Diversey Liquidating Corp. v. Neunkirchen

• Decision Date: 15 February 1939
• Docket Number: No. 24934.,24934.
• Citation: 370 Ill. 523,19 N.E.2d 363
• Parties: DIVERSEY LIQUIDATING CORPORATION v. NEUNKIRCHEN.
• Court: Illinois Supreme Court

370 Ill. 523

19 N.E.2d 363

DIVERSEY LIQUIDATING CORPORATION

v.NEUNKIRCHEN.

No. 24934.

Supreme Court of Illinois.

Feb. 15, 1939.

Action by the Diversey Liquidating Corporation against Joseph Neunkirchen. From an order granting a motion for summary judgment against defendant for $2,005.87, and from orders denying defendant's motions to vacate the judgment, defendant appeals.

Reversed and remanded with instructions.Appeal from Municipal Court of Chicago; Joseph J. Drucker, judge.

Hyman M. Selkowitz, of Chicago (Irving Goodman, of Chicago, of counsel), for appellant.

Kotin & Gainer, of Chicago (William E. Gainer, of Chicago, of counsel), for appellee.

FARTHING, Justice.

Joseph Neunkirchen perfected a direct appeal to this court from an order of the municipal court of Chicago granting a motion of appellee for summary judgment against him for $2005.87 and costs. He also appealed from orders of the court dated June 24, 1938, and July 5, 1938, denying motions to vacate the aforesaid judgment. As grounds for his appeal he contends that paragraph 3 of rule 111 of the revised civil practice rules of the municipal court is unconstitutional because it deprives him of his constitutional right to a jury trial, and of due process of law.

On December 21, 1937, the Diversey Liquidating Corporation filed its statement of claim. That company had been duly incorporated under the laws of Illinois on June 24, 1937, and had taken over the assets of the Diversey Trust and Savings Bank, which had suspended business about June 12, 1931, and had gone into liquidation. Neunkirchen had a deposit of $794.16 in that bank and also owned 40 shares of its stock of the par value of $100 per share. A representative suit in equity was filed on June 13, 1931, against all its stockholders. On December 13, 1936, after the cause had been referred to a master to hear evidence, a petition to stay the proceedings was filed in this stockholders' liability suit. It set forth a plan to organize a liquidating corporation, to purchase the assets of the bank, and to discharge its liabilities. As a result, the stockholders' liability proceedings were stayed. In January, 1937, defendant and other stockholders of the bank subscribed for stock in the appellee liquidating corporation. The statement of claim contained an alleged subscription agreement by which Neunkirchen subscribedfor 79 1/2 shares of the common stock of appellee at $10 per share, in payment for which he assigned his bank deposit. This agreement also purports to show he subscribed for 200 1/2 additional shares.

Neunkirchen filed an appearance, demanded a trial by jury and paid the requisite appearance and jury fees. On motion of plaintiff his affidavit of defense was stricken but he was given leave to file an amended affidavit. In his amended affidavit of merits he denied signing the subscription agreement as alleged, but claimed that it had been altered by inserting a subscription for 200 1/2 additional shares whereas, in fact, he subscribed for only 79 1/2 shares. He alleged that he was induced to sign the subscription agreement for 79 1/2 shares upon the representation that he would be relieved of all liability arising out of his ownership of stock in the Diversey Trust and Savings Bank.

Plaintiff then filed a motion for summary judgment supported by affidavit of its secretary, Olson, who also had sworn to the statement of claim. This affidavit denied the allegations of fraud and material alteration. An affidavit of Olson's stenographer was also attached. She stated that she had typed the subscription agreement and that it is in the same form now as it was originally. An answer, suggestions, and counter-affidavits were filed on behalf of defendant. The court heard the motion on affidavits and counter-affidavits and entered summary judgment for plaintiff. Two motions were filed by defendant to vacate this judgment. In the second of these he alleged that paragraph 3 of rule 111 of the municipal court is unconstitutional, because it purports to authorize the court to deprive him of a bona fide defense, and deprives him of his right to a trial by jury. Appellee's contention that the constitutional question was not presented to the trial court and passed on by it is without merit.

The rule was adopted pursuant to the provisions of section 20 of the Municipal Court Act (Ill.Rev.Stat.1937, chap. 37, § 375). By that act the legislature delegated to the municipal court of Chicago power to make such rules of practice as might be necessary or expedient for the proper administration of justice in that court. We have held this delegation of rule-making power constitutional in Hopkins v. Levandowski, 250 Ill. 372, 95 N.E. 496;People v. Gill, 358 Ill. 261, 193 N.E. 192; and Ptacek v. Coleman, 364 Ill. 618, 5 N.E.2d 467. But if a rule denies litigants a constitutional right it must be declared void. Danoff v. Larson, 368 Ill. 519, 15 N.E.2d 290.

Appellant does not question the validity of any part of rule 111 other than paragraph 3. Nor does he question the validity of section 57 of the Civil Practice Act (Ill.Rev.Stat.1937, chap. 110, § 181) which provides for summary judgments. Under that section, if plaintiff, in certain enumerated actions, files affidavits based on personal knowledge of the affiants of the truth of the facts on which his claim is based, the court shall, on motion, enter a summary judgment, unless defendant, by affidavit of merits, shows that he has a sufficiently good defense on the merits to entitle him to defend.

This provision is similar to paragraph 2 of rule 111 of the municipal court rules, and to the summary judgment rules and statutes in New York, Michigan and the District of Columbia. The new Federal rule 56, 28 U.S.C.A. following section 723c, is also similar to the Illinois statute, though broader in scope in that it is applicable to all civil actions in the Federal district courts. The New York, Michigan and the District of Columbia summary judgment rules and statutes were held constitutional when attacked on the ground that they permitted the court to deprive defendant of his right to a jury trial. Peoples Wayne County Bank v. Wolverine Box Co., 250 Mich 273, 230 N.W. 170, 69 A.L.R. 1024;General Investment Co. v. Interborough Rapid Transit Co., 235 N.Y. 133, 139 N.E. 216;Fidelity & Deposit Co. v. United States, 187 U.S. 315, 23 S.Ct. 120, 121, 47 L.Ed. 194; see, also, note in 69 A.L.R. 1031. The function of a jury is to decide disputed issues of fact. But it is obvious that where no such issue is presented there can be no denial of the right to a jury trial. The purpose of a proceeding for summary judgment is to determine whether a defense exists. Where a defense raising an issue of fact as to plaintiff's right to recover is set up, a summary judgment must be denied. To try an issue of fact by affidavits would deprive defendant of his right to a jury trial. In General Investment Co. v. Interborough Rapid Transit Co. supra, the New York Court of Appeals said: ‘The argument that rule 113 infringes upon the right of trial by jury guaranteed by the Constitution cannot be sustained. The rule in question is simply one...