which stated that Calumet's attorney had learned, through a telephone conversation with one of the attorneys for the plaintiffs and Lessors on July 6, 1972, that the judgment in favor of the plaintiffs and against the Lessors had been satisfied for $60,000, so that the liability of Calumet as an indemnitor should have been limited to that amount. The attorneys for the plaintiffs and Lessors filed a response to the motion that included an affidavit which stated that the assignment of the judgment contained the full and complete agreement between the plaintiffs and the Lessors. Calumet's motion was denied without prejudice, with the suggestion that the question be raised in the trial court.

Thereafter, Calumet filed petitions in the trial court which sought a stay of execution, reduction of the judgment and discovery as to whether there had been a settlement agreement other than the assignment of the judgment. These petitions are described more fully in the appellate court opinion (23 Ill.App.3d 628, 631, 320 N.E.2d 222). On February 15, 1973, the trial court ruled that discovery would be permitted. On February 22, the attorneys for the plaintiffs and Lessors disclosed, for the first time, an executed settlement agreement dated August 1, 1969. The trial had commenced on Monday, July 28, 1969, and it had continued for two weeks after the settlement agreement, through Wednesday, August 13. The agreement, a five-page handwritten document, provided in part:

'AGREEMENT NOT TO EXECUTE Dated August 1, 1969

For and in consideration of the payment of the sum of Eighty Thousand ($80,000.00) Dollars, the receipt of which is hereby acknowledged, the undersigned, Frank Gatto and Sophie Gatto, his wife, individually and as husband and wife, paid by and on behalf of (Lessors), * * * do hereby covenant and agree not to execute on any judgment rendered in the cause now on trial * * * or in any other cause now on file or hereafter filed, arising out of the occurrence of June 19th, 1964, at or near 6865 West 111th Street, Worth, Illinois, in any amount in excess of Eighty Thousand ($80,000.00) Dollars, against the above named defendants.

Further, for and in consideration of the payment of the sum of Fifteen Thousand ($15,000.00) Dollars, the receipt of which is hereby acknowledged, the undersigned, Frank Gatto and Sophie Gatto, his wife, individually and as husband and wife, paid by and on behalf of (lessee), * * * do hereby covenant and agreed not to execute on any judgment rendered in the cause now on trial * * * or in any other cause now on file or hereafter filed, arising out of the occurrence of June 19th, 1964, at or near 6865 West 111th Street, Worth, Illinois, in any amount in excess of Fifteen Thousand ($15,000.00) Dollars, against the above named defendant.

The above payments, and each of them, are made solely as a purchase of peace and are not to be construed as an admission of liability on the part of any of the said defendants.

Inasmuch as each of the above named defendants has now pending in the above-captioned lawsuit actions in the nature of Third-Party Actions and Counterclaims against certain other parties in the said lawsuit; now therefore it is agreed as follows:

1. In the event that the above named defendants, (Lessors), * * * shall in any such Third-Party Action or Counterclaim recover a judgment or judgments, and collect same, in excess of Eighty Thousand ($80,000.00) Dollars, or less than Eighty Thousand ($80,000.00), the distribution thereof shall be as follows: (A) any amount up to an (sic) including Eighty Thousand ($80,000.00) Dollars shall become and remain the sole property of (Lessors) * * * or the entity having actually paid the aforesaid Eighty Thousand ($80,000.00) Dollars. (B) Any amount in excess of Eighty Thousand ($80,000.00) shall be paid over to the aforesaid plaintiffs.

2. In the event that the above-named defendant, Louis F. Sladky, shall in any such Third-Party Action or Counter-claim recover a judgment or judgments, and collect same, in excess of Fifteen Thousand ($15,000.00) Dollars or less than Fifteen Thousand ($15,000.00) Dollars the distribution thereof shall be as follows: (A) Any amount up to and including Fifteen Thousand ($15,000.00) Dollars shall become and remain the sole property of Louis F. Sladky, or the entity having actually paid the aforesaid Fifteen Thousand ($15,000.00) Dollars. (B) Any amount in excess of Fifteen Thousand ($15,000.00) Dollars shall be paid over to the aforesaid plaintiffs.

In the event the aforesaid defendants shall be awarded any judgment or judgments in any such Third-Party Action or Counterclaim, said defendants, at their sole option, may:

1. Attempt to collect such judgment or judgments, or

2. Permit plaintiffs, at plaintiffs' expenses, to attempt to collect such judgment or judgments.'

After the disclosure of this agreement, Calumet filed a second amended petition on April 13, 1973. This petition alleged that after the agreement was signed there was no longer a 'justiciable cause of action to submit to trial, verdict, and judgment. Hence, the trial was a sham and a sharade and the resulting verdicts and judgments are void.' It alleged further that the plaintiffs and Lessors fraudulently concealed the agreement from Calumet in an attempt to recover judgments not based on lawful claims. The petition sought an order vacating the judgments against the Lessors and Calumet, an order dismissing plaintiffs' complaints against the Lessors and Calumet, discovery to allow the court to impose appropriate sanctions against persons who participated in the scheme to defraud Calumet, an order assessing damages including attorney's fees, and any other relief that justice required.

On the basis of briefs, affidavits, and oral argument, the trial court, on June 1, 1973, entered an order denying all the relief sought in Calumet's second amended petition. This order, however, continued the stay of execution, granted leave to Calumet to file a motion to limit the amount for which plaintiffs could execute, and continued the cause for further order. The motion to limit execution was filed by Calumet on June 15. It was denied on August 21, 1973. Calumet filed a notice of appeal on September 13 praying for a reversal of both the June 1 and August 21 orders.

The appellate court held that it had no jurisdiction to consider the June 1 order, on the ground that the notice of appeal had not been filed within 30 days from the entry of that order. The appellate court, however, held that it had jurisdiction to limit execution upon the judgment, and limited execution against Calumet to $80,000. In addition, the court held that interest on the $80,000 would accrue only from the date on which the 'Agreement Not to Execute' was disclosed. (23 Ill.App.3d at 645, 320 N.E.2d 222.) We granted leave to appeal.

On this appeal, Calumet argues that both the June 1 and August 21 orders were reviewable and that the trial court improperly denied the second amended petition. The plaintiffs and Lessors have cross-appealed arguing that the appellate court erred in limiting execution on the judgment and in accruing interest only from the date of the disclosure of the 'Agreement Not to Execute.'

The first question to be considered is the correctness of the appellate court's determination that it was without jurisdiction to review the trial court's order of June 1, 1973. In reaching that conclusion the appellate court relied upon Rule 304(b)(3) of the rules of this court. Rule 304(a) provides that if multiple claims are involved in an action, an appeal may be taken from a final judgment disposing of less than all of...