Finley v. Kesling, No. 81-945

CourtIllinois Appellate Court
Writing for the CourtROMITI; JOHNSON, P. J., and JIGANTI
Citation433 N.E.2d 1112,105 Ill.App.3d 1,60 Ill.Dec. 874
Decision Date18 March 1982
Docket NumberNo. 81-945
Parties, 60 Ill.Dec. 874 Charles O. FINLEY, Plaintiff-Appellant, v. Sharon Finley KESLING, Charles O. Finley, Jr., Kathryn Finley Perlmutter, Paul Finley, Peer Pedersen, Shirley M. Finley, Charles O. Finley & Company, Inc., an Illinois corporation, Defendants-Appellees.

Page 1112

433 N.E.2d 1112
105 Ill.App.3d 1, 60 Ill.Dec. 874
Charles O. FINLEY, Plaintiff-Appellant,
v.
Sharon Finley KESLING, Charles O. Finley, Jr., Kathryn
Finley Perlmutter, Paul Finley, Peer Pedersen, Shirley M.
Finley, Charles O. Finley & Company, Inc., an Illinois
corporation, Defendants-Appellees.
No. 81-945.
Appellate Court of Illinois, First District, Fourth Division.
March 18, 1982.

[105 Ill.App.3d 2]

Page 1114

[60 Ill.Dec. 876] Mitchell S. Rieger, Aaron J. Kramer, Patrick J. Ward, Frederick J. Sperling, Schiff Hardin & Waite, Raymond J. Smith, Ellen G. Robinson, Burke & Smith Chartered, Chicago, for plaintiff-appellant.

Jonathan B. Gilbert, Arthur M. Holtzman, Pederson & Houpt, Chicago, for defendants-appellees.

ROMITI, Justice:

The plaintiff in this case was previously a party to a divorce action in Indiana. In that case he testified, under oath, that he owned 31% of certain stock, his wife 29% and his children 40%. The Indiana court accepted this testimony and so divided the particular property. Now the plaintiff has filed a lawsuit in Illinois claiming beneficial ownership of the stock which in Indiana he had testified was owned by the children. The trial court, while aware that Indiana will not apply collateral estoppel unless mutuality is present, held that even though the children were not parties to the Indiana action, it would be contrary to Illinois public policy to allow plaintiff to deny either his own previous testimony or the Indiana decree and to carry this issue further, and dismissed the action. We agree and affirm.

In 1954 the plaintiff, Charles Finley, organized a previously founded [105 Ill.App.3d 3] insurance brokerage business into Charles O. Finley & Co., Inc., an Illinois corporation. At that time, in view of his poor medical history and for tax reasons in the event of his early death, he put 10% of the stock in each of his four children's names. The remaining 60% was divided between Finley and his wife. Although other children were born after 1954, no stock was given to them.

At the time of its formation in 1954, the total capitalization of the corporation was $5,000, all of which was contributed by Finley. In 1961, the corporation became the owner and operator of a major league professional baseball franchise; this was sold in 1980. At the same time the corporation, which now has a shareholder equity in excess of $20,000,000, adopted a plan of liquidation and distribution. Finley in the present action claims that although 40% of the stock is registered in the children's names they are not entitled to any part of the liquidating distributions of the corporation.

As already stated, Finley filed this declaratory judgment action seeking a declaration that the children are not beneficial owners of the stock and that he is the beneficial owner of the stock. Defendants filed a motion to dismiss, pursuant to section 48(d) of the Civil Practice Act on the grounds of res judicata. The pleadings and briefs of the parties in the trial court disclose that in about 1974, Shirley M. Finley, then the wife of the plaintiff, filed a suit for divorce in Indiana. At the hearing on her motion for temporary support, Finley testified:

" * * * So I said, 'Well, that does sound like a good idea to give the stock to the kids and the wife.' So I decided that I'd give her 29 percent and the four children

Page 1115

[60 Ill.Dec. 877] 10 percent each. That was a total of 69 percent of the stock that I gave at the time I formed the corporation for tax purposes. That was my thinking in the event of an early death.

Q. Let me ask this: Was that done, then, as part of an estate plan contemplating your early death perhaps?

A. Yes, yes, it was part of the beginning of my estate planning.

Q. * * *-by the way, does the stock still remain in the same percentage-29 percent to Mrs. Finley, 31 to you and 10 to each of the four children.

