Barrett v. Baylor, 71-1158.

Citation457 F.2d 119
Decision Date14 March 1972
Docket NumberNo. 71-1158.,71-1158.
PartiesThomas S. BARRETT, Sr., Plaintiff-Appellant, v. James A. BAYLOR et al., Defendants-Appellees.
CourtUnited States Courts of Appeals. United States Court of Appeals (7th Circuit)

Harold W. Huff, James P. Dorr, Wildman, Harrold, Allen & Dixon, Chicago, Ill., for plaintiff-appellant.

Kenart M. Rahn, Don H. Reuben, Steven L. Bashwiner, Earl G. Schneider, Chicago, Ill., for defendants-appellees; Kirkland, Ellis, Hodson, Chaffetz & Masters, Chicago, Ill., of counsel.

Before SWYGERT, Chief Judge, HASTINGS, Senior Circuit Judge, and SPRECHER, Circuit Judge.

SPRECHER, Circuit Judge.

The plaintiff sought to state a diversity claim for relief based upon abuse of process in connection with three civil actions presently pending in the state courts of Illinois, in each of which one or more of the defendants are parties.

On September 9, 1969, George F. Barrett and L. Williams, members of Prudence Mutual Casualty Company, a domestic mutual insurance company incorporated in Illinois ("Prudence"), brought a derivative and class action in the Circuit Court of Cook County in case No. 69 CH 3231, against more than 40 defendants, including present and former officers and directors, their alleged nominees, and insurance agencies of Prudence, alleging several acts of mismanagement and misappropriation of assets of Prudence. Included as a defendant in his capacity as a director and officer of Prudence was Thomas S. Barrett, Sr., a brother of the plaintiff George Barrett. Also added as a defendant on September 23, 1969, was James A. Baylor as Director of Insurance of the State of Illinois, who was charged with wrongfully approving the disposition of Prudence's accident and health insurance business to Maine Insurance Company.

On October 1, 1969, Prudence was placed in rehabilitation and Baylor was named rehabilitator pursuant to state statute. On February 7, 1970, Prudence was placed in liquidation and Baylor was appointed liquidator pursuant to state statute.

On October 29, 1969, Thomas S. Barrett, Sr., moved to dismiss the complaint on the ground that under the Illinois Insurance Code only the director of insurance had the right to file a complaint concerning the conduct and affairs of Prudence.

In the meantime, American United Cab Association, Radio Cab Company and Solly Breitowich, as taxicab owners and operators who held public liability and property damage policies issued by Prudence, filed a derivative and class action against Thomas S. Barrett, George F. Barrett and other officers and directors of Prudence as case No. 69 CH 3837 in the Circuit Court of Cook County alleging acts of mismanagement and misappropriation of Prudence.

On January 23, 1970, American United Cab Association, Radio Cab Company and Solly Breitowich sought to intervene in 69 CH 3231 on the ground that one of the plaintiffs, George F. Barrett, formerly chairman of the board of Prudence, would not adequately represent the interests of other members of Prudence.

The Circuit Court judge consolidated cases 69 CH 3231 and 69 CH 3837. Subsequently, he granted intervention in Case 69 CH 3231 by the plaintiffs in 69 CH 3837 and thereupon dismissed 69 CH 3837.

Thereafter in April, 1970, the state court judge denied the motion of Thomas S. Barrett, Sr., to dismiss 69 CH 3231 on the ground that under the Illinois Insurance Code only the director could bring the action.

On May 25, 1970, Thomas S. Barrett, Sr., filed a motion for leave to file a petition for writ of mandamus in the Supreme Court of Illinois, alleging that the director of insurance had the exclusive right to prosecute causes of action on behalf of Prudence. The Supreme Court denied the motion on May 27, 1970.

On May 15, 1970, Universal Mutual Casualty Company ("Universal") filed a complaint in the Circuit Court of Cook County as case No. 70 CH 2135, verified by Thomas S. Barrett, Sr., as Secretary-Treasurer of Universal, against James A. Baylor as insurance director, alleging that the director was wrongfully withholding assets belonging to Universal. Director Baylor counterclaimed, alleging that Prudence and Universal had common officers, directors and facilities, that Thomas S. Barrett, Sr., and other officers and directors of Universal had committed numerous acts of malfeasance in connection with their joint operation of Prudence and Universal, that Universal was insolvent, and praying for the appointment of a liquidator for Universal.

