Bank of Aspen v. Fox Cartage, Inc.

• Decision Date: 27 February 1986
• Docket Number: No. 2-85-0823,2-85-0823
• Citation: 95 Ill.Dec. 672,141 Ill.App.3d 369,490 N.E.2d 145
• Parties: , 95 Ill.Dec. 672 BANK OF ASPEN, Plaintiff-Appellee, v. FOX CARTAGE, INC., et al. Defendants, v. BATAVIA BANK, Citation Respondent-Appellant.
• Court: United States Appellate Court of Illinois

Page 145

490 N.E.2d 145

141 Ill.App.3d 369, 95 Ill.Dec. 672

BANK OF ASPEN, Plaintiff-Appellee, v. FOX CARTAGE, INC., et al. Defendants, v. BATAVIA BANK, Citation Respondent-Appellant.

No. 2-85-0823.

Appellate Court of Illinois,

Second District.

Feb. 27, 1986.

Guerard & Drenk, Ltd., Wheaton, David Drenk, Douglas Drenk, Mardyth E. Pollard, Louis A. Varchetto, Wheaton, for citation respondent-appellant.

Reid, Ochsenschlager, Piccony & Weiler, Lambert M. Ochsenschlager, Wayne F. Weiler, Aurora, for plaintiff-appellee.

REINHARD, Justice.

Petitioner, Bank of Aspen (Aspen), obtained a judgment in the State of Colorado against Fox Cartage, Inc. and David L. Thomas which was subsequently registered in Illinois in the circuit court of Kane County, and a new personal judgment was entered against Thomas for $147,628.25. Aspen then commenced supplementary proceedings to discover assets, and caused a citation to be issued by the circuit clerk of Kane County to the third-party respondent, Batavia Bank (Batavia) directing it to appear on October 9, 1985, and prohibiting Batavia from transferring or disposing of any property which it held belonging to Thomas. Batavia's emergency petition to quash the citation to discover assets was denied by the trial court, and Batavia brings this interlocutory appeal from that order pursuant to Supreme Court Rule 307. 87 Ill.2d R. 307.

Batavia raises two issues on appeal: (1) whether the trial court erred when it refused to dissolve the ex parte citation injunction issued without notice, hearing, or bond, where Aspen had adequate remedies under the Illinois Commercial Code; and (2) whether section 2-1402 of the Illinois Code of Civil Procedure (Ill.Rev.Stat.1983, ch. 110, par. 2-1402) violates the due process clause of the fourteenth amendment to the United States Constitution (U.S. Const., amend. XIV) when used to enjoin a third-party citation respondent. In its brief and in a separate motion to dismiss this interlocutory appeal, Aspen contends the order denying Batavia's emergency petition to quash the citation against it is not an interlocutory order appealable under Rule 307(a)(1) and the appeal should be dismissed.

In response, Batavia essentially argues that the citation prohibiting it from transferring or disposing of property belonging to Thomas was, in substance, an ex parte injunction. Batavia further contends that its emergency motion to quash, later orally amended to include a motion to dismiss, followed Rule 307(b) which requires a motion to vacate an ex parte interlocutory order. Batavia had loaned money to Roselaine Construction Company, Inc., and received notes on behalf of Roselaine signed and guaranteed by Thomas, its president, which were secured, in part, by a pledge of 1,430 shares of Batavia Concrete, Inc. stock which Batavia possessed. Roselaine Construction Company was in default, and Batavia had arranged a private sale of the shares of stock held as security. For the reasons set forth below, we conclude that this court does not have jurisdiction to entertain this appeal, and, consequently, we do not address the merits of the issues raised by Batavia.

Pursuant to section 2-1402 of the Code of Civil Procedure (Ill.Rev.Stat.1983, ch. 110, par. 2-1402), as implemented by Supreme Court Rule 277 (87 Ill.2d R. 277), a judgment creditor may prosecute supplementary proceedings by service of a citation upon the judgment debtor or any other person to discover assets or income of the debtor and to compel application of nonexempt assets or income toward the payment of the amount due under the judgment. The citation is issued by the clerk of the circuit court upon oral request. (87 Ill.2d R. 277(b).) The citation may prohibit the party to whom it is directed from making or allowing any transfer or disposition of nonexempt property belonging to the judgment debtor, or which he is entitled to, until further order of the court or the termination of the proceedings, whichever occurs first. Ill.Rev.Stat.1983, ch. 110, par. 2-1402(d)(1).

Supplementary proceedings under section 2-1402 are designed to provide a statutory foundation for an efficient and expeditious procedure to compel discovery of assets of the debtor and their application to the payment of the judgment (Vendo Co. v. Stoner (1982), 108 Ill.App.3d 51, 57, 63 Ill.Dec. 791, 438 N.E.2d 933), and the proceedings are to be construed liberally rather than strictly (Kauk v. Matthews (1981), 100 Ill.App.3d 107, 111, 55 Ill.Dec. 406, 426 N.E.2d 552). A restraining provision under this section does not adjudicate any rights in the property held by the party to whom it is addressed; it merely requires that the party hold property which is subject to the reach of the judgment creditor in status quo until the judgment creditor's rights can be determined. (Kirchheimer Brothers Co. v. Jewelry Mine, Ltd. (1981), 100 Ill.App.3d 360, 362, 55 Ill.Dec. 785, 426 N.E.2d 1110; see Ill.Ann.Stat., ch. 110, par. 2-1402, Historical and Practice Notes, at 866 (Smith-Hurd 1983).) The Historical and Practice Notes to section 2-1402 state, in pertinent part, as follows:

"Section 2-1402(d)(1) should be construed just as the New York statute. It applies only to property of the judgment debtor in the hands of the third party or property of the judgment debtor, if the citation is directed to him, which is subject to the supplementary proceeding. The restraining provision of the citation is not an injunction, as Judge Learned Hand recognized with respect to the New York provision. It is simply notice to the person served with the citation that if he transfers property subject to the supplementary proceeding, thereby attempting to impede the administration of justice, and places the property beyond the reach of the court, he will be punished either by having a judgment entered against him for the amount of the judgment creditor's claim or the value of the property, whichever is less, or may be punished as and for contempt. See Kirchheimer Bros. Co. v. Jewelry Mine, Ltd., 100 Ill.App.3d 360, 426 N.E.2d 1110, 55 Ill.Dec. 785 (1st Dist.1981)." (Ill.Ann.Stat., ch. 110, par. 2-1402, Historical and Practice Notes, at 867 (Smith-Hurd 1983).)

Such commentary is helpful when ascertaining legislative intent. Schutzenhofer v. Granite City Steel Co. (1982), 93 Ill.2d 208, 212, 66 Ill.Dec. 637, 443 N.E.2d 563.

The 1970 Illinois Constitution vests in the supreme court the authority to make rules governing appeals and specifies that the supreme court may provide by rule for appeals to the appellate court...