A. Yes, it does.

Q. (Continuing)-that it did in 1954?

A. Yes, it does.

Q. How was that stock set up?

A. Identical to the stock of the Chicago corporation. I gave Mrs. [105 Ill.App.3d 4] Finley 29 percent and the children 10 percent each-and for the same reason, for my estate planning, especially in event of an early death. In the event of an early death, I might say, they would have saved a tremendous amount of money on the stock."

Likewise at a hearing on another motion Finley testified on direct examination:

"I personally own, I have 31 percent. Mrs. Finley owns 29 percent and four of the children own 10 percent each. So my wife and four children own 69 percent and I own 31 percent."

One of the sons, Paul Finley, was called as a witness by his father. He testified on direct examination that he was one of the children who were stockholders with 10% interest. In addition, Finley's attorney filed a motion to reopen for the introduction of further evidence "critical in establishing the net worth of the corporation and the value of the stock of Shirley Finley, Charles Finley and the children in that corporation." Likewise, in the memorandum attached to the motion to correct errors, counsel reiterated that "as an estate planning device, Mr. Finley received 31% of the shares of each corporation, Mrs. Finley 29% of the shares and the remaining 40% was divided equally among the four (4) children living at that time." The trial court in its decree of dissolution found that:

"The capital stock of Charles O. Finley of Illinois and Charles O. Finley of Indiana is now and has been for many years owned in these proportions: 31 percent by the husband, 29 percent by the wife and 40 percent in equal proportions by four of their children. Thus as to these two corporations we are concerned only with 60 percent of their authorized, issued and outstanding capital stock."

The court decreed that the parties should retain as their separate property the shares of the capital stock issued to them in the corporation, namely 31% to Finley and 29% to his wife. In addition, the Indiana appellate court in 1977 on an appeal from an interlocutory order stated "The husband holds thirty-one per cent of the corporate stock and the wife holds twenty-nine per cent of the corporate stock. The remaining forty per cent of the corporate stock which is not part of the marital estate is divided equally among four of their children." Finley v. Finley (Ind.App.1977), 367 N.E.2d 1126, 1127.

The Illinois trial judge granted the motion to dismiss and dismissed the proceedings with prejudice. The written order expressly adopted his oral opinion in which he stated in part:

"Every relevant stage along the way to the final divorce decree, the plaintiff either affirmatively stated or acquiesced in the trial (and) in the Appellate Court case that he owned 31 percent and the four children owned the total of 40 percent. I cite specifically Mr. Finley's direct testimony under questioning by his attorney, Mr. [105 Ill.App.3d 5] Ruman, Exhibit E, in the children's reply, Mr. Finley saying, 'I personally own, I have 31 percent, Mrs. Finley owns 29 percent, and the four children own 10 percent each, so that my wife and four children own 69 percent, and I own 31 percent.' If the plaintiff, Mr. Charles Finley, here ever asserted in Indiana, as he does here, that he owns 71 percent, the

Page 1116

[60 Ill.Dec. 878] formula for the property distribution would have been considerably different than the one ultimately adjudged and the Indiana trial court's opinion could not possibly read the way it does read. And further, had Mr. Finley made such a claim, his wife could have and the four children certainly would have contested that assertion. Indeed, it's my belief that had the plaintiff made such a reach into the children's pockets in the process of the divorce action that it would have been necessary for him to bring them into that case to resolve the issue. He didn't do that. There, apparently, was no contest on the percentage of the stock ownership in the children because the plaintiff never raised that issue in Indiana. And there was no reason for Mrs. Finley or the children to raise it since they concurred in his representation on the record and since they concurred in the findings by both the trial court and the Appellate Court.

If the text writers need a classic example of the folly of requiring mutuality of estoppel for estoppel by verdict, these facts and the plaintiff's inconsistent positions taken in sister states supply it.

To my view, it's immaterial here to debate over which state law on estoppel...