On June 12, 1970, Thomas J. Barrett, Sr., filed the present complaint in the federal district court, alleging that Baylor, George F. Barrett, L. Williams, American United Cab Association, Radio Cab Company and Solly Breitowich conspired to bring cases 69 CH 3231, 69 CH 3837 and to counterclaim in 70 CH 2135, "well knowing that no authority exists in law for the maintenance of any representative actions by any person other than the Director of Insurance as provided by Statutes of the State of Illinois" in order to deprive Thomas S. Barrett, Sr., of his livelihood and to bring him into disrepute. The complaint described the alleged wrongdoing as "tortious abuse of the judicial process to inflict injury upon the plaintiff."

On July 24, 1970, the state court judge consolidated cases 69 CH 3231 and 70 CH 2135. Universal appealed from this order to the Illinois Appellate Court but the appeal was dismissed on Baylor's motion on October 13, 1970.

The consolidated cases remain pending in the state court.

On December 30, 1970, the federal district court dismissed the action "in consonance with the doctrine of comity" upon the motions to dismiss of all defendants. Each of the defendants had expressly moved to dismiss on the ground, among others, that the complaint failed to allege a claim upon which relief may be awarded.

Thomas S. Barrett, Sr., has appealed the order of dismissal and has argued that the court should have assumed diversity jurisdiction and disposed of the case on its merits. We affirm the district court for the reason that the complaint failed to state a claim for relief under Illinois law.

It is well established that the judgment of a district court may be affirmed by a court of appeals where the result is correct, although the district court assigned a different reason for its decision. J. E. Riley Investment Co. v. Commissioner of Internal Revenue, 311 U.S. 55, 59, 61 S.Ct. 95, 85 L.Ed. 36 (1940); United States v. Rose, 346 F.2d 985 (3rd Cir.1965), cert. denied, 382 U.S. 979, 86 S.Ct. 551, 15 L.Ed.2d 469 (1966). Where the lower court could have properly dismissed plaintiff's complaint for failure to state a claim, its dismissal upon another ground will be affirmed. Lusk v. Eastern Products Corp., 427 F.2d 705, 708 (4th Cir.1970).

Obviously, the plaintiff has failed to state a claim under Illinois law for malicious use of process, which is "but another name for malicious prosecution" and requires (1) arrest of the person, seizure of property, or other special injury beyond service of summons only, and (2) termination of the prosecuted suit in the plaintiff's favor. Ammons v. Jet Credit Sales, Inc., 34 Ill. App.2d 456, 461-62, 181 N.E.2d 601, 603 (1962). Neither element has occurred in the present case. The plaintiff's alleged claim must therefore rest, if anywhere, upon abuse of process.

An Illinois court has said, "Courts have frequently observed that the elements vital to an action for abuse of process are not clearly defined either by the cases or by writers on the subject. The reason apparently is that the term has been used as a designation for a variety of dissimilar situations. . . ." Shatz v. Paul, 7 Ill.App.2d 223, 237, 129 N.E.2d 348, 355 (1955).

Abuse of process, sometimes called malicious abuse of process, is the misuse of legal process to accomplish some purpose outside the proper scope of the process itself. "There are two essentials to an action for abuse of process: an ulterior purpose and an act in the use of legal process not proper in the regular prosecution of the proceedings." March v. Cacioppo, 37 Ill.App.2d 235, 243, 185 N.E.2d 397, 401 (1962).

Professor Prosser has analyzed the cases throughout the country which have applied the above elements specified by the Illinois courts and has concluded (Law of Torts (3d ed. 1964) at 877-78):

"The improper purpose usually takes the form of coercion to obtain a collateral advantage, not properly involved in the proceeding itself, such as the surrender of property or the payment of money, by the use of the process as a threat or a club. There is, in other words, a form of extortion, and it is what is done in the course of negotiation, rather than the issuance or any formal use of the process itself, which constitutes the tort. The cases have involved such extortion by means of attachment, execution, garnishment, or sequestration proceedings, or arrest of the person, or criminal prosecution, or even such infrequent cases as the use of a subpoena for the collection of a debt." (Footnotes omitted.)

The Illinois courts have found no abuse of process even in the following cases involving dubious practices: (1) A garnishment demand was served upon the plaintiff and her employer before any judgment was obtained (Ammons v. Jet Credit Sales, Inc., 34 Ill.App.2d 456, 181 N.E.2d 601 (1962)); (2) A confession of judgment was followed by garnishment of a bank account for rent in futuro although the lease contained no acceleration clause (March v....

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