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47 practice notes
  • Astor Chauffeured Limousine Co. v. Runnfeldt Inv. Corp., Nos. 89-1631
    • United States
    • United States Courts of Appeals. United States Court of Appeals (7th Circuit)
    • August 24, 1990
    ...Judicial estoppel is not part of the law of judgments in Illinois so much as it is a rule of evidence or pleading. Finley v. Kesling, 105 Ill.App.3d 1, 8, 60 Ill.Dec. 874, 880-81, 433 N.E.2d 1112, 1118-19 (1st But what of the state claim? The Rules of Decision Act, 28 U.S.C. Sec. 1652, requ......
  • Ceres Terminals, Inc. v. Chicago City Bank and Trust Co., No. 10062
    • United States
    • United States Appellate Court of Illinois
    • March 31, 1994
    ...Bank of Des Page 495 [200 Ill.Dec. 156] Plaines (1985), 136 Ill.App.3d 971, 91 Ill.Dec. 438, 483 N.E.2d 924; Finley v. Kesling (1982), 105 Ill.App.3d 1, 60 Ill.Dec. 874, 433 N.E.2d 1112.) The application of this doctrine serves to limit "the prospect that an adept litigant may succeed in pr......
  • Wilkes ex rel. Mason v. Phoenix Home
    • United States
    • Pennsylvania Supreme Court
    • July 18, 2006
    ...(Miss.1980) (applying preclusion law of Mississippi where Louisiana judgment was argued to have preclusive effect); Finley v. Kesling, 105 Ill.App.3d 1, 60 Ill.Dec. 874, 433 N.E.2d 1112, 1117 (1982) (declining to apply collateral estoppel rules of The "fog of ambiguity" to which Mr. Chief J......
  • Rourke v. Amchem Products, Inc., No. 130 September Term, 2003.
    • United States
    • Court of Appeals of Maryland
    • December 14, 2004
    ...rule. Such an expectation simply is not, and would not have been, reasonable. In addition, I am persuaded by Finley v. Kesling, 105 Ill.App.3d 1, 60 Ill.Dec. 874, 433 N.E.2d 1112 (1982).17 That a judgment has no constitutional claim to a greater effect in the state in which enforcement is s......
  • Request a trial to view additional results
47 cases
  • Astor Chauffeured Limousine Co. v. Runnfeldt Inv. Corp., Nos. 89-1631
    • United States
    • United States Courts of Appeals. United States Court of Appeals (7th Circuit)
    • August 24, 1990
    ...Judicial estoppel is not part of the law of judgments in Illinois so much as it is a rule of evidence or pleading. Finley v. Kesling, 105 Ill.App.3d 1, 8, 60 Ill.Dec. 874, 880-81, 433 N.E.2d 1112, 1118-19 (1st But what of the state claim? The Rules of Decision Act, 28 U.S.C. Sec. 1652, requ......
  • Ceres Terminals, Inc. v. Chicago City Bank and Trust Co., No. 10062
    • United States
    • United States Appellate Court of Illinois
    • March 31, 1994
    ...Bank of Des Page 495 [200 Ill.Dec. 156] Plaines (1985), 136 Ill.App.3d 971, 91 Ill.Dec. 438, 483 N.E.2d 924; Finley v. Kesling (1982), 105 Ill.App.3d 1, 60 Ill.Dec. 874, 433 N.E.2d 1112.) The application of this doctrine serves to limit "the prospect that an adept litigant may succeed in pr......
  • Wilkes ex rel. Mason v. Phoenix Home
    • United States
    • Pennsylvania Supreme Court
    • July 18, 2006
    ...(Miss.1980) (applying preclusion law of Mississippi where Louisiana judgment was argued to have preclusive effect); Finley v. Kesling, 105 Ill.App.3d 1, 60 Ill.Dec. 874, 433 N.E.2d 1112, 1117 (1982) (declining to apply collateral estoppel rules of The "fog of ambiguity" to which Mr. Chief J......
  • Rourke v. Amchem Products, Inc., No. 130 September Term, 2003.
    • United States
    • Court of Appeals of Maryland
    • December 14, 2004
    ...rule. Such an expectation simply is not, and would not have been, reasonable. In addition, I am persuaded by Finley v. Kesling, 105 Ill.App.3d 1, 60 Ill.Dec. 874, 433 N.E.2d 1112 (1982).17 That a judgment has no constitutional claim to a greater effect in the state in which enforcement is s......
  • Request a trial to view additional results